BK Technologies Corp Commitments Disclosure

15. Commitments and Contingencies

 

Royalty Commitment

 

In 2003, the Company entered into a technology license related to its development of digital products. Under this agreement, the Company is obligated to pay a royalty for each product sold that utilizes the technology covered by this agreement. The Company paid $181 and $234 for the years ended December 31, 2024 and 2023, respectively. The agreement has an indefinite term and can be terminated by either party under certain conditions.

 

In 2022, the Company entered into a technology license related to its development of multi-band products. Under this agreement, the Company is obligated to pay a royalty for each product sold that utilizes the technology covered by this agreement, which started in June 2023. The Company paid $4 and $0.03 in 2024 and 2023, respectively.  The agreement is for three years and can be automatically renewed for one year at the end of its initial term unless either party provides at least 120 days’ prior written notice of its election not to extend the initial term. Thereafter, either party can terminate the agreement by providing a written notice of non-renewal of at least 60 days’ prior to the end of the then current term.

 

Purchase Commitments

 

The Company has purchase commitments for inventory totaling $9,324 as of December 31, 2024.

 

Self-Insured Health Benefits

 

The Company maintains a self-insured health benefit plan for its employees.  This plan is administered by a third party.  As of December 31, 2024, the plan had a stop-loss provision insuring losses beyond $90 per employee per year and an aggregate stop-loss of $2,185.  As of December 31, 2024 and 2023, the Company recorded an accrual for estimated claims in the amount of approximately $336 and $275, respectively, in accrued other expenses and other current liabilities on the Company’s consolidated balance sheets.  This amount represents the Company’s estimate of incurred but not reported claims as of December 31, 2024 and 2023.

 

Liability for Product Warranties

 

Changes in the Company’s liability for its standard two-year and five-year product warranties during the years ended December 31, 2024 and 2023 are as follows:

 

		Balance at												Balance at
		Beginning of				Warranties				Warranties				End of
		Year				Issued				Settled				Year
2024		$	722			$	1,149			$	(863	)		$	1,008
2023		$	591			$	165			$	(34	)		$	722

 

Legal Proceedings

 

From time to time the Company may be involved in various claims and legal actions arising in the ordinary course of its business.

 

There were no pending material claims or legal matters as of December 31, 2024.

 

Geopolitical Tensions 

 

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the military conflict between Russia and Ukraine and in the Middle East. Although the length and impact of the ongoing military conflicts is highly unpredictable, the conflict in both of these regions could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions.