Indicate by check mark whether the registrantregistrant: (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. Yes ☑ No ☐

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). Yes ☑ No ☐

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.

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).

There were 13,358,81312,716,514 shares of common stock, $0.60 par value, of the registrant outstanding at OctoberApril 26, 2018.2019.

The condensed consolidated balance sheet as of September 30, 2018,March 31, 2019, the condensed consolidated statements of income and comprehensive incomeoperations for the three and nine months ended September 30,March 31, 2019 and 2018, and 2017 and the condensed consolidated statements of cash flows for the ninethree months ended September 30,March 31, 2019 and 2018 and 2017 have been prepared by BK Technologies Inc.Corporation (the “Company” or “we”), and are unaudited. On March 28, 2019, BK Technologies, Inc., the predecessor of BK Technologies Corporation, implemented a holding company reorganization, which resulted in BK Technologies Corporation becoming the direct parent company of, and the successor issuer to, BK Technologies, Inc. For the purpose of this report, references to “we” or the “Company” or its management or business at any period prior to the holding company reorganization (March 28, 2019) refer to those of BK Technologies, Inc. as the predecessor company and its subsidiaries and thereafter to those of BK Technologies Corporation and its subsidiaries, except as otherwise specified or to the extent the context otherwise indicates. See Note 2 (Significant Events and Transactions) of the Notes to these condensed consolidated financial statements for additional information regarding the holding company reorganization. In the opinion of management, all adjustments, which include normal recurring adjustments, necessary for a fair presentation have been made. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated balance sheet at December 31, 20172018 has been derived from the Company’s audited consolidated financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. It is suggested that these condensed consolidated financial statements 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, 2017,2018, as filed with the Securities and Exchange Commission (“SEC”). The results of operations for the three and nine months ended September 30, 2018March 31, 2019 are not necessarily indicative of the operating results for a full year.

Effective January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, and the additional related ASUs (ASC “606”(“ASC 606”), which replacesreplaced existing revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under U.S. GAAP. The Company elected the modified retrospective method upon adoption with no impact to the opening retained earnings or revenue reported. These standards provide guidance on recognizing revenue, including a five-step method to determine when revenue recognition is appropriate.appropriate:

The Company consolidates entities in which it has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by first evaluating whether the entity is a variable interest entity (“VIE”) or a voting interest entity.

VIEs are entities in which (i) the total equity investment at risk is not sufficient to enable the entity to finance its activities independently, or (ii) the at-risk equity holders do not have the normal characteristics of a controlling financial interest. A controlling financial interest in a VIE is present when an enterprise has one or more variable interests that have both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance, and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The enterprise with a controlling financial interest is the primary beneficiary and consolidates the VIE.

Voting interest entities lack one or more of the characteristics of a VIE. The usual condition for a controlling financial interest is ownership of a majority voting interest for a corporation or a majority of kick-out or participating rights for a limited partnership.

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.

The Company has an investment in 1347 Property Insurance Holdings, Inc., made through FGI 1347 Holdings, LP, a consolidated VIE.

The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, investment in securities, accounts payable, accrued expenses and other liabilities. As of September 30, 2018March 31, 2019 and December 31, 2017,2018, 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.

Investments reported on the December 31, 2017 balance sheet consisted of marketable equity securities of a publicly held company. As of December 31, 2017, the investment cost was $2,402. On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”)ASU 2016-01 “Financial Instruments,” which amended the guidance in U.S. GAAP regarding the classification and measurement of financial instruments. Changes to the prior guidance primarily affected the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. Upon its adoption, the Company applied the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance was effective. On January 1, 2018, the Company recognized approximately $4,300 of net unrealized gain in its accumulated deficit balance. During the first quarter of 2018, the Company sold 1,317,503 shares of Iteris, Inc. (Nasdaq: ITI), which cost $2,402, for approximately $8,335 of proceeds and reported a loss on the sales of approximately $849.

In May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09 “Revenue from Contracts with Customers,” which provided for a single, principles-based model for revenue recognition and replaced the existing revenue recognition guidance, became effective for annual and interim periods beginning on or after December 15, 2017, and replaced most existing revenue recognition guidance under U.S. GAAP. This ASU requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgements and estimates and changes in those estimates. It permits the use of either a modified retrospective or cumulative effect transition method. The Company adopted ASU 2014-09 in the first quarter of 2018 and applied the modified retrospective approach. Because the Company’s primary source of revenues is from shipments of products, the adoption of this new guidance did not have any impact on its consolidated financial statements and related disclosures. See Note 1 for additional information.

In August 2018, the SEC adopted the final rule under SEC Release No. 33-10532, “Disclosure Update and Simplification”, amending certain disclosure requirements that were redundant, duplicative, overlapping, outdated or superseded. In addition, the amendments expanded the disclosure requirements on the analysis of stockholders’ equity for interim financial statements. Under the amendments, an analysis of changes in each caption of stockholders’ equity presented in the balance sheet must be provided in a note or separate statement. The analysis should present a reconciliation of the beginning balance to the ending balance of each period for which a statement of comprehensive income is required to be filed. This final rule is effective for all filings made on or after November 5, 2018. Given the effective date and the proximity to most filers’ quarterly reports, the SEC permitted deferring the presentation of interim changes in stockholders’ equity in Forms 10-Q until the quarter that begins after the date of adoption, November 5, 2018. The Company adopted this rule in the first quarter of 2019, and its adoption did not have a material impact on its retained earnings, asconsolidated financial statements. Note 7 (Stockholders’ Equity) of the Company reclassified approximately $4,300 of unrealized gain on investment securities that was previously classifiedNotes to these condensed consolidated financial statements summarizes changes in other comprehensive income.stockholders’ equity.

