Indicate by check mark whether the registrantregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ⬜☐

Indicate by check mark whether the registrant has submitted electronically 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.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⬜☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

There were 13,505,53512,711,958 shares of common stock, $0.60 par value, of the registrant outstanding at July 24, 2018.26, 2019.

The condensed consolidated balance sheet as of June 30, 2018,2019, the condensed consolidated statements of income and comprehensive incomeoperations for the three and six months ended June 30, 20182019 and 20172018, and the condensed consolidated statements of cash flows for the six months ended June 30, 20182019 and 20172018 have been prepared by BK Technologies Inc.Corporation (the “Company” or “we”), and are unaudited. On March 28, 2019, BK Technologies, Inc., the predecessor of BK Technologies Corporation, implemented a holding company reorganization, which resulted in BK Technologies Corporation becoming the direct parent company of, and the successor issuer to, BK Technologies, Inc. For the purpose of this report, references to “we” or the “Company” or its management or business at any period prior to the holding company reorganization (March 28, 2019) refer to those of BK Technologies, Inc. as the predecessor company and its subsidiaries and thereafter to those of BK Technologies Corporation and its subsidiaries, except as otherwise specified or to the extent the context otherwise indicates. In the opinion of management, all adjustments, which include normal recurring adjustments, necessary for a fair presentation have been made. All intercompany transactions and balances have been eliminated in consolidation. The condensed consolidated balance sheet at December 31, 20172018 has been derived from the Company’s audited consolidated financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted. It is suggested that these condensed consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017,2018, as filed with the Securities and Exchange Commission.Commission (“SEC”). The results of operations for the three and six months ended June 30, 20182019 are not necessarily indicative of the operating results for a full year.

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 percent20% to 50 percent)50%), the Company’s investment is accounted for under the equity method of accounting. If the Company does not have a controlling financial interest in, or exert significant influence over, an entity, the Company accounts for its investment at fair value, if the fair value option was elected, or at cost.

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

The Company’s financial instruments consist of cash and cash equivalents, trade accounts receivable, investment in securities, accounts payable, accrued expenses and other liabilities. As of June 30, 20182019 and December 31, 2017,2018, the carrying amount of cash and cash equivalents, trade accounts receivable, accounts payable, accrued expenses and other liabilities approximated their respective fair value due to the short-term nature and maturity of these instruments.

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

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.

Pursuant to the Company’s capital return program, the Company’s Board of Directors declared a quarterly dividend of $0.02 per share of the Company’s common stock on June 4, 201810, 2019 to stockholders of record as of July 2, 2018.1, 2019. These dividends were paid on July 16, 2018.15, 2019.

Effective on June 4, 2018,On July 11, 2019, the Company changedannounced that its nameoperating subsidiary received an order totaling approximately $1,600 for KNG-Series radios and related accessories from “RELM Wireless Corporation”a new California State customer. The order was for KNG-Series Digital P-25 portable and mobile radios with accessories, and was fulfilled in the second quarter of 2019.

On July 10, 2019, the Company announced that its operating subsidiary received an order totaling approximately $3,100 from the U.S. Forest Service (USFS). The order was for KNG-Series Digital P-25 portable and mobile radios with accessories. The order is expected to “BK Technologies, Inc.” The Company’s stock began trading onbe fulfilled in the NYSE American stock exchange under the new ticker symbol “BKTI” on June 5, 2018. Stockholders approved the name change at the annual meetingthird quarter of stockholders held on June 4, 2018.2019.

The allowance for doubtful accounts on trade receivables was approximately $50 on gross trade receivables of $7,033$5,143 and $5,574$5,771 at June 30, 20182019 and December 31, 2017,2018, respectively. This allowance is used to state trade receivables at a net realizable value or the amount that the Company estimates will be collected of the Company’s gross trade receivables.

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

Allowances for slow-moving, excess, or obsolete inventory are used to state the Company’s inventories at the lower of cost or net realizable value. The allowances were approximately $758$678 at June 30, 2018,2019, compared with approximately $789$629 at December 31, 2017.2018.

