UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended June 30, 20172018
 
OR
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 
SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from _________ to _________
 
Commission file number 001-32644
 
RELM WIRELESS CORPORATIONBK TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
 
Nevada59-3486297
State or other jurisdiction of(I.R.S. Employer
Incorporationincorporation or organizationIdentification No.)
 
7100 Technology Drive
West Melbourne, Florida 32904
(Address of principal executive offices and Zip Code)
 
Registrant’s telephone number, including area code: (321) 984-1414
RELM Wireless Corporation
(Former name, former address and former fiscal year, if changed since last report)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filerAccelerated filer
Non-accelerated filer(Do not check if a smaller reporting company) 
Smaller reporting companyEmerging growth company
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No ☑
 
There were 13,844,58413,505,535 shares of common stock, $0.60 par value, of the registrant outstanding at July 31, 2017.24, 2018.

 
 
PART I - FINANCIAL INFORMATION
 
Item 1.  
FINANCIAL STATEMENTS
 
RELM WIRELESS CORPORATIONBK TECHNOLOGIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
 
 
 
June 30,
 
 
December 31,
 
 
 
2017
 
 
2016
 
ASSETS
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 $7,490 
 $10,910 
 Available-for-sale-securities
  2,103 
   
Trade accounts receivable, net
  5,313 
  3,448 
Inventories, net
  14,793 
  13,999 
Prepaid expenses and other current assets
  884 
  1,410 
Total current assets
  30,583 
  29,767 
Property, plant and equipment, net
  2,427 
  2,486 
Available-for-sale securities
  7,942 
  6,472 
Deferred tax assets, net
  1,943 
  3,418 
Other assets
  356 
  401 
Total assets
 $43,251 
 $42,544 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
    
    
 
    
    
Current liabilities:
    
    
Accounts payable
 $2,872 
 $1,973 
Accrued compensation and related taxes
  1,355 
  2,193 
Accrued warranty expense
  1,060 
  650 
Accrued other expenses and other current liabilities
  372 
  169 
     Dividends payable
  275 
  1,235 
     Deferred revenue
  147 
  142 
Total current liabilities
  6,081 
  6,362 
 
    
    
Deferred revenue
  397 
  408 
Total liabilities
 $6,478 
 $6,770 
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; 13,844,584 and13,754,749 issued and outstanding shares at June 30, 2017 and
 December 31, 2016, respectively
  8,307 
  8,253 
Additional paid-in capital
  25,533 
  25,382 
Accumulated (deficit) earnings
  (1,227)
  240 
Accumulated other comprehensive income
  4,539 
  2,061 
Treasury stock, at cost, 76,722 and 30,422 at June 30, 2017 and December 31, 2016, respectively
  (379)
  (162)
Total stockholders' equity
  36,773 
  35,774 
Total liabilities and stockholders' equity
 $43,251 
 $42,544 
 
 
June 30,
2018
 
 
December 31,
2017
 
 
 
(Unaudited)
 
 
 
 
ASSETS
 
 
 
 
 
 
 
 
 
 
 
 
 
Current assets:
 
 
 
 
 
 
Cash and cash equivalents
 $10,723 
 $7,147 
Available-for-sale-securities
   
  9,184 
Trade accounts receivable, net
  6,983 
  5,524 
Inventories, net
  12,781 
  14,358 
Prepaid expenses and other current assets
  871 
  772 
Total current assets
  31,358 
  36,985 
 
    
    
Property, plant and equipment, net
  2,367 
  2,201 
Investment in securities
  3,389 
   
Deferred tax assets, net
  3,139 
  3,317 
Other assets
  239 
  298 
Total assets
 $40,492 
 $42,801 
 
 
 
LIABILITIES AND STOCKHOLDERS’ EQUITY
    
    
 
    
    
Current liabilities:
    
    
Accounts payable
 $3,534 
 $5,971 
Accrued compensation and related taxes
  1,615 
  1,364 
Accrued warranty expense
  1,415 
  1,389 
Accrued other expenses and other current liabilities
  974 
  1,159 
     Dividends payable
  271 
  273 
     Deferred revenue
  175 
  157 
Total current liabilities
  7,984 
  10,313 
 
    
    
Deferred revenue
  1,045 
  481 
Total liabilities
 $9,029 
 $10,794 
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; 13,882,937 and 13,844,584 issued and 13,529,983 and 13,652,490 outstanding shares at June 30, 2018 and December 31, 2017, respectively
  8,330 
  8,307 
Additional paid-in capital
  25,730 
  25,642 
Accumulated deficit
  (1,171)
  (5,450)
Accumulated other comprehensive income
   
  4,318 
Treasury stock, at cost, 352,954 and 192,094 shares at June 30, 2018 and December 31, 2017, respectively
  (1,426)
  (810)
Total stockholders’ equity
  31,463 
  32,007 
Total liabilities and stockholders’ equity
 $40,492 
 $42,801 
 
See notes to condensed consolidated financial statements.
 
2
 
 
RELM WIRELESS CORPORATIONBK TECHNOLOGIES, INC.
Condensed Consolidated Statements of OperationsIncome
(In thousands, except share and per share data) (Unaudited)
 
 
Three Months Ended
 
 
Six Months Ended
 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30, 2017
 
 
June 30, 2016
 
 
June 30, 2017
 
 
June 30, 2016
 
 
June 30,
2018
 
 
June 30,
2017
 
 
June 30,
2018
 
 
June 30,
2017
 
 
 
 
 
 
 
Sales, net
 $10,762 
 $16,664 
 $18,142 
 $28,733 
 $13,656 
 $10,762 
 $25,402 
 $18,142 
Expenses
    
    
Cost of products
  6,268 
  11,073 
  11,411 
  19,313 
  7,771 
  6,268 
  14,681 
  11,411 
Selling, general and administrative
  3,521 
  3,497 
  6,964 
  6,560 
  4,554 
  3,521 
  8,644 
  6,964 
Total expenses
  9,789 
  14,570 
  18,375 
  25,873 
  12,325 
  9,789 
  23,325 
  18,375 
    
    
Operating income (loss)
  973 
  2,094 
  (233)
  2,860 
  1,331 
  973 
  2,077 
  (233)
    
    
Other income (expense):
    
    
Interest income
  10 
  1 
  18 
  2 
  19 
  10 
  35 
  18 
Gain on available-for-sale
    
securities
  617 
   
  617 
   
Loss on disposal of property,
    
plant and equipment
   
  (104)
   
Other (expense) income
  (60)
  7 
  (147)
  8 
Total other income
  567 
  8 
  384 
  10 
(Loss) gain on investment in securities
  (55)
  617 
  (1,201)
  617 
Loss on disposal of property, plant and equipment
   
   
  (104)
Other expense
  (58)
  (60)
  (225)
  (147)
Total other income (expense)
  (94)
  567 
  (1,391)
  384 
    
    
Income before income taxes
  1,540 
  2,102 
  151 
  2,870 
  1,237 
  1,540 
  686 
  151 
    
    
Income tax expense
  (222)
  (737)
  (101)
  (992)
  (290)
  (222)
  (183)
  (101)
    
    
Net income
 $1,318 
 $1,365 
 $50 
 $1,878 
 $947 
 $1,318 
 $503 
 $50 
    
    
Net earnings per share-basic:
 $0.10 
 $0.10 
 $0.00 
 $0.14 
Net earnings per share-diluted:
 $0.10 
 $0.10 
 $0.00 
 $0.14 
Net earnings per share-basic
 $0.07 
 $0.10 
 $0.04 
 $0.00 
Net earnings per share-diluted
 $0.07 
 $0.10 
 $0.04 
 $0.00 
Weighted average shares outstanding-basic
  13,785,046  
  13,734,286  
  13,759,732  
  13,732,424  
  13,532,958 
  13,785,046 
  13,567,778 
  13,759,732 
Weighted average shares outstanding-diluted
  13,814,690  
  13,841,208  
  13,902,587  
  13,819,700  
  13,547,394 
  13,814,690 
  13,595,586 
  13,902,587 
See notes to condensed consolidated financial statements.
 
3
 
 
RELM WIRELESS CORPORATIONBK TECHNOLOGIES, INC.
Condensed Consolidated Statements of Comprehensive Income
(In thousands) (Unaudited)
 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30, 2017
 
 
June 30, 2016
 
 
June 30, 2017
 
 
June 30, 2016
 
 
Three Months Ended
 
 
Six Months Ended
 
 
 
 
 
June 30,
2018
 
 
June 30,
2017
 
 
June 30,
2018
 
 
June 30,
2017
 
Net income
 $1,318 
 $1,365 
 $50 
 $1,878 
 $947 
 $1,318 
 $503 
 $50 
Unrealized gain on available-
    
for-sale securities, net of tax
  419 
  480 
  2,478 
  773 
Unrealized gain on available- for-sale securities, net of tax
   
  419 
   
  2,478 
Total comprehensive income
 $1,737 
 $1,845 
 $2,528 
 $2,651 
 $947 
 $1,737 
 $503 
 $2,528 
See notes to condensed consolidated financial statements.
 