The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures.

On September 27, 2018,March 28, 2019, the Company announcedimplemented a holding company reorganization. The reorganization created a new holding company, BK Technologies Corporation, which became the new parent company of BK Technologies, Inc. The holding company reorganization was intended to create a more efficient corporate structure and increase operational flexibility. The Company did not incur any material operational or financial impacts. The holding company reorganization was effected through a merger transaction among BK Technologies, Inc., BK Technologies Corporation, then a wholly-owned subsidiary of BK Technologies, Inc., and a former direct, wholly-owned subsidiary of BK Technologies Corporation that it was selectedmerged with and into BK Technologies, Inc., with BK Technologies, Inc. surviving as a supplier under the Subscriber Unit Radio and Accessory Contract (“SURAC”) issued by thewholly-owned subsidiary of BK Technologies Corporation. The merger was a tax-free transaction for U.S. Army, and received its first task orders under the contract totaling approximately $800. The task orders werefederal income tax purposes for the Company’s UHF portable radiosstockholders. No stockholder vote of the Company was required to effect the merger transaction.

As part of the holding company reorganization, stockholders of BK Technologies, Inc. became stockholders of BK Technologies Corporation, on a one-for-one basis, with the same number of shares and related accessories, which are anticipatedsame ownership percentage of common stock that they held immediately prior to be delivered during the fourth quarter of 2018. The SURAC contract is intended to serveholding company reorganization. Following the reorganization, BK Technologies Corporation replaced BK Technologies, Inc. as the U.S. Army’s primary contract vehicle for procuring Project 25 standardpublicly traded entity, and shares of BK Technologies Corporation were listed on the Association of Public-Safety Communications Officials (P-25) digital communications equipment.NYSE American under the symbol “BKTI,” which is the same symbol as previously used by BK Technologies, Inc. The CompanyCompany’s common stock was one of five companies selected byassigned a new CUSIP Number: 05587G 104. The holding company has the U.S. Army. The maximum total value of the contract is $495,000 over a five-year period that commenced on June 18, 2018,same directors and ends on June 18, 2023. The contract does not specify purchase dates or quantities of equipment from any particular named supplier, and there is no assurance that the Company will receive any additional orders.executive officers as its predecessor, BK Technologies, Inc.

In July 2018,March 2019, BK Technologies, Inc. made a dividend payment of $256 to BK Technologies Corporation as the Transportation Security Administration (“TSA”) of the U.S. Department of Homeland Security exercised its third one-year option, extending its contract with the Company for an additional year to September 27, 2019. The option providesholding company for the purchasepayment of upquarterly dividends to $2,000 of the Company’s products; however, precise dates for quantities or deliveries are not specified. The original contract awarded in September 2015 totaled $26,200, with $15,500 in firm delivery orders and $10,700 in potential option exercises. Separate from the contract extension, the TSA also ordered approximately $2,000 of additional equipment and services for deployment at various domestic airports.stockholders.

Pursuant to the Company’s capital return program, on September 6, 2018, the Company’s Board of Directors declared a quarterly dividend of $0.02 per share of the Company’s common stock in March 2019 to stockholders of record as of OctoberApril 1, 2018.2019. These dividends were paid on OctoberApril 15, 2018.2019.

The allowance for doubtful accounts on trade receivables was approximately $50 on gross trade receivables of $7,457$5,095 and $5,574$5,771 at September 30, 2018March 31, 2019 and December 31, 2017,2018, respectively. This allowance is used to state trade receivables at a net realizable value or the amount that the Company estimates will be collected of the Company’s gross trade receivables.

The components of inventories, net of allowances for slow-moving, excess or obsolete inventory, consist of the following:

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. The allowances were approximately $758$648 at September 30, 2018,March 31, 2019, compared with approximately $789$629 at December 31, 2017.2018.

IncomeThe Company recorded an income tax expense totalingbenefit of approximately $17 and $200 has been recorded$355 for the three and nine months ended September 30, 2018, respectively,March 31, 2019, compared with $252 and $353, respectively,approximately $106 for the same periodsperiod last year.

As of September 30, 2018 and DecemberMarch 31, 2017,2019, the Company’s net deferred tax assets totaled approximately $3,122 and $3,317, respectively,$3.9 million, and were primarily composed ofderived from research and development tax credits, accrued expenses and net operating loss carryforwards (“NOLs”) and research and development costs and tax credits.  As of September 30, 2018, these NOLs totaled approximately $5,216 for federal and $12,766 for state purposes, with expirations starting in 2018 through 2030..

In order to fully utilize the net deferred tax assets, the Company will need to generate sufficient taxable income in future years to utilize its NOLs prior to their expiration.years. The Company analyzesanalyzed all positive and negative evidence to determine if, based on the weight of available evidence, the Companyit is 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 the Company’s 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.