IncomeThe Company recorded an income tax expense totalingand benefit, respectively, of approximately $290$154 and $183 has been recorded$201 for the three and six months ended June 30, 2018,2019, respectively, compared with $222an income tax expense of approximately $290 and $101,$183, respectively, for the same periods last year.

As of June 30, 2018 and December 31, 2017,2019, the Company’s net deferred tax assets totaled approximately $3,139$3,659, and $3,317, respectively,were primarily derived from research and are primarily composed ofdevelopment tax credits, accrued expenses and net operating loss carryforwards (“NOLs”) and research and development costs and tax credits.  As of June 30, 2018, these NOLs total approximately $4,422 for federal and $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.years. The Company analyzesanalyzed all positive and negative evidence to determine if, based on the weight of available evidence, the Companyit is more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon the Company’s conclusions regarding, among other considerations, estimates of future earnings based on information currently available and current and anticipated customers, contracts and product introductions, as well as historical operating results and certain tax planning strategies.

Based on management’sthe analysis of all available evidence, both positive and negative, the Company’s managementCompany has concluded that the Company does not haveit has 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, 2018, it is more likely than not that approximately $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 additionala valuation allowance related to the deferred tax assets recognized as of June 30, 2018.2019.

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

Affiliates of Fundamental Global Investors, LLC serve as the general partner and the investment manager of FGI 1347 Holdings, LP, and the Company is the sole limited partner. As of June 30, 2018,2019, the Company and the affiliates of Fundamental Global Investors, LLC, including without limitation Ballantyne Strong, Inc., beneficially owned in the aggregate 2,639,3622,714,362 shares of PIH’s common stock, representing approximately 44.1%45.1% of PIH’s outstanding shares. Fundamental Global with its affiliates is the largest stockholder of the Company. Mr. Kyle Cerminara, Chairman of the Company’s Board of Directors, is Chief Executive Officer, Co-Founder and Partner of Fundamental Global Investors, LLC and serves as Chief Executive Officer and Chairman of the Board of Directors of Ballantyne Strong. Mr. Lewis M. Johnson, Co-Chairman of the Company,Company’s Board of Directors, is President, Co-Founder and Partner of Fundamental Global Investors, LLC and serves as a directorCo-Chairman of the Board of Directors of Ballantyne Strong. Messrs. Cerminara and Johnson also serve as Chairman and Co-Chairman, respectively, of the Board of Directors of PIH.

The changes in condensed consolidated stockholders’ equity for the three and six months ended June 30, 2019 and 2018 are as follows:

The following table sets forth the computation of basic and diluted (loss) income per share:

Approximately 435,000564,500 stock options and 3,768116,667 restricted stock units for the three and six months ended June 30, 2018,2019, and 178,500435,000 stock options and 9,0503,768 restricted stock units granted for the three and six months ended June 30, 2017,2018, were excluded from the calculation because they were anti-dilutive.

The Company has an employee and non-employee director share-based incentive compensation plan. Related to these programs, the Company recorded non-cash share-based employee compensation expense of $17$37 and $38$68 for the three and six months ended June 30, 2018,2019, respectively, compared with $14$17 and $16,$38, 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, 20182019 was calculated using certain assumptions. Such assumptions are described more comprehensively in Note 10 (Share-Based Employee Compensation) of the Notes to the Company’s Consolidated Financial Statementsconsolidated financial statements included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2017.2018.

A summary of activity under the Company’s stock option plans during the six months ended June 30, 20182019 is presented below:

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 vestvested on June 4, 2019, subject to continued service through such vesting date. 2019.

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

The Company recorded non-cash restricted stock unit compensation expense of $39$32 and $73$74 for the three and six months ended June 30, 2018,2019, respectively, compared with $6$39 and $0$73, respectively, for the same periods last year.

