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 $178 and $181 for the years ended December 31, 2025 and 2024, 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 $7 and $4 in 2025 and 2024, 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 $11,159 as of  December 31, 2025, which are expected to be satisfied over the following 3 months.

 

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, 2025, 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, 2025 and 2024, the Company recorded an accrual for estimated claims in the amount of approximately $238 and $336, 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, 2025 and 2024.

 

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, 2025 and 2024 are as follows:

 

		Balance at												Balance at
		Beginning of				Warranties				Warranties				End of
		Year				Issued				Settled				Year
2025		$	1,008			$	269			$	(517	)		$	760
2024		$	722			$	1,149			$	(863	)		$	1,008

 

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. The Company assesses its liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that the Company will incur a loss and the amount of the loss can be reasonably estimated, the Company records a liability in its consolidated financial statements. These legal accruals may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of the loss is not estimable, the Company does not record an accrual, consistent with applicable accounting guidance. In the opinion of management, while the outcome of such claims and disputes cannot be predicted with certainty, the Company’s ultimate liability in connection with these matters is not expected to have a material adverse effect on the Company’s results of operations, financial position or cash flows, and the amounts accrued for any individual matter are not material. However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to the Company’s results of operations for a particular period, depending upon the size of the loss or the Company’s income for that particular period.

 

On February 3, 2026, the Company filed a complaint with the United States District Court for the Eastern District of Texas, alleging patent infringement against AT&T Mobility LLC and AT&T Services, Inc. (collectively, “AT&T”) and requesting monetary and injunctive relief. AT&T has not responded to the Company’s complaint, as of the date of this filing.

 

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.