The Company has an investment in a limited partnership, FGI 1347 Holdings, LP, of which the Company is the sole limited partner. FGI 1347 Holdings, LP, was established for the purpose of investing in securities.

Affiliates of Fundamental Global Investors, LLC serve as the general partner and the investment manager of FGI 1347 Holdings, LP, and the Company is the sole limited partner. As of September 30, 2018,March 31, 2019, the Company and the affiliates of Fundamental Global Investors, LLC, including without limitation Ballantyne Strong, Inc., beneficially owned in the aggregate 2,714,362 shares of PIH’s common stock, representing approximately 45.4%45.1% of PIH’s outstanding shares. Fundamental Global with its affiliates is the largest stockholder of the Company. Mr. Kyle Cerminara, Chairman of the Company’s Board of Directors, is Chief Executive Officer, Co-Founder and Partner of Fundamental Global Investors, LLC and serves as Chief Executive Officer and Chairman of the Board of Directors of Ballantyne Strong. Mr. Lewis M. Johnson, Co-Chairman of the Company, is President, Co-Founder and Partner of Fundamental Global Investors, LLC and serves as a directorCo-Chairman of the Board of Directors of Ballantyne Strong. Messrs. Cerminara and Johnson also serve as Chairman and Co-Chairman, respectively, of the Board of Directors of PIH.

The changes in condensed consolidated stockholders’ equity for the ninethree months ended September 30,March 31, 2019 and 2018 are as follows:

The following table sets forth the computation of basic and diluted incomeloss per share:

Approximately 434,500537,500 stock options and 148,598 restricted stock units for the three and nine months ended September 30, 2018,March 31, 2019, and 328,500438,500 stock options and 30,570 restricted stock units for the three and nine months ended September 30, 2017,March 31, 2018, were excluded from the calculation because they were anti-dilutive.

The Company has an employee and non-employee director share-based incentive compensation plan. Related to these programs, the Company recorded non-cash share-based employee compensation expense of $28 and $66$31 for the three and nine months ended September 30, 2018, respectively,March 31, 2019, compared with $19 and $34, respectively,$21 for the same periodsperiod last year. The Company considers its non-cash share-based employee compensation expenses as a component of cost of products and selling, general and administrative expenses. There was no non-cash share-based employee compensation expense capitalized as part of capital expenditures or inventory for the periods presented.

The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The non-cash share-based employee compensation expense recorded in the three and nine months ended September 30, 2018March 31, 2019 was calculated using certain assumptions. Such assumptions are described more comprehensively in Note 10 (Share-Based Employee Compensation) of the Notes to the Company’s consolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2017.2018.

A summary of activity under the Company’s stock option plans during the ninethree months ended September 30, 2018March 31, 2019 is presented below:

On September 6, 2018, the Company granted to each non-employee director restricted stock units with a grant fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which will vest in five equal annual installments beginning with the first anniversary of the grant date, subject to the director’s continued service through such date, provided that, if the director makes himself available and consents to be nominated by the Company for continued service as a director, but is not nominated for the Board for election by shareholders, other than for good reason as determined by the Board in its discretion, then the restricted stock units shall vest in full as of the director’s last date of service as a director of the Company.

On June 4, 2018, the Company granted to each non-employee director restricted stock units with a grant fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which will vest on June 4, 2019, subject to continued service through such vesting date.

On June 15, 2017, the Company granted to each non-employee director restricted stock units with a grant fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which vested on June 15, 2018.

The Company recorded non-cash restricted stock unit compensation expense of $38 and $111$41 for the three and nine months ended September 30, 2018, respectively,March 31, 2019, compared with $35 and $41$34 for the same periodsperiod last year.

From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of its business. OnThere were no pending material claims or legal matters as of March 28, 2017, The Sales Group, Inc. (“TSG”) filed a lawsuit in the U.S. District Court for the Central District of California against the Company. TSG was a sales representative of the Company that the Company terminated in March 2017. TSG asserted claims against the Company for alleged breach of oral contract, violation of the California and Arizona sales representative statutes and an accounting of alleged unpaid sales commissions. TSG’s complaint sought damages in the amount of $6,090 for alleged unpaid past and future sales commissions. On April 3, 2017, counsel for TSG sent the Company a letter outlining additional alleged grounds for recovery against the Company and offering to settle the litigation in exchange for the continued payment of sales commissions to TSG for a negotiated period, a buyout of TSG’s alleged rights for a negotiated sum or reinstatement of TSG for a period of at least 2.5 years with commission rates equal to those in effect at the time of TSG’s termination. The matter was mediated on November 14, 2017, during which the parties agreed to a settlement. On December 19, 2017, the Company entered into a settlement agreement with TSG, pursuant to which TSG agreed to dismiss with prejudice its lawsuit filed against the Company. Pursuant to the settlement agreement, the Company agreed to pay an amount of $900 to TSG on or before December 31, 2017. The Company also agreed to pay to TSG commissions, at the rates in effect since February 7, 2013, on all orders for the Company’s products received and accepted by the Company from the states of Arizona, California, Nevada and Hawaii from January 1, 2018 through December 31, 2018, other than for (i) sales of the Company’s products to federal government agencies and offices, (ii) sales of the Company’s products to other end-users, excepting state and local government agencies and offices, and (iii) sales of parts or service, including warranty service. In addition, if at any time on or before December 31, 2018, the Company completes a change-in-control transaction, then the Company will pay to TSG an amount equal to $2,000, less the amount of commissions paid by the Company with respect to 2018, as described above. The settlement agreement settled all claims raised by TSG in its lawsuit against the Company. In December 2017, the Company recorded an estimated commission amount of approximately $536. For the nine months ended September 30, 2018, the Company paid $682 in commissions to TSG. In June 2018, the Company estimated and recorded an additional commission amount of approximately $290 for the remainder of 2018. No additional commission amounts were estimated for the three months ended September 30, 2018.2019.

