Company: BKTI
Filing Date: 2025-05-13
Form Type: 10-Q
Source: 0001437749-25-016253
Chunk: 39

Company: BK Technologies Corp
Filing Date: 2025-05-13
Form: 10-Q
Item: Part I, Item 1
Chunk 39
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 derived from material, labor, and overhead costs, product mix, manufacturing volumes and pricing. Gross profit margins for the three-months ended March 31, 2025, increased compared to the same period of fiscal year 2024, generally reflecting radio product and accessories sales mix and the full impact of material cost improvements related to the transition of manufacturing production to East West Manufacturing, LLC.

We utilize a combination of internal manufacturing capabilities and contract manufacturing relationships for production efficiencies and to manage material and labor costs. During the year ended December 31, 2024, we completed the transfer of manufacturing most of our products and accessories to East West Manufacturing, LLC. We believe that our current manufacturing capabilities and contract relationships or comparable alternatives will continue to be available to us. However, we may encounter new product costs and competitive pricing pressures in the future and the extent of their impact on gross margins, if any, is uncertain.

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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 quarter ended March 31, 2025, totaled approximately $6.0 million (31.7% of sales), compared with approximately $5.3 million (29.1% of sales) for the same quarter of fiscal year 2024.  

Engineering and product development expenses for the first quarter of 2025 totaled approximately $2.5 million (13.3% of sales), compared with approximately $2.1 million (11.4% of sales) for the same quarter of fiscal year 2024. The increase in engineering expenses was attributed primarily to non-capitalizable development costs for the BKR multi-band mobile radio product and RSU issuance costs described above and Note 10 (Non-Cash Share-Based Employee Compensation) to the condensed consolidated financial statements included in this report. Most of these activities were being performed by our internal engineering team and were their primary focus, combined with sustaining engineering support for our existing products. The precise date for developing and introducing new products is uncertain and can be impacted by, among other things, supply chain shortages, including the impact of tariffs and certain component lead times in coming months and quarters.

Marketing and selling expenses for the first quarter of 2025 totaled approximately $1.7 million (9.0% of sales),