<SEC-DOCUMENT>0001654954-20-002295.txt : 20200305
<SEC-HEADER>0001654954-20-002295.hdr.sgml : 20200305
<ACCEPTANCE-DATETIME>20200305154535
ACCESSION NUMBER:		0001654954-20-002295
CONFORMED SUBMISSION TYPE:	8-K
PUBLIC DOCUMENT COUNT:		2
CONFORMED PERIOD OF REPORT:	20200305
ITEM INFORMATION:		Regulation FD Disclosure
ITEM INFORMATION:		Financial Statements and Exhibits
FILED AS OF DATE:		20200305
DATE AS OF CHANGE:		20200305

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			BK Technologies Corp
		CENTRAL INDEX KEY:			0000002186
		STANDARD INDUSTRIAL CLASSIFICATION:	RADIO & TV BROADCASTING & COMMUNICATIONS EQUIPMENT [3663]
		IRS NUMBER:				593486297
		STATE OF INCORPORATION:			NV
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		8-K
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-32644
		FILM NUMBER:		20690688

	BUSINESS ADDRESS:	
		STREET 1:		7100 TECHNOLOGY DRIVE
		CITY:			WEST MELBOURNE
		STATE:			FL
		ZIP:			32904
		BUSINESS PHONE:		321-984-1414

	MAIL ADDRESS:	
		STREET 1:		7100 TECHNOLOGY DRIVE
		CITY:			WEST MELBOURNE
		STATE:			FL
		ZIP:			32904

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	BK Technologies, Inc.
		DATE OF NAME CHANGE:	20180604

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	RELM WIRELESS CORP
		DATE OF NAME CHANGE:	19980129

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ADAGE INC
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>8-K
<SEQUENCE>1
<FILENAME>bkti_8k.htm
<DESCRIPTION>CURRENT REPORT
<TEXT>
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<div style="text-align: center"><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font><font style="font-weight: bold; color: #000000; font-family: Times New Roman; font-size: 16px">UNITED
STATES</font></div>
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SECURITIES AND EXCHANGE COMMISSION</font></div>
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WASHINGTON, D.C. 20549</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
<div style="text-align: center"><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font><font style="font-weight: bold; color: #000000; font-family: Times New Roman; font-size: 24px">FORM
8-K</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
<div style="text-align: center"><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font><font style="font-weight: bold; color: #000000; font-family: Times New Roman; font-size: 13px">CURRENT
REPORT</font></div>
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Pursuant to Section&#xA0;13 or 15(d) of the Securities Exchange Act
of 1934</font></div>
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<font style="color: #000000; font-family: Times New Roman; font-size: 13px">
Date of Report (Date of Earliest Event Reported):</font></div>
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<font style="font-weight: bold; font-family: Times New Roman; font-size: 13px">
March 5, 2020</font></div>
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<font style="color: #000000; font-weight: bold; font-family: Times New Roman; font-size: 32px">
BK Technologies Corporation</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
<div style="text-align: center"><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font><font style="color: #000000; font-family: Times New Roman; font-size: 13px">__________________________________________</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
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<font style="color: #000000; font-family: Times New Roman; font-size: 13px">
(Exact name of registrant as specified in its charter)</font></div>
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<font style="font-family: Times New Roman; font-size: 13px;">&#xA0;</font></div>
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<div style="text-align: center"><font>&#xA0;</font><font style="font-weight: bold; color: #000000; font-family: Times New Roman; font-size: 13px">Nevada</font></div>
</td>
<td style="width: 33%">
<div style="text-align: center"><font>&#xA0;</font><font style="font-weight: bold; color: #000000; font-family: Times New Roman; font-size: 13px">001-32644</font></div>
</td>
<td style="width: 33%">
<div style="text-align: center"><font>&#xA0;</font><font style="font-weight: bold; color: #000000; font-family: Times New Roman; font-size: 13px">83-4064262</font></div>
</td>
</tr><tr>
<td style="width: 34%">
<div style="text-align: center"><font>&#xA0;</font><font style="color: #000000; font-family: Times New Roman; font-size: 13px">(State
or other jurisdiction</font> <font style="color: #000000; font-family: Times New Roman; font-size: 13px">of
incorporation)</font></div>
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<div style="text-align: center"><font>&#xA0;</font><font style="color: #000000; font-family: Times New Roman; font-size: 13px">(Commission</font>
<font style="color: #000000; font-family: Times New Roman; font-size: 13px">File
Number)</font></div>
</td>
<td style="width: 33%">
<div style="text-align: center"><font>&#xA0;</font><font style="color: #000000; font-family: Times New Roman; font-size: 13px">(I.R.S.