From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of its business. On March 28, 2017, The Sales Group, Inc. (“TSG”) filed a lawsuit in the U.S. District Court for the Central District of California against the Company. TSG was a sales representative of the Company that the Company terminated in March 2017. TSG assertedThere were no pending material claims against the Company for alleged breach of oral contract, violation of the California and Arizona sales representative statutes and an accounting of alleged unpaid sales commissions. TSG’s complaint sought damages in the amount of $6,090 for alleged unpaid past and future sales commissions. On April 3, 2017, counsel for TSG sent the Company a letter outlining additional alleged grounds for recovery against the Company and offering to settle the litigation in exchange for the continued payment of sales commissions to TSG for a negotiated period, a buyout of TSG’s alleged rights for a negotiated sum or reinstatement of TSG for a period of at least 2.5 years with commission rates equal to those in effect at the time of TSG’s termination. The matter was mediated on November 14, 2017, during which the parties agreed to a settlement. On December 19, 2017, the Company entered into a settlement agreement with TSG, pursuant to which TSG agreed to dismiss with prejudice its lawsuit filed against the Company. Pursuant to the settlement agreement, the Company agreed to pay an amount of $900 to TSG on or before December 31, 2017. The Company also agreed to pay to TSG commissions, at the rates in effect since February 7, 2013, on all orders for the Company’s products received and accepted by the Company from the states of Arizona, California, Nevada and Hawaii from January 1, 2018 through December 31, 2018, other than for (i) sales of the Company’s products to federal government agencies and offices, (ii) sales of the Company’s products to other end-users, excepting state and local government agencies and offices, and (iii) sales of parts or service, including warranty service. In addition, if at any time on or before December 31, 2018, the Company completes a change-in-control transaction, then the Company will pay to TSG an amount equal to $2,000, less the amount of commissions paid by the Company with respect to 2018,legal matters as described above. The settlement agreement settled all claims raised by TSG in its lawsuit against the Company. In December 2017, the Company recorded an estimated commission amount of approximately $536. For the six months ended June 30, 2018, the Company paid $231 in commissions to TSG. As of June 30, 2018, the Company estimated and recorded an additional commission amount of approximately $290 for the remaining six months of 2018.2019.

As of June 30, 2018,2019, the Company had purchase orders to suppliers for inventory of approximately $6,380.$12,131.

Sales to the United States government agencies represented approximately $4,776 (35.0%$4,021 (30.2%) and $8,769 (34.5%$9,421 (45.0%) of the Company’s net total sales for the three and six months ended June 30, 2018,2019, respectively, compared with approximately $3,018 (28.0%$4,776 (35.0%) and $5,935 (32.7%$8,769 (34.5%), respectively, for the same periods last year. Accounts receivable from agencies of the United States government were $1,260$690 as of June 30, 2018,2019, compared with approximately $924$1,260 at the same date last year.

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

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

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

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

We believe that it is important to communicate our future expectations to our security holders and to the public. This report, therefore, contains statements about future events and expectations which are “forward-looking statements” within the meaning of Sections 27A of the Securities Act of 1933 and 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), including the statements about our plans, objectives, expectations and prospects. You can expect to identify these statements by forward-looking words such as “may,” “might,” “could,” “would,” “should,” “will,” “anticipate,” “believe,” “plan,” “estimate,” “project,” “expect,” “intend,” “seek”“seek,” “are encouraged” and other similar expressions. Any statement contained in this report that is not a statement of historical fact may be deemed to be a forward-looking statement. Although we believe that the plans, objectives, expectations and prospects reflected in or suggested by our forward-looking statements are reasonable, those statements involve risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements, and we can give no assurance that our plans, objectives, expectations and prospects will be achieved.

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

We assume no obligation to publicly update or revise any forward-looking statements made in this report, whether as a result of new information, future events, changes in assumptions or otherwise, after the date of this report. Readers are cautioned not to place undue reliance on these forward-looking statements.

Reported dollar amounts in the management’s discussion and analysis (“MD&A”) are disclosed in millions or as whole dollar amounts.

The following discussion and analysis should be read in conjunction with our condensed consolidated financial statements and notes thereto appearing elsewhere in this report and the MD&A, consolidated financial statements and notes thereto appearing in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.2018.