4
 
 
RELM WIRELESS CORPORATIONBK TECHNOLOGIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands) (Unaudited)
 
 
Six Months Ended
 
 
Six Months Ended
 
 
June 30, 2017
 
 
June 30, 2016
 
 
June 30,
2018
 
 
June 30,
2017
 
Operating activities
 
 
 
 
 
 
Net income
 $50 
 $1,878 
 $503 
 $50 
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
    
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
    
Inventories allowances
  49 
  64 
  (31)
  49 
Deferred tax expense
  100 
  610 
Deferred taxes
  178 
  100 
Depreciation and amortization
  471 
  456 
  439 
  471 
Share-based and stock compensation expense
  16 
  26 
  38 
  16 
Restricted stock unit compensation expense
  6 
  - 
  73 
  6 
Realized tax benefit from stock option exercise
  - 
  380 
Gain on available-for-sale securities
  (617)
  - 
Loss (gain) on investment in securities
  1,201 
  (617)
Loss on disposal of property, plant and equipment
  104 
  - 
   
  104 
Changes in operating assets and liabilities:
    
    
Trade accounts receivable
  (1,865)
  (1,794)
  (1,459)
  (1,865)
Inventories
  (843)
  320 
  1,608 
  (843)
Prepaid expenses and other current assets
  527 
  1,175 
  (99)
  527 
Other assets
  (25)
  17 
  23 
  (25)
Accounts payable
  899 
  2,275 
  (2,437)
  899 
Accrued compensation and related taxes
  (838)
  676 
  251 
  (838)
Accrued warranty expense
  410 
  (20)
  26 
  410 
Deferred revenue
  (6)
  (16)
  582 
  (6)
Customer deposits
  - 
  989 
Accrued other expenses and other current liabilities
  203 
  66 
  (185)
  203 
Net cash (used in) provided by operating activities
  (1,359)
  7,102 
Net cash provided by (used in) operating activities
  711 
  (1,359)
    
    
Investing activities
    
    
Purchases of property, plant and equipment
  (447)
  (962)
  (569)
  (447)
Investment in securities
  - 
  (481)
  (3,741)
   
Proceeds from sale of available-for-sale securities
  897
  - 
  8,335 
  897 
Net cash provided by (used in) investing activities
  450 
  (1,443)
Net cash provided by investing activities
  4,025 
  450 
    
    
Financing activities
    
    
Proceeds from issuance of common stock
  183 
  10 
   
  183 
Cash dividends declared and paid
  (2,477)
  (1,236)
  (544)
  (2,477)
Repurchase of common stock
  (217)
  (22)
  (616)
  (217)
Cash used in financing activities
  (2,511)
  (1,248)
Net cash used in financing activities
  (1,160)
  (2,511)
    
    
Net change in cash and cash equivalents
  (3,420)
  4,411 
  3,576 
  (3,420)
Cash and cash equivalents, beginning of period
  10,910 
  4,669 
  7,147 
  10,910 
Cash and cash equivalents, end of period
 $7,490 
 $9,080 
 $10,723 
 $7,490 
    
    
Supplemental disclosure
    
    
Cash paid for interest
 $- 
 $- 
 $ 
 $ 
Income tax paid
 $- 
 $- 
 $ 
 $ 
Non-cash financing activity
    
    
Restricted stock units issued
 $140 
 $ 
Cashless exercise of stock options and related conversion of net shares to stockholders’ equity
 $27 
 $4 
 $ 
 $27 
 
See notes to condensed consolidated financial statements.


5
 
RELM WIRELESS CORPORATIONBK TECHNOLOGIES, INC.
Notes to Condensed Consolidated Financial Statements
Unaudited
(in thousands, except share and per share data and percentages)
 
1.            
Condensed Consolidated Financial Statements
 
Basis of Presentation
 
The condensed consolidated balance sheetssheet as of June 30, 2017 and December 31, 2016,2018, the condensed consolidated statements of operationsincome and comprehensive income for the three and six months ended June 30, 20172018 and 20162017 and the condensed consolidated statements of cash flows for the six months ended June 30, 20172018 and 20162017 have been prepared by RELM Wireless CorporationBK Technologies, Inc. (the “Company”), and are unaudited. In the opinion of management, all adjustments, which include normal recurring adjustments, necessary for a fair presentation have been made. The condensed consolidated balance sheet at December 31, 20162017 has been derived from the Company’s audited consolidated financial statements at that date.
 
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016,2017, as filed with the Securities and Exchange Commission. The results of operations for the three and six months ended June 30, 20172018 are not necessarily indicative of the operating results for a full year.
Principles of 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 percent to 50 percent), the Company’s investment is accounted for under the equity method of accounting. If the Company does not have a controlling financial interest in, or exert significant influence over, an entity, the Company accounts for its investment at fair value, if the fair value option was elected, or at cost.
The Company has an investment in 1347 Property Insurance Holdings, Inc., made through FGI 1347 Holdings, LP, a consolidated VIE.

 
Fair Value
 
The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, and available-for-saleinvestment in securities, accounts payable, accrued expenses and other liabilities. As of June 30, 2017,2018 and December 31, 2016,2017, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments.
 
The Company uses observable market data or assumptions (Level 1 inputs as defined in accounting guidance) that it believes market participants would use in pricing the available-for-saleinvestment in securities. There were no sales of available-for-sale securities, nor gains or losses reclassified out of accumulated other comprehensive income as a result of an other-than-temporary impairment of the available-for-sale securities. There were no transfers of available-for-saleinvestment in securities between Level 1 and Level 2 during the six months ended June 30, 2017.2018.
 
Available-For-Sale Securities
 
Investments reported on the June 30, 2017 and December 31, 20162017 balance sheets consistsheet consisted of marketable equity securities of a publicly held company. As of June 30, 2017, and December 31, 2016,2017, the investment cost was $2,944$2,402. On January 1, 2018, the Company adopted Accounting Standards Update (“ASU”) 2016-01 “Financial Instruments,” which amended the guidance in U.S. GAAP regarding the classification and $3,242, respectively. Management intendsmeasurement of financial instruments. Changes to hold such securitiesthe prior guidance primarily affected the accounting for equity investments, financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. Upon its adoption, the Company applied the amendments by means of a sufficientcumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which to realize a reasonable return, which periods may range between one to several years, although there is no assurance that positive returns will be realized or that such securities will not be liquidatedthe guidance was effective. On January 1, 2018, the Company recognized approximately $4,300 of net unrealized gain in a shorter-than-expected time frame to accommodate future liquidity requirements.its accumulated deficit balance. During the three months ended June 30, 2017, the Company’s Boardfirst quarter of Directors authorized the sale of up to $3 million of available-for-sale securities. Thereafter,2018, the Company sold a portion1,317,503 shares of its available-for-sale securitiesIteris, Inc. (Nasdaq: ITI), which cost $2,402, for approximately $897$8,335 of proceeds and realizedreported a gainloss on the sales of approximately $617. Accordingly, available-for sale-securities totaling approximately $2.1 million were classified as current assets as of June 30, 2017, while the remainder were classified as non-current assets. Investments are marked to market at each measurement date, with changes in net unrealized gains or losses presented as adjustments to accumulated other comprehensive income or loss.

6
$849.
 
Other Comprehensive Income
 
Other comprehensive income consists of net income and unrealized gain on available-for-sale securities, net of taxes.
 
RecentRecently Adopted Accounting Pronouncements
 
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)ASU 2014-09 on “Revenue from Contracts with Customers,” which providesprovided for a single, principles-based model for revenue recognition and replaces the existing revenue recognition guidance. In August 2015, the FASB issued ASU 2015-14, which delays the effective date of ASU 2014-09 by one year. The guidance, isbecame effective for annual and interim periods beginning on or after December 15, 2017, and will replacereplaced most existing revenue recognition guidance under U.S. GAAP when it becomes effective.GAAP. This ASU requires additional disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgements and estimates and changes in those estimates. It permits the use of either a modified retrospective or cumulative effect transition method. The Company adopted ASU 2014-09 in the first quarter of 2018 and applied the modified retrospective approach. Because the Company’s primary source of revenues is from shipments of products, the Company does not expect the impact on its consolidated financial statements to be material.
In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurementadoption of Inventory,” to simplify the guidance on the subsequent measurement of inventory, excluding inventory measured using last-in, first-out or the retail inventory method. Under the new standard, inventory should be stated at the lower of cost and net realizable value. The new accounting guidance is effective for interim and annual periods beginning after December 15, 2016, with early adoption permitted. The Company has adopted thethis new guidance with no materialdid not have any impact on its consolidated financial statements and related disclosures.
 