Employer</font> <font style="color: #000000; font-family: Times New Roman; font-size: 13px">Identification
No.)</font></div>
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<font style="font-family: Times New Roman; font-size: 13px;">&#xA0;</font></div>
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<div style="text-align: center"><font>&#xA0;</font><font style="font-weight: bold; color: #000000; font-family: Times New Roman; font-size: 13px">7100
Technology Drive, West Melbourne, FL</font></div>
</td>
<td style="width: 50%">
<div style="text-align: center"><font>&#xA0;</font><font style="font-weight: bold; color: #000000; font-family: Times New Roman; font-size: 13px">32904</font></div>
</td>
</tr><tr>
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<div style="text-align: center"><font>&#xA0;</font><font style="color: #000000; font-family: Times New Roman; font-size: 13px">(Address
of principal executive offices)</font></div>
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<div style="text-align: center"><font>&#xA0;</font><font style="color: #000000; font-family: Times New Roman; font-size: 13px">(Zip
Code)</font></div>
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<div style="text-align: center; margin-left: 0px; margin-right: 0px; text-indent: 0px;"><font style="color: #000000; font-family: Times New Roman; font-size: 13px">&#xA0;&#xA0;
Registrant&#x2019;s telephone number, including area code:</font>
<font style="font-weight: bold; color: #000000; font-family: Times New Roman; font-size: 13px">
(321) 984-1414</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
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N/A</font></div>
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<font style="color: #000000; font-family: Times New Roman; font-size: 13px">
______________________________________________</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
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<font style="color: #000000; font-family: Times New Roman; font-size: 13px">
Former name or former address, if changed since last
report</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
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<font style="color: #000000; font-family: Times New Roman; font-size: 13px">
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:</font></div>
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<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="color: #000000; font-family: Times New Roman; font-size: 13px">
[&#xA0;&#xA0;]&#xA0;&#xA0;Written communications pursuant to Rule
425 under the Securities Act (17 CFR 230.425)</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
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<font style="color: #000000; font-family: Times New Roman; font-size: 13px">
[&#xA0;&#xA0;]&#xA0;&#xA0;Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
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<font style="color: #000000; font-family: Times New Roman; font-size: 13px">
[&#xA0;&#xA0;]&#xA0;&#xA0;Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
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<font style="color: #000000; font-family: Times New Roman; font-size: 13px">
[&#xA0;&#xA0;]&#xA0;&#xA0;Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))</font></div>
<div><font style="font-family: Times New Roman; font-size: 10">&#xA0;</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Securities
registered pursuant to Section 12(b) of the Act:</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<tr>
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<div style="text-align: center; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Title
of each class</font></div>
</td>
<td style="vertical-align: top; width: 25%; border-left: 0.5pt solid #000000; border-top: 0.5pt solid #000000; border-bottom: 2px solid #000000">
<div style="text-align: center; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Trading
Symbol(s)</font></div>
</td>
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<div style="text-align: center; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Name of
each exchange on which registered</font></div>
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</tr><tr>
<td style="vertical-align: top; width: 37%; border-left: 0.5pt solid #000000; border-bottom: 2px solid #000000">
<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-weight: bold; font-family: Times New Roman; font-size: 13px">
Common Stock, par value $0.60 per share</font></div>
</td>
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<div style="text-align: center; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-weight: bold; font-family: Times New Roman; font-size: 13px">
BKTI</font></div>
</td>
<td style="vertical-align: top; width: 38%; border-left: 0.5pt solid #000000; border-right: 0.5pt solid #000000; border-bottom: 2px solid #000000">
<div style="text-align: center; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-weight: bold; font-family: Times New Roman; font-size: 13px">
