Nevada
|
83-4064262
|
(State
or other jurisdiction ofincorporation or organization)
|
(I.R.S.
Employer Identification No.)
|
Title
of Each Class
|
|
Trading
Symbol(s)
|
|
Name of
Each Exchange on Which Registered
|
Common
Stock, par value $.60
|
|
BKTI
|
|
NYSE
American
|
Large
accelerated filer ☐
|
Accelerated filer
☐
|
Non-accelerated
filer ☒
|
Smaller
reporting company ☒
|
|
Emerging
growth company ☐
|
|
|
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36
|
|
2020
|
2019
|
|
(in
millions)
|
|
United
States
|
$43.1
|
$39.7
|
International
|
1.0
|
0.4
|
Total
|
$44.1
|
$40.1
|
Period
|
Total Number of Shares Purchased
|
Average Price Paid Per Share (1)
|
Total Number of Shares Purchased as Part of Publicly Announced
Plans or Programs (2)
|
Maximum Number of Shares that May Yet Be Purchased Under Publicly
Announced Plans or Programs (2)
|
01/01/20-01/31/20
|
36,155
|
$2.94
|
36,155
|
81,787
|
02/01/20-02/29/20
|
20,963
|
$2.72
|
20,963
|
60,824
|
03/01/20-03/31/20
|
44,695
|
$1.72
|
44,695
|
16,129
|
04/01/20-04/30/20
|
16,129
|
$1.63
|
16,129
|
—
|
Total
|
117,942
|
$2.25
|
117,942
|
|
|
Percent of
Sales
for Years Ended
December 31,
|
|
|
2020
|
2019
|
Sales
|
100.0%
|
100.0%
|
Cost of
products
|
(59.0)
|
(61.0)
|
Gross
margin
|
41.0
|
39.0
|
Selling, general
and administrative expenses
|
(38.6)
|
(50.0)
|
Other (expense)
income, net
|
(1.8)
|
1.9
|
Income (loss)
before income taxes
|
0.6
|
(9.1)
|
Income tax
expense
|
(0.0)
|
2.5
|
Net Income
(loss)
|
0.6%%
|
(6.6)%
|
|
December
31,
|
|
|
2020
|
2019
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
Cash and cash
equivalents
|
$6,826
|
$4,676
|
Trade accounts
receivable, net
|
6,466
|
3,964
|
Inventories,
net
|
9,441
|
13,513
|
Prepaid expenses
and other current assets
|
1,878
|
1,733
|
Total current
assets
|
24,611
|
23,886
|
|
|
|
Property, plant and
equipment, net
|
3,566
|
3,964
|
Right-of-use (ROU)
asset
|
2,887
|
2,885
|
Investment in
securities
|
2,014
|
2,635
|
Deferred tax
assets, net
|
4,300
|
4,373
|
Other
assets
|
112
|
197
|
Total
assets
|
$37,490
|
$37,940
|
|
||
LIABILITIES
AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$5,119
|
$5,310
|
Accrued
compensation and related taxes
|
1,635
|
1,271
|
Accrued warranty
expense
|
791
|
1,248
|
Accrued other
expenses and other current liabilities
|
307
|
479
|
Dividends
payable
|
250
|
252
|
Short-term lease
liability
|
525
|
369
|
Note
payable-current portion
|
82
|
78
|
Deferred
revenue
|
757
|
369
|
Total current
liabilities
|
9,466
|
9,376
|
|
|
|
Note payable, net
of current portion
|
247
|
328
|
Long-term lease
liability
|
2,702
|
2,606
|
Deferred
revenue
|
2,551
|
2,354
|
Total
liabilities
|
14,966
|
14,664
|
Commitments and
contingencies
|
|
|
Stockholders’
equity:
|
|
|
Preferred stock;
$1.00 par value; 1,000,000 authorized shares; none issued or
outstanding
|
—
|
—
|
Common stock; $.60
par value; 20,000,000 authorized shares; 13,962,366 and 13,929,381
issued and 12,511,966 and 12,596,923 outstanding shares at December
31, 2020 and 2019, respectively
|
8,377
|
8,357
|
Additional paid-in
capital
|
26,346
|
26,095
|
Accumulated
deficit
|
(6,797)
|
(6,043)
|
Treasury stock, at
cost, 1,450,400 and 1,332,458 shares at December 31, 2020 and 2019,
respectively
|
(5,402)
|
(5,133)
|
Total
stockholders’ equity
|
22,524
|
23,276
|
Total liabilities
and stockholders’ equity
|
$37,490
|
$37,940
|
|
Years Ended
December 31,
|
|
|
2020
|
2019
|
Sales,
net
|
$44,139
|
$40,100
|
Expenses
|
|
|
Cost of
products
|
26,055
|
24,449
|
Selling, general
and administrative
|
17,036
|
20,036
|
Total
expenses
|
43,091
|
44,485
|
Operating income
(loss)
|
1,048
|
(4,385)
|
Other (expense)
income:
|
|
|
Net interest
(expense) income
|
(8)
|
150
|
(Loss) gain on
investment in securities
|
(620)
|
716
|
Other (expense)
income
|
(169)
|
(104)
|
Total other
(expense) income
|
(797)
|
762
|
Income (loss)
before income taxes
|
251
|
(3,623)
|
Income tax
(expense) benefit
|
(3)
|
987
|
Net income
(loss)
|
$248
|
$(2,636)
|
Net income (loss)
per share-basic
|
$0.02
|
$(0.21)
|
Net income (loss)
per share-diluted
|
$0.02
|
$(0.21)
|
Weighted average
shares outstanding-basic
|
12,553
|
12,705
|
Weighted average
shares outstanding-diluted
|
12,561
|
12,705
|
|
Common Stock
Shares
|
Common Stock
Amount
|
Additional
Paid-In Capital
|
Accumulated
Deficit
|
Treasury
Stock
|
Total
|
Balance at December 31,
2018
|
13,882,937
|
$8,330
|
$25,867
|
$(2,393)
|
$(4,092)
|
$27,712
|
Stock Options exercised and
issued
|
1,000
|
—
|
2
|
—
|
—
|
2
|
Common stock issued under
restricted stock units
|
45,444
|
27
|
(27)
|
—
|
—
|
—
|
Share-based compensation
expense-stock options
|
—
|
—
|
148
|
—
|
—
|
148
|
Shared-based compensation
expense-restricted stock units
|
—
|
—
|
105
|
—
|
—
|
105
|
Dividends declared ($0.08 per
share)
|
—
|
—
|
—
|
(1,014)
|
—
|
(1,014)
|
Net loss
|
—
|
—
|
—
|
(2,636)
|
—
|
(2,636)
|
Repurchase of common
stock
|
—
|
—
|
—
|
—
|
(1,041)
|
(1,041)
|
Balance at December 31,
2019
|
13,929,381
|
8,357
|
26,095
|
(6,043)
|
(5,133)
|
23,276
|
Common stock issued-restricted
stock units
|
32,985
|
20
|
(20)
|
—
|
—
|
—
|
Share-based compensation
expense-stock options
|
—
|
—
|
129
|
—
|
—
|
129
|
Shared-based compensation
expense-restricted stock units
|
—
|
—
|
142
|
—
|
—
|
142
|
Dividends declared ($0.08 per
share)
|
—
|
—
|
—
|
(1,002)
|
—
|
(1,002)
|
Net
income
|
—
|
—
|
—
|
248
|
—
|
248
|
Repurchase of common
stock
|
—
|
—
|
—
|
—
|
(269)
|
(269)
|
Balance at December 31,
2020
|
13,962,366
|
$8,377
|
$26,346
|
$(6,797)
|
$(5,402)
|
$22,524
|
|
Years Ended
December 31,
|
|
|
2020
|
2019
|
Operating
activities
|
|
|
Net
income (loss)
|
$248
|
$(2,636)
|
Adjustments to
reconcile net income (loss) to net cash provided by (used in)
operating activities:
|
|
|
Inventory
allowance
|
126
|
194
|
Deferred tax
benefit
|
73
|
(878)
|
Depreciation and
amortization
|
1,344
|
1,219
|
Share-based compensation expense
-stock options
|
129
|
148
|
Share-based compensation
expense-restricted stock units
|
142
|
105
|
Unrealized loss (gain) on
investment in securities
|
620
|
(716)
|
Changes in
operating assets and liabilities:
|
|
|
Trade accounts
receivable
|
(2,502)
|
1,757
|
Inventories
|
3,946
|
(2,241)
|
Prepaid expenses
and other current assets
|
(145)
|
669
|
Other
assets
|
84
|
(5)
|
Lease
liability
|
250
|
90
|
Accounts
payable
|
(191)
|
(285)
|
Accrued
compensation and related taxes
|
364
|
(743)
|
Accrued warranty
expense
|
(457)
|
(298)
|
Deferred
revenue
|
585
|
947
|
Accrued other
expenses and other current liabilities
|
(172)
|
187
|
Net
cash provided by (used in) operating activities
|
4,444
|
(2,486)
|
|
|
|
Investing
activities
|
|
|
Purchases of
property, plant and equipment
|
(946)
|
(2,455)
|
Net
cash used in investing activities
|
(946)
|
(2,455)
|
|
|
|
Financing
activities
|
|
|
Dividends
paid
|
(1,002)
|
(1,018)
|
Repurchase of
common stock
|
(269)
|
(1,041)
|
Proceeds from
issuance of common stock
|
—
|
2
|
Proceeds from
debt
|
2,196
|
425
|
Repayment of
debt
|
(2,273)
|
(19)
|
Net
cash used in financing activities
|
(1,348)
|
(1,651)
|
|
|
|
Net change in cash
and cash equivalents
|
2,150
|
(6,592)
|
Cash and cash
equivalents, beginning of year
|
4,676
|
11,268
|
Cash and cash
equivalents, end of year
|
$6,826
|
$4,676
|
|
|
|
Supplemental
disclosure
|
|
|
Interest
paid
|
$22
|
$10
|
|
|
|
Non-cash
financing activity
|
|
|
Common Stock issued
under restricted stock units
|
$128
|
$147
|
|
December 31,
|
|
|
2020
|
2019
|
Finished
goods
|
$1,975
|
$3,864
|
Work in
process
|
3,288
|
6,122
|
Raw
materials
|
4,178
|
3,527
|
|
$9,441
|
$13,513
|
|
Years Ended
December 31,
|
|
|
2020
|
2019
|
Balance, beginning
of year
|
$823
|
$629
|
Charged to cost of
sales
|
126
|
194
|
Disposal of
inventory
|
(429)
|
—
|
Balance,
end of year
|
$520
|
$823
|
|
Years Ended
December 31,
|
|
|
2020
|
2019
|
Balance, beginning
of year
|
$50
|
$50
|
Provision for
doubtful accounts
|
—
|
—
|
Uncollectible
accounts written off
|
—
|
—
|
Balance, end of
year
|
$50
|
$50
|
|
December 31,
|
|
|
2020
|
2019
|
Leasehold
improvements
|
$727
|
$732
|
Machinery and
equipment
|
11,971
|
12,430
|
Gross Property,
Plant, and Equipment
|
12,698
|
13,162
|
Less accumulated
depreciation and amortization
|
(9,132)
|
(9,198)
|
Property,
plant and equipment, net
|
$3,566
|
$3,964
|
|
December 31,
|
|
|
2020
|
2019
|
Operating lease
cost
|
$610
|
$573
|
Short-term lease
cost
|
2
|
2
|
Variable lease
cost
|
129
|
128
|
Total lease
cost
|
$741
|
$703
|
|
December
31,
|
|
|
2020
|
2019
|
Cash paid for
amounts included in the measurement of lease
liabilities:
|
|
|
Operating cash
flows (fixed payments)
|
$521
|
$522
|
Operating cash
flows (liability reduction)
|
367
|
369
|
|
|
|
ROU assets obtained
in exchange for lease obligations:
|
|
|
Operating
leases
|
454
|
2,840
|
|
December
31,
2020
|
Weighted average
remaining lease term (in years)
|
5.99
|
Weighted average
discount rate
|
5.50%
|
|
Year ending
December 31,
|
2021
|
$683
|
2022
|
579
|
2023
|
592
|
2024
|
604
|
2025
|
615
|
Thereafter
|
722
|
Total
payments
|
3,795
|
Less:
imputed interest
|
568
|
Total
liability
|
$3,227
|
|
Years Ended
December 31,
|
|
|
2020
|
2019
|
Current:
|
|
|
Federal
|
$(72)
|
$(107)
|
State
|
3
|
(3)
|
|
(69)
|
(110)
|
Deferred:
|
|
|
Federal
|
(44)
|
(889)
|
State
|
116
|
12
|
|
72
|
(877)
|
|
$3
|
$(987)
|
|
Years Ended
December 31,
|
|
|
2020
|
2019
|
|
|
|
Statutory U.S.
