8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 11, 2022

BK Technologies Corporation

(Exact name of registrant as specified in its charter)  

Nevada	001-32644	83-4064262
(State or other jurisdiction of	(Commission	(IRS Employer
incorporation or organization)	File No.)	Identification Number)

7100 Technology Drive, West Melbourne, FL	32904
(Address of principal executive offices)	(Zip Code)

(321) 984-1414

(Registrant’s telephone number including area code)

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, par value $0.60 per share	BKTI	NYSE American

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

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. ☐

Item 7.01 Regulation FD Disclosure

On August 11, 2022, management of BK Technologies Corporation, a Nevada corporation (the “Company”), discussed the Company’s financial results for the second quarter ended June 30, 2022, and certain aspects of the Company’s business plan, on an earnings conference call with analysts and investors. A transcript of the conference call is furnished with this Current Report on Form 8-K as Exhibit 99.1. The supplemental slides referenced during the conference call are furnished with this Current Report on Form 8-K as Exhibit 99.2.

The information contained in Item 7.01 to this Current Report on Form 8-K, including the exhibits, is being “furnished” and, as such, shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.  Financial Statements and Exhibits

(d) Exhibits

Exhibit No.	Description
99.1	August 11, 2022 Earnings Conference Call Transcript
99.2	Supplemental Slides Referenced During the Second Quarter Conference Call of BK Technologies Corporation

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	BK TECHNOLOGIES CORPORATION
Date: August 16, 2022	By:	/s/ Scott A. Malmanger
		Scott A. Malmanger
		Interim Chief Financial Officer

3

EX-99.2

EXHIBIT 99.1

Transcript of

BK Technologies Corporation

BKTI Second Quarter 2022 Earnings Call

August 11, 2022

Participants

John Suzuki - Chief Executive Officer, BK Technologies Corporation

Scott Malmanger - Chief Financial Officer, BK Technologies Corporation

Analysts

Aaron Martin - AIGH Investment Partners

Orin Zvi Hirschman - AIGH Investment Partners

Presentation

Operator

Good morning, ladies and gentlemen, and welcome to the BK Technologies Corporation Conference Call for the Second Quarter 2022. This call is being recorded. All participants have been placed in a listen-only mode. Following management's remarks, the call will be open to questions. There is a slide presentation that is accompanying today's remarks that is available through the webcast.

Before turning the call over to Chief Executive Officer, Mr. John Suzuki, for opening remarks, I will provide the following Safe Harbor statement:

Statements made during this conference call and presented in the presentation that are not based on historical facts are forward-looking statements. Such statements include, but are not limited to, projections or statements of future goals and targets regarding the Company’s revenue and profits.  These statements are subject to known and unknown factors and risks. The Company’s actual results, performance, or achievements may differ materially from those expressed or implied by these forward-looking statements, and some of the factors and risks that could cause or contribute to such material differences have been described in this morning’s press release and in BK’s filings with the U.S. Securities and Exchange Commission.  

These statements are based on information and understandings that are believed to be accurate as of today, and we do not undertake any duty to update such forward-looking statements.  

I will now turn the call over to John Suzuki, CEO of BK Technologies.  Mr. Suzuki, you may begin.

1

John Suzuki - Chief Executive Officer, BK Technologies Corporation

Thank you, everyone, for joining today. I'll start by reviewing some of the highlights of our operations and financial results during the quarter. Then I'll turn it over to our Chief Financial Officer, Scott Malmanger for a deeper dive into our financial results. We'll conclude by opening up the call for a brief Q&A.

We experienced strong growth this quarter, highlighted by an increase in our revenues to just over $12 million. Booking activity has been significant as market demand for our BKR product line continues to exceed our expectations. Bookings in the quarter reached $19 million as new and existing customers embraced the BKR 5000. We are also making great progress towards the launch of our next-generation BKR 9000 multiband device and have completed our first manufacturing build with a targeted launch date during the fourth quarter of 2022.

As many of you know, we're very excited about the potential for this product as we believe it will transform the size of our addressable market by giving us access to additional market verticals. Finally, our new Software-as-a-Service, or SaaS business unit has launched. With this new unit, we will implement an aggressive strategy for introduction of state-of-the-art, subscription-based solution for responders, utilizing the LTE and BK smartphone application branded BKR Play.

Our BKR 5000 radio continues to see strong traction in the marketplace. We achieved record bookings of $19 million in the second quarter of 2022 and $34 million in bookings in the first six months. Our bookings in the first half of 2022 represent a 50% increase compared to bookings in the first half of 2021, primarily driven by continued success of our BKR 5000 as new and existing customers upgrade radio fleets.