NYSE American</font></div>
</td>
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</div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Indicate
by check mark whether the registrant is an emerging growth company
as defined in Rule 405 of the Securities Act of 1933
(&#xA7;&#x2009;230.405 of this chapter) or Rule 12b-2 of the
Securities Exchange Act of 1934 (&#xA7;&#x2009;240.12b-2 of this
chapter).</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Emerging
growth company&#x2003;<font style="color: #000000">[&#xA0;&#xA0;]&#xA0;&#xA0;</font></font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">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.&#x2003; <font style="color: #000000">[&#xA0;&#xA0;]&#xA0;&#xA0;</font></font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<div style="text-align: left; margin-left: 0px; text-indent: 0px; margin-right: 0px;"><font style="font-weight: bold; font-family: Times New Roman; font-size: 13px"><a name="id_3"><!--anchor--></a></font></div>
<div style="text-align: left; margin-left: 0px; text-indent: 0px; margin-right: 0px;"><font style="font-family: Times New Roman; font-size: 13px;">&#xA0;</font></div>
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<font style="font-weight: bold; font-family: Times New Roman; font-size: 13px">Item</font>
<font style="font-weight: bold; font-family: Times New Roman; font-size: 13px">7.01</font></div>
<div style="text-align: justify; display: table-cell; margin-left: 0px; text-indent: 0px; margin-right: 0px;"><font style="font-weight: bold; font-family: Times New Roman; font-size: 13px"><font style="text-decoration: underline">
Regulation FD Disclosure</font>.</font></div>
</div>
</div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 48px">
<font style="font-family: Times New Roman; font-size: 13px">On
March 5, 2020, our management discussed our financial results for
the fourth quarter and year ended December 31, 2019 and certain
aspects of our business plan on an earnings conference call with
analysts and investors. A transcript of the conference call is
furnished herewith as Exhibit 99.1.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 48px">
<font style="font-family: Times New Roman; font-size: 13px">The
information contained in Item 7.01 to this Current Report on Form
8-K, including the exhibit, is being &#x201C;furnished&#x201D; and,
as such, shall not be deemed to be &#x201C;filed&#x201D; for the
purposes of Section&#xA0;18 of the Securities Exchange Act of 1934,
as amended (the &#x201C;Exchange Act&#x201D;), or otherwise subject
to the liabilities of that section, nor shall it be incorporated by
reference into any filing under the Securities Act of 1933, as
amended, or the Exchange Act, except as shall be expressly set
forth by specific reference in such filing.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<div style="display: table-row;">
<div style="text-align: left; display: table-cell; width: 72px;">
<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Item 9.01</font> </font></div>
<div style="text-align: justify; display: table-cell; margin-left: 0px; text-indent: 0px; margin-right: 0px;">
<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold; text-decoration: underline">Financial
Statements and Exhibits</font><font style="font-weight: bold">.</font></font></div>
</div>
</div>
<div style="text-align: left; margin-left: 96px; margin-right: 0px; text-indent: -96px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="display: table">
<div style="display: table-row">
<div style="display: table-cell; width: 48px"><font style="font-family: Times New Roman; font-size: 13px">(d)&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;</font></div>
<div style="text-align: left; display: table-cell"><font style="font-family: Times New Roman; font-size: 13px">Exhibits.</font></div>
</div>
</div>
<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 48px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 48px">
<font style="font-family: Times New Roman; font-size: 13px"><a href="bkti_ex991.htm">
99.1</a>&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;&#xA0;March
5, 2020 Earnings Conference Call Transcript.</font></div>
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SIGNATURE</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">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 hereunto duly authorized.</font></div>
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<div><font style="font-weight: bold; font-family: Times New Roman; font-size: 13px">BK
TECHNOLOGIES CORPORATION</font><font style="font-size: 13px; font-family: Times New Roman"></font></div>
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March 5, 2020</font></div>
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<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 0px"><font style="font-size: 13px; font-family: Times New Roman">/s/ <font style="font-family: Times New Roman; font-size: 13px">William P.