income tax rate
|
21.00%
|
(21.00)%
|
State taxes, net of
federal benefit
|
6.00%
|
(1.21)%
|
Permanent
differences
|
3.45%
|
0.61%
|
Change in valuation
allowance
|
38.83%
|
0.00%
|
Change in net
operating loss carryforwards and tax credits
|
(67.58)%
|
(5.50)%
|
Other
|
(0.50)%
|
(0.14)%
|
Effective income
tax rate
|
1.20%
|
(27.24)%
|
|
Years Ended
December 31,
|
|
|
2020
|
2019
|
Deferred tax
assets:
|
|
|
Operating
loss carryforwards
|
$1,238
|
$1,347
|
R&D
Tax Credit
|
1,952
|
1,678
|
AMT Tax
Credit
|
—
|
72
|
Section
263A costs
|
203
|
294
|
R&D
costs
|
—
|
110
|
Amortization
|
21
|
24
|
Unrealized
loss
|
391
|
252
|
|
|
|
Asset
reserves:
|
|
|
Bad
debts
|
11
|
11
|
Inventory
allowance
|
118
|
187
|
|
|
|
Accrued
expenses:
|
|
|
Non-qualified
stock options
|
175
|
132
|
Compensation
|
64
|
132
|
Warranty
|
927
|
904
|
Deferred tax
assets
|
5,098
|
5,143
|
|
|
|
Less valuation
allowance
|
(98)
|
—
|
Total deferred tax
assets
|
5,000
|
5,143
|
|
|
|
Deferred tax
liabilities:
|
|
|
Depreciation
|
(700)
|
(770)
|
Total deferred tax
liabilities
|
(700)
|
(770)
|
|
|
|
Net deferred tax
assets (before unrealized gain)
|
4,300
|
4,373
|
|
|
|
Deferred tax
liability: unrealized gain
|
—
|
—
|
Net deferred tax
assets
|
$4,300
|
$4,373
|
|
Years Ended
December 31,
|
|
|
2020
|
2019
|
Numerator:
|
|
|
Net
income (loss) from continuing operations numerator for basic and
diluted earnings per share
|
$248
|
$(2,636)
|
Denominator:
|
|
|
Denominator
for basic income (loss) per share weighted average
shares
|
12,552,889
|
12,705,304
|
Effect
of dilutive securities:
|
|
|
Stock
options
|
8,440
|
—
|
Denominator
for diluted income ( loss) per share weighted average
shares
|
12,561,329
|
12,705,304
|
Basic
income (loss) per share
|
$0.02
|
$(0.21)
|
Basic income (loss) per share
|
$0.02
|
$(0.21)
|
|
FY
2020
|
FY
2019
|
Expected
Volatility
|
52.1%
|
49.0%
|
Expected
Dividends
|
2.0%
|
2.0%
|
Expected Term (in
years)
|
6.5
|
6.5
|
Risk-Free
Rate
|
0.49%
|
2.36%
|
Estimated
Forfeitures
|
0.0%
|
0.0%
|
As of
January 1, 2020
|
Stock
Options
|
Wgt.
Avg.
Exercise
Price
($)
Per
Share
|
Wgt.
Avg.
Remaining
Contractual
Life
(Years)
|
Wgt
Avg.
Grant
Date
Fair Value
($)
Per
Share
|
Aggregate
Intrinsic
Value
($)
|
Outstanding
|
569,500
|
4.16
|
6.82
|
1.75
|
24,000
|
Vested
|
214,800
|
4.12
|
4.20
|
1.95
|
24,000
|
Nonvested
|
354,700
|
4.18
|
8.40
|
1.63
|
—
|
|
|
|
|
|
|
Period
activity
|
|
|
|
|
|
Issued
|
110,000
|
3.24
|
—
|
1.27
|
—
|
Exercised
|
—
|
—
|
—
|
—
|
—
|
Forfeited
|
120,500
|
4.17
|
—
|
1.69
|
—
|
Expired
|
70,000
|
4.11
|
—
|
2.79
|
—
|
|
|
|
|
|
|
As
of December 31, 2020
|
|
|
|
|
|
Outstanding
|
489,000
|
3.96
|
7.23
|
1.51
|
20,000
|
Vested
|
185,800
|
4.15
|
5.65
|
1.55
|
20,000
|
Nonvested
|
303,200
|
3.84
|
8.20
|
1.49
|
—
|
Range of
Exercise Prices
($) Per
Share
|
Stock
Options
Outstanding
|
Wgt.
Avg.Exercise
Price
($)
Per
Share
|
Wgt. Avg.
RemainingContractual
Life
(Years)
|
|
2.23
|
3.83
|
245,000
|
3.35
|
7.82
|
4.07
|
5.10
|
244,000
|
4.56
|
6.63
|
|
|
489,000
|
3.96
|
7.23
|
Range of
Exercise Prices
($) Per
Share
|
Stock
Options
Exercisable
|
Wgt.
Avg.Exercise
Price
($)
Per
Share
|
|
2.23
|
3.83
|
67,000
|
3.18
|
4.07
|
5.10
|
118,800
|
4.70
|
|
|
185,800
|
4.15
|
|
Balance at
Beginning of Year
|
Warranties
Issued
|
Warranties
Settled
|
Balance at End
of Year
|
2020
|
$1,248
|
$166
|
$(623)
|
$791
|
2019
|
$1,546
|
$606
|
$(904)
|
$1,248
|
1.