In January 2016, the FASB issued ASU 2016-01 “Financial Instruments,” which amendsamended the guidance in U.S. GAAP on the classification and measurement of financial instruments. Changes to the current guidance primarily affectaffected the accounting for equity investments, financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. In addition, the ASU clarifiesclarified guidance related to the valuation allowance assessment when recognizing deferred tax assets resulting from unrealized losses on available-for-sale debt securities. The new standard isbecame effective for fiscal years and interim periods beginning after December 15, 2017, and upon adoption, an entity should apply the amendments by means of a cumulative-effect adjustment to the balance sheet at the beginning of the first reporting period in which the guidance is effective. Early adoption is not permitted except forThe Company adopted the provision to record fair value changes for financial liabilities undernew guidance, which had a material impact on its retained earnings, as the fair value option resulting from instrument-specific credit riskCompany reclassified approximately $4,300 of unrealized gain on investment securities that was previously classified in other comprehensive income. The Company has not yet determined the potential effects of the adoption of ASU 2016-01 on its consolidated financial statements.

Recent Accounting Pronouncements
 
In February 2016, the FASB issued ASU 2016-02, “Leases,” which amends leasing guidance by requiring companies to recognize a right-of-use asset and a lease liability for all operating and capital (finance) leases with lease terms greater than twelve months. The lease liability will be equal to the present value of lease payments. The lease asset will be based on the lease liability, subject to adjustment, such as for initial direct costs. For income statement purposes, leases will 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 is effective for interim and annual periods beginning after December 15, 2018, with early adoption permitted. The Company expects this will result in the recognition of right-of-use assets and lease liabilities not currently recorded on the consolidated financial statements under existing accounting guidance, but the Company is still evaluating all the Company’s contractual arrangements and the impact that adoption of ASU 2016-02 will have on the Company’s consolidated financial statements.
 
In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting.” The guidance is effective for annual reporting periods beginning after December 15, 2016 and interim periods within those fiscal years with early adoption permitted. The Company has adopted the new guidance with no material impact on its consolidated financial statements.
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.            
Significant Events and Transactions
 
InOn June 2017,26, 2018, the Company changed its capital return program, authorizingannounced that it received orders totaling approximately $4.5 million for BK Radio-brand KNG-series portable and mobile radios, and related accessories that will be deployed by a California State public safety agency. The orders were partially fulfilled in the repurchasesecond quarter of 500,000 shares2018, and the remainder are anticipated to be fulfilled during the third quarter of the Company's common stock in addition2018.
Pursuant to the 500,000 shares originally authorized, for a total repurchase authorization of 1 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 has no termination date.  In addition, pursuant to theCompany’s capital return program, the Company’s Board of Directors declared a quarterly dividend of $0.02 per share of the Company'sCompany’s common stock on June 14, 20174, 2018 to shareholdersstockholders of record as of June 30, 2017.July 2, 2018. These dividends were paid on July 17, 2017.16, 2018.
 
OnEffective on June 15, 2017,4, 2018, the Company changed its name from “RELM Wireless Corporation” to “BK Technologies, Inc.” The Company’s shareholdersstock began trading on the NYSE American stock exchange under the new ticker symbol “BKTI” on June 5, 2018. Stockholders approved the 2017 incentive compensation plan. Undername change at the plan, the Company’s compensation committeeannual meeting of the Board of Directors granted to each non-employee director an award of restricted stock units (“RSUs”) equal to $20, with the number of RSUs calculated basedstockholders held on the Company’s common stock price on the date of grant. The RSUs vest in full twelve months after the grant date, subject to continued service as a director through the vesting date. The shares underlying the RSU awards are not issued until the RSUs vest in full. Upon vesting, each RSU converts into one share of the Company’s common stock.June 4, 2018.
 
3.            
Allowance for Doubtful Accounts
 
The allowance for doubtful accounts on trade receivables was approximately $50 on gross trade receivables of $5,363$7,033 and $3,498$5,574 at June 30, 20172018 and December 31, 2016,2017, respectively. This allowance is used to state trade receivables at a net realizable value or the amount that the Company estimates will be collected of the Company’s gross trade receivables.
 
4.            
Inventories, net
 
The components of inventories, net of allowances for slow-moving, excess or obsolete inventory, consist of the following:
 
 
June 30, 2017
 
 
December 31, 2016
 
 
June 30,
2018
 
 
December 31,
2017
 
Finished goods
 $3,214 
 $3,216 
 $2,201 
 $2,825 
Work in process
  7,038 
  6,612 
  6,408 
  7,111 
Raw materials
  4,541 
  4,171 
  4,172 
  4,422 
 $14,793 
 $13,999 
 $12,781 
 $14,358 
 
Allowances for slow-moving, excess, or obsolete inventory are used to state the Company’s inventories at the lower of cost or net realizable value. The allowances were approximately $1,647$758 at June 30, 2017,2018, compared with approximately $1,607$789 at December 31, 2016.2017.

 
5.            
Income Taxes
 
Income tax expense totaling approximately $222$290 and $101$183 has been recorded for the three and six months ended June 30, 2017,2018, respectively, compared with $737$222 and $992,$101, respectively, for the same periods last year.
 
The Company’s income tax provision is based on management’s estimate of the effective tax rate for the full year.  The tax provision in any period will be affected by, among other things, permanent, as well as temporary differences in the deductibility of certain items, in addition to changes in tax legislation. As a result, the Company may experience significant fluctuations in the effective book tax rate (that is, its tax expense divided by pre-tax book income) from period to period.  For 2018, the Company generally expects its effective tax rate to decline compared to 2017, primarily due to the implementation of the Tax Cuts and Jobs Act enacted in December 2017, which, among other things, reduced the U.S. federal corporate tax rate from 35% to 21%.
As of June 30, 2017,2018 and December 31, 2016,2017, the Company’s net deferred tax assets totaled approximately $1,943$3,139 and $3,418,$3,317, respectively, and are primarily composed of net operating loss carryforwards (“NOLs”), and research and development costs and tax credits partially offset by an increase to deferred tax liabilities of $1,374 derived from the unrealized gain on available-for-sale securities.credits.  As of June 30, 2017,2018, these NOLs total approximately $1,629$4,422 for federal and $11,899$13,323 for state purposes, with expirations starting in 2018 through 2030.

 
In order to fully utilize the net deferred tax assets, the Company will need to generate sufficient taxable income in future years to utilize its NOLs prior to their expiration. The Company analyzedanalyzes all positive and negative evidence to determine if, based on the weight of available evidence, the Company is more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon the Company’s conclusions regarding, among other considerations, estimates of future earnings based on information currently available, current and anticipated customers, contracts and product introductions, as well as historical operating results and certain tax planning strategies.
 
Based on management’s analysis of all available evidence, both positive and negative, the Company’s management has concluded 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. Management estimated that as of June 30, 2017,2018, it is more likely than not that approximately $129$83 of the Company’s deferred tax asset will not be realized due to the inability to generate sufficient Florida taxable income in the necessary period to fully utilize its Florida NOLs. The Company cannot presently estimate what, if any, changes to the valuation of its deferred tax assets may be deemed appropriate in the future. If the Company incurs future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of June 30, 2017.2018.
 
6.            
Investment in Securities
 
The Company has an investment in a limited partnership, FGI 1347 Holdings, LP, of which the Company is the sole limited partner. FGI 1347 Holdings, LP, was established for the purpose of investing in securities.
As of June 30, 2017,2018, the Company through its wholly owned subsidiary,indirectly held approximately 1.6 million$225 in cash and 477,282 shares of Iteris,1347 Property Insurance Holdings, Inc. (NASDAQ: ITI), which represented(Nasdaq: PIH) with fair value of $3,389, through an investment in FGI 1347 Holdings, LP. These shares were purchased in March and May 2018 for approximately 5.0% of Iteris’s outstanding shares.  During$3,741. For the three and six months ended June 30, 2017, the Company’s board of directors authorized the sale of up to $3 million of its shares of Iteris common stock. Thereafter, the Company sold 163,221 shares for approximately $897, realizing a gain on the sales of approximately $617. At June 30, 2017,2018, the Company recognized an unrealized gainsloss on the investment of approximately $2,478, net of tax of $232, which is included in accumulated other comprehensive income as a separate component of stockholders’ equity.$55 and $352, respectively.
 
On July 29, 2016,Affiliates of Fundamental Global Investors, LLC serve as the general partner and the investment manager of FGI 1347 Holdings, LP, and the Company oneis the sole limited partner. As of June 30, 2018, the Company and the affiliates of Fundamental Global Investors, LLC, including without limitation Ballantyne Strong, Inc., beneficially owned in the aggregate 2,639,362 shares of PIH’s common stock, representing approximately 44.1% of PIH’s outstanding shares. Fundamental Global with its affiliates is the largest stockholder of the Company. Mr. Kyle Cerminara, Chairman of the Company’s significant stockholders,Board of Directors, is Chief Executive Officer, Co-Founder and certainPartner of their affiliates, entered into an agreement with Iteris. Pursuant to the agreement, a directorFundamental Global Investors, LLC and serves as Chief Executive Officer and Chairman of the Company, who is an executive, co-founder and partner of the significant stockholder that is party to the agreement, was appointed to the Board of Directors of Iteris.  As of June 30, 2017, the Company and the significant stockholderBallantyne Strong. Mr. Lewis M. Johnson, Co-Chairman of the Company, beneficially own inis President, Co-Founder and Partner of Fundamental Global Investors, LLC and serves as a director of Ballantyne Strong. Messrs. Cerminara and Johnson also serve as Chairman and Co-Chairman, respectively, of the aggregate 2,126,948 sharesBoard of Iteris, which represents approximately 6.5%Directors of Iteris’s outstanding shares.PIH.
 