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

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

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

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

OurOverall, our financial and operating results for the three and six months ended June 30, 2018 improved significantly2019 declined 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 duringFor the second quarter of 2018 compared with the2019, sales were within 97.3% of sales for last year’s second quarter last year and compared with the preceding quarter of 2018. Consequently, we recognized operating incomequarter. Sales for the first six months of 2018, as compared to an operating lossended June 30, 2019 were 17.6% below sales for the same period last year, which was attributed primarily to sales in the first quarter of 2019. Gross profit margins for the second quarter of 2019 were comparable to the second quarter last year. AlsoFor the six month period of 2019, however, gross profit margins were adversely impacted by lower sales and manufacturing levels during the first quarter of 2019. Engineering and product development expenses for the second quarter and six monthsmonth periods of 2018,2019 exceeded expenses for the comparable periods last year. The second quarter of 2019 yielded operating income; an improvement from an operating loss in the first quarter of 2019. For the six month period of 2019, we generated positive cash flow and reduced inventory.recognized an operating loss compared with operating income for the same period last year.

For the second quarter of 2018,2019, our sales increased 26.9%decreased 2.7% to approximately $13.7$13.3 million, compared with approximately $10.8$13.7 million for the same quarter last year. For the six months ended June 30, 2018,2019, sales increased 40.0%decreased 17.6% to approximately $25.4$20.9 million, compared with $18.1$25.4 million for the same period last year.

Gross profit margins as a percentage of sales for the second quarter of 2018 grew to2019 were approximately 43.1%42.9%, compared with 41.8%43.1% for the second quarter last year. For the six month period ended June 30, 2018,2019, gross profit margins as a percentage of sales increaseddecreased to 42.2%38.9%, compared with 37.1%42.2% for the same period last year.

For the second quarter of 2018, selling,Selling, general and administrative expenses (“SG&A”) for the second quarter of 2019 totaled approximately $4.6$5.7 million (33.3%(42.7% of sales), compared with approximately $3.5$4.6 million (32.7%(33.3% of sales) for the same quarter last year. SG&A expenses for the first six months of 20182019 totaled approximately $8.6$10.4 million (34.0%(49.8% of sales), compared with approximately $7.0$8.6 million (38.4%(34.0% of sales) for the same period last year.

Operating income forFor the second quarter ended June 30, 2018, increased 36.8% toof 2019, we recognized operating income of approximately $20,000, compared with approximately $1.3 million compared with approximately $973,000 for the same quarter last year. For the six month period of 2018, operating income increased to approximately $2.1 million, compared with2019, we reported an operating loss of approximately $233,000$2.3 million, compared with operating income of approximately $2.1 million for the same period last year.

For the three and six months ended June 30, 2018,second quarter of 2019, we recognized an unrealized loss totaling $55,000 and $352,000, respectively,$148,000 on our investment in 1347 Property Insurance Holdings, Inc., made through FGI 1347 Holdings, LP, a consolidated variable interest entity. No comparableThis compares with an unrealized loss was incurredof $55,000 on the investment for the second quarter last year. For the six month period ended June 30, 2019, we recognized unrealized gain of approximately $444,000, compared with an unrealized loss of $352,000 for last year’s three and six month periods.period. 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 $58,000 and $225,000, respectively, compared with approximately $60,000 and $147,000 for the same periods last year.$849,000.

As of June 30, 2018,2019, working capital totaled approximately $23.4$17.1 million, of which approximately $17.7$12.5 million was comprised of cash, cash equivalents and trade receivables. As of December 31, 2017,2018, working capital totaled approximately $26.7$21.0 million, of which approximately $12.7$17.0 million was comprised of cash, cash equivalents and trade receivables.

As an aid to understanding our operating results for the periods covered by this report, the following table shows selected items from our condensed consolidated statements of incomeoperations expressed as a percentage of sales:

For the second quarter ended June 30, 2018,2019, net sales increased 26.9% tototaled approximately $13.7$13.3 million, compared with approximately $10.8$13.7 million for the same quarter last year. ForSales for the six months ended June 30, 2018, net sales increased 40.0% to2019 totaled approximately $25.4$20.9 million, compared with approximately $18.1$25.4 million for the samesix month period last year.

The increase in totalNet sales for the second quarter of 2019 were comparable with sales for the second quarter last year, and six months ended June 30, 2018increased 73.9% ($5.7 million) from the first quarter this year, which was attributed primarilyadversely impacted by the shutdown of the federal government in the United States and sluggish sales to state and local government agency customers. Subsequent to the shutdown, orders from federal government customers improved during the second quarter. Sales to state public safety agencies also improved during the second quarter, including orders fora previously announced order from the Statestate of California, and new state agency customers. Sales to state agencies were supplemented by demand from federal agencies, as well as international customers.which was fulfilled during the second quarter of 2019.