Consolidated Financial Statements listed below:
|
Page
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
Consolidated
Balance Sheets as of December 31, 2020 and 2019
|
F-2
|
Consolidated
Statements of Operations - years ended December 31, 2020 and
2019
|
F-3
|
Consolidated
Statements of Changes in Stockholders’ Equity - years ended
December 31, 2020 and 2019
|
F-4
|
Consolidated
Statements of Cash Flows - years ended December 31, 2020 and
2019
|
F-5
|
Notes
to Consolidated Financial Statements
|
F-6
|
Number
|
|
Exhibit
|
|
Articles
of Merger, filed with the Nevada Secretary of State on March 28,
2019 (incorporated by reference from Exhibit 3.1 to the
Company’s Current Report on Form 8-K12B filed March 28,
2019)
|
|
|
Articles of Incorporation (incorporated by reference from Exhibit
3.2 to the Company’s Current Report on Form 8-K12B filed
March 28, 2019)
|
|
|
Bylaws
(incorporated by reference from Exhibit 3.3 to the Company’s
Current Report on Form 8-K12B filed March 28, 2019)
|
|
|
Description
of the Company’s Registered Securities*
|
|
|
Form of
Common Stock Certificate (incorporated by reference from Exhibit
4.1 to the Company’s Current Report on Form 8-K12B filed
March 28, 2019)
|
|
|
2007
Incentive Compensation Plan (incorporated by reference from Annex G
to the Company’s Definitive Proxy Statement on Schedule 14A
filed April 5, 2007, relating to the 2007 annual
stockholders’ meeting)
|
|
|
Amendment
to the 2007 Incentive Compensation Plan, effective as of March 17,
2017 (incorporated by reference from Exhibit 10.1 to the
Company’s Current Report on Form 8-K filed March 21,
2017)
|
|
|
Form of
2007 Incentive Compensation Plan Stock Option Agreement
(incorporated by reference from Exhibit 10.15 to the
Company’s Annual Report on Form 10-K for the year ended
December 31, 2012)
|
|
|
2017
Incentive Compensation Plan (incorporated by reference from Exhibit
4.5 to the Company’s Registration Statement on Form S-8 filed
June 15, 2017)
|
|
10.5+
|
|
Omnibus
Amendment to Incentive Compensation Plans, dated as of March 28,
2019, by and between BK Technologies,
Inc. and BK Technologies Corporation (incorporated by
reference from Exhibit 10.1 to the Company’s Current Report
on Form 8-K12B filed March 28, 2019)
|
|
Form of
Stock Option Agreement under the 2017 Incentive Compensation Plan
(incorporated by reference from Exhibit 4.6 to the Company’s
Registration Statement on Form S-8 filed June 15,
2017)
|
|
|
Form of
Restricted Share Agreement under the 2017 Incentive Compensation
Plan (incorporated by reference from Exhibit 4.7 to the
Company’s Registration Statement on Form S-8 filed June 15,
2017)
|
|
|
Form of
Restricted Stock Unit Agreement under the 2017 Incentive
Compensation Plan (incorporated by reference from Exhibit 4.8 to
the Company’s Registration Statement on Form S-8 filed June
15, 2017)
|
|
|
Form of
Non-Employee Director Restricted Share Unit Agreement under the
2017 Incentive Compensation Plan (September 2018) (Incorporated by
reference from Exhibit 10.1 to the Company’s Quarterly Report
on Form 10-Q filed November 7, 2018)
|
|
|
Form of
Stock Option Agreement under the BK Technologies Corporation 2017
Incentive Compensation Plan (incorporated by reference from Exhibit
10.2 to the Company’s Current Report on Form 8-K12B filed
March 28, 2019)
|
|
Form of Restricted Share Agreement under the BK Technologies
Corporation 2017 Incentive Compensation Plan (incorporated by
reference from Exhibit 10.3 to the Company’s Current Report
on Form 8-K12B filed March 28, 2019)
|
|
|
Form of
Restricted Stock Unit Agreement under the BK Technologies
Corporation 2017 Incentive Compensation Plan (incorporated by
reference from Exhibit 10.4 to the Company’s Current Report
on Form 8-K12B filed March 28, 2019)
|
|
|
Relocation
Agreement, dated December 31, 2019, between the Company and Henry
R. (Randy) Willis (incorporated by reference from Exhibit 10.20 to
the Company’s Annual Report on Form 10-K for the year ended
December 31, 2018)
|
|
|
Employment
Agreement, executed March 20, 2019, by and between BK Technologies,
Inc. and Timothy A. Vitou (incorporated by reference from Exhibit
10.1 to the Company’s Current Report on Form 8-K filed March
21, 2019)
|
|
|
Employment
Agreement, executed March 20, 2019, by and between BK Technologies,
Inc. and William P. Kelly (incorporated by reference from Exhibit
10.2 to the Company’s Current Report on Form 8-K filed March
21, 2019)
|
|
|
Employment
Agreement, executed March 20, 2019, by and between BK Technologies,
Inc. and Randy Willis (incorporated by reference from Exhibit 10.3
to the Company’s Current Report on Form 8-K filed March 21,
2019)
|
|
|
Employment
Agreement, executed March 20, 2019, by and between BK Technologies,
Inc. and James R. Holthaus (incorporated by reference from Exhibit
10.4 to the Company’s Current Report on Form 8-K filed March
21, 2019)
|
|
|
First
Amendment, approved October 30, 2019, to Employment Agreement,
executed March 20, 2019, by and between BK Technologies, Inc. and
James R. Holthaus (incorporated by reference from Exhibit 10.1 to
the Company’s Current Report on Form 8-K filed October 31,
2019)
|
|
|
Employment
Agreement, dated October 31, 2019, by and between BK Technologies,
Inc. and Branko Avanic (incorporated by reference from Exhibit
10.19 to the Company’s Annual Report on Form 10-K filed March
4, 2020)
|
|
|
Credit
Agreement, executed as of January 30, 2020, by and between JPMorgan
Chase Bank, N.A., as lender, and BK Technologies, Inc., as borrower
(incorporated by reference from Exhibit 10.1 to the Company’s
Current Report on Form 8-K filed January 30, 2020)
|
|
|
Line of Credit Note, executed as of January 30, 2020, by BK
Technologies, Inc., as borrower, for the benefit of JPMorgan Chase
Bank, N.A., as lender (incorporated by reference from
Exhibit 10.2 to the Company’s Current Report on Form 8-K
filed January 30, 2020)
|
|
|
Continuing
Guaranty, executed as of January 30, 2020, by and among JPMorgan
Chase Bank, N.A., as lender, and BK Technologies Corporation and
RELM Communications, Inc., as guarantors (incorporated by reference
from Exhibit 10.3 to the Company’s Current Report on Form 8-K
filed January 30, 2020)
|
|
|
Continuing
Security Agreement, executed as of January 30, 2020, by and between
JPMorgan Chase Bank, N.A., as lender, and BK Technologies, Inc., as
pledgor (incorporated by reference from Exhibit 10.4 to the
Company’s Current Report on Form 8-K filed January 30,
2020)
|
|
|
Subsidiaries
of the Company*
|
|
|
Consent
of Moore Stephens Lovelace, P.A. (relating to the Company’s
Registration Statements on Form S-3 (Registration
No. 333-218765 and Registration
No. 333-147354)*
|
|
|
Power
of Attorney (included on signature page)
|
|
|
Certification
Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002*
|
|
|
Certification
Pursuant to Item 601(b)(31) of Regulation S-K, as adopted pursuant
to Section 302 of the Sarbanes-Oxley Act of 2002*
|
|
|
Certification
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)**
|
|
|
Certification
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)**
|
101.INS
|
|
XBRL
Instance Document*
|
101.SCH
|
|
XBRL
Taxonomy Extension Schema Document*
|
101.CAL
|
|
XBRL
Taxonomy Extension Calculation Linkbase Document*
|
101.LAB
|
|
XBRL
Taxonomy Extension Label Linkbase Document*
|
101.PRE
|
|
XBRL
Taxonomy Extension Presentation Linkbase Document*
|
101.DEF
|
|
XBRL
Taxonomy Definition Linkbase Document*
|
|
|
|
|
BK TECHNOLOGIES CORPORATION
|
|
|
|
|
|
By:
|
/s/
Timothy A. Vitou
|
|
|
Timothy
A. Vitou
|
|
|
President
|
SIGNATURE
|
|
TITLE
|
|
DATE
|
|
|
|
|
|
/s/
John W. Struble
John W.
Struble
|
|
Chairman
of the Board
|
|
March
3, 2021
|
/s/
Timothy A. Vitou
Timothy
A. Vitou
|
|
President
(Principal Executive Officer)
|
|
March
3, 2021
|
/s/
William P. Kelly
William
P. Kelly
|
|
Executive
Vice President and Chief Financial Officer (Principal Financial
Officer and Principal Accounting Officer)
|
|
March
3, 2021
|
/s/ D.
Kyle Cerminara
D. Kyle
Cerminara
|
|
Director
|
|
March
3, 2021
|
|
|
|
|
|
/s/
Michael R. Dill
Michael
R. Dill
|
|
Director
|
|
March
3, 2021
|
/s/
Charles T. Lanktree
Charles
T. Lanktree
|
|
Director
|
|
March
3, 2021
|
/s/ E.
Gray Payne
E. Gray
Payne
|
|
Director
|
|
March
3, 2021
|
Entity Name
|
Organized Under Laws of
|
Percentage Ownership
|
BK
Technologies, Inc.
|
Nevada
|
100%
|
RELM
Communications, Inc.
|
Florida
|
100%
|
Tactical
Capital Investments, LLC
|
Delaware
|
100%
|
Date: March 3,
2021
|
By:
|
/s/ Timothy A.
Vitou
|
|
|
|
Timothy A.
Vitou
|
|
|
|
President
(Principal
Executive Officer)
|
|
Date: March 3,
2021
|
By:
|
/s/ William P.
Kelly
|
|
|
|
William P.
Kelly
|
|
|
|
Executive Vice
President and
Chief
Financial Officer
(Principal
Financial Officer)
|
|
Date: March 3,
2021
|
By:
|
/s/ Timothy A.
Vitou
|
|
|
|
Timothy A.
Vitou
|
|
|
|
President
|
|
Date: March 3,
2021
|
By:
|
/s/ William P.
Kelly
|
|
|
|
William P.
Kelly
|
|
|
|
Executive Vice
President and
Chief
Financial Officer
|
|
Document and Entity Information - USD ($) |
12 Months Ended | ||
---|---|---|---|
Dec. 31, 2020 |
Feb. 26, 2021 |
Jun. 30, 2020 |
|
Cover [Abstract] | |||
Entity Registrant Name | BK Technologies Corp | ||
Entity Central Index Key | 0000002186 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2020 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Interactive Data Current | Yes | ||
Entity Incorporation, State or Country Code | NV | ||
Entity File Number | 001-32644 | ||
Entity Public Float | $ 17,141,876 | ||
Entity Common Stock, Shares Outstanding | 12,511,966 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 |
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Stockholders equity: | ||
Preferred stock, par value | $ 1.00 | $ 1.00 |
Preferred stock, authorized shares | 1,000,000 | 1,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $ 0.60 | $ 0.60 |
Common stock, authorized shares | 20,000,000 | 20,000,000 |
Common stock, issued shares | 13,962,366 | 13,929,381 |
Common stock, outstanding shares | 12,511,966 | 12,596,923 |
Treasury stock, shares | 1,450,400 | 1,332,458 |
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Statement [Abstract] | ||
Sales, net | $ 44,139 | $ 40,100 |
Expenses | ||
Cost of products | 26,055 | 24,449 |
Selling, general and administrative | 17,036 | 20,036 |
Total expenses | 43,091 | 44,485 |
Operating income (loss) | 1,048 | (4,385) |
Other income (expense): | ||
Net interest (expense) income | (8) | 150 |
(Loss) gain on investment in securities | (620) | 716 |
Other (expense) income | (169) | (104) |
Total other (expense) income | (797) | 762 |
Income (loss) before income taxes | 251 | (3,623) |
Income tax (expense) benefit | (3) | 987 |
Net income (loss) | $ 248 | $ (2,636) |
Net income (loss) per share-basic | $ 0.02 | $ (0.21) |
Net income (loss) per share-diluted | $ 0.02 | $ (0.21) |
Weighted average shares outstanding-basic | 12,553 | 12,705 |
Weighted average shares outstanding-diluted | 12,561 | 12,705 |
1. Summary of Significant Accounting Policies |
12 Months Ended |
---|---|
Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
1. Summary of Significant Accounting Policies | Description of Business
BK Technologies Corporation (collectively with its subsidiaries, the “Company”) is a holding company. The primary business of its wholly-owned operating subsidiary, BK Technologies, Inc., is the designing, manufacturing and marketing of wireless communications equipment primarily consisting of two-way land mobile radios and related products, which are sold in two primary markets: (1) the government and public safety market, and (2) the business and industrial market. The Company has only one reportable business segment.