Kelly</font> &#xA0;</font></div>
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President and</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Chief
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<DOCUMENT>
<TYPE>EX-99.1
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<FILENAME>bkti_ex991.htm
<DESCRIPTION>EARNINGS CONFERENCE CALL TRANSCRIPT
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Exhibit 99.1</font></div>
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Transcript of</font></div>
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BK Technologies Corporation</font></div>
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<font style="color: #000080; font-weight: bold; font-family: Times New Roman; font-size: 16px">
Fourth Quarter and Full Year 2019 Earnings Call</font></div>
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March 5, 2020</font></div>
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Participants</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Timothy
Vitou &#x2013; President</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Bill
Kelly &#x2013; Chief Financial Officer</font></div>
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Analysts</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Allen
Lyons &#x2013; Investor</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Edwin
Morgan &#x2013; Investor</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Ed
Schulte &#x2013; Investor</font></div>
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Presentation</font></div>
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Operator</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Good
morning, ladies and gentlemen. Welcome to BK Technologies
Corporation conference call for the fourth quarter and full year
ended December 31, 2019. This call is being recorded. All
participants have been placed in a listen-only mode. Following
management&#x2019;s remarks, the call will be opened to
questions.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Before
turning the call over to Mr. Vitou for opening remarks, I will
provide the following Safe Harbor statement. Statements made during
this conference call that are based on historical facts are
forward-looking statements. These statements are subject to known
and unknown factors and risks. The company&#x2019;s actual results,
performance or achievements may differ materially from those
expressed or implied by these forward-looking statements, and some
of the factors and risks that could cause or contribute to such
material differences have been described in yesterday&#x2019;s press
release and in BK&#x2019;s filings with the SEC. These statements
are based on information and understandings that are believed to be
accurate as of today, March 5, 2020. We do not undertake any duty
to update forward-looking statements.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">I will
now turn the call over to Mr. Timothy Vitou, President of BK
Technologies. Mr. Vitou, you may begin.</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Thank
you, Jess. Good morning, everyone. Welcome to the BK Technologies
Investor conference call for the fourth quarter and full year ended
December 31, 2019. I&#x2019;ll provide some comments about the
business before Bill takes us through the financial and operating
results.</font></div>
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<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">The
fourth quarter presented sales challenges for us as some of our
established customers, particularly federal public safety agencies,
were slower than expected in issuing purchase orders for new
equipment. Some of the opportunities that we had anticipated for Q4
were delayed until Q1 of this year, as evidenced by our two
announcements regarding orders from the US Forest Service in
January and February, totaling just short of $5
million.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Favorably impacting
Q4 we received an order from a California public safety customer
late in the quarter, which was previously announced and shipped
prior to the year end. Compared to the previous year, sales for the
full year 2019 were impacted by reduced orders from certain state
and international customers that had made substantial purchases in
recent years. However, the impact was partially mitigated primarily
by purchases by new state and local customers.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Looking
ahead, I believe our future is promising. On our last call, I
mentioned the appointment of a new chief technology officer, Dr.
Branko Avanic, and a renewed focus on our product development
initiatives. Since then, we have upgraded and broadened our
engineering capabilities resulting in positive progress on the
development of the new BKR product line. The initial model of the
new BKR series is anticipated to be completed in the first half of
2020 with additional models coming in late 2020 and early
2021.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Given
this increasing profile of widespread economic impact in recent
weeks and months, I would like to briefly address the topic of the
coronavirus. BK does business with several international supply
chain partners, some of which are based in Asia. Some of these
partners suspended their business operations. In late February,
most of them have resumed operations to varying degrees. To date,
our operations have not been adversely impacted by these events.
The situation, however, is complex and rapidly evolving.