 
7.            
Stockholders’ Equity
 
The changes in consolidated stockholders’ equity for the six months ended June 30, 20172018 are as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Common
 
 
Common
 
 
Additional
 
 
Accumulated
 
 
Other
 
 
 
 
 
 
 
 
 
Stock
 
 
Stock
 
 
Paid-In
 
 
Earnings
 
 
Comprehensive
 
 
Treasury
 
 
 
 
 
 
Shares
 
 
Amount
 
 
Capital
 
 
(Deficit)
 
 
Income
 
 
Stock
 
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2016
  13,754,749 
 $8,253 
 $25,382 
 $240 
 $2,061 
 $(162)
 $35,774 
Common stock options exercised
    
    
    
    
    
    
    
  and issued
  89,835 
  54 
  129 
  - 
  - 
  - 
  183 
Share-based compensation
    
    
    
    
    
    
    
  expense
  - 
  - 
  16 
  - 
  - 
  - 
  16 
RSUs compensation expense
  - 
  - 
  6 
  - 
  - 
  - 
  6 
Dividends declared
    
    
    
  (1,517)
  - 
  - 
  (1,517)
Net income
  - 
  - 
  - 
  50 
  - 
  - 
  50 
Unrealized gain on
    
    
    
    
    
    
    
  available-for-sale securities
  - 
  - 
  - 
  - 
  2,478 
  - 
  2,478 
Repurchase of common stock
  - 
  - 
  - 
  - 
  - 
  (217)
  (217)
Balance at June 30, 2017
  13,844,584 
 $8,307 
 $25,533 
 $(1,227)
 $4,539 
 $(379)
 $36,773 
 
 
Common Stock Shares
 
 
Common Stock Amount
 
 
Additional Paid-In Capital
 
 
Accumulated
Deficit
 
 
Other
Comprehensive
Income
 
 
Treasury
Stock
 
 
Total
 
Balance at December 31, 2017
  13,844,584 
 $8,307 
 $25,642 
 $(5,450)
 $4,318 
 $(810)
 $32,007 
Restricted stock units issued
  38,353 
  23 
  (23)
   
   
   
   
Share-based compensation expense
   
   
  38 
   
   
   
  38 
Restricted stock unit compensation expense
   
   
  73 
   
   
   
  73 
Dividends declared
   
   
   
  (542)
   
   
  (542)
Net income
   
   
   
  503 
   
   
  503 
Effect of adoption of ASU 2016-01
   
   
   
  4,318 
  (4,318)
   
   
Repurchase of common stock
   
   
   
   
   
  (616)
  (616)
Balance at June 30, 2018
  13,882,937 
 $8,330 
 $25,730 
 $(1,171)
 $ 
 $(1,426)
 $31,463 
 
8.            
Income per Share
 
The following table sets forth the computation of basic and diluted income per share:
 
 
Three Months Ended
 
 
Six Months Ended
 
 
Three Months Ended
 
 
Six Months Ended
 
 
June 30, 2017
 
 
June 30, 2016
 
 
June 30, 2017
 
 
June 30, 2016
 
 
June 30,
2018
 
 
June 30,
2017
 
 
June 30,
2018
 
 
June 30,
2017
 
Numerator:
 
 
 
 
 
 
Net income (numerator for basic and diluted earnings per share)
 $1,318 
 $1,365 
 $50 
 $1,878 
 $947 
 $1,318 
 $503 
 $50 
Denominator:
    
    
Denominator for basic earnings per share weighted average shares
  13,785,046 
  13,734,286 
  13,759,732 
  13,732,424 
  13,532,958 
  13,785,046 
  13,567,778 
  13,759,732 
    
Effect of dilutive securities:
    
    
Options and RSUs
  29,644
  106,922 
  142,855
  87,276 
    
Options and restricted stock units
  14,436 
  29,644 
  27,808 
  142,855 
Denominator:
    
    
Denominator for diluted earnings per share weighted average shares
  13,814,690  
  13,841,208  
  13,902,587  
  13,819,700  
  13,547,394 
  13,814,690 
  13,595,586 
  13,902,587 
    
    
Basic income per share
 $0.10 
 $0.10 
 $0.00 
 $0.14 
 $0.07 
 $0.10 
 $0.04 
 $0.00 
Diluted income per share
 $0.10 
 $0.10 
 $0.00 
 $0.14 
 $0.07 
 $0.10 
 $0.04 
 $0.00 
 
Approximately 435,000 stock options and 3,768 restricted stock units for the three and six months ended June 30, 2018, and 178,500 stock options and 9,050 restricted stock units granted for the three and six months ended June 30, 2017, were excluded from the calculation because they were anti-dilutive.
 

 
9.            
Non-Cash Share-Based Employee Compensation
 
The Company has an employee and non-employee director share-based incentive compensation plan. Related to these programs, the Company recorded non-cash share-based employee compensation expense of $14$17 and $16$38 for the three and six months ended June 30, 2017,2018, respectively, compared with $14 and $26,$16, respectively, for the same periods last year. The Company considers its non-cash share-based employee compensation expenses as a component of cost of products and selling, general and administrative expenses. There was no non-cash share-based employee compensation expense capitalized as part of capital expenditures or inventory for the periods presented.
 
The Company uses the Black-Scholes-Merton option valuation model to calculate the fair value of a stock option grant. The non-cash share-based employee compensation expense recorded in the three and six months ended June 30, 20172018 was calculated using certain assumptions. Such assumptions are described more comprehensively in Note 1110 (Share-Based Employee Compensation) of the Company’s Consolidated Financial Statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2017.
 
A summary of activity under the Company’s stock option plans during the six months ended June 30, 20172018 is presented below:
 
As of January 1, 2017
 
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 ($)
 
 
 
 
As of January 1, 2018
 
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
  311,000 
  3.48 
  - 
  1.96 
  - 
  354,500 
  4.46 
   
  1.79 
   
Vested
  231,000 
  3.30 
  - 
  1.97 
  - 
  113,000 
  3.75 
   
  2.23 
   
Non-vested
  80,000 
  4.01 
  - 
  1.93 
  - 
Nonvested
  241,500 
  4.80 
   
  1.58 
   
    
Period activity
    
    
Issued
  178,500 
  5.10 
  - 
  1.36 
  - 
  130,000 
  3.72 
   
  1.62 
   
Exercised
  125,000 
  2.88 
  - 
  1.62 
  - 
   
Forfeited
  75,000 
  4.26 
  - 
  1.99 
  - 
  23,500 
  5.10 
   
  1.37 
   
Expired
  - 
   
As of June 30, 2017
    
    
As of June 30, 2018
    
Outstanding
  289,500 
  4.54 
  7.32 
  1.73 
  39,860 
  461,000 
  4.22 
  7.58 
  1.76 
  40,560 
Vested
  108,000 
  3.69 
  3.61 
  2.28 
  39,860 
  143,000 
  4.01 
  3.91 
  2.06 
  38,560 
Non-vested
  181,500 
  5.04 
  9.53 
  1.40 
  - 
Nonvested
  318,000 
  4.31 
  9.23 
  1.63 
  2,000 
 
Restricted Stock Units
 
On June 4, 2018, the Company granted to each non-employee director restricted stock units with a grant fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which will vest on June 4, 2019, subject to continued service through such vesting date. On June 15, 2017, the Company granted to each non-employee director RSUsrestricted stock units with a grant fair value of $20 per award (resulting in total aggregate grant-date fair value of $140), which will vestvested on June 15, 2018. The Company recorded non-cash restricted stock unit compensation expense of $39 and $73 for the three and six months ended June 30, 2018, subject to continued service through such vesting date.respectively, compared with $6 and $0 for the same periods last year.
 