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 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.
Principles of Consolidation
The accounts of the Company have been included in the accompanying 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. 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 FG Financial Group, Inc. (formerly 1347 Property Insurance Holdings, Inc.), made through FGI 1347 Holdings, LP, a consolidated VIE (see Note 6).
Inventories
Inventories are stated at the lower of cost (determined by the average cost method) or net realizable value. Freight costs are classified as a component of cost of products in the accompanying consolidated statements of operations.
The allowance for slow-moving, excess, and obsolete inventory is used to state the Company’s inventories at the lower of cost or net realizable value. Because the amount of inventory that will actually be recouped through sales cannot be known with certainty at any particular time, the Company relies on past sales experience, future sales forecasts, and its strategic business plans. Generally, in analyzing inventory levels, inventory is classified as having been used or unused during the past year. The Company then establishes an allowance based upon several factors, including, but not limited to, business forecasts, inventory quantities and historic usage profile.
Supplemental to the aforementioned analysis, specific inventory items are reviewed individually by management. Based on the review, considering business levels, future prospects, new products and technology changes, management, using its business judgment, may adjust the valuation of specific inventory items to reflect an accurate valuation estimate. Management also performs a determination of net realizable value for all finished goods with a selling price below cost. For all such items, the inventory is valued at not more than the selling price less cost, if any, to sell.
Property, Plant and Equipment
Property, plant and equipment is carried at cost less accumulated depreciation. Expenditures for maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and the resulting gain or loss is reflected in operations for the period.
Depreciation and amortization are generally computed on the straight-line method using lives of 3 to 10 years for machinery and equipment and 5 to 8 years for leasehold improvements.
Impairment of Long-Lived Assets
Management regularly reviews long-lived assets and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds their fair value, which considers the discounted future net cash flows. No long-lived assets were considered impaired at December 31, 2020 and 2019.
Cash Equivalents
The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
Allowance for Doubtful Accounts
The Company records an allowance for doubtful accounts based on specifically identified amounts that the Company believes to be uncollectible. The Company also records an additional allowance based on certain percentages of the Company’s aged receivables, which are determined based on historical experience and the Company’s assessment of the general financial conditions affecting the Company’s customer base. If the Company’s actual collections experience changes, revisions to the Company’s allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on the information available, management believes the allowance for doubtful accounts as of December 31, 2020 and 2019 is adequate.
Revenue Recognition
The Company recognizes revenues in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” and the additional related ASUs (“ASC 606”), which replaced previous revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under accounting principles generally accepted in the United States of America (“GAAP”). These standards provide guidance on recognizing revenue, including a five-step method to determine when revenue recognition is appropriate:
Step 1: Identify the contract with the customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations; and
Step 5: Recognize revenue as the Company satisfies a performance obligation.
ASC 606 provides that sales revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company generally satisfies performance obligations upon shipment of the product or service to the customer. This is consistent with the time in which the customer obtains control of the product or service. For extended warranties, sales revenue associated with the warranty is deferred at the time of sale and later recognized on a straight-line basis over the extended warranty period. Some contracts include installation services, which are completed in a short period of time and the revenue is recognized when the installation is complete. Customary payment terms are granted to customers, based on credit evaluations. Currently, the Company does not have any contracts where revenue is recognized, but the customer payment is contingent on a future event.
The Company periodically reviews its revenue recognition procedures to assure that such procedures are in accordance with GAAP. Surcharges collected on certain sales to government customers and remitted to governmental agencies are not included in revenues or in costs and expenses.
Income Taxes
The Company accounts for income taxes using the asset and liability method specified by GAAP. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply in the period in which the deferred tax asset or liability is expected to be realized. The effect of changes in net deferred tax assets and liabilities is recognized on the Company’s consolidated balance sheets and consolidated statements of operations in the period in which the change is recognized. Valuation allowances are provided to the extent that impairment of tax assets is more likely than not. In determining whether a tax asset is realizable, the Company considers, among other things, estimates of future earnings based on information currently available, current and anticipated customers, contracts and new product introductions, as well as recent operating results and certain tax planning strategies. If the Company fails to achieve the future results anticipated in the calculation and valuation of net deferred tax assets, the Company may be required to increase the valuation allowance related to its deferred tax assets in the future.
Concentration of Credit Risk
The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. At December 31, 2020 and 2019, accounts receivable from governmental customers were approximately $2,102 and $353, respectively. Generally, receivables are due within 30 days. Credit losses relating to customers have been consistently within management’s expectations.
The Company primarily maintains cash balances at one financial institution. Accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250. From time to time, the Company has had cash in financial institutions in excess of federally insured limits. As of December 31, 2020, the Company had cash and cash equivalents in excess of FDIC limits of $6,576.
Manufacturing and Raw Materials
The Company relies upon a limited number of manufacturers to produce its products and on a limited number of component suppliers. Some of these manufacturers and suppliers are in other countries. Approximately 53.0% of the Company’s material, subassembly and product procurements in 2020 were sourced internationally, of which approximately 48.0% were sourced from three suppliers. For 2019, approximately 67.0% of the Company’s material, subassembly and product procurements were sourced internationally, of which approximately 64.0% were sourced from three suppliers. Purchase orders denominated in U.S. dollars are placed with these suppliers from time to time and there are no guaranteed supply arrangements or commitments.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Significant estimates include accounts receivable allowances, inventory obsolescence allowance, warranty allowance, and income tax accruals. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, investment in securities, accounts payable, accrued expenses, notes payable, and other liabilities. As of December 31, 2020 and 2019, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, notes payable, and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments.
The Company uses observable market data assumptions (Level 1 inputs, as defined in accounting guidance) that it believes market participants would use in pricing investment in securities.
Shipping and Handling Costs
Shipping and handling costs are classified as a part of cost of products in the accompanying consolidated statements of operations for the years ended December 31, 2020 and 2019. Amounts billed to a customer, if any, for shipping and handling are reported as revenue.
Advertising and Promotion Costs
The cost for advertising and promotion is expensed as incurred. Advertising and promotion expenses are classified as part of selling, general and administrative (“SG&A”) expenses in the accompanying consolidated statements of operations. For the years ended December 31, 2020 and 2019, such expenses totaled $214 and $555, respectively.
Engineering, Research and Development Costs
Included in SG&A expenses for the years ended December 31, 2020 and 2019 are engineering, research and development costs of $7,869 and $9,803, respectively.
Share-Based Compensation
The Company accounts for share-based arrangements in accordance with GAAP, which requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which the employee is required to provide service in exchange for the award requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.
Restricted Stock Units
On August 24, 2020, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $40 per award (resulting in total aggregate grant-date fair value of $240), 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 stockholders, 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 April 24, 2020, upon the resignation of former director Ryan Turner, the Company, at the direction of the Board of Directors, accelerated the vesting of Mr. Turner’s unvested restricted stock units granted September 6, 2019 and issued 10,389 shares of common stock.
On September 6, 2019, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $40 per award (resulting in total aggregate grant-date fair value of $280), 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 stockholders, 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 September 6, 2018, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which 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 stockholders, other than for good reason, as determined by the Board in its discretion, then the restricted stock units vest in full as of the director’s last date of service as a director of the Company. On September 6, 2019, which was the first anniversary of the grant date, the first tranche of the September 2018 restricted stock units vested. On April 24, 2020, upon the resignation of Mr. Turner, the Company accelerated the vesting of Mr. Turner’s unvested restricted stock units granted September 6, 2018 and issued 4,050 shares of common stock.
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 vested on June 4, 2019.
Earnings (Loss) Per Share
Earnings (loss) per share amounts are computed and presented for all periods in accordance with GAAP.
Comprehensive Income (loss)
Comprehensive income (loss) was equal to net income (loss) for the years ended December 31, 2020 and 2019.
Product Warranty
The Company offers two-year standard warranties to its customers, depending on the specific product and terms of the customer purchase agreement. The Company’s typical warranties require it to repair and replace defective products during the warranty period at no cost to the customer. At the time the product revenue is recognized, the Company records a liability for estimated costs under its warranties. The costs are estimated based on historical experience. The Company periodically assesses the adequacy of its recorded liability for product warranties and adjusts the amount as necessary.
Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 “Leases,” which amended leasing guidance by requiring companies to recognize a right-of-use (“ROU”) asset and a lease liability for all operating and capital (finance) leases with lease terms greater than twelve months. The lease liability is equal to the present value of lease payments. The lease asset is based on the lease liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases continue to be classified as operating or capital (finance), with lease expense in both cases calculated substantially the same as under the prior leasing guidance. The updated guidance became effective for interim and annual periods beginning after December 15, 2018. The Company adopted the new guidance on January 1, 2019. Adoption resulted in the recognition of ROU assets and lease liabilities on the consolidated financial statements. Based on the Company’s lease portfolio as of January 1, 2019, which consisted solely of operating leases, the Company recognized approximately $2,885 of ROU assets and $2,975 of lease liabilities on its consolidated financial statements. Refer to Note 7 (Leases) for further details on leases. In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. The amendments in ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in ASU 2018-15. The amendments in ASU 2018-15 became effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption was permitted, including adoption in any interim period. The Company adopted the new guidance in the fourth quarter of 2018, with no material impact on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement,” which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, including the removal of certain disclosure requirements. The amendments in the ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this guidance as of January 1, 2020, and the adoption did not have an impact on its consolidated financial statements. Recent Accounting Pronouncements 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.