Accordingly, the future impact on our operations if any is
uncertain.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">This
concludes my overview this morning. I&#x2019;ll now turn the call
over to Bill Kelly, our Chief Financial Officer, who will review
the financial and operating highlights for the fourth quarter and
full year 2019 before returning for some closing thoughts.
Bill?</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Bill Kelly &#x2013; Chief Financial Officer</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Thank
you, Tim. Following is a summary of our financial and operating
results for the fourth quarter and full year ended December 31,
2019.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Net
sales for the fourth quarter of 2019 totaled approximately $7.4
million, compared with approximately $10.7 million for the fourth
quarter last year. For the full year ended December 31, 2019 net
sales totaled approximately $40.1 million, compared with $49.4
million last year.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Gross
profit margins as a percentage of sales for the fourth quarter of
2019 were approximately 32.7%, compared with 35.5% for the fourth
quarter last year. Gross profit margins for the fourth quarter of
2019 were impacted by under absorption due to lower sales and
manufacturing volumes and a mix of product sales that were more
heavily weighted toward lower margin products. For the full year
2019, gross profit margins were 39%, compared with 40.5% last
year.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">For the
fourth quarter of 2019, selling, general, and administrative
expenses totaled approximately $4.8 million, compared with $4.3
million for last year&#x2019;s fourth quarter and were largely
unchanged from the preceding quarter. For the full year of 2019,
SG&amp;A expenses totaled approximately $20 million, compared with
approximately $17.6 million last year. The increase in SG&amp;A
expenses in 2019 was attributable primarily to new product
development.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">For the
fourth quarter of 2019, we recognized net other income totaling
approximately $540,000, related primarily to an unrealized gain on
our investment in 1347 Property Insurance Holdings. During last
year&#x2019;s fourth quarter, we recognized net other expenses
totaling approximately $1.3 million. For the full year of 2019, net
other income totaled approximately $762,000 primarily from gains on
1347 PIH. Last year we recognized net other expenses of
approximately $2.9 million related to investment and exchange
losses.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">For the
fourth quarter of 2019, we reported a net loss of approximately
$1.3 million or $0.10 per diluted share, compared with $1.3 million
or $0.10 per diluted share for the fourth quarter last year. For
the full year 2019, our net loss totaled approximately $2.6 million
or $0.21 per diluted share, compared with approximately $195,000 or
$0.01 per diluted share last year.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Our
capital return program has paid 15 consecutive quarterly dividends,
with the last one being paid on January 17<font style="font-size: 70%; vertical-align: top">th</font> of 2020. We
announced our 16<font style="font-size: 70%; vertical-align: top">th</font> consecutive
quarterly dividend on March 2<font style="font-size: 70%; vertical-align: top">nd</font>, which will be
payable on April 13<font style="font-size: 70%; vertical-align: top">th</font>, 2020. Also, we
have repurchased approximately 1.3 million shares since the
repurchase programs inception.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">I&#x2019;ll now turn
the call back over to Tim.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Thank
you, Bill. We faced several challenges during 2019, particularly
those related to sales and product development. However, we have
plans in place to address those challenges. With the changes that
have already been implemented in both those areas, I believe our
engineering and technical capabilities are broader and stronger,
and we&#x2019;re in a much better position to realize new products
and sales growth in coming quarters.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">We&#x2019;ll now
move on to the question and answer portion of the conference call.
I&#x2019;d like to remind everyone that we do not provide financial
and operating guidance on a quarterly or annual basis. Jess,
we&#x2019;re now ready to open the floor to questions.</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Operator</font></div>
<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 48px">
<font style="font-family: Times New Roman; font-size: 13px">Thank
you. [Operator instructions]. We&#x2019;ll go first to Allen Lyons
[ph].</font></div>
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<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Yes. Good morning, Tim and
Bill.&#xA0;</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 48px">
<font style="font-family: Times New Roman; font-size: 13px">Good
morning, Al.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Thanks. I notice you&#x2019;re really
basically doing no foreign business. Are there any opportunities,
or are you just focusing on domestic?</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 48px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 0px; margin-right: 0px; text-indent: 48px">
<font style="font-family: Times New Roman; font-size: 13px">I&#x2019;m sorry.