SalesWe are encouraged by our funnel of sales prospects, for the remainder of 2018 and into next year appear promising as we look to grow our market share, particularlyincluding potential new customers in thefederal, state and local arena. Accordingly, we are investing in additionalpublic safety agencies. Our sales and marketing resources have been expanded and strengthened in order to capitalize on new opportunities.these opportunities in the future.

Gross profit marginmargins as a percentage of sales for the second quarter ended June 30, 2018 increased to 43.1%2019 were approximately 42.9%, compared with 41.8%43.1% for the same quarter last year, and improved from 31.9% for the first quarter this year. For the six monthsmonth period ended June 30, 2018,2019, gross profit margins increased to 42.2%were approximately 38.9%, compared with 37.1%42.2% for the same period last year.

Our cost of products and gross profit marginmargins are derived primarily from material, labor and overhead costs, product mix, manufacturing volumes and pricing. TheFor the second quarter of 2019, the improvement in gross profit margins for bothfrom the secondpreceding quarter was a reflection of higher sales and six month period was attributed primarily to increased salesmanufacturing volumes combined with a more favorable mix of product sales. Additionally,Gross profit margins for the first quarter of 2019 were adversely impacted by increased productionmaterial costs for certain components and a mix of sales weighted more heavily toward lower margin products. Also, lower manufacturing volumes enabled usin the first quarter contributed to more effectively utilizesuboptimal utilization and absorb our baseabsorption of manufacturing overhead expenses, and we are realizing benefits associated with manufacturing and quality improvement programs. Comparatively, last year’s first two quarters included certain product enhancement expensessupport expenses. Anticipated sales growth and the discontinuationexpected production and sale of a product development initiative.new products should favorably impact overall gross profit margins in the future.

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

SG&A expenses consist of marketing, sales, commissions, engineering, product development, management information systems, accounting, headquarters and non-cash share-based employee compensation expenses.

SG&A expenses for the second quarter ended June 30, 20182019 totaled approximately $5.7 million, or 42.7% of sales, compared with approximately $4.6 million, or 33.3% of sales, compared with approximately $3.5 million, or 32.7% of sales, for the second quarter last year. For the six months ended June 30, 2018,2019, SG&A expenses totaled approximately $10.4 million, or 49.8% of sales, compared with approximately $8.6 million, or 34.0% of sales, compared with approximately $7.0 million, or 38.4% of sales, for the samesix month period last year.

Engineering and product development expenses for the second quarter of 20182019 totaled approximately $1.9$3.1 million (13.8%(23.3% of total sales), compared with $1.2approximately $1.9 million (11.1%(13.8% of total sales) for the same quarter last year. For the six-month period,six months ended June 30, 2019, engineering and product development expenses totaled approximately $3.7$5.2 million (14.6%(25.1% of total sales), compared with approximately $2.1$3.7 million (11.6%(14.5% of total sales) for the samesix month period last year. The increase in engineering expenses was driven by costs related toDuring the first six months of 2019, we launched two new product development.development initiatives relating to a new line of portable and mobile radios to succeed our current KNG line, while also continuing to invest in the development of our BKR 9000 multiband product.

Marketing and selling expenses for the second quarter of 20182019 totaled approximately $1.6$1.3 million (11.7%(9.6% of sales), compared with approximately $1.3$1.6 million (12.0% of sales) for the second quarter last year. For the six-month period,six months ended June 30, 2019, marketing and selling expenses totaled approximately $2.9$2.7 million (11.4%(12.9% of sales), compared with $2.6approximately $2.9 million (14.4%(11.2% of sales) for the same period last year. The increase for both periods is attributed primarily to. Sales incentive commission expenses decreased as a result of lower sales, commissions and incentive compensation directly related towhich were partially offset by expenses associated with additional sales performance.staff.