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2. Inventories, net |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
2. Inventories, net | Inventories, which are presented net of allowance for obsolete and slow-moving inventory, consisted of the following:
Changes in the allowance for obsolete and slow-moving inventory are as follows:
For the year ended December 31, 2020, the Company wrote off obsolete inventory that had been fully allowed for previously, which had no material impact to the Company’s consolidated balance sheets or consolidated statements of operations.
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3. Allowance for Doubtful Accounts |
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3. Allowance for Doubtful Accounts | Changes in the allowance for doubtful accounts are composed of the following:
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4. Property, Plant and Equipment, net |
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4. Property, Plant and Equipment, net | Property, plant and equipment, net include the following:
Depreciation and amortization expense relating to property, plant and equipment for the years ended December 31, 2020 and 2019 was approximately $1,344 and $1,219, respectively. During the year ended 31, 2020, the company removed from its records approximately $1,400 of fully depreciated machinery and equipment.
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5. Debt |
12 Months Ended |
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Dec. 31, 2020 | |
Debt Disclosure [Abstract] | |
5. Debt | On January 30, 2020, BK Technologies, Inc., a wholly-owned subsidiary of the Company, entered into a $5,000 Credit Agreement and a related Line of Credit Note (the “Note” and collectively with the Credit Agreement, as modified by that certain Note Modification Agreement dated as of January 26, 2021, the “Credit Agreement”) with JPMorgan Chase Bank, N.A. (“JPMC”).
The Credit Agreement provides for a revolving line of credit of up to $5,000, with availability under the line of credit subject to a borrowing base calculated as a percentage of accounts receivable and inventory. The line of credit, as modified by the Note Modification Agreement, expires on January 31, 2022. Proceeds of borrowings under the Credit Agreement may be used for general corporate purposes. The line of credit is collateralized by a blanket lien on all personal property of BK Technologies, Inc. pursuant to the terms of the Continuing Security Agreement with the Lender. The Company and each subsidiary of BK Technologies, Inc. are guarantors of BK Technologies, Inc.’s obligations under the Credit Agreement, in accordance with the terms of the Continuing Guaranty.
Borrowings under the Credit Agreement will bear interest at a rate per annum equal to one-month LIBOR or zero if the LIBOR is less than zero) plus a margin of 1.90% (2.054% as of December 31, 2020). The line of credit, as modified, is to be repaid in monthly payments of interest only, payable in arrears, commencing on February 1, 2020, with all outstanding principal and interest to be payable in full at maturity (January 31, 2022).
The Credit Agreement contains certain customary restrictive covenants, including restrictions on liens, indebtedness, loans and guarantees, acquisitions and mergers, sales of assets, and stock repurchases by BK Technologies, Inc. The Credit Agreement contains one financial covenant requiring BK Technologies, Inc. to maintain a tangible net worth of at least $20,000 at any fiscal quarter end.
The Credit Agreement provides for customary events of default, including: (1) failure to pay principal, interest or fees under the Credit Agreement when due and payable; (2) failure to comply with other covenants and agreements contained in the Credit Agreement and the other documents executed in connection therewith; (3) the making of false or inaccurate representations and warranties; (4) defaults under other agreements with JPMC or 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, JPMC may declare the entire unpaid balance immediately due and payable and/or exercise any and all remedial and other rights under the Credit Agreement.
BK Technologies, Inc. was in compliance with all covenants under the Credit Agreement as of December 31, 2020 and the date of filing this report. As of December 31, 2020 and the date of filing this report, there were no borrowings outstanding under the Credit Agreement.
On September 25, 2019, BK Technologies, Inc., a wholly-owned subsidiary of BK Technologies Corporation, and U.S. Bank Equipment Finance, a division of U.S. Bank National Association, as a lender, entered into a Master Loan Agreement in the amount of $425 to finance various items of equipment. The loan is collateralized by the equipment purchased using the proceeds. The Master Loan Agreement is payable in 60 monthly principal and interest payments of approximately $8 beginning on October 25, 2019 and maturing on September 25, 2024, and bears a fixed interest rate of 5.11%.
On March 28, 2019, BK Technologies, Inc., a wholly-owned subsidiary of the Company, RELM Communications, Inc., a wholly-owned 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 Loan and Security Agreement replaced BK Technologies, Inc.’s prior Loan and Security Agreement with SVB (the “Prior Agreement”) under which its collateralized revolving credit facility (the “Credit Facility”) was maintained. The Loan and Security Agreement matured on December 26, 2019, and the Company elected not to renew it.
Pursuant to the Loan and Security Agreement, the Credit Facility provided BK Technologies, Inc. with a maximum borrowing availability of $1,000 and BK Technologies, Inc. was 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 $5,000 during any twelve-month period, was permitted so long as an event of default did not exist at the time of such dividend and would not exist after giving effect to such dividend. The variable rate at which borrowings under the Credit Facility were to bear interest was The Wall Street Journal prime rate plus 25 basis points.
The financial maintenance covenants, which were required to be maintained at all times and tested quarterly (or, for the “Adjusted Quick Ratio” covenant, monthly, if any obligations were outstanding), included: (1) a ratio of “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 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 were collateralized by substantially all of its assets, principally accounts receivable and inventory.
BK Technologies, Inc. was in compliance with all covenants under the Loan and Security Agreement when it matured on December 26, 2019. BK Technologies, Inc. had no borrowings outstanding under the credit facility at the time it matured.
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6. Investment in Securities |
12 Months Ended |
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Dec. 31, 2020 | |
Investments [Abstract] | |
6. Investment in Securities | The Company has an investment in a limited partnership, FGI 1347 Holdings, LP (“1347 LP”), of which the Company is the sole limited partner. FGI 1347 Holdings, LP was established for the purpose of investing in securities. As of December 31, 2020, the Company indirectly held approximately $110 in cash and 477,282 shares of FG Financial Group, Inc. (formerly 1347 Property Insurance Holdings, Inc.) (Nasdaq: FGF) with fair value of $2,014, through an investment in FGI 1347 Holdings, LP. These shares were purchased in March and May 2018 for approximately $3,741. During the years ended December 31, 2020 and 2019, the Company recognized a loss of approximately $620 and a gain of approximately $716, respectively, due to changes in the unrealized loss on investment in securities. Affiliates of Fundamental Global Investors, LLC (“FG”) serve as the general partner and the investment manager of 1347 LP, and the Company is the sole limited partner. As the sole limited partner, the Company is entitled to 100% of net assets held by 1347 LP. The general partner of 1347 LP is entitled to a management fee from 1347 LP. There were no fees paid to the general partner or its affiliates for the years ended December 31, 2020 or 2019. As of December 31, 2020, the Company and the affiliates of FG, including, without limitation, Ballantyne Strong, Inc., beneficially owned in the aggregate 3,109,891 shares of FGF’s common stock, representing approximately 62.7% of FGF’s outstanding shares. FG with its affiliates is the largest stockholder of the Company. Mr. Kyle Cerminara, a member of the Company’s Board of Directors, is Chief Executive Officer, Co-Founder and Partner of FG and serves as Chairman of the Board of Directors of Ballantyne Strong, Inc. Mr. Cerminara also serves as Chairman of the Board of Directors of FGF. |
7. Leases |
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7. Leases | The Company leases approximately 54,000 square feet (not in thousands) of industrial space in West Melbourne, Florida, under a non-cancellable operating lease. The lease has the expiration date of June 30, 2027. Rental, maintenance and tax expenses for this facility were approximately $510 and $502 in 2020 and 2019, respectively. The Company also leases 8,100 square feet (not in thousands) of office space in Lawrence, Kansas, to accommodate a portion of the Company’s engineering team. In November 2019, this lease was amended to extend the lease term until December 31, 2021. Rental, maintenance and tax expenses for this facility were approximately $124 and $108 in 2020 and 2019, respectively.
In February 2020, the Company entered into a lease for 6,857 (not in thousands) square feet of office space at Sawgrass Technology Park, 1619 NW 136th Avenue in Sunrise, Florida, for a period of 64 months. The commencement date for this lease was July 1, 2020. Rental, maintenance, and tax expenses for the facility were $169 in 2020.
The Company adopted ASU No. 2016-02, “Leases” (Topic 842) on January 1, 2019 and applied the modified retrospective approach to adoption whereby the standard is applied only to the current and future periods. The Company leases manufacturing and office facilities and equipment under operating leases and determines if an arrangement is a lease at inception. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.
As most of its leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. The Company’s lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The Company has lease agreements with lease and non-lease components, which are accounted for separately.
Lease costs consist of the following:
Supplemental cash flow information related to leases was as follows:
Other information related to operating leases was as follows:
Maturity of lease liabilities as of December 31, 2020 were as follows:
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8. Income Taxes |
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Income Tax Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
8. Income Taxes | The income tax expense (benefit) is summarized as follows:
A reconciliation of the statutory U.S. income tax rate to the effective income tax rate follows:
The components of the deferred income tax assets (liabilities) are as follows:
As of December 31, 2020, the Company had a net deferred tax asset of approximately $5,000 offset by deferred tax liabilities of $700 derived from accelerated tax depreciation. This asset is primarily composed of net operating loss carryforwards (“NOLs”), research and development tax credits, and deferred revenue, net of a valuation allowance of approximately $98. The NOLs total approximately $4,829 for federal and $6,332 for state purposes, with expirations starting in 2021 for state purposes. State NOLs of $648 expired in 2020.
During 2019, the Company generated $5,006 of federal NOLs and during 2020, the Company expects to use $176 of available federal NOLs. The deferred tax asset amounts are based upon management’s conclusions regarding, among other considerations, the Company’s current and anticipated customer base, contracts, and product introductions, certain tax planning strategies, and management’s estimates of future earnings based on information currently available, as well as recent operating results during 2020, 2019, and 2018. GAAP requires that all positive and negative evidence be analyzed to determine if, based on the weight of available evidence, the Company is more likely than not to realize the benefit of the deferred tax asset.