 
10.            
Commitments and Contingencies
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. On March 28, 2017, The Sales Group, Inc. (“TSG”) purported to filefiled a lawsuit in the U.S. District Court for the Central District of California against the Company. TSG was a sales representative of the Company that the Company terminated in March 2017. TSG has asserted claims against the Company for alleged breach of oral contract, violation of the California and Arizona sales representative statutes and an accounting of alleged unpaid sales commissions. TSG’s complaint seekssought damages in the amount of $6,090 for alleged unpaid past and future sales commissions. On April 3, 2017, counsel for TSG sent the Company a letter outlining additional alleged grounds for recovery against the Company and offering to settle the litigation in exchange for the continued payment of sales commissions to TSG for a negotiated period, a buyout of TSG’s alleged rights for a negotiated sum or reinstatement of TSG for a period of at least 2.5 years with commission rates equal to those in effect at the time of TSG’s termination. The Company believes that TSG’s claim has no merit, thatmatter was mediated on November 14, 2017, during which the parties agreed to a settlement. On December 19, 2017, the Company had the rightentered into a settlement agreement with TSG, pursuant to terminatewhich TSG without the payment of any further sales commissions and intends to defend against this litigation vigorously. The Company filed a motionagreed to dismiss with prejudice its lawsuit filed against the Company. Pursuant to the settlement agreement, the Company agreed to pay an amount of $900 to TSG on or in the alternative, stay the case pending arbitration of the dispute. A hearing on the motion was held on July 24,before December 31, 2017. The Company took the position in briefing andalso agreed to pay to TSG commissions, at the hearing thatrates in effect since February 7, 2013, on all orders for the dispute should be arbitrated.Company’s products received and accepted by the Company from the states of Arizona, California, Nevada and Hawaii from January 1, 2018 through December 31, 2018, other than for (i) sales of the Company’s products to federal government agencies and offices, (ii) sales of the Company’s products to other end-users, excepting state and local government agencies and offices, and (iii) sales of parts or service, including warranty service. In addition, if at any time on or before December 31, 2018, the Company completes a change-in-control transaction, then the Company will pay to TSG an amount equal to $2,000, less the amount of commissions paid by the Company with respect to 2018, as described above. The Court indicated atsettlement agreement settled all claims raised by TSG in its lawsuit against the hearing that it will consider whether arbitration is appropriate after some discovery is conducted. The outcomeCompany. In December 2017, the Company recorded an estimated commission amount of this matter cannot presently be determined; accordingly, no related provision has been madeapproximately $536. For the six months ended June 30, 2018, the Company paid $231 in commissions to TSG. As of June 30, 2018, the Condensed Consolidated Financial Statements.Company estimated and recorded an additional commission amount of approximately $290 for the remaining six months of 2018.
 
Purchase Commitments
 
As of June 30, 2017,2018, the Company had purchase orders to suppliers for inventory of approximately $7,128.$6,380.
 
Significant Customers
 
Sales to the United States government agencies represented approximately $3,018 (28.0%$4,776 (35.0%) and $5,935 (32.7%$8,769 (34.5%) of the Company’s total sales for the three and six months ended June 30, 2017,2018, respectively, compared with approximately $10,055 (60.3%$3,018 (28.0%) and $16,785 (58.4%$5,935 (32.7%), respectively, for the same periods last year. Accounts receivable from agencies of the United States government were $924$1,260 as of June 30, 2017,2018, compared with approximately $2,765$924 at the same date last year.
 
11.            
Debt
 
The Company has a secured revolving credit facility with Silicon Valley Bank with maximum borrowing availability of $1,000 (subject to a borrowing base) and a maturity date of December 27, 2017.26, 2018. As of June 30, 2017,2018, the Company was in compliance with all covenants under the loan and security agreement, as amended, governing this revolving credit facility. For a description of such covenants and the other terms and conditions of the loan and security agreement, as amended, reference is made to Note 65 (Debt) of the Company’s Consolidated Financial Statementsconsolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2017. As of June 30, 2017,2018, there were no borrowings outstanding under the revolving credit facility and there was $1,000 of borrowing available under the revolving credit facility.
 

 
Item 2.       
MANAGEMENT'SMANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
SPECIAL NOTE CONCERNING
FORWARD-LOOKING STATEMENTS
 
We believe that it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), including the statements about our plans, objectives, expectations and prospects under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”prospects. You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” “will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.
 
Important factors that might cause our actual results to differ materially from the results contemplated by the forward-looking statements are contained in the “Risk Factors” section of and elsewhere in our Annual Report on Form 10-K for the fiscal year ended December 31, 20162017 and in our subsequent filings with the Securities and Exchange Commission, and include, among others, the following:
 
● 
changes or advances in technology;
 
the success of our LMRland mobile radio product line;
 
successful introduction of new products and technologies;
competition in the land mobile radio industry;
 
general economic and business conditions, including federal, state and local government budget deficits and spending limitations;
 
the availability, terms and deployment of capital;
 
reliance on contract manufacturers and suppliers;
 
heavy reliance on sales to agencies of the United States government;
 
our ability to utilize deferred tax assets;
 
retention of executive officers and key personnel;
 
our ability to manage our growth;
 
our ability to identify potential candidates for, and consummate, acquisition or investment transactions,
and risks incumbent to being a noncontrolling interest stockholder in a corporation;
 
● 
impact of our investmentcapital allocation strategy;
 
● 
government regulation;
 
our business with manufacturers located in other countries;
 

our inventory and debt levels;
 

protection of our intellectual property rights;
 
fluctuation in our operating results;
 
acts of war or terrorism, natural disasters and other catastrophic events;
 
any infringement claims;
 
data security breaches, cyber attacks and other factors impacting our technology systems;systems;
 
availability of adequate insurance coverage;
 
maintenance of our NYSE American listing; and
 
the effect on our stock price and ability to raise equity capital of future sales of shares of our common stock.
 
We assume no obligation to publicly update or revise any forward-looking statements made in this report, whether as a result of new information, future events, changes in assumptions or otherwise, after the date of this report. Readers are cautioned not to place undue reliance on these forward-looking statements.
 
Reported dollar amounts in the management’s discussion and analysis (“MD&A”) are disclosed in millions or as whole dollar amounts.
 
The following discussion and analysis should be read in conjunction with our Condensed Consolidated Financial Statementscondensed consolidated financial statements and notes thereto appearing elsewhere in this report and the MD&A, Consolidated Financial Statementsconsolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2017.
 

Executive Overview
 
We design, manufacture and market two-way land mobile radios, repeaters, base stations and related components and subsystems.
 
Two-way land mobile radios can be hand-held (portable) or installed in vehicles (mobile). Repeaters expand the range of two-way land mobile radios, enabling them to operate over a wider area. Base station components and subsystems are installed at radio transmitter sites to improve performance by enhancing the signal and reducing or eliminating signal interference and enabling the use of one antenna for both transmission and reception. We incorporate both analog and digital technologies in our products. Our digital technology is compliant with the Project 25 standard of the Association of Public-Safety Communications Officials (“APCO Project 25,” or “P-25”). Later in 2018, we plan to introduce the first model in our line of multi-band products to complement our existing KNG products.
Effective on June 4, 2018, we changed our corporate name from “RELM Wireless Corporation” to “BK Technologies, Inc.,” and our common stock began trading on the NYSE American stock exchange under the new ticker symbol “BKTI” on June 5, 2018. Our stockholders approved the name change at the annual meeting of stockholders held on June 4, 2018.
 
We conduct business under the name BK Technologies, Inc. and offer products under two brand names: BK Radio and RELM. Generally, BK Radio-branded products serve the government and public safety market, while RELM-branded products serve the business and industrial market.
 

Second Quarter Summary
 
Our financial and operating results for the three and six months ended June 30, 2018 improved significantly compared with the same periods last year. Sales grew for both the second quarter and the six month periods of 2018 compared with the same periods last year. Gross profit margins increased during the second quarter of 2017 improved2018 compared with the first quarter of 2017, yielding increases in sales and earnings. Compared with the second quarter last year sales and earnings decreased due to the positive impact in 2016 of sales related to our contractcompared with the U.S. Transportation Security Administration (“TSA”).preceding quarter of 2018. Consequently, we recognized operating income for the first six months of 2018, as compared to an operating loss for the same period last year. Also during the second quarter,first six months of 2018, we declared a dividend of $0.02 per sharegenerated positive cash flow and increased to 1 million the total number of shares authorized under our repurchase program.reduced inventory.
 
For the three months ended June 30, 2017,second quarter of 2018, our sales totaledincreased 26.9% to approximately $10.8$13.7 million, compared with $16.7approximately $10.8 million for the same quarter last year, and $7.4 million for the preceding quarter. Sales of P-25 digital products for the second quarter of 2017 totaled approximately $7.7 million (71.1% of total sales), compared with approximately $10.5 million (63.0% of total sales) for the second quarter last year.
For the six months ended June 30, 2017, net2018, sales totaledincreased 40.0% to approximately $18.1$25.4 million, compared with approximately $28.7$18.1 million for the same period last year. Sales of P-25 digital products for the six months ended June 30, 2017 totaled approximately $13.1 million (72.4% of total sales), compared with approximately $18.4 million (64.0% of total sales) for the same period last year.
Last year’s three and six month periods included sales from our contract with the TSA, which were completed during 2016.
 
Gross profit margins as a percentage of sales for the second quarter ended June 30, 2017 totaledof 2018 grew to approximately 41.8%43.1%, compared with 33.6%41.8% for the second quarter last year. For the six monthsmonth period ended June 30, 2017,2018, gross profit margins as a percentage of sales totaled approximately 37.1%increased to 42.2%, compared with approximately 32.8%37.1% for the same period last year. The comparative changes in gross profit margins were attributed primarily to competitive factors associated with last year’s TSA contract and delivery orders.
 