Could you repeat the question, Al?</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> The question was I noticed in the
annual numbers that you basically had no foreign business income,
and I was wondering is there no focus to try to improve that, or
are you just focusing mainly on domestic
opportunities?</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Our
main go-to-market focus has been North America, primarily the US
and Canada based. We have done business in the past with some
international customers that are in Australia and parts of
Indonesia and some Latin American countries. One of our focuses in
2020 is to do exactly that, Allen, is to expand into some markets
where we&#x2019;re going to be able to do the product distribution
and channel alignment in some foreign countries, but our primary
focus has been up until now very North
America-centric.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Right. Understood. With your new
credit agreement I presume that initially anyway there won&#x2019;t
be any &#x2014; you&#x2019;re in a position to continue your dividend
and stock buyback program, because you&#x2019;re well within your
tangible net worth requirement. Is that a fact? Is that accurate,
or is that being reconsidered?</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Bill Kelly &#x2013; Chief Financial Officer</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Al,
this is Bill. No, you are correct in that statement.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Okay. Thank you. Could you just talk
about your bidding results last year versus 2018 success rates? I
was curious, I know there&#x2019;s delays and so forth, but I just
was curious how your bidding results were in 2019 versus
2018.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">I
assume you&#x2019;re talking about sales close ratios via activities
that we chase and what we&#x2019;re able to capture?</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Yes. Where you went after business,
how successful were you in &#x2019;19 versus &#x2019;18?</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Sure.
It&#x2019;s a great question, Allen. Thank you. We monitor close
ratios very, very closely and on a very regular basis to see how
effective our sales organization is doing as well as the rest of
the go-to-market team, marketing, and what have you. Our results in
&#x2019;19 actually were a little bit better than in &#x2019;18 from
a close ratio standpoint. Some of the moves we made at the tail end
especially of &#x2019;19 is we started to focus on very specific
verticals and channels that we felt that we&#x2019;ve been very
successful in the past and focused more of our sales resources on
those verticals.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">We had
tried earlier in the year to expand it to some different additional
verticals, and they weren&#x2019;t being as a success as the
verticals that we ended up with in &#x2019;19. I anticipate close
ratios in &#x2019;20 to actually increase off of &#x2019;19 chasing
more activities and very, very specific choices in our verticals
that we want to go after &#x2013; fire [ph] of course being one,
wild and fire of course being one, and there are some additional
ones as well.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Great. Okay one last question &#x2013;
as far as competition of course Motorola, the new products
you&#x2019;re developing and starting coming out with here in the
first half and then later on in the year or next year, is there
anything in the marketplace that as far as you know that Motorola
has comparable?</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Our
products being comparable to what Motorola is or our stuff being
comparable to Motorola? I&#x2019;m not sure I follow the
question.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Well okay. You&#x2019;re having new
products coming out and developed in your engineering and so forth,
is it similar to something that Motorola may have or working on as
far as you know, or is it going to be differential to what&#x2019;s
out in the marketplace?</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Okay.
I&#x2019;m sorry, Allen. I just didn&#x2019;t understand the
question. Our product roadmap that we&#x2019;re developing right now
as you can tell we&#x2019;re investing a great deal of money in
R&amp;D. One of the challenges that we have faced over the last
several years when I took over as president was our lack of
spending on R&amp;D in the prior years, and it left us with a
portfolio frankly that wasn&#x2019;t capable of competing in a lot
of the channels that we decided to chase from a sales perspective.