To meet this demand, we've added a second production line in our Melbourne, Florida facility that significantly increases our manufacturing capabilities, which we believe will help us fulfill a large portion of our $26.8 million in backlog orders in the back half of 2022. I want to take a moment to discuss our margin performance.

During the second quarter, we saw continued margin pressure related to component shortages. The shortages remain a prevalent issue across our industry and directly impacted our gross margins over the past several quarters. We had to get creative in order to secure components we needed for production, which created an unusual short-term spike in production costs in the first half of 2022.

The good news is that we're beginning to see more component availability. So we expect this pressure to subside considerably and anticipate margin improvement in the back half of 2022. We believe that as pressures ease, we are well positioned to meet the growing demand and to convert bookings to deliveries. Radio deliveries are a key metric for us as they represent when we realize revenue.

As you can see, we are forecasting significant growth in our delivery numbers in the back half of 2022. We delivered just over 8,500 radios in the first half of this year. And we're forecasting a range between 16,000 and 18,400 units to be delivered in the second half. We're also projecting to beat our full-year 2021 delivery numbers by as much as 4,500 units for the full-year in 2022.

Shifting now to our product development pipeline. We are making great progress advancing our new BKR 9000 multiband product and are now targeting a Q4 2022 launch. As you can see in the graph provided, this product transforms our addressable markets, specifically adding such verticals as police, structure fire and emergency medical services.

2

Currently, our engineering and manufacturing teams are optimizing the performance, fit and manufacturability of the 9000, and we are working to complete FCC certification, field testing with several key accounts and a number or a second round of accelerated life testing.

The BKR 9000 multi-band radio will be positioned to take market share compared to similar multi-band radios in the market. With a strong value proposition and a robust go-to-market strategy, we believe we will yield stronger results once the product is officially launched. We are also very excited about opportunities that we're seeing with SaaS applications for the public safety communications market.

As the global SaaS market is poised for exponential growth over the past decade, the opportunity in public safety has been in wirelessly connecting first responders vehicle using LTE cellular devices. Over the next 10 years, though, we believe the opportunity is to expand the communications platform that keeps first responders connected in almost any environment, whether they're in their car or have stepped away from their vehicle by leveraging smartphone technology advancements and the LTE 5G network, we're developing state-of-the-art applications that will connect the first responder through his or her smartphone and the BKR personal radio creating reliable communications that's not just convenient, but can also contribute to a safer, faster response.

This is a massive opportunity. We believe that this opportunity in this technology has the potential to revolutionize public safety communications by maximizing efficiency, safety and execution in an industry where situational awareness and response times are everything. Given the importance of this opportunity, in early March, we announced the launch of a dedicated business unit focused on delivering Software-as-a-Service, SaaS solutions to the public safety market. Led by industry veteran, James Teo, the unit will develop and deliver comprehensive suite of SaaS solutions for first responders by utilizing the LTE 5G network.

We have several scalable smartphone applications under development, including the iOS and Android compatible BKR Play, which will serve as BK's smartphone platform application. Additionally, we filed for three patents related to Push to Talk over cellular and other cellular-based smartphone apps. We're currently targeting a Q4 launch for our first SaaS offering and look forward to keeping you apprised of future developments.

At this point, I'd like to turn it over to Scott Malmanger, our Chief Financial Officer, who will review the financial and operating highlights. Scott?

3

Scott Malmanger - Chief Financial Officer, BK Technologies Corporation

Thanks, John. The following is a summary of our financial and operating results for the period ending June 30, 2022. Sales for the second quarter totaled approximately $12.1 million compared with $11.3 million for the same quarter last year. Importantly, Q2 bookings reached a record $19 million and first half bookings increased 50% compared to the first half of 2021. So there is considerable momentum as we move into the back half of the year. Gross profit margins as a percentage of sales in the second quarter were 14.2% compared with 38.4% for the second quarter last year.

This was primarily due to a short-term dramatic spike in component prices. To keep production online, we made the strategic decision to go to the secondary market to secure certain parts which had a significant short-term impact on our gross margins. We are also still contending with escalated freight costs. However, as we speak with you today, we begin to see pricing pressure ease and are confident that we will see improving margins in the back half of the year.

Selling, general and administrative expenses or SG&A for the second quarter totaled $5.4 million compared with $4.6 million for the same quarter last year. This increase was primarily due to increases -- increased costs associated with the launch of the SaaS division as well as preparing for the BKR 9000 launch.