As of September 30, 2018,March 31, 2019, the Company had purchase orders to suppliers for inventory of approximately $6,924.$15,071.

Sales to United States government agencies represented approximately $7,110 (53.5%) and $15,879 (41.0%$5,401 (70.7%) of the Company’s total net sales for the three and nine months ended September 30, 2018, respectively,March 31, 2019, compared with approximately $5,210 (43.7%$3,993 (34.0%) and $11,145 (36.5%), respectively, for the same periodsperiod last year. Accounts receivable from agencies of the United States government were $3,440$4,255 as of September 30, 2018,March 31, 2019, compared with approximately $2,977$1,928 at the same date last year.

On March 28, 2019, BK Technologies, Inc., a wholly-owned subsidiary of BK Technologies Corporation (the “Company”), RELM Communications, Inc., a subsidiary of BK Technologies, Inc., and Silicon Valley Bank, as lender (“SVB”), entered into an Amended and Restated Loan and Security Agreement (the “Loan and Security Agreement”). The Company has aLoan and Security Agreement replaced BK Technologies, Inc.’s prior Loan and Security Agreement with SVB (the “Prior Agreement”) under which its secured revolving credit facility (the “Credit Facility”) was maintained.

Pursuant to the Loan and Security Agreement, the Credit Facility continues to provide BK Technologies, Inc. with Silicon Valley Bank witha maximum borrowing availability of $1,000 (subjectand BK Technologies, Inc. continues to abe subject to substantially the same customary borrowing base)terms and aconditions under the Credit Facility as it was under the Prior Agreement, including the accuracy of representations and warranties, compliance with financial maintenance and restrictive covenants and the absence of events of default. Pursuant to the Loan and Security Agreement, payment of cash dividends, in the aggregate not to exceed $5,000 during any twelve-month period, is permitted so long as an event of default does not exist at the time of such dividend and would not exist after giving effect to such dividend. Any borrowings under the Credit Facility will bear interest at the variable interest rate equal to 25 basis points above the Wall Street Journal prime rate. The maturity date of the Credit Facility has been extended to December 26, 2018. As2019.

 The financial maintenance covenants, required to be maintained at all times and tested quarterly (or, for the “Adjusted Quick Ratio” covenant, monthly, if any obligations are outstanding), include: (1) a ratio of September 30, 2018,“Quick Assets” to the Companysum of “Current Liabilities” plus outstanding borrowings to SVB to the extent not included in “Current Liabilities” minus the current portion of “Deferred Revenue” (all as defined in the Loan and Security Agreement) of at least 1.25:1.00; provided that “Net Cash” (defined as the difference between unrestricted cash on deposit with SVB minus any outstanding advances under the Credit Facility) is required to be at least $1,000; and (2) maximum “Total Leverage” (as defined in the Loan and Security Agreement) of no greater total consolidated “Indebtedness” than 3 times “Adjusted EBITDA” (all as defined in the Loan and Security Agreement). BK Technologies, Inc.’s obligations are collateralized by substantially all of its assets, principally accounts receivable and inventory.

 BK Technologies, Inc. was in compliance with all covenants under the loanLoan and security agreement,Security Agreement as amended, governing this revolving credit facility. For a description of such covenants and the other terms and conditions of the loan and security agreement, as amended, reference is made to Note 5 (Debt)date of filing this report. As of the Company’s consolidated financial statements included in its Annualdate of filing this Current Report, on Form 10-K for the fiscal year ended December 31, 2017. As of September 30, 2018, there were no borrowings outstanding under the revolving credit facilityCredit Facility.

We believe that it is important to communicate our future expectations to our security holders and to the public. 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 and 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), including the statements about our plans, objectives, expectations and prospects. 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” 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. 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 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.

Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 20172018 and in our subsequent filings with the Securities and Exchange Commission, and include, among others, the following:

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”) 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, 2017.2018.

BK Technologies Corporation is a holding company, with a wholly-owned operating subsidiary, BK Technologies, Inc. We design, manufacture and market two-way land mobile radios, repeaters, base stations and related components and subsystems.