The new products are designed exactly to do that.</font></div>
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<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px;">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Our KNG
product series has done well for us in the past 10, 12 years, but
the new products the BKR series is designed to attack the customer
base based on what the customers are asking for. They&#x2019;re
asking for very, very specific features and options and man-machine
interface, user interface, very intuitive, very specific
specifications. Our products when it&#x2019;s all said and done when
they&#x2019;re shipping, will be competing very, very admirably
against the Motorola lineup as well as several other competitors
that are out there. Motorola being the biggest of
course.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">But our
products will be able to do exactly what the customers have been
asking for and that&#x2019;s to meet their mission, no more or no
less, and we&#x2019;re very, very focused on bringing them a product
that frankly they&#x2019;ve had an enormous amount of say in the
design. With Branko coming on, Dr. Avanic, and the buildup of our
engineering resources, you&#x2019;re going to see that the product
is going to be &#x2014; this isn&#x2019;t a refresh of KNG &#x2014;
this is a whole new departure for us, and we&#x2019;re extremely
excited. And the customers that we&#x2019;ve already been working
with are very excited as well about the new product lineup. I hope
that answered your question.</font></div>
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<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Operator</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">We&#x2019;ll move
next to Edwin Morgan.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Good morning, Bill and
Tim.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Bill Kelly &#x2013; Chief Financial Officer</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Good
morning.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Good
morning, Edwin.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Good morning. I just had a few
questions. The first one is about the balance sheet. The cash and
cash equivalent went from the fourth quarter of last year to the
fourth quarter of this year went down to $4 million from $11
million. And I&#x2019;m just looking at that, and I&#x2019;m thinking
that&#x2019;s a pretty extreme drop-off. Are you guys comfortable
with that especially when we&#x2019;re paying a dividend, which I
think might be a little bit misleading, and we also have a share
buyback program, which that by itself the shareholder return that
was $2 million from the cash balance just last year. It just seems
to me like that cash balance is dropping really fast, and now
we&#x2019;re increasing the credit facility, so are you comfortable
with this, and is it a good idea to maintain this shareholder
return program? It&#x2019;s really not doing much. We have a 2%
dividend yield, and we have a 50% price decline in the stock in
2019. I mean where&#x2019;s the value in this, and is it worth
it?</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Bill Kelly &#x2013; Chief Financial Officer</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Edwin,
this is Bill. To answer your question about comfort, we are
comfortable with this at this point. There was a drop in cash
during the year that&#x2019;s largely associated with the extra
expenditures that we had to do with engineering, and of course
sales dropped comparatively year over year as well. We believe our
funnel of prospects we&#x2019;re going to have an improved 2020 this
year.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">I think
from a share buyback perspective and a dividend perspective,
we&#x2019;re comfortable doing that. We ultimately believe that will
help shareholder value. I understand your comments about the
dividend yield, and I think that will improve as we move forward.
But I think we&#x2019;re comfortable with it right now. It&#x2019;s a
topic that we evaluate on a regular basis, not only internally but
with the involvement of the board. And as things unfold in the
coming quarters, we&#x2019;ll be looking at that
regularly.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Okay. That&#x2019;s good to hear.
I&#x2019;m just going to make a quick comment about the share
buyback and then move on, because I know that that is a board level
decision. But it seems to me that the vast majority of the shares
that were repurchased were bought from directors. There was
basically two insider purchases, block purchases, several hundred
thousand shares, and other than that, there hasn&#x2019;t really
been any significant open market purchases; certainly nothing
that&#x2019;s creating any kind of stock price stability direct in
my view we certainly need at this time. But I just want to move on.