For the three months ended June 30, 2017,second quarter of 2018, selling, general and administrative expenses (“SG&A”) totaled approximately $3.5$4.6 million (32.7%(33.3% of sales), compared with approximately $3.5 million (21.0%(32.7% of sales) for the same quarter last year. SG&A expenses for the first six months of 2018 totaled approximately $8.6 million (34.0% of sales), compared with approximately $7.0 million (38.4% of sales) for the same period last year.
Operating income for the second quarter ended June 30, 2018, increased 36.8% to approximately $1.3 million, compared with approximately $973,000 for the same quarter last year. For the six months ended June 30, 2017, SG&A expenses totaledmonth period of 2018, operating income increased to approximately $7.0$2.1 million, (38.4% of sales), compared with an operating loss of approximately $6.6 million (22.8% of sales)$233,000 for the same period last year.
 
For the three and six months ended June 30, 2017, other income2018, we recognized an unrealized loss, totaling $55,000 and $352,000, respectively, on our investment in 1347 Property Insurance Holdings, Inc., made through FGI 1347 Holdings, LP, a consolidated variable interest entity. No comparable loss was incurred for last year’s three and six month periods. Also, for the six months ended June 30, 2018, we recognized a loss on the sale of securities totaling approximately $849,000, compared with a $617,000 gain for the same period last year. Other expense for the three and six months ended June 30, 2018 totaled approximately $0.6 million primarily from gains on sales of Iteris common stock (see Note 6 to$58,000 and $225,000, respectively, compared with approximately $60,000 and $147,000 for the Condensed Consolidated Financial Statements on Page 9 of this report).same periods last year.
 
Pretax income for the three months ended June 30, 2017,2018, totaled approximately $1.5$1.2 million, compared with approximately $2.1$1.5 million for the same quarter last year. For the six months ended June 30, 20172018, pretax income totaled approximately $151,000,$686,000, compared with approximately $2.9 million$151,000 for the same period last year.
 

For the three and six months ended June 30, 2017,2018, we recognized income tax expense totaling approximately $222,000,$290,000 and $183,000, respectively, compared with $737,000$222,000 and $101,000, respectively, for the same quarter last year. For the six months ended June 30, 2017 income tax expense totaled approximately $101,000, compared with approximately $1.0 million for the same periodperiods last year. Our income tax expense is largely non-cash due to utilization of our net operating loss carryforwards (“NOLs”).
 
Net income for the three months ended June 30, 20172018 was approximately $1.3 million$947,000 ($0.100.07 per basic and diluted share), compared with approximately $1.4$1.3 million ($0.10 per basic and diluted share) for the same quarter last year. For the six months ended June 30, 2017,2018, net income totaled approximately $50,000,$503,000 ($0.04 per basic and diluted share), compared with approximately $1.9 million$50,000 ($0.00 per basic and diluted share) for the same period last year.
 
As of June 30, 2017,2018, working capital totaled approximately $24.5$23.4 million, of which approximately $12.8$17.7 million was comprised of cash, cash equivalents and trade receivables. As of December 31, 2016,2017, working capital totaled approximately $23.4$26.7 million, of which approximately $14.4$12.7 million was comprised of cash, cash equivalents and trade receivables.

 
Results of Operations
 
As an aid to understanding our operating results for the periods covered by this report, the following table shows selected items from our Condensed Consolidated Statementscondensed consolidated statements of Operationsincome expressed as a percentage of sales:
 
 
Percentage of Sales Three Months Ended
 
 
Percentage of Sales Six Months Ended
 
 
June 30, 2017
 
 
June 30, 2016
 
 
June 30, 2017
 
 
June 30, 2016
 
 
Percentage of SalesThree Months Ended
 
 
Percentage of SalesSix Months Ended
 
 
 
 
 
June 30,
2018
 
 
June 30,
2017
 
 
June 30,
2018
 
 
June 30,
2017
 
Sales
  100.0%
  100.0%
  100.0%
  100.0%
  100.0%
  100.0%
  100.0%
  100.0%
Cost of products
  (58.2)
  (66.4)
  (62.9)
  (67.2)
  (56.9)
  (58.2)
  (57.8)
  (62.9)
Gross margin
  41.8 
  33.6 
  37.1 
  32.8 
  43.1 
  41.8 
  42.2 
  37.1 
Selling, general and administrative expenses
  (32.7)
  (21.0)
  (38.4)
  (22.8)
  (33.3)
  (32.7)
  (34.0)
  (38.4)
Other income (expense)
  5.2 
  0.0 
  2.1 
  0.0 
  (0.7)
  5.2 
  (5.5)
  2.1 
Income before income taxes
  14.3 
  12.6 
  0.8 
  10.0 
  9.1 
  14.3 
  2.7 
  0.8 
Income tax expense
  (2.1)
  (4.4)
  (0.5)
  (3.5)
  (2.1)
  (2.1)
  (0.7)
  (0.5)
Net income
  12.2%
  8.2%
  0.3%
  6.5%
  7.0%
  12.2%
  2.0%
  0.3%
 
Net Sales
 
For the second quarter ended June 30, 2017,2018, net sales totaledincreased 26.9% to approximately $10.8$13.7 million, compared with approximately $16.7$10.8 million for the same quarter last year. Sales of P-25 digital products for the quarter totaled approximately $7.7 million (71.1% of total sales), compared with approximately $10.5 million (63.0% of total sales) for the same quarter last year.
For the six months ended June 30, 2017,2018, net sales totaledincreased 40.0% to approximately $18.1$25.4 million, compared with approximately $28.7$18.1 million for the same period last year. Sales of P-25 digital products for the period totaled approximately $13.1 million (72.4% of total sales), compared with approximately $18.4 million (64.0% of total sales) for the same period last year.
 
The comparative decreaseincrease in total sales and sales of digital products for the threesecond quarter and six-month periods of 2017six months ended June 30, 2018 was attributed primarily to last year’s deliverystate public safety agencies, including orders fromfor the TSA, whichState of California and new state agency customers. Sales to state agencies were not replicated this year. During the second quarter, however, we experienced resurgentsupplemented by demand from somefederal agencies, as well as international customers.
Sales prospects for the remainder of 2018 and into next year appear promising as we look to grow our market share, particularly in the state and federal government agencies aslocal arena. Accordingly, we are investing in additional sales increased approximately 45.8% from the first quarter of 2017. Comparedand marketing resources to last year’s second quarter, sales to agencies other than the TSA increased approximately 34.3%.capitalize on new opportunities.
 
We also believe our funnel of future sales prospects is healthy. To maximize the funnel and drive sales growth moving forward, we added sales resources during the first six months of 2017.

Cost of Products and Gross Profit Margin
 
Gross profit margin as a percentage of sales for the second quarter ended June 30, 2017 was 41.8%2018 increased to 43.1%, compared with 33.6%41.8% for the same quarter last year. For the six months ended June 30, 2017,2018, gross profit margin as a percentage of sales was 37.1%margins increased to 42.2%, compared with 32.8%37.1% for the same period last year.
 
Our cost of products and gross profit margin are derived primarily from material, labor and overhead costs, product mix, manufacturing volumes and pricing. DuringThe improvement in gross profit margins for both the second quarter of 2017 theand six month period was attributed primarily to increased sales combined with a more favorable mix of product sales improved relative to the first quarter. Also, as a result ofsales. Additionally, increased production volumes weenabled us to more fully utilizedeffectively utilize and absorbedabsorb our base of manufacturing overhead expenses. Forexpenses, and we are realizing benefits associated with manufacturing and quality improvement programs. Comparatively, last year’s second quarterfirst two quarters included certain product enhancement expenses and six-month period, gross profit margins were negatively impacted by competitive factors associated with the TSA business.discontinuation of a product development initiative.
 
During the quarter, we launched an initiative to evaluate and improve all aspects of our manufacturing, including quality, costs and efficiencies. We believe this initiative will yield benefits in future quarters. We continue to utilize contract manufacturing relationships for production efficiencies and to manage material and labor costs. We anticipate that our current contract manufacturing relationships or comparable alternatives will be available to us in the future. We may encounter product cost and competitive pricing pressures in the future. However, the extent of their impact on gross margins, if any, is uncertain.
 

Selling, General and Administrative Expenses
 
SG&A expenses consist of marketing, sales, commissions, engineering, product development, management information systems, accounting, headquarters and non-cash share-based employee compensation expenses.
 
SG&A expenses for the second quarter ended June 30, 2018 totaled approximately $4.6 million, or 33.3% of 2017 were materially unchanged from the same quarter last year, totalingsales, compared with approximately $3.5 million, or 32.7% and 21.0% of total sales, for 2017 and 2016, respectively.the second quarter last year. For the six months ended June 30, 2017,2018, SG&A expenses totaled approximately $8.6 million, or 34.0% of sales, compared with approximately $7.0 million, (38.4%or 38.4% of sales), compared with $6.6 million (22.8% of sales)sales, for the same period last year.
 
Engineering and product development expenses for the second quarter of 20172018 totaled approximately $1.2$1.9 million (11.1%(13.8% of total sales), compared with $1.1$1.2 million (6.9%(11.1% of total sales) for the same quarter last year. For the six-month period, engineering and product development expenses totaled approximately $2.1$3.7 million (11.8%(14.6% of sales), compared with approximately $2.0$2.1 million (7.1%(11.6% of sales) for the same period last year. Contributing to theThe increase in engineering expenses werewas driven by costs related to new product development projects.development.
 