Two-way land mobile radios can be hand-held (portable) or installed in vehicles (mobile). Repeaters expand the range of two-way land mobile radios, enabling them to operate over a wider area. Base station components and subsystems are installed at radio transmitter sites to improve performance by enhancing the signal and reducing or eliminating signal interference and enabling the use of one antenna for both transmission and reception. We incorporate both analog and digital technologies in our products. Our digital technology is compliant with the Project 25 standard of the Association of Public-Safety Communications Officials (“APCO Project 25,” or “P-25”). Later in 2018, we plan to introduceWe offer products under two brand names: BK Radio and RELM. Generally, BK Radio-branded products serve the first model in our line of multi-bandgovernment and public safety market, while RELM-branded products to complement our existing KNG products.serve the business and industrial market.

Effective on June 4, 2018, we changed our corporate name from “RELM Wireless Corporation” to “BK Technologies, Inc.,” and our common stock began trading on the NYSE American stock exchange under the new ticker symbol “BKTI” on June 5, 2018. Our stockholders approved the name change at the annual meetingAnnual Meeting of stockholdersStockholders held on June 4, 2018.

We conduct business underOn March 28, 2019, we implemented a holding company reorganization. The reorganization created a new holding company, BK Technologies Corporation, which became the namenew parent company of BK Technologies, Inc. The holding company reorganization was intended to create a more efficient corporate structure and offer products under two brand names: BK Radio and RELM. Generally, BK Radio-branded products serveincrease operational flexibility. We did not incur any material operational or financial impacts. The holding company reorganization was effected through a merger transaction that was a tax-free transaction for U.S. federal income tax purposes for our stockholders. No stockholder vote was required to effect the government and public safety market, while RELM-branded products serve the business and industrial market.merger transaction.

Our financial and operating results forFor the three and nine months ended September 30, 2018 were improved from the comparable periods last year. Sales grew for both the third quarterMarch 31, 2019, sales and the nine month periods of 2018gross profit margins declined while operating expenses increased, compared with the same periods last year. Gross profit margins increased during the third quarter and nine month periods of 2018 versus the same periodsperiod last year. Consequently, operating income for the three and nine months ended September 30, 2018 increased significantlyMarch 31, 2019 decreased from the comparable periodsperiod last year. For the nine month period, we also generated positive cash flow and reduced inventory.

For the thirdfirst quarter of 2018,2019, our sales increased 12.4%decreased 34.9% to approximately $13.3$7.6 million, compared with approximately $11.8$11.7 million for the same quarter last year. For the nine months ended September 30, 2018, sales increased 29.1% to approximately $38.7 million, compared with $30.0 million for the same period last year.

Gross profit margins as a percentage of sales for the thirdfirst quarter of 2018 grew to2019 totaled approximately 41.1%31.9%, compared with 32.3%41.2% for the thirdfirst quarter last year. For the nine month period ended September 30, 2018, gross profit margins as a percentage of sales increased to 41.8%, compared with 35.2% for the same period last year.

For the thirdfirst quarter of 2018,2019, selling, general and administrative expenses (“SG&A”) totaled approximately $4.6$4.8 million (34.5%(62.2% of sales), compared with approximately $3.7$4.1 million (30.9%(34.8% of sales) for the same quarter last year. SG&A expenses

Operating loss for the first nine months of 2018quarter ended March 31, 2019, totaled approximately $13.2$2.3 million (34.2%(30.3% of sales), compared with operating income of approximately $10.6 million (35.4% of sales)$748,000 for the same period last year.

For the three and nine months ended September 30, 2018,March 31, 2019, we recognized an unrealized loss,a gain, totaling approximately $191,000 and $543,000, respectively,$592,000 on our investment in 1347 Property Insurance Holdings, Inc., made through FGI 1347 Holdings, LP, a consolidated variable interest entity. No comparable loss was incurred forsecurities. For the same period last year’s three and nine month periods. Also, for the nine months ended September 30, 2018,year, we recognized a loss on the sale of securities totaling approximately $849,000, compared with a $1.3 million gain for the same period last year. For the three months ended September 30, 2018, we recognized other expenses totaling approximately $48,000, compared with other income of approximately $1,000 for the same period last year. For the nine months ended September 30, 2018, other expense totaled approximately $274,000, compared with approximately $146,000 for the same period last year.$1,146.

Pretax incomeloss for the three months ended September 30, 2018,March 31, 2019, totaled approximately $667,000, compared with approximately $852,000 for the same quarter last year. For the nine months ended September 30, 2018, pretax income totaled approximately $1.4$1.7 million, compared with approximately $1.0 million$549,000 for the same periodquarter last year.

For the three and nine months ended September 30, 2018,March 31, 2019, we recognized an income tax expensebenefit totaling approximately $17,000 and $200,000, respectively,$355,000, compared with $252,000 and $353,000, respectively,$106,000 for the same periodsperiod last year. Our income tax expensebenefit is largely non-cash due to utilization of our net operating loss carryforwards (“NOLs”).non-cash.

Net incomeloss for the three months ended September 30, 2018March 31, 2019 was approximately $650,000$1.3 million ($0.050.10 per basic and diluted share), compared with approximately $600,000$443,000 ($0.040.03 per basic and diluted share) for the same quarter last year. For the nine months ended September 30, 2018, net income totaled approximately $1.2 million ($0.09 per basic and diluted share), compared with approximately $650,000 ($0.05 per basic and diluted share) for the same period last year.