Operating loss totaled $3.7 million compared with operating loss of $200,000 for the second quarter of last year. It is important to note that for the quarter, we recognized an unrealized noncash loss of approximately $600,000 on our investment in FG Financial Group compared to an unrealized gain of $2.3 million in the second quarter of 2021.

As of June 30, 2022, working capital totaled approximately $17.4 million, of which approximately $12.4 million is comprised of cash, cash equivalents and trade receivables. This quarter marks the 25th consecutive payment of quarterly dividends to shareholders under our capital return program. That concludes my remarks.

John Suzuki - Chief Executive Officer, BK Technologies Corporation

Thanks, Scott. I am energized about the growth opportunities in front of our company, particularly given the traction we are seeing with the BKR 5000, the pending launch of the BKR 9000, multi-band radio and the establishment of our new SaaS business unit. As we execute selling our 5000 product and capitalize on the significantly expanded market opportunity that our 9000 and SaaS business unit brings to the table, we are targeting driving this business to exceed $100 million by 2025.

Importantly, as we look longer-term, both the 9000 and the SaaS business should drive higher margins in the business.

With that, we will move to the question-and-answer portion of the conference call. Operator, we are now ready to open the floor for questions.

4

Operator

Ladies and gentlemen the floor is now open for questions. [Operator Instructions]. And we do have a first questioner, Lucas Hamden from Locus Bridge Capital [ph].

Q: Hey good morning. Thanks for taking my question. I know you mentioned that you think we'll likely see margin improvement in the back half of the year. Can you provide any more color on this and what we could expect? Thanks.

Scott Malmanger - Chief Financial Officer, BK Technologies Corporation

Sure. As I mentioned, component shortages have created an unusual and short-term spike in product costs that have increased pricing pressures in the first half. These pressures are only temporary and have already subsided considerably, and we expect margin improvement in the back half of 2022.

Q: Thank you.

Operator

And we have an additional questioner, Aaron Martin, from AIGH Investment Partners.

Q: Hi, good morning. Congratulations on the strong bookings this quarter. I want to follow-up again on the margin and your comment there on the component pricing. It's nice to see that starting to ease. Do you really believe that all the pricing is all transitory? I mean because you're seeing it out there with inflation, some of the stuff is permanent. It's not just about shortages and rush ordering and expedite fees. Some of it is actual true just cost increase that I don't believe are coming back down. So are you seeing that it's all really going back down?

Scott Malmanger - Chief Financial Officer, BK Technologies Corporation

I would say that we are trending back to historical rates as far as the gross margin on sales. So I think we're trending in that direction, but it's too early to tell exactly when we will be able to achieve historic margins.

Q: I mean this brings up something I've discussed with you before, which comes down to -- you can't just sit there waiting for prices -- component prices to come down. And I understand the nature of your long-term contracts with your customers, but you're in an environment right now where you have strong bookings or booking more than you can deliver. And these are -- some of them are under your long-term contracts and some of them are otherwise, and it would be very reasonable to price those based upon the current pricing environment. And is that part of the strategy to get gross margin where it needs to be?

John Suzuki - Chief Executive Officer, BK Technologies Corporation

Aaron, thanks. This is John Suzuki. Yes, we've talked about this in the past, for sure. We've continued the policy that where we can raise prices, we are raising prices. And you are correct. We do have some long-term contracts, specifically the federal government, which have more restrictions around that. But again, we have executed on price hike increases and that we are continuing to do that.

5

I would just want to add one other note on the margin error, if I can. So part of that is definitely in the supply side of the parts increases as Scott mentioned, right? But the other activity that we can take as a company and have taken is looking at how we do cost reductions on our product. And so between the pricing stabilizing, going back to historical levels, in addition, we've taken the additional actions to take cost out of our [indiscernible] cost structure faster.

Q: Okay. And then one appropriate, the third leg is of course, pricing. That's all. Keep pushing you on it.

John Suzuki - Chief Executive Officer, BK Technologies Corporation

Absolutely, Aaron. Thank you.

Q: Okay. Thank you. We're looking forward to the -- see the 9000 launch in a few months.

John Suzuki - Chief Executive Officer, BK Technologies Corporation

Thank you.

Operator

[Operator Instructions] And we have a next questioner Orin Hirschman from AIGH Investment Partners.

Q: Hi. Just one more follow-up on the 9000, which is mean the 9,000 works in field testing in the last time you had started field test with customers and now it's a matter of getting production ready for Q3 -- I'm sorry Q4?