Management’s analysis of all available evidence, both positive and negative, provides support that the Company does not have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax asset. Accordingly, as of December 31, 2020, a valuation allowance has been established totaling approximately $98.
Should the factors underlying management’s analysis change, future valuation adjustments to the Company’s net deferred tax asset may be necessary. If future losses are incurred, it may be necessary to record an additional valuation allowance related to the Company’s net deferred tax asset recorded as of December 31, 2020. It cannot presently be estimated what, if any, changes to the valuation of the Company’s deferred tax asset may be deemed appropriate in the future. The 2020 federal and state NOLs and tax credit carryforwards could be subject to limitation if, within any three-year period prior to the expiration of the applicable carryforward period, there is a greater than 50% change in ownership of the Company by any stockholder with 5% or greater ownership.
The Company performed a comprehensive review of its portfolio of uncertain tax positions in accordance with recognition standards established by GAAP. In this regard, an uncertain tax position represents the Company’s expected treatment of a tax position taken in a filed tax return or planned to be taken in a future tax return that has not been reflected in measuring income tax expense for financial reporting purposes. As a result of this review, on January 1, 2021, the Company is not aware of any uncertain tax positions that would require additional liabilities or which such classification would be required. The amount of unrecognized tax positions did not change as of December 31, 2020, and the Company does not believe there will be any material changes in its unrecognized tax positions over the next twelve months.
Penalties and tax-related interest expense, of which there were no material amounts for the years ended December 31, 2020 and 2019, are reported as a component of income tax expense (benefit).
The Company files federal income tax returns, as well as multiple state and local jurisdiction tax returns. A number of years may elapse before an uncertain tax position is audited and finally resolved. While it is often difficult to predict the final outcome or the timing of resolution on any particular uncertain tax position, the Company believes that its allowances for income taxes reflect the most probable outcome. The Company adjusts these allowances, as well as the related interest, in light of changing facts and circumstances. The resolution of a matter would be recognized as an adjustment to the provision for income taxes and the effective tax rate in the period of resolution. The calendar years 2017, 2018, and 2019 are still open to IRS examination under the statute of limitations. The last IRS examination on the Company’s 2007 calendar year was closed with no change.
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9. Income (Loss) per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9. Income (Loss) per Share | The following table sets forth the computation of basic and diluted loss per share:
Approximately 464,000 stock options and 139,233 restricted stock units for the year ended December 31, 2020 and 569,500 stock options and 101,073 restricted stock units for the year ended December 31, 2019, were excluded from the calculation because they were anti-dilutive.
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10. Share-Based Employee Compensation |
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Employee Benefit and Share-based Payment Arrangement, Noncash Expense [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
10. Share-Based Employee Compensation | The Company has an employee and non-employee director incentive compensation equity plan. Related to these programs, the Company recorded $129 and $148 of share-based employee compensation expense during the years ended December 31, 2020 and 2019, respectively, which is included as a component of cost of products and SG&A expenses in the accompanying consolidated statements of operations. No amount of share-based employee compensation expense was capitalized as part of capital expenditures or inventory for the years presented.
The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The share-based employee compensation expense recorded in the years ended December 31, 2020 and 2019 was calculated using the assumptions noted in the following table. Expected volatilities are based on the historical volatility of the Company’s common stock over the period of time, commensurate with the expected life of the stock options. The dividend yield assumption is based on the Company’s expectations of dividend payouts at the grant date. In 2020, the Company paid dividends on January 17, for a dividend declared in 2019, April 13, July 20 and October 19. In December 2020, the Company’s Board of Directors also declared a quarterly dividend that was paid on January 19, 2021. The Company has estimated its future stock option exercises. The expected term of option grants is based upon the observed and expected time to the date of post vesting exercises and forfeitures of options by the Company’s employees. The risk-free interest rate is derived from the average U.S. Treasury rate for the period, which approximates the rate at the time of the stock option grant.
A summary of stock option activity under the Company’s equity compensation plans as of December 31, 2020, and changes during the year ended December 31, 2020, are presented below:
Outstanding:
Exercisable:
The weighted-average grant-date fair value per option granted during the years ended December 31, 2020 and 2019 was $1.27 and $1.64, respectively. The aggregate intrinsic value of stock options exercised during the years ended December 31, 2020 and 2019 was approximately $0 and $1, respectively.
In connection with the restricted stock units granted to non-employee directors, the Company accrues compensation expense based on the estimated number of shares expected to be issued, utilizing the most current information available to the Company at the date of the consolidated financial statements. The Company estimates the fair value of the restricted stock unit awards based upon the market price of the underlying common stock on the date of grant. As of December 31, 2020 and 2019, there was approximately $872 and $982, respectively, of total unrecognized compensation cost related to non-vested share-based compensation arrangements, including stock options and restricted stock units. This compensation cost is expected to be recognized approximately over four years. |
11. Significant Customers |
12 Months Ended |
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Dec. 31, 2020 | |
Risks and Uncertainties [Abstract] | |
11. Significant Customers | Sales to the U.S. Government represented approximately 50.5% and 49.1% of the Company’s total sales for the years ended December 31, 2020 and 2019, respectively. These sales were primarily to the various government agencies, including those within the United States Department of Defense, the United States Forest Service, the United States Department of Interior, and the United States Department of Homeland Security.
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12. Retirement Plan |
12 Months Ended |
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Dec. 31, 2020 | |
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | |
12. Retirement Plan | The Company sponsors a participant contributory retirement 401(k) plan, which is available to all employees. The Company’s contribution to the plan is either a percentage of the participant’s contribution (50% of the participant’s contribution up to a maximum of 6%) or a discretionary amount. In the second quarter of 2020, the Company suspended the participant contributory retirement 401(k) plan to reduce costs and to better position the Company in an uncertain business environment due in part to the COVID-19 pandemic. For the years ended December 31, 2020 and 2019, total contributions made by the Company were $60 and $164, respectively.
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13. Commitments and Contingencies |
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
13. Commitments and Contingencies | Royalty Commitment
In 2002, the Company entered into a technology license related to its development of digital products. Under this agreement, the Company is obligated to pay a royalty for each product sold that utilizes the technology covered by this agreement. The Company paid $120 and $133 for the years ended December 31, 2020 and 2019, respectively. The agreement has an indefinite term, and can be terminated by either party under certain conditions.
Purchase Commitments
The Company has purchase commitments for inventory totaling $8,317 as of December 31, 2020.
Self-Insured Health Benefits
The Company maintains a self-insured health benefit plan for its employees. This plan is administered by a third party. As of December 31, 2020, the plan had a stop-loss provision insuring losses beyond $80 per employee per year and an aggregate stop-loss of $1,215. As of December 31, 2020 and 2019, the Company recorded an accrual for estimated claims in the amount of approximately $116 and $165, respectively, in accrued other expenses and other current liabilities on the Company’s consolidated balance sheets. This amount represents the Company’s estimate of incurred but not reported claims as of December 31, 2020 and 2019.
Liability for Product Warranties
Changes in the Company’s liability for its standard two-year product warranties during the years ended December 31, 2020 and 2019 are as follows:
Legal Proceedings
From time to time the Company may be involved in various claims and legal actions arising in the ordinary course of its business.
There were no pending material claims or legal matters as of December 31, 2020.
Consulting Services Agreement
On June 24, 2020, the Company entered into a Financial and Consulting Services Agreement (the “Itasca Agreement”) with Itasca Financial LLC (“Itasca”), pursuant to which Itasca agreed to advise the Company on aspects of its strategic direction. In exchange for Itasca’s services, the Company agreed to pay Itasca a retainer fee of $50,000, payable in two installments of $25,000, and a monthly fee of $20,000. On December 15, 2020, the parties agreed to terminate the agreement and to waive the provision for a termination fee. This description of the Agreement is a summary only and is qualified by reference to full text of Itasca Agreement, which is filed as exhibit 10.1 to the Company’s Quarterly Report on Form 10-Q filed with the SEC on August 5, 2020. Total fees incurred by the Company in connection with the Agreement during the year ended December 31, 2020 were $70,000.
Fundamental Global Investors, LLC, with its affiliates, owners and managers (collectively, “FG”), is the largest stockholder of the Company. D. Kyle Cerminara, the Chief Executive Officer, Co-Founder and Partner of FG, is a member of the Company’s Board of Directors, and John W. Struble, Chairman of the Board of Directors, serves as a consultant to Fundamental Global Management, LLC, an affiliate of FG. FG is the controlling stockholder of FGF (see Note 6), and Larry G. Swets, Jr. serves as Interim Chief Executive Officer and principal executive officer of FGF and as a member of FGF’s Board of Directors. In addition, Mr. Swets founded and serves as the managing member of Itasca, which previously provided services to the Company, as described above, as well as to other companies affiliated with FG.
COVID-19
In December 2019, a novel strain of the coronavirus (COVID-19) surfaced in Wuhan, China, which spread globally and was declared a pandemic by the World Health Organization in March 2020. Although we believe the pandemic has not had a material adverse impact on our business through the first three quarters of 2020, it may have the potential of doing so in the future. The extent of the potential impact of the COVID-19 pandemic on our business and financial performance will depend on future developments, which are uncertain and, given the continuing evolution of the COVID-19 pandemic and the global responses to curb its spread, cannot be predicted. In addition, the pandemic has significantly increased economic uncertainty and caused a worldwide economic downturn. Even after the COVID-19 pandemic has subsided, we may continue to experience an adverse impact to our business as a result of its national and, to some extent, global economic impact, including any recession that may occur in the future. |
14. Capital Program |
12 Months Ended |
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Dec. 31, 2020 | |
Capital Program | |
14. Capital Program | In May 2016, the Company implemented a capital return program that included a stock repurchase program and a quarterly dividend. Under the program, the Company’s Board of Directors approved the repurchase of up to 500,000 shares of the Company’s common stock pursuant to a stock repurchase plan in conformity with the provisions of Rule 10b5-1 and Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. In June 2017, the Board of Directors approved an increase in the Company’s capital return program, authorizing the repurchase of 500,000 shares of the Company’s common stock in addition to the 500,000 shares originally authorized, for a total repurchase authorization of one million shares, pursuant to a stock repurchase plan in conformity with the provisions of Rule 10b5-1 and Rule 10b-18 promulgated under the Securities Exchange Act of 1934, as amended. The repurchase program was completed in April 2020.