General and administrative expenses for the second quarter of 20182019 totaled approximately $1.0$1.3 million (7.3%(9.8% of total sales), compared with approximately $1.1$1.0 million (10.2%(7.5% of total sales) for the samesecond quarter last year. For the six-month period,six months ended June 30, 2019, general and administrative expenses totaled approximately $2.5 million (11.9% of sales), compared with approximately $2.1 million (8.2% of sales), compared with $2.2 million (12.3% of sales) for the samesix month period last year. The decreaseincrease in costs for both periodsgeneral and administrative expenses was attributed primarily to one-time costs incurred last year related to changes in senior leadership. Those cost decreases were partially offset by expenses associated with changing the Company’s name.corporate headquarters, including our holding company reorganization, and upgrading our information technology security and capabilities.

Operating income for the second quarter ended June 30, 2018 increased 36.8% to2019 totaled approximately $1.3 million (9.7%$20,000 (0.2% of sales), compared with operating income of approximately $973,000 (9.0%$1.3 million (9.7% of sales) for the same quarter last year. For the six months ended June 30, 2018,2019, our operating income increased toloss totaled approximately $2.1$2.3 million (8.2%(11.0% of sales), compared with an operating lossincome of approximately $233,000 (1.3% of sales)$2.1 million for the samesix month period last year. The increasedecline in operating income for the quarter, and the operating loss for the six month period, of 2019 was attributed primarily to lower sales growth and improved gross profit margins, which were partially offset bycombined with increased product development expenses.

For the three and six months ended June 30, 2018,2019, we recognized other expenses totaling approximately $58,000$11,000 and $225,000,$13,000, respectively, compared with approximately $60,000$58,000 and $147,000,$225,000, respectively, for the same periods last year. TheseOther expenses in 2018 were primarily attributed the disposal of assets related to a discontinued product initiative and exchange losses related to sales under a Canadian dollar-denominated contract. Also during last year’s first quarter, we recorded a non-recurring loss of approximately $104,000 on the disposal of assets related to a discontinued product initiative.

We recorded an income tax expense of approximately $154,000 for the three months ended June 30, 2019, compared with income tax expense of approximately $290,000 and $183,000, respectively, for the three andsecond quarter last year. For the six months ended June 30, 2018,2019, we recorded an income tax benefit of approximately $201,000, compared with income tax expense of approximately $222,000 and $101,000, respectively,$183,000 for the same periodssix month 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 divided by pre-tax book income) from period to period.  For 2018,2019, we generally expects itsexpect our effective tax rate to decline comparedbe comparable to 2017, primarily due to the implementation of the Tax Cuts and Jobs Act enacted in December 2017, which, among other things, reduced the U.S. federal corporate tax rate from 35% to 21%.last year.

As of June 30, 2018,2019, our net deferred tax assets totaled approximately $3.14$3.7 million, and arewere primarily composed of NOLs.  These NOLs total approximately $4.42 million for federalderived from research and $13.32 million for state purposes, with expirations starting in 2018 through 2030.development tax credits and accrued expenses.

In order to fully utilize the net deferred tax assets, we will need to generate sufficient taxable income in future years to utilize our NOLs prior to their expiration.years. We analyze all positive and negative evidence to determine if, based on the weight of available evidence, we are more likely than not to realize the benefit of the net deferred tax assets. The recognition of the net deferred tax assets and related tax benefits is based upon our conclusions regarding, among other considerations, estimates of future earnings based on information currently available and current and anticipated customers, contracts and product introductions, as well as historical operating results and certain tax planning strategies.

Based on our analysis of all available evidence, both positive and negative, we have concluded that we do not have the ability to generate sufficient taxable income in the necessary period to utilize the entire benefit for the deferred tax asset. Management estimates that as of June 30, 2018, it is more likely than not that approximately $83,000 of the deferred tax asset will not be realized due to the inability to generate sufficient Florida taxable income in the necessary period to fully utilize the Florida NOLs. We cannot presently estimate what, if any, changes to the valuation of our deferred tax assets may be deemed appropriate in the future. If we incur future losses, it may be necessary to record additional valuation allowance related to the deferred tax assets recognized as of June 30, 2018.2019.