Marketing and selling expenses for the second quarter of 20172018 totaled approximately $1.3$1.6 million (11.7% of sales) compared with approximately $1.5$1.3 million (9.0%(12.0% of sales) for the second quarter last year. For the six-month period, marketing and selling expenses totaled approximately $2.6$2.9 million (14.2%(11.4% of sales), compared with $2.8$2.6 million (9.8%(14.4% of sales) for the same period last year. The decreaseincrease for both periods is attributed primarily to sales commissions and incentive compensation directly related to sales performance. These decreases were partially offset by expenses related to new sales staff.
 
General and administrative expenses for the second quarter of 20172018 totaled approximately $1.1$1.0 million (9.9%(7.3% of total sales), compared with approximately $861,000 (5.2%$1.1 million (10.2% of total sales) for the same quarter last year. For the six-month period, general and administrative expenses totaled approximately $2.2$2.1 million (12.3%(8.2% of sales), compared with $1.7$2.2 million (5.9%(12.3% of sales) for the same period last year. The increases weredecrease in costs for both periods was attributed primarily to one-time costs incurred last year related to certain headquarters professional fees, as well as approximately $0.4 millionchanges in non-recurring first quartersenior leadership. Those cost decreases were partially offset by expenses associated with changes in senior management.changing the Company’s name.
 
Operating Income (Loss)
 
Operating income for the second quarter ended June 30, 2017 totaled2018 increased 36.8% to approximately $1.0$1.3 million (9.1%(9.7% of sales), compared with approximately $2.1 million (12.6%$973,000 (9.0% of sales) for the same quarter last year. For the six-month period, we recognizedsix months ended June 30, 2018, operating income increased to approximately $2.1 million (8.2% of sales), compared with an operating loss of approximately $233,000 compared with operating income(1.3% of approximately $2.9 millionsales) for the same period last year. The decreaseincrease in operating income for both periodsthe quarter was attributed primarily to the impact of last year’s sales to the TSAgrowth and relatedimproved gross profit margins, which were partially offset by increased product costs as well as certain SG&A expenses, some of which are considered non-recurring.

development expenses.
 
Other Income (Expense)
 
We realizedrecorded net interest income of $10,000 and $1,000$19,000 for the quarterssecond quarter ended June 30, 2017 and 2016, respectively.2018, compared with $10,000 for the second quarter last year. For the six-month periodssix months ended June 30, 2017 and 2016, we earned net2018, interest income oftotaled approximately $35,000, compared with approximately $18,000 and $2,000, respectively.for the same period last year. Interest income increased primarily as a result of our higher cash balance. Interest expense may be incurred from time to time on outstanding borrowings under our revolving credit facility and earn interest income on our cash balances. The interest rate on such revolving credit facility as of June 30, 20172018 was the Wall Street Journal prime rate plus 25 basis points (4.50%(5.25% as of June 30, 2017)2018).
 
DuringFor the three and six months ended June 30, 2018, we recognized an unrealized loss of approximately $55,000 and $352,000, respectively, on our investment in 1347 Property Insurance Holdings, Inc. (Nasdaq: PIH). In March and May 2018, we indirectly purchased 477,282 shares of common stock of PIH, for approximately $3.7 million, through an investment in FGI 1347 Holdings, LP, a consolidated variable interest entity of which we are the sole limited partner. For the three and six months ended June 30, 2017, we sold 163,221 sharesrecognized a gain of Iteris, realizing a gain$617,000 on the sales of available-for-sales securities.

During the first six months ended June 30, 2018, we sold 1,317,503 shares of Iteris, Inc., which cost approximately $0.6$2.4 million, (See Note 6 to the Condensed Consolidated Financial statements on page 9for approximately $8.3 million, and recognized a loss of this report). There were no comparable gains recorded for the same period last year.approximately $849,000.
 
For the six-month period of 2017, partially offsettingthree and six months ended June 30, 2018, we recognized other expenses totaling approximately $58,000 and $225,000, respectively, compared with approximately $60,000 and $147,000, respectively, for the aforementioned gain on sale of securities,same periods last year. These expenses were primarily attributed to exchange losses related to sales under a Canadian dollar-denominated contract. Also during last year’s first quarter, we recorded a non-recurring loss of approximately $104,000 on the disposal of assets related to a discontinued product initiative. We also recognized an exchange loss related to sales under a Canadian-dollar-denominated contract. No comparable expenses were incurred during the same period last year.
 
Income Taxes
 
We recorded income tax expense of approximately $222,000$290,000 and $183,000, respectively, for the second quarterthree and six months ended June 30, 2017,2018, compared with approximately $737,000$222,000 and $101,000, respectively, for the same quarterperiods last year. For the six-month period of 2017 we recorded income tax expense of approximately $101,000 compared with approximately $1.0 million for the same period last year.
Our income tax provision is based on management’s estimate of the effective tax rate for the full year.  The tax provision in any period will be affected by, among other things, permanent, as well as temporary differences in the deductibility of certain items, in addition to changes in tax legislation. As a result, we may experience significant fluctuations in the effective book tax rate (that is, its tax expense isdivided by pre-tax book income) from period to period.  For 2018, we generally expects its effective tax rate to decline compared to 2017, primarily non-cash.due to the implementation of the Tax Cuts and Jobs Act enacted in December 2017, which, among other things, reduced the U.S. federal corporate tax rate from 35% to 21%.
 
As of June 30, 2017,2018, our net deferred tax assets totaled approximately $1.9$3.14 million, and are primarily composed of NOLs, offset by deferred tax liabilities of $1,374 primarily derived from the unrealized gain on available-for-sale securities.NOLs.  These NOLs total $1.6approximately $4.42 million for federal and $11.9$13.32 million for state purposes, with expirations starting in 2018 through 2030.
 
In order to fully utilize the net deferred tax assets, we will need to generate sufficient taxable income in future years to utilize our NOLs prior to their expiration. We analyze all positive and negative evidence to determine if, based on the weight of available evidence, we are more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon our conclusions regarding, among other considerations, estimates of future earnings based on information currently available and current and anticipated customers, contracts and product introductions, as well as historical operating results and certain tax planning strategies.
 
Based on our analysis of all available evidence, both positive and negative, we have concluded that we do not have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax asset. Management assertsestimates that as of June 30, 2018, it is more likely than not that approximately $129,000$83,000 of the deferred tax asset will not be realized due to the inability to generate sufficient Florida taxable income in the necessary period to fully utilize the Florida NOLs. We cannot presently estimate what, if any, changes to the valuation of our deferred tax assets may be deemed appropriate in the future. If we incur future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of June 30, 2017.2018.
 
Liquidity and Capital Resources
 
For the six months ended June 30, 2017,2018, net cash provided by operating activities totaled approximately $711,000, compared with cash used in operating activities totaledof approximately $1.4 million, compared with cash provided by operating activities of approximately $7.1 million for the same period last year.  Cash used inprovided by operating activities was primarily related to trade accounts receivable,net income, adjusted by unrealized loss on investment in securities, and a decrease in inventories, and accrued compensation and related taxeswhich were partially offset by a decrease in accounts payable and accrued warranty expense.an increase in trade accounts receivable.
 

 
For the six months ended June 30, 2017,2018, we had net income of approximately $50,000$503,000, compared with net income of approximately $1.9 million$50,000 for the same period last year. Net inventories decreased during the six months ended June 30, 2018 by approximately $1.6 million, compared with an increase of $843,000 for the same period last year. The 2018 decrease was primarily attributed to an increase in sales. The loss on investment in securities for the six months ended June 30, 2018 totaled approximately $1.2 million, compared with a gain of approximately $617,000 for the same period last year. For additional information pertaining to our investment in securities, refer to Notes 1 and 6 to the condensed consolidated financial statements found on pages 7 and 9, respectively, of this report. Accounts receivable increased approximately $1.9$1.5 million during the six months ended June 30, 2017,2018, compared with $1.8$1.9 million for the same period last year, reflecting sales that were consummated later in the respective quarter that had not yet completed their collection cycle. Net inventories increased during the six months ended June 30, 2017 by approximately $843,000 primarily due to material purchases. For the first six months ended June 30, 2016, inventories decreased approximately $320,000. Accrued compensation and related taxes decreased by approximately $838,000 during the first six months of 2017 as performance incentives were paid. For the same period last year, accrued compensation and related taxes increased by approximately $676,000. Accounts payable for the six months ended June 30, 2017 increased2018, decreased approximately $899,000,$2.4 million, compared with $2.3 millionan increase of approximately $899,000 for the same quarterperiod last year, primarily due to timing of payments to material purchases.suppliers. Depreciation and amortization totaled approximately $471,000$439,000 for the six months ended June 30, 2017,2018, compared with approximately $456,000$471,000 for the same period last year.
 