As of September 30, 2018,March 31, 2019, working capital totaled approximately $23.6$17.6 million, of which approximately $18.8$12.6 million was comprised of cash, cash equivalents and trade receivables. As of December 31, 2017,2018, working capital totaled approximately $26.7$21.0 million, of which approximately $12.7$17.0 million was comprised of cash, cash equivalents and trade receivables. The decrease in cash and working capital was primarily related to our net loss combined with changes in inventories, accrued compensation, accounts receivable and accounts payable.

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 incomeoperations expressed as a percentage of sales:

For the thirdfirst quarter ended September 30, 2018,March 31, 2019, net sales increased 12.4% tototaled approximately $13.3$7.6 million, compared with approximately $11.8$11.7 million for the same quarter last year. Net sales totaled approximately $38.7 million for the nine months ended September 30, 2018, which was 29.1% greater than the comparable period last year, and 98.2% of

The decrease in net sales for the full year of 2017.

OurWe believe our funnel of sales prospects forfrom prior to the remainder of 2018shutdown remains largely intact, and into next year appear promising as we introducenow includes opportunities for our new multi-band products and look to grow our market share, particularlymultiband product (BKR 9000) that was introduced at the International Wireless Communications Exposition in the state and local arena.March 2019. Accordingly, we are expanding andcontinuing to invest in upgrading our sales and marketing capabilities to capitalize on new opportunities and drive anticipated sales growth.growth moving forward.

Gross profit margin as a percentage of sales for the thirdfirst quarter ended September 30, 2018 increased to 41.1%March 31, 2019 was approximately 31.9%, compared with 32.3%41.2% for the same quarter last year. For the nine months ended September 30, 2018, gross profit margins increased to 41.8%, compared with 35.2% for the same period last year.

Our cost of products and gross profit marginmargins are derived primarily from material, labor and overhead costs, product mix, manufacturing volumes and pricing. The improvement in grossGross profit margins for both the thirdfirst quarter of 2019 were impacted by increased material costs for certain components and nine-month period was attributed primarily to increased sales combined with a more favorable mix of product sales. Increased productionsales weighted more heavily toward lower margin products. Also, lower volumes enabled uscontributed to more effectively utilizesuboptimal utilization and absorb our baseabsorption of manufacturing overhead expenses, and we are realizing benefits associated with manufacturing and quality improvement programs. Comparatively, the first three quarters last year included certain product enhancement expensessupport expenses. Anticipated sales growth and the discontinuationanticipated production and sale of a product development initiative.

We continue to utilize contract manufacturing relationships for production efficiencies and to manage material and labor costs. We anticipate that our current contract manufacturing relationships or comparable alternatives will be available to us in the future. We may encounter product cost and competitive pricing pressures in the future. However, the extent of their impact on gross margins, if any, is uncertain.

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 thirdfirst quarter ended September 30, 2018March 31, 2019 totaled approximately $4.6$4.8 million, or 34.5%62.2% of sales, compared with approximately $3.7$4.1 million, or 30.9%34.8% of sales, for the thirdfirst quarter last year. For the nine months ended September 30, 2018, SG&A expenses totaled approximately $13.2 million, or 34.2% of sales, compared with approximately $10.6 million, or 35.4% of sales, for the same period last year.

Engineering and product development expenses for the thirdfirst quarter of 20182019 totaled approximately $2.1 million (15.9%(28.1% of total sales), compared with approximately $1.2$1.8 million (10.3%(15.3% of total sales) for the same quarter last year. For the nine-month period, engineering and product development expenses totaled approximately $5.8 million (15.0% of sales), compared with approximately $3.4 million (11.2% of sales) for the same period last year. The increase in engineering expenses was driven by costs related to our BKR 9000 multiband product development and the launch of two new product development initiatives.initiatives relating to a new line of portable and mobile radios to succeed our current KNG Line.

Marketing and selling expenses for the thirdfirst quarter of 20182019 totaled approximately $1.4 million (10.2%(18.4% of sales) compared with approximately $1.4$1.2 million (12.0%(10.4% of sales) for the thirdfirst quarter last year. For the nine-month period, marketing and selling expenses totaled approximately $4.2 million (10.9% of sales), compared with approximately $4.0 million (13.4% of sales) for the same period last year. The increase for the nine month period is attributed primarily to additional sales staff, which was partially offset by reduced commissions and incentive compensation directly related to sales performance.

General and administrative expenses for the thirdfirst quarter of 20182019 totaled approximately $1.1$1.2 million (8.3%(15.7% of total sales), compared with approximately $1.0$1.1 million (8.6%(9.0% of total sales) for the same quarter last year. For the nine-month period, general and administrative expenses totaled approximately $3.2 million (8.2% of sales), compared with approximately $3.3 million (10.9% of sales) for the same period last year. The slight increase for the thirdfirst quarter of 2019 was attributed primarily to headquarters expenses, while the decrease in costs for the nine-month period was primarily related to one-time costs incurred last year related to changes in senior leadership. Those cost decreases were partially offset by expenses associated with changing the Company’s name.our holding company reorganization, and upgrading our information technology security and capabilities.