John Suzuki - Chief Executive Officer, BK Technologies Corporation

Thanks, Orin, for the question. Certainly, getting the production set up, you're correct, right? That's an activity. I think that in terms of the work that still needs to be done, we're still getting feedback, both from our manufacturing team and from the testing in the field. So the objective here is to fine-tune and dial in the performance of the radio, the assembly fits of the radio and the overall reliability of the radio, which is one of the reasons why we're doing the second round of accelerated life testing. So that work is ongoing and will continue. And once it's completed, as I mentioned before, we'll put out a press release, and we are anticipating that that press release will go out in the Q4 time frame.

Q: Just a clarification, does this mean that there's no issues anymore in terms of achieving frequencies and things like that, like we had in the first go around?

6

John Suzuki - Chief Executive Officer, BK Technologies Corporation

That's a correct statement, Orin. We have high confidence that this radio will get launched in the fourth quarter.

Q: Okay, sounds very good. Thank you.

Operator

Okay. Sir there appears to be no further questions in the queue. Do you have any closing comments you would like to finish?

John Suzuki - Chief Executive Officer, BK Technologies Corporation

Thanks, Mike. Thank you all for participating in today's call. We look forward to speaking with you again when we report our Q3 2022 results in November of 2022. All the best to all of you, and have a great day.

Operator

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

7

EX-99.1

  EXHIBIT 99.2

 

NYSE American: BKTI BK TECHNOLOGIES SECOND QUARTER 2022 EARNINGS RESULTS August 11, 2022

 

DISCLOSURES This presentation contains certain forward-looking statements that are made pursuant to the “Safe Harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements concern the Company’s operations, economic performance, and financial condition, including, but not limited to, statements regarding the Company’s long-term strategic plan, and are based largely on the Company’s beliefs and expectations. These statements involve known and unknown risks, uncertainties, and other factors that may cause the actual results, performance, or achievements of the Company, or industry results, to be materially different from any future results, performance, or achievements expressed or implied by such forward-looking statements. Such factors and risks, some of which have been, and may further be, exacerbated by the COVID-19 pandemic and the ongoing war in Ukraine, include, among others, the following: changes or advances in technology; the success of our land mobile radio product line; disruption in the global supply chain creating delays, unavailability and adverse conditions; successful introduction of new products and technologies, including our ability to successfully develop and sell our anticipated new multiband product and other related products in the planned new BKR Series product line; competition in the land mobile radio industry; general economic and business conditions, including inflationary pressures, federal, state and local government budget deficits and spending limitations, any impact from a prolonged shutdown of the U.S. Government, the ongoing effects of the COVID-19 pandemic and the ongoing war in Ukraine, including the impact of related sanctions being imposed by the U.S. Government and the governments of other countries, impact of potential reprisals as a consequence of the war in Ukraine and any related sanctions; 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, and risks incumbent to being a noncontrolling interest stockholder in a corporation; impact of the COVID-19 pandemic or the ongoing war in Ukraine on the companies in which the Company holds investments; 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 changes in the U.S. Government and foreign governments’ trade and tariff policies, as well as any further impact resulting from the COVID-19 pandemic or the ongoing war in Ukraine; our inventory and debt levels; protection of our intellectual property rights; fluctuation in our operating results and stock price; acts of war or terrorism, natural disasters and other catastrophic events, such as the COVID-19 pandemic and the ongoing war in Ukraine; any infringement claims; data security breaches, cyber-attacks and other factors impacting our technology systems; availability of adequate insurance coverage; maintenance of our NYSE American listing; risks related to being a holding company; and the effect on our stock price and ability to raise equity capital of future sales of shares of our common stock. Certain of these factors and risks, as well as other risks and uncertainties, are stated in more detail in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2021, and in the Company’s subsequent filings with the SEC. These forward-looking statements are made as of the date of this presentation, and the Company assumes no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statement. 2 2 Forward-Looking Statements

 

STRONG GROWTH Revenues of $12 million increased 6.8% year over year and 84% sequentially compared to 1Q22 Record bookings of $19 million driven by strong demand for BKR 5000 as customers upgrade portable communications platforms SECOND QUARTER HIGHLIGHTS 3 Developing our BK branded “BKRplay” IOS and Android smartphone application. BKRplay will be the platform that will enable BK to deliver a suite of new services Targeting Q4 2022 to launch first SaaS offering PROGRESSING TOWARDS BKR 9000 MULTIBAND RADIO LAUNCH Completed first manufacturing build Targeting Q4 2022 launch SAAS BUSINESS UNIT PRODUCT OFFERINGS UNDER DEVELOPMENT 3