For the six months ended June 30, 2018,2019, net cash used in operating activities totaled approximately $1.3 million, compared with cash provided by operating activities totaled approximately $711,000, compared with cash used in operating activities of approximately $1.4$0.7 million for the same period last year.  Cash provided byused in operating activities for the six months ended June 30, 2019, was primarily related to a net income, adjusted byloss, an increase in inventories, a decrease in accrued compensation, and unrealized lossgains on investment in securities, and a decrease in inventories, which were partially offset by a decrease inincreased accounts payable and an increase in tradedecreased accounts receivable.

For the six months ended June 30, 2018,2019, we had a net loss of approximately $1.6 million, compared with net income of approximately $503,000 compared with approximately $50,000 for the same period last year. Accrued compensation decreased approximately $691,000 for the 2019 period, which was attributed primarily to the payment of sales and management incentive compensation. For the same period last year, accrued compensation increased approximately $251,000. Net inventories decreasedincreased during the six months ended June 30, 20182019 by approximately $1.6$1.8 million, compared with an increasea decrease of $843,000approximately $1.6 million for the same period last year. The 2018 decreaseincrease for the six months period of 2019 was primarily attributedattributable to an increasematerial purchases combined with a decrease in sales. The lossUnrealized gains on investment in securities for the six months ended June 30, 20182019 totaled approximately $1.2 million,$444,000, compared with a gainlosses of approximately $617,000$1.2 million for the same period last year. For additional information pertaining to our investment in securities, refer to Notes 1 (Condensed Consolidated Financial Statements) and 6 (Investment in Securities) to the condensed consolidated financial statements found on pages 7 and 9, respectively, ofincluded in this report. Accounts receivable increaseddecreased approximately $1.5 million$628,000 during the six months ended June 30, 2018,2019, compared with $1.9an increase of approximately $1.5 million for the same period last year, reflecting sales that were consummated lateryear. The decrease in the respective quarter that had not yet completed their collection cycle.accounts receivable was attributable to collections. Accounts payable for the six months ended June 30, 2018, decreased2019, increased approximately $1.2 million, compared with a decrease of approximately $2.4 million compared with an increase of approximately $899,000 for the same period last year, primarily due to timing of payments to material suppliers. Depreciation and amortization totaled approximately $439,000$575,000 for the six months ended June 30, 2018,2019, compared with approximately $471,000$439,000 for the same period last year.

Cash provided byused in investing activities for the six months ended June 30, 20182019 totaled approximately $1.5 million and was attributed to purchases of property, plant and equipment. For the same period last year, cash provided by investing activities totaled approximately $4.0 million, compared with approximately $450,000 for the same period last year. Proceedscomprised primarily of proceeds from the sale of available-for-sale securities totaledtotaling approximately $8.3 million, for the six months ended June 30, 2018, compared with approximately $897,000 for the same period last year. We utilized approximately $3.7 million forwhich was partially offset by an investment in FGI 1347 Holdings, LP. There was no comparable investment for the same period last year. For the six months ended June 30, 2018,LP of approximately $3.7 million, and purchases of property, plant and equipment totaledtotaling approximately $569,000, compared with approximately $447,000 for the same period last year.$569,000.

For the six months ended June 30, 2018,2019, approximately $1.2$1.1 million was used in financing activities, primarily related to our capital return program, which included quarterly dividends totaling approximately $544,000$510,000 and stock repurchases totaling approximately $616,000.$550,000. For the same period last year, approximately $2.5 million$544,000 was used to pay dividends and approximately $217,000$616,000 was used for stock repurchases. For the same period last year, we also received approximately $183,000 from the issuance of common stock upon the exercise of stock options.

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

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

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

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

Our cash and cash equivalents balance at June 30, 20182019 was approximately $10.7$7.4 million.  We believe these funds combined with anticipated cash generated from operations and borrowing availability under our revolving credit facilityCredit Facility are sufficient to meet our working capital requirements for the foreseeable future. However, financial and economic conditions could limit our access to credit and impair our ability to raise capital, if needed, on acceptable terms or at all. We also face other risks that could impact our business, liquidity and financial condition. For a description of these risks, see “Item 1A. Risk Factors” set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.

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

There were no other changes to our critical accounting policies during the quarter ended June 30, 2018,2019, as described in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.2018.

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

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