Operating incomeloss for the thirdfirst quarter ended September 30, 2018 increased byMarch 31, 2019 totaled approximately $721,000 (459.2%$2.3 million (30.3%) to approximately $878,000 (6.6% of sales), compared with operating income of approximately $157,000 (1.3%$748,000 (6.4% of sales) for the same quarter last year. For the nine months ended September 30, 2018, operating income increased to approximately $3.0 million (7.6% of sales), compared with anThe operating loss of approximately $76,000 (0.3% of sales) for the same period last year. The increase in operating income for the quarter and nine-month periods was attributed primarily to lower sales growth and improved gross profit margins, which were partially offset bycombined with increased product development expenses.

For the three months ended September 30, 2018,March 31, 2019, we recognized other expenses totaling approximately $48,000,$5,000, compared with other income of approximately $1,000$168,000 for the same period last year. For the nine months ended September 30,Other expenses in 2018 we recognized other expenses totaling approximately $274,000, compared with approximately $146,000 in expenses for the same period last year. These expenses were primarily attributed the disposal of assets related to a discontinued product initiative and exchange losses related to sales under a Canadian dollar-denominated contract. Also during last year’s first quarter, we recorded a non-recurring loss of approximately $104,000 on the disposal of assets related to a discontinued product initiative.

We recorded an income tax expensebenefit of approximately $17,000 and $200,000, respectively,$355,000 for the three and nine months ended September 30, 2018,March 31, 2019, compared with approximately $252,000 and $353,000, respectively,$106,000 for the same periodsperiod last year.

Our income tax provision is based on management’s estimate of the effective tax rate for the full year.  The tax provision in any period will 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 significant fluctuations in the effective book tax rate (that is, tax expense divided by pre-tax book income) from period to period.  For 2018,2019, we generally expect our effective tax rate to decline comparedbe comparable to 2017, primarily due to the implementation of the Tax Cuts and Jobs Act enacted in December 2017, which, among other things, reduced the U.S. federal corporate tax rate from 35% to 21%.last year.

As of September 30, 2018,March 31, 2019, our net deferred tax assets totaled approximately $3.1$3.9 million, and were primarily composed of NOLs.  These NOLs totaled approximately $5.2 million for federalderived from research and $12.7 million for state purposes, with expirations starting in 2018 through 2030.development tax credits and accrued expenses.

In order to fully utilize the net deferred tax assets, we will need to generate sufficient taxable income in future years to utilize our NOLs prior to their expiration.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 we do not have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax asset. Management estimates that as of September 30, 2018, it is more likely than not that approximately $83,000 of the deferred tax asset will not be realized due to the inability to generate sufficient Florida taxable income in the necessary period to fully utilize the Florida NOLs. 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 September 30, 2018.March 31, 2019.

For the ninethree months ended September 30, 2018,March 31, 2019, net cash provided byused in operating activities totaled approximately $2.6$2.3 million, compared with cash used in operating activities of approximately $245,000$3.3 million for the same periodquarter last year.  Cash provided byused in operating activities for the three months ended March 31, 2019, was primarily related to a net income, adjusted byloss, a decrease in accrued compensation, an increase in inventories, and unrealized lossgains on investment in securities, and a decrease in inventories, which were partially offset by a decrease indecreased accounts payablereceivable and an increase in tradeincreased accounts receivable.payable.

For the ninethree months ended September 30, 2018,March 31, 2019, we had a net incomeloss of approximately $1.2$1.3 million, compared with approximately $650,000$443,000 for the same periodquarter last year. Accrued compensation decreased $951,000 for the quarter, which was attributed primarily to the payment of sales and management incentive compensation. For the same quarter last year, accrued compensation decreased approximately $76,000. Net inventories decreasedincreased during the ninethree months ended September 30, 2018March 31, 2019 by approximately $3.7 million,$715,000, compared with an increase of $1.3 million$929,000 for the same period last year. The 2018 decreaseincrease for the first quarter was primarily attributed to an increasematerial purchases combined with a decrease in sales. The lossunrealized gains on investment in securities for the ninethree months ended September 30, 2018March 31, 2019 totaled approximately $1.4 million,$592,000, compared with a gainlosses of approximately $1.3$1.1 million for the same period last year. For additional information pertaining to our investment in securities, refer to Notes 1 (Condensed Consolidated Financial Statements) and 6 (Investment in Securities) to the condensed consolidated financial statements included in this report. Accounts receivable increaseddecreased approximately $1.9 million$676,000 during the ninethree months ended September 30, 2018,March 31, 2019, compared with $3.6an increase of $2.2 million for the same period last year, reflecting sales that were consummated lateryear. The first quarter decrease in the respective quarter that had not yet completed their collection cycle.accounts receivable was attributed to collections. Accounts payable for the ninethree months ended September 30, 2018, decreasedMarch 31, 2019, increased approximately $2.5 million,$602,000, compared with an increasea decrease of approximately $3.8$1.1 million for the same period last year, primarily due to timing of payments to material suppliers. Depreciation and amortization totaled approximately $702,000$256,000 for the ninethree months ended September 30, 2018,March 31, 2019, compared with approximately $727,000$211,000 for the same period last year.