Pursuant to the capital return program, during 2019, the Company’s Board of Directors declared quarterly dividends on the Company’s common stock of $0.02 per share on March 5, June 10, September 12 and December 5. The dividends were payable to stockholders of record as of April 1, 2019, July 1, 2019, October 1, 2019 and January 3, 2020, respectively. These dividends were paid on April 15, 2019, July 15, 2019, October 15, 2019 and January 17, 2020.
Pursuant to the capital return program, during 2020, the Company’s Board of Directors declared quarterly dividends on the Company’s common stock of $0.02 per share on March 2, June 10, September 14 and December 9. The dividends were payable to stockholders of record as of March 31, 2020, July 6, 2020, October 5, 2020 and January 4, 2021, respectively. These dividends were paid on April 13, 2020, July 20, 2020, October 19, 2020 and January 19, 2021.
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1. Summary of Significant Accounting Policies (Policies) |
12 Months Ended |
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Dec. 31, 2020 | |
Accounting Policies [Abstract] | |
Description of Business | BK Technologies Corporation (collectively with its subsidiaries, the “Company”) is a holding company. The primary business of its wholly-owned operating subsidiary, BK Technologies, Inc., is the designing, manufacturing and marketing of wireless communications equipment primarily consisting of two-way land mobile radios and related products, which are sold in two primary markets: (1) the government and public safety market, and (2) the business and industrial market. The Company has only one reportable business segment.
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 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.
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Principles of Consolidation | The accounts of the Company have been included in the accompanying 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. 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 FG Financial Group, Inc. (formerly 1347 Property Insurance Holdings, Inc.), made through FGI 1347 Holdings, LP, a consolidated VIE (see Note 6).
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Inventories | Inventories are stated at the lower of cost (determined by the average cost method) or net realizable value. Freight costs are classified as a component of cost of products in the accompanying consolidated statements of operations.
The allowance for slow-moving, excess, and obsolete inventory is used to state the Company’s inventories at the lower of cost or net realizable value. Because the amount of inventory that will actually be recouped through sales cannot be known with certainty at any particular time, the Company relies on past sales experience, future sales forecasts, and its strategic business plans. Generally, in analyzing inventory levels, inventory is classified as having been used or unused during the past year. The Company then establishes an allowance based upon several factors, including, but not limited to, business forecasts, inventory quantities and historic usage profile.
Supplemental to the aforementioned analysis, specific inventory items are reviewed individually by management. Based on the review, considering business levels, future prospects, new products and technology changes, management, using its business judgment, may adjust the valuation of specific inventory items to reflect an accurate valuation estimate. Management also performs a determination of net realizable value for all finished goods with a selling price below cost. For all such items, the inventory is valued at not more than the selling price less cost, if any, to sell.
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Property, Plant and Equipment | Property, plant and equipment is carried at cost less accumulated depreciation. Expenditures for maintenance, repairs and minor renewals are expensed as incurred. When assets are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts and the resulting gain or loss is reflected in operations for the period.
Depreciation and amortization are generally computed on the straight-line method using lives of 3 to 10 years for machinery and equipment and 5 to 8 years for leasehold improvements.
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Impairment of Long-Lived Assets | Management regularly reviews long-lived assets and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds their fair value, which considers the discounted future net cash flows. No long-lived assets were considered impaired at December 31, 2020 and 2019.
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Cash Equivalents | The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.
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Allowance for Doubtful Accounts | The Company records an allowance for doubtful accounts based on specifically identified amounts that the Company believes to be uncollectible. The Company also records an additional allowance based on certain percentages of the Company’s aged receivables, which are determined based on historical experience and the Company’s assessment of the general financial conditions affecting the Company’s customer base. If the Company’s actual collections experience changes, revisions to the Company’s allowance may be required. After all attempts to collect a receivable have failed, the receivable is written off against the allowance. Based on the information available, management believes the allowance for doubtful accounts as of December 31, 2020 and 2019 is adequate.
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Revenue Recognition | The Company recognizes revenues in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers” and the additional related ASUs (“ASC 606”), which replaced previous revenue guidance and outlines a single set of comprehensive principles for recognizing revenue under accounting principles generally accepted in the United States of America (“GAAP”). These standards provide guidance on recognizing revenue, including a five-step method to determine when revenue recognition is appropriate:
Step 1: Identify the contract with the customer;
Step 2: Identify the performance obligations in the contract;
Step 3: Determine the transaction price;
Step 4: Allocate the transaction price to the performance obligations; and
Step 5: Recognize revenue as the Company satisfies a performance obligation.
ASC 606 provides that sales revenue is recognized when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company generally satisfies performance obligations upon shipment of the product or service to the customer. This is consistent with the time in which the customer obtains control of the product or service. For extended warranties, sales revenue associated with the warranty is deferred at the time of sale and later recognized on a straight-line basis over the extended warranty period. Some contracts include installation services, which are completed in a short period of time and the revenue is recognized when the installation is complete. Customary payment terms are granted to customers, based on credit evaluations. Currently, the Company does not have any contracts where revenue is recognized, but the customer payment is contingent on a future event.
The Company periodically reviews its revenue recognition procedures to assure that such procedures are in accordance with GAAP. Surcharges collected on certain sales to government customers and remitted to governmental agencies are not included in revenues or in costs and expenses.
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Income Taxes | The Company accounts for income taxes using the asset and liability method specified by GAAP. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply in the period in which the deferred tax asset or liability is expected to be realized. The effect of changes in net deferred tax assets and liabilities is recognized on the Company’s consolidated balance sheets and consolidated statements of operations in the period in which the change is recognized. Valuation allowances are provided to the extent that impairment of tax assets is more likely than not. In determining whether a tax asset is realizable, the Company considers, among other things, estimates of future earnings based on information currently available, current and anticipated customers, contracts and new product introductions, as well as recent operating results and certain tax planning strategies. If the Company fails to achieve the future results anticipated in the calculation and valuation of net deferred tax assets, the Company may be required to increase the valuation allowance related to its deferred tax assets in the future.
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Concentration of Credit Risk | The Company performs periodic credit evaluations of its customers’ financial condition and generally does not require collateral. At December 31, 2020 and 2019, accounts receivable from governmental customers were approximately $2,102 and $353, respectively. Generally, receivables are due within 30 days. Credit losses relating to customers have been consistently within management’s expectations.
The Company primarily maintains cash balances at one financial institution. Accounts are insured by the Federal Deposit Insurance Corporation (“FDIC”) up to $250. From time to time, the Company has had cash in financial institutions in excess of federally insured limits. As of December 31, 2020, the Company had cash and cash equivalents in excess of FDIC limits of $6,576.
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Manufacturing and Raw Materials | The Company relies upon a limited number of manufacturers to produce its products and on a limited number of component suppliers. Some of these manufacturers and suppliers are in other countries. Approximately 53.0% of the Company’s material, subassembly and product procurements in 2020 were sourced internationally, of which approximately 48.0% were sourced from three suppliers. For 2019, approximately 67.0% of the Company’s material, subassembly and product procurements were sourced internationally, of which approximately 64.0% were sourced from three suppliers. Purchase orders denominated in U.S. dollars are placed with these suppliers from time to time and there are no guaranteed supply arrangements or commitments.
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Use of Estimates | The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of sales and expenses during the reporting period. Significant estimates include accounts receivable allowances, inventory obsolescence allowance, warranty allowance, and income tax accruals. Actual results could differ from those estimates.
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Fair Value of Financial Instruments | The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, investment in securities, accounts payable, accrued expenses, notes payable, and other liabilities. As of December 31, 2020 and 2019, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses, notes payable, and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments.
The Company uses observable market data assumptions (Level 1 inputs, as defined in accounting guidance) that it believes market participants would use in pricing investment in securities.
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Shipping and Handling Costs | Shipping and handling costs are classified as a part of cost of products in the accompanying consolidated statements of operations for the years ended December 31, 2020 and 2019. Amounts billed to a customer, if any, for shipping and handling are reported as revenue.
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Advertising and Promotion Costs | The cost for advertising and promotion is expensed as incurred. Advertising and promotion expenses are classified as part of selling, general and administrative (“SG&A”) expenses in the accompanying consolidated statements of operations. For the years ended December 31, 2020 and 2019, such expenses totaled $214 and $555, respectively.
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Engineering, Research and Development Costs | Included in SG&A expenses for the years ended December 31, 2020 and 2019 are engineering, research and development costs of $7,869 and $9,803, respectively.
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Share-Based Compensation | The Company accounts for share-based arrangements in accordance with GAAP, which requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which the employee is required to provide service in exchange for the award requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.
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Restricted Stock Units | On August 24, 2020, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $40 per award (resulting in total aggregate grant-date fair value of $240), 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 stockholders, 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 April 24, 2020, upon the resignation of former director Ryan Turner, the Company, at the direction of the Board of Directors, accelerated the vesting of Mr. Turner’s unvested restricted stock units granted September 6, 2019 and issued 10,389 shares of common stock.
On September 6, 2019, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $40 per award (resulting in total aggregate grant-date fair value of $280), 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 stockholders, 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 September 6, 2018, the Company granted to each non-employee director restricted stock units with a grant-date fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which 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 stockholders, other than for good reason, as determined by the Board in its discretion, then the restricted stock units vest in full as of the director’s last date of service as a director of the Company. On September 6, 2019, which was the first anniversary of the grant date, the first tranche of the September 2018 restricted stock units vested. On April 24, 2020, upon the resignation of Mr. Turner, the Company accelerated the vesting of Mr. Turner’s unvested restricted stock units granted September 6, 2018 and issued 4,050 shares of common stock.
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 vested on June 4, 2019.
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Earnings (Loss) Per Share | Earnings (loss) per share amounts are computed and presented for all periods in accordance with GAAP.
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Comprehensive Income (Loss) | Comprehensive income (loss) was equal to net income (loss) for the years ended December 31, 2020 and 2019.