 

INCREASING DEMAND FOR BKR LINE: New and existing customers upgrading radio fleets Record bookings in 2Q’22/1H ‘22 Second BKR5000 production line added that increases manufacturing capabilities to reduce backlog and respond to continued strong demand $26.8 million backlog provides momentum through the balance of 2022 BKR 5000 CONTINUES TO SEE STRONG TRACTION 4 TEMPORARY MARGIN COMPRESSION RELATED TO COMPONENT SHORTAGES Component shortages created unusual short-term spike in product costs and pricing pressures in the first half Pressure has subsided considerably; expect margin improvement in the back half of 2022 4

 

POSITIONED FOR SIGNIFICANT GROWTH IN 2H & FY 2022 Securing material and production capacity to increase deliveries in the second half of 2022 and capitalize on record bookings for BKR 5000 1H ’22 (actual) 2H ’22 (projection) Targeting ~16,000 – 18,400 units RADIO UNITS DELIVERED FY ’21 (actual) FY ’22 (projection) Targeting ~24,600-27,000 units 5

 

PROGRESS ADVANCING BKR 9000: EXPECTING Q4 LAUNCH 6 6 Source: Motorola Annual Reports, Morningstar, Statista, AllTrucking, DataUSA, BLS, NCES, ParkRanger.edu, MarketWatch, US Department of Labour, US Census BKR 9000 multiband radio significantly expands market verticals into police, structure fire and EMS Engineering and manufacturing teams are dialing in the performance, fit and manufacturability Working to complete FCC certification, field testing with key customer accounts and a second round of accelerated life testing. Competitive price and robust go-to-market strategy; targeting Q4 launch MARKET OPPORTUNITY PROGRESS TOWARDS LAUNCH Total Addressable Market Size of $2.3B

 

SAAS BUSINESS UNIT: LMR/LTE PRESENTS A LARGE MARKET OPPORTUNITY 7 7 Global SaaS market valued at $131B; expected to grow at CAGR of 27.5% to $717B in 20281 Global 5G infrastructure expected to grow at CAGR of 34.2% to $67B in 20302 Global Public Safety LTE market expected to grow at CAGR of 21.1% to $15.4B in 20253 1MarketsandMarkets 2Grand View Research 3Fortune Business Insights PREVIOUS SUCCESSES

 

CAPITALIZING ON OPPORTUNITIES IN LMR/LTE 8

 

FINANCIAL RESULTS & HIGHLIGHTS 9 Revenue grew 6.8% to $12 million; record Q2 bookings of $19 million provides momentum Significant margin compression related to higher component prices as a result of supply chain constraints SG&A increase primarily related to headquarter staffing and strategic initiatives Net loss reflects an unrealized loss of $600 thousand from FG Financial compared to an unrealized gain of $2.3 million in 2Q21 $5.9 million in cash and cash equivalents at June 30, 2022; working capital of $17.4 million 25 consecutive quarterly dividend payments (TTM $0.12 per share)

 

THE FUTURE OF BK TECHNOLOGIES: TARGETING $100M IN REVENUES BY 2025 10 Create a leader in the public safety industry specializing in personal communications devices that maximize safety and efficiency for first responders BKR 5000 continues to gain traction in the market; BKR 9000 positioned to significantly expand LMR verticals LMR/LTE opportunity is broad and expanding; new SaaS business unit developing innovative services to capture LTE market share and drive additional BKR radio sales 10

 

Q&A 11 11

XML

Cover	Aug. 11, 2022
Cover [Abstract]
Entity Registrant Name	BK Technologies Corporation
Entity Central Index Key	0000002186
Document Type	8-K
Amendment Flag	false
Entity Emerging Growth Company	false
Document Period End Date	Aug. 11, 2022
Entity Incorporation State Country Code	NV
Entity Tax Identification Number	83-4064262
Written Communications	false
Soliciting Material	false
Pre Commencement Tender Offer	false
Pre Commencement Issuer Tender Offer	false
Entity File Number	001-32644
Entity Address Address Line 1	7100 Technology Drive
Entity Address City Or Town	West Melbourne
Entity Address State Or Province	FL
Entity Address Postal Zip Code	32904
City Area Code	321
Local Phone Number	984-1414
Security 12b Title	Common Stock, par value $0.60 per share
Trading Symbol	BKTI
Security Exchange Name	NYSEAMER