Cash used in investing activities for the three months ended March 31, 2019 totaled approximately $829,000 and was attributed to purchases of property, plant and equipment. For the same period last year, cash provided by investing activities for the nine months ended September 30, 2018 totaled approximately $3.5$4.9 million, compared with approximately $1.2 million for the same period last year. Proceedscomprised primarily of proceeds from the sale of available-for-sale securities totaledtotaling approximately $8.3 million, for the nine months ended September 30, 2018, compared with approximately $1.8 million for the same period last year. We utilized approximately $3.7 million forwhich was partially offset by an investment in FGI 1347 Holdings, LP. There was no comparable investment for the same period last year. For the nine months ended September 30, 2018,LP of approximately $3.3 million, and purchases of property, plant and equipment totaledtotaling approximately $1.1 million, compared with approximately $572,000 for the same period last year.$143,000.

For the ninethree months ended September 30, 2018,March 31, 2019, approximately $2.0 million$591,000 was used in financing activities, primarily related to our capital return program, which included quarterly dividends totaling approximately $815,000$256,000 and stock repurchases totaling approximately $1.2 million.$337,000. For the same period last year, approximately $2.8 million$273,000 was used to pay dividends and approximately $405,000$357,000 was used for stock repurchases. For the same period last year, we also received approximately $183,000 from the issuance of common stock upon the exercise of stock options.

We haveOn March 28, 2019, BK Technologies, Inc., our wholly-owned subsidiary, and RELM Communications, Inc., a wholly-owned subsidiary of BK Technologies, Inc., entered into an Amended and Restated Loan and Security Agreement (the “Loan and Security Agreement”) with Silicon Valley Bank (“SVB”). The Loan and Security Agreement replaced BK Technologies, Inc.’s prior Loan and Security Agreement with SVB (the “Prior Agreement”) under which its secured revolving credit facility (the “Credit Facility”) was maintained.

Pursuant to the Loan and Security Agreement, the Credit Facility continues to provide BK Technologies, Inc. with Silicon Valley Bank witha maximum borrowing availability of $1.0 million, and aBK Technologies, Inc. continues to be subject to substantially the same customary borrowing terms and conditions under the Credit Facility as it was under the Prior Agreement, including the accuracy of representations and warranties, compliance with financial maintenance and restrictive covenants and the absence of events of default. Pursuant to the Loan and Security Agreement, payment of cash dividends, in the aggregate not to exceed $5.0 million during any twelve-month period, is permitted so long as an event of default does not exist at the time of such dividend and would not exist after giving effect to such dividend. Any borrowings under the Credit Facility will bear interest at the variable interest rate equal to 25 basis points above the Wall Street Journal prime rate. The maturity date of the Credit Facility has been extended to December 26, 2018. As2019.

The financial maintenance covenants, required to be maintained at all times and tested quarterly (or, for the “Adjusted Quick Ratio” covenant, monthly, if any obligations are outstanding), include: (1) a ratio of September 30, 2018,“Quick Assets” to the sum of “Current Liabilities” plus outstanding borrowings to SVB to the extent not included in “Current Liabilities” minus the current portion of “Deferred Revenue” (all as defined in the Loan and Security Agreement) of at least 1.25:1.00; provided that “Net Cash” (defined as the datedifference between unrestricted cash on deposit with SVB minus any outstanding advances under the Credit Facility) is required to be at least $1.0 million; and (2) maximum “Total Leverage” (as defined in the Loan and Security Agreement) of this report, we wereno greater total consolidated “Indebtedness” than 3 times “Adjusted EBITDA” (all as defined in the Loan and Security Agreement). BK Technologies, Inc.’s obligations are collateralized by substantially all of its assets, principally accounts receivable and inventory.

BK Technologies, Inc. was in compliance with all covenants under the loanLoan and security agreement,Security Agreement as amended, governing the revolving credit facility. For a description of such covenants and the other terms and conditions of the loan and security agreement, as amended, reference is made to Note 5 (Debt)date of our consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Our cash and cash equivalents balance at September 30, 2018March 31, 2019 was approximately $11.3$7.5 million.  We believe these funds combined with anticipated cash generated from operations and borrowing availability under our revolving credit facilityCredit Facility are sufficient to meet our working capital requirements for the foreseeable future. However, financial and economic conditions could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity and financial condition. For a description of these risks, see “Item 1A. Risk Factors” set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.2018.

In response to the Securities and Exchange Commission’s financial reporting release, FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, we have selected for disclosure 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, software development 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 adopted ASU No. 2014-09, "Revenue from Contracts with Customers", and all the related amendments (collectively “Topic 606”) in the first quarter of 2018 and applied the modified retrospective approach.  Under Topic 606, revenue is recognized when control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred.  The adoption of Topic 606 did not have, and is not expected to have, a material effect on the timing or amount of revenue recognized as compared with the Company’s previous revenue recognition practices because the Company’s primary source of revenues is from shipments of products.  

There were no other changes to our critical accounting policies during the quarter ended September 30, 2018,March 31, 2019, as described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

Our President (who serves as our principal executive officer) and Chief Financial Officer (who serves as our principal financial and accounting officer) have evaluated the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of September 30, 2018.March 31, 2019. Based on this evaluation, they have concluded that our disclosure controls and procedures were effective as of September 30, 2018.March 31, 2019.

During the three months ended September 30, 2018,March 31, 2019, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index below.

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.