Cash provided by investing activities for the six months ended June 30, 20172018 totaled approximately $4.0 million, compared with approximately $450,000 which was primarily related to proceeds totaling approximately $897,000for the same period last year. Proceeds from the sale of available-for-sale securities partially offset by purchases of equipment totalingtotaled approximately $447,000. For$8.3 million for the six months ended June 30, 2018, compared with approximately $897,000 for the same period last yearyear. We utilized approximately $481,000$3.7 million for an investment in FGI 1347 Holdings, LP. There was usedno comparable investment for the investment in Iteris common stock (see Note 6 to our Condensed Consolidated Financial Statements in this report),same period last year. For the six months ended June 30, 2018, purchases of property, plant and $962,000 was utilizedequipment totaled approximately $569,000, compared with approximately $447,000 for the purchase of manufacturing and engineering equipment.same period last year.
 
For the six months ended June 30, 2017,2018, approximately $2.5$1.2 million was used in financing activities, primarily related to our capital return program, which included quarterly dividends totaling approximately $2.5 million$544,000 and stock repurchases totaling approximately $217,000. We$616,000. For the same period last year, approximately $2.5 million was used to pay dividends and approximately $217,000 was used for stock repurchases. For the same period last year, we also received approximately $183,000 provided byfrom the issuance of common stock upon the exercise of stock options. For the same period last year, approximately $1.2 million was used to pay dividends.
 
We have a secured revolving credit facility with Silicon Valley Bank with maximum borrowing availability of $1.0 million and a maturity date of December 27, 2017.26, 2018. As of June 30, 2017,2018, and the date of this report, we were in compliance with all covenants under the loan and security agreement, as amended, governing the revolving credit facility. For a description of such covenants and the other terms and conditions of the loan and security agreement, as amended, reference is made to Note 65 (Debt) of our Consolidated Financial Statementsconsolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2017.
 
As of June 30, 2017,2018, and the date of this report, there were no borrowings outstanding under the revolving credit facility. As of June 30, 2017,2018, and the date of this report, there was $1.0 million of borrowing available under the revolving credit facility.
 
Our cash and cash equivalents balance at June 30, 20172018 was approximately $7.5$10.7 million.  We believe these funds combined with anticipated cash generated from operations and borrowing availability under our revolving credit facility are sufficient to meet our working capital requirements for the foreseeable future. However, the financial and economic conditions could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity and financial condition. For a description of these risks, see “Item 1A. Risk Factors” set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2017.
 

Critical Accounting Policies
 
In response to the SEC’sSecurities and Exchange Commission’s financial reporting release, FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, we have selected for disclosure our revenue recognition process and our accounting processes involving significant judgments, estimates and assumptions.  These processes affect our reported revenues and current assets and are, therefore, critical in assessing our financial and operating status.  We regularly evaluate these processes in preparing our financial statements.  The processes for revenue recognition, allowance for collection of trade receivables, allowance for excess or obsolete inventory, software development and income taxes involve certain assumptions and estimates that we believe to be reasonable under present facts and circumstances. These estimates and assumptions, if incorrect, could adversely impact our operations and financial position.  The Company adopted ASU No. 2014-09, "Revenue from Contracts with Customers", and all the related amendments (collectively “Topic 606”) in the first quarter of 2018 and applied the modified retrospective approach.  Under Topic 606, revenue is recognized when control of promised goods and services is transferred to customers, and the amount of revenue recognized reflects the consideration to which an entity expects to be entitled in exchange for the goods and services transferred.  The adoption of Topic 606 did not have, and is not expected to have, a material effect on the timing or amount of revenue recognized as compared with the Company’s previous revenue recognition practices because the Company’s primary source of revenues is from shipments of products.  
There were no other changes to our critical accounting policies during the quarter ended June 30, 2017,2018, as described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.

2017.
 
Item 4.    
CONTROLS AND PROCEDURES
 
Evaluation of Disclosure Controls and Procedures
 
Our Chief Executive OfficerPresident (who serves as our principal executive officer) and Chief Financial Officer (who serves as our principal financial and accounting officer) have evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities Exchange Act of 1934 (“Securities Exchange Act”) Rules 13a-15(e) and 15d-15(e)) as of June 30, 2017.2018. Based on this evaluation, they have concluded that our disclosure controls and procedures were effective as of June 30, 2017.2018.
 
Changes in Internal Control over Financial Reporting
 
During the three months ended June 30, 2017,2018, there were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Securities Exchange Act Rules 13a-15 or 15d-15 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
 

PART II-OTHER INFORMATION
 
 
 
Item 1.
LEGAL PROCEEDINGS

Reference is made to Note 10 (Commitments and Contingencies) of the Company’s Condensed Consolidated Financial Statements included elsewhere in this report for the information required by this Item.PART II-OTHER INFORMATION
 
Item 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 
Issuer Purchases of Equity Securities
 
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)
 
04/01/17-04/30/17
  3,600 
 $5.17 
  3,600 
  446,678 
05/01/17-05/31/17
  10,100 
 $4.80 
  10,100 
  436,578 
06/01/17- 06/30/17
  13,100 
 $3.93 
  13,100 
  923,478(2)
Total
  26,800 
 $4.63 
  26,800 
    
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)
 
04/01/18-04/30/18
  21,084 
 $3.92 
  21,084 
  693,602(2)
 
05/01/18-05/31/18
  23,635 
 $3.72 
  23,635 
  669,967 
 
06/01/18-06/30/18
  22,721 
 $3.77 
  22,721 
  647,246 
 
Total
  67,440 
 $3.80 
  67,440 
 
    
 
(1)
Average price paid per share of common stock repurchased is the executed price, including commissions paid to brokers.
(2)
On May 19, 2016, theThe Company announced that on May 18, 2016, its Board of Directors approved thehas a repurchase program of up to 500,0001 million shares of the Company’s common stock that can be purchased, from time to time, 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”).Act. The Repurchase Programrepurchase program has no termination date. On June 15, 2017, the Company announced that its Board of Directors approved the increase in the Repurchase Program from 500,000 to 1,000,000 shares of the Company’s common stock.

 
Item 6.    
EXHIBITS
 
Exhibits required to be filed by Item 601 of Regulation S-K are listed in the Exhibit Index below.

Exhibit Index
 
Exhibit
Number
DescriptionDescription
   
Articles of Incorporation(1)
Certificate of Amendment to Articles of Incorporation(2)Incorporation (2001)(2)
Certificate of Amendment to Articles of Incorporation (2018)(3)
Second Amended and Restated By-Laws(3)Bylaws(4)
Exhibit 3(iv)Amendment to By-Laws, dated December 9, 2015(4)
+Exhibit 10.1RELM Wireless Corporation 2017 Incentive Compensation Plan (5)
+Exhibit 10.2Form of Stock Option Agreement under the RELM Wireless Corporation 2017 Incentive Compensation Plan (6)
+Exhibit 10.3Form of Restricted Share Agreement under the RELM Wireless Corporation 2017 Incentive Compensation Plan (7)
+Exhibit 10.4Form of Restricted Stock Unit Agreement under the RELM Wireless Corporation 2017 Incentive Compensation Plan (8)
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 pursuantpurs  uant 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)
Exhibit 101.INSXBRL Instance Document
Exhibit 101.SCHXBRL Taxonomy Extension Schema Document
Exhibit 101.CALXBRL Taxonomy Extension Calculation Linkbase Document
Exhibit 101.LABXBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PREXBRL Taxonomy Extension Presentation Linkbase Document
Exhibit 101.DEFXBRL Taxonomy Definition Linkbase Document
+Each management contract or compensatory plan or arrangement.
 
(1) 
Incorporated by reference from Exhibit 3(i) to the Company'sCompany’s Annual Report on Form 10-K for the year ended December 31, 1997.
 
(2) 
Incorporated by reference from Exhibit 10.3 to the Company'sCompany’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2001.
 
(3) 
Incorporated by reference from Exhibit 3(iii)3.1 to the Company’s Current Report on Form 8-K filed May 29, 2013.June 4, 2018.
 
(4) 
Incorporated by reference from Exhibit 3.13.2 to the Company’s Current Report on Form 8-K filed December 10, 2015.June 4, 2018.
 
(5) 
Incorporated by reference from Exhibit 4.5 to the Company’s Registration Statement on Form S-8 filed on June 15, 2017.
(6) 
Incorporated by reference from Exhibit 4.6 to the Company’s Registration Statement on Form S-8 filed on June 15, 2017.
(7) 
Incorporated by reference from Exhibit 4.7 to the Company’s Registration Statement on Form S-8 filed on June 15, 2017.
(8) 
Incorporated by reference from Exhibit 4.8 to the Company’s Registration Statement on Form S-8 filed on June 15, 2017.
 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 RELM WIRELESS CORPORATIONBK TECHNOLOGIES, INC.
 (The “Registrant”)
  
Date: August 1, 20172018By:/s/ Timothy A. Vitou                                                                  
 
Timothy A. Vitou
President
(Principal executive officer and duly
authorized officer)
  
Date: August 1, 20172018By:/s/ William P. Kelly                                                                 
 
William P. Kelly
Executive Vice President and
Chief Financial Officer
(Principal financial and accounting
officer and duly authorized officer)
  

 
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