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Product Warranty | The Company offers two-year standard warranties to its customers, depending on the specific product and terms of the customer purchase agreement. The Company’s typical warranties require it to repair and replace defective products during the warranty period at no cost to the customer. At the time the product revenue is recognized, the Company records a liability for estimated costs under its warranties. The costs are estimated based on historical experience. The Company periodically assesses the adequacy of its recorded liability for product warranties and adjusts the amount as necessary.
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Recent Accounting Pronouncements | Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02 “Leases,” which amended leasing guidance by requiring companies to recognize a right-of-use (“ROU”) asset and a lease liability for all operating and capital (finance) leases with lease terms greater than twelve months. The lease liability is equal to the present value of lease payments. The lease asset is based on the lease liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases continue to be classified as operating or capital (finance), with lease expense in both cases calculated substantially the same as under the prior leasing guidance. The updated guidance became effective for interim and annual periods beginning after December 15, 2018. The Company adopted the new guidance on January 1, 2019. Adoption resulted in the recognition of ROU assets and lease liabilities on the consolidated financial statements. Based on the Company’s lease portfolio as of January 1, 2019, which consisted solely of operating leases, the Company recognized approximately $2,885 of ROU assets and $2,975 of lease liabilities on its consolidated financial statements. Refer to Note 7 (Leases) for further details on leases. In August 2018, the FASB issued ASU 2018-15, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract,” to help entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance for determining when the arrangement includes a software license. The amendments in ASU 2018-15 align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by the amendments in ASU 2018-15. The amendments in ASU 2018-15 became effective for fiscal years and interim periods beginning after December 15, 2019. Early adoption was permitted, including adoption in any interim period. The Company adopted the new guidance in the fourth quarter of 2018, with no material impact on its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, “Disclosure Framework–Changes to the Disclosure Requirements for Fair Value Measurement,” which modifies the disclosure requirements on fair value measurements in Topic 820, Fair Value Measurement, including the removal of certain disclosure requirements. The amendments in the ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The Company adopted this guidance as of January 1, 2020, and the adoption did not have an impact on its consolidated financial statements. Recent Accounting Pronouncements 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. |
2. Inventories, net (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of components of inventory |
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Schedule of changes in allowance for obsolete or slow moving inventory |
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3. Allowance for Doubtful Accounts (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Allowance for Credit Loss [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of allowance for doubtful accounts |
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4. Property, Plant and Equipment, net (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of property, plant, and equipment |
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7. Leases (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Lease costs |
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Supplemental cash flow information |
Other information related to operating leases was as follows:
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Schedule of future minimum rental payments |
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8. Income Taxes (Tables) |
12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of income tax expense/(benefit) |
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Schedule of effective income tax rate |
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Schedule of deferred tax assets and liabilities |
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9. Income (Loss) per Share (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of computation of basic and diluted income per share |
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10. Share-Based Employee Compensation (Tables) |
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employee Benefit and Share-based Payment Arrangement, Noncash Expense [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of risk free interest rates |
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Schedule of stock option activity |
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Schedule of outstanding options by exercise price range |
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Schedule of exercisable options by exercise price range |
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13. Commitments and Contingencies (Tables) |
12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||
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Dec. 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule for product warranties |
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1. Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Accounting Policies [Abstract] | ||
Advertising costs | $ 214 | $ 555 |
Engineering, research and development costs | $ 7,869 | $ 9,803 |
2. Inventories, net (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Inventory Disclosure [Abstract] | ||
Finished goods | $ 1,975 | $ 3,864 |
Work in process | 3,288 | 6,122 |
Raw materials | 4,178 | 3,527 |
Total Inventory | $ 9,441 | $ 13,513 |
2. Inventories, net (Details 1) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
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Inventory Disclosure [Abstract] | ||
Balance, beginning of year | $ 823 | $ 629 |
Charged to cost of sales | 126 | 194 |
Disposal of inventory | (429) | 0 |
Balance, end of year | $ 520 | $ 823 |
3. Allowance for Doubtful Accounts (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Allowance for Credit Loss [Abstract] | ||
Balance, beginning of year | $ 50 | $ 50 |
Provision for doubtful accounts | 0 | 0 |
Uncollectible accounts written off | 0 | 0 |
Balance, end of year | $ 50 | $ 50 |
4. Property, Plant and Equipment, net (Details) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Property, Plant and Equipment [Abstract] | ||
Leasehold improvements | $ 727 | $ 732 |
Machinery and equipment | 11,971 | 12,430 |
Gross property, plant, and equipment | 12,698 | 13,162 |
Less accumulated depreciation and amortization | (9,132) | (9,198) |
Property, plant and equipment, net | $ 3,566 | $ 3,964 |
4. Property, Plant and Equipment, net (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Property, Plant and Equipment [Abstract] | ||
Depreciation and amortization expense | $ 1,344 | $ 1,219 |
Disposal group | $ 1,400 |
7. Leases (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Leases [Abstract] | ||
Operating lease cost | $ 610 | $ 573 |
Short-term lease cost | 2 | 2 |
Variable lease cost | 129 | 128 |
Total lease cost | $ 741 | $ 703 |
7. Leases (Details 1) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash flows (fixed payments) | $ 521 | $ 522 |
Operating cash flows (liability reduction) | 367 | 369 |
ROU assets obtained in exchange for lease obligations | $ 454 | $ 2,840 |
Weighted average remaining lease term (in years) | 5 years 11 months 26 days | |
Weighted average discount rate | 5.50% |
7. Leases (Details 2) $ in Thousands |
Dec. 31, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
2021 | $ 683 |
2022 | 579 |
2023 | 592 |
2024 | 604 |
2025 | 615 |
Thereafter | 722 |
Total payments | 3,795 |
Less: imputed interest | 568 |
Leases, net | $ 3,227 |
8. Income Taxes (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Current: | ||
Federal | $ (72) | $ (107) |
State | 3 | (3) |
Total, current | (69) | (110) |
Federal | (44) | (889) |
State | 116 | 12 |
Total, deferred | 72 | (877) |
Total, current and deferred | $ 3 | $ (987) |
8. Income Taxes (Details 1) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Income Tax Disclosure [Abstract] | ||
Statutory U.S. income tax rate | 21.00% | (21.00%) |
States taxes, net of federal benefit | 6.00% | (1.21%) |
Non-deductible items | 3.45% | 0.61% |
Change in valuation allowance | 38.83% | 0.00% |
Change in net operating loss carryforwards and tax credits | (67.58%) | (5.50%) |
Other | (0.50%) | (0.14%) |
Effective income tax rate | 1.20% | (27.24%) |
8. Income Taxes (Details 2) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Deferred tax assets: | ||
Operating loss carryforwards | $ 1,238 | $ 1,347 |
R&D tax credit | 1,952 | 1,678 |
AMT tax credit | 0 | 72 |
Section 263A costs | 203 | 294 |
R&D costs | 0 | 110 |
Amortization | 21 | 24 |
Unrealized loss | 391 | 252 |
Asset reserves: | ||
Bad debts | 11 | 11 |
Inventory allowance | 118 | 187 |
Accrued expenses: | ||
Non-qualified stock options | 175 | 132 |
Compensation | 64 | 132 |
Warranty | 927 | 904 |
Deferred tax assets | 5,098 | 5,143 |
Less valuation allowance | (98) | 0 |
Total deferred tax assets | 5,000 | 5,143 |
Deferred tax liabilities: | ||
Depreciation | (700) | (770) |
Total deferred tax liabilities | (700) | (770) |
Net deferred tax assets (before unrealized gain) | 4,300 | 4,373 |
Deferred tax liability: unrealized gain | 0 | 0 |
Net deferred tax assets | $ 4,300 | $ 4,373 |
8. Income Taxes (Details Narrative) - USD ($) $ in Thousands |
Dec. 31, 2020 |
Dec. 31, 2019 |
---|---|---|
Net deferred tax assets | $ 5,000 | $ 5,143 |
Federal | ||
Net operating loss carryforward | 4,829 | $ 5,006 |
State | ||
Net operating loss carryforward | $ 6,332 |
9. Income (Loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Numerator: | ||
Net income (loss) from continuing operations numerator for basic and diluted earnings per share | $ 248 | $ (2,636) |
Denominator: | ||
Denominator for basic income (loss) per share weighted average shares | 12,552,889 | 12,705,304 |
Effect of dilutive securities: | ||
Stock Options | 8,440 | 0 |
Denominator | ||
Denominator for diluted earnings per share weighted average shares | 12,561,329 | 12,705,304 |
Basic income (loss) per share | $ 0.02 | $ (0.21) |
Diluted income (loss) per share | $ 0.02 | $ (0.21) |
9. Income (Loss) per Share (Details Narrative) - shares |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Stock Options | ||
Antidilutive securities excluded from earnings per share | 464,000 | 569,500 |
RSUs | ||
Antidilutive securities excluded from earnings per share | 139,233 | 101,073 |
10. Share-Based Employee Compensation (Details) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Expected volatility | 52.10% | 49.00% |
Expected dividends | 2.00% | 2.00% |
Expected term (in years) | 6 years 6 months | 6 years 6 months |
Risk-free rate | 0.49% | 2.36% |
Estimated forfeitures | 0.00% | 0.00% |
11. Significant Customers (Details Narrative) |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Risks and Uncertainties [Abstract] | ||
Sales to United States Government | 50.50% | 49.10% |
12. Retirement Plan (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Defined Benefit Plans and Other Postretirement Benefit Plans Disclosures [Abstract] | ||
Defined contribution to retirement plan | $ 60 | $ 164 |
13. Commitments and Contingencies (Details) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Warranties, beginning | $ 1,248 | $ 1,546 |
Warranties issued | 166 | 606 |
Warranties settled | (623) | (904) |
Warranties, ending | $ 791 | $ 1,248 |
13. Commitments and Contingencies (Details Narrative) - USD ($) $ in Thousands |
12 Months Ended | |
---|---|---|
Dec. 31, 2020 |
Dec. 31, 2019 |
|
Commitments and Contingencies Disclosure [Abstract] | ||
Royalty commitment | $ 120 | $ 133 |
Purchase commitment of inventory | $ 8,317 |
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