There&#x2019;s no point in debating that.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">I want
to talk about the sales drop-off and maybe we can pinpoint what is
causing it, because I know that there was a think tank &#x2013; I
think it was August last year &#x2013; came out with a paper where
they kind of just had a doom and gloom scenario with the LMR radios
and how they could be cannibalized with the development of
FirstNet. Did that have something to do with it, because I noticed
that one your main competitors&#x2019; numbers have certainly
debunked the extinction theory with LMR radios. They had another
record year with the P25 radios and all the associated
equipment.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">We had
a serious drop-off in the sales, and the sales were delayed. Has
anything come to light about what caused that? I know we had
another government showdown with the possible budget crisis;
however, that was resolved and there was never a funding freeze. So
looking in the rearview mirror now, what caused this delay and this
drop-off in orders which we were given a really optimistic
scenario? You know last year this time everything was bright and
rosy, and now this is a very bad quarter comparable to the first
quarter of last year when there was a significant government
shutdown. So I mean what caused it? Can you guys give me some
feedback on that?</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Sure,
Edwin. This is Tim. We&#x2019;ve done a lot of review based on the
customers. The LMR market itself, first of all, is not going away;
it&#x2019;s not being weakened by FirstNet. If anything, first
responder communications is being highlighted in today&#x2019;s day
and age, and one of the main communication devices that first
responders will always continue to use is two-way radio. FirstNet
is more of an ancillary support communication. I&#x2019;m not going
to address any kind of detail of FirstNet at this point. I&#x2019;m
very, very focused on continuing our buildout of our LMR product,
because there is a very vibrant &#x2014; as our competition has
shown &#x2014; a very vibrant market.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">Our own
situation from business in &#x2019;19, the year started out
extremely difficult as you know with the federal shutdown. The Q4
there was some smoke signals that there may be another possible
shutdown coming. It was resolved and it never really impacted
business, but what we saw was at the state and local level, which
we&#x2019;ve been growing our business very, very significantly,
those people were pushing out in delaying buying based on their own
internal budget issues. Because they were facing a lot of internal
issues at the county levels and at the state levels and it was
delaying the LMR. Those are the delays I&#x2019;m talking about. Our
federal customers also did the same thing. They delayed and pushed
out business.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">We had
a record &#x2019;18. We did over $55 million worth of orders in
&#x2019;18, and there was a significant drop-off in &#x2019;19, and
when you look at who the major &#x2013; where the big delta was
&#x2013; I could point out about a half a dozen very strong 20 plus
year customers who were just way off of their purchases in
&#x2018;19. If they would have done what they had typically done in
&#x2019;18 and in &#x2019;17 and in &#x2019;16, we would have matched
&#x2018;18&#x2019;s sales. I think it&#x2019;s more of a combination,
Edwin, of factors.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Also I
don&#x2019;t want to disregard the fact that some of the customers
are not buying the current KNG radio to fulfill some orders, and
they&#x2019;re going to wait until this year for our new BKR series
of radios that are coming out. So I think you&#x2019;ll see us
rebound. That&#x2019;s our anticipation and our belief that 2020
will be a strong rebound year.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Are we still the low price option?
When David Storey was CEO, he was always talking about that. Are we
still &#x2014; I don&#x2019;t want to say it&#x2019;s a budget phone
or I mean budget radios &#x2014; but are we still the low-cost
option, or has that changed? If a customer is trying to evaluate,
you know that Motorola is on the other side of the deal.
They&#x2019;re evaluating whether or not they&#x2019;re going to buy
your phone or Motorola&#x2019;s, does cost come into it, and how
significant is it?</font></div>
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<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Sure.
There&#x2019;s multiple questions really in your statements but let
me just address it as we consider ourselves not necessarily the
budget radio. We think we have the best performing radio for the
price that we&#x2019;re selling our radio at. There really are very
few choices that are priced below us at this point in the market.
You&#x2019;ve seen some considerable compression in the marketplace.
EF Johnson was purchased by Kenwood. You have Midland leaving the
arena. They&#x2019;re not competing in two-way radios. Those were
both very low-end radios prices wise. They were quality radios,
they were just very low priced.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">So
you&#x2019;re going to see some of those guys falling off. Our radio
price is still consistently where it had been. Some of the
competition have lowered their price to get down to some of our
levels, but I think when you look at performance and you look at
capability and quality and then you look at our price, we believe
we&#x2019;re giving an incredibly fair value, and that&#x2019;s
resonating with a lot of the customers. I hope that answered your
question.</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Operator</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">We&#x2019;ll move
next to Ed Schulte.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Tim, can you hear me?</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">I can,
Ed. Good morning.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> I&#x2019;m sorry there. Good morning.
Again, thank you for taking my call.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Sure.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> I had three questions, but it looks
like two of which you have already somewhat answered. The product
upgrade cycle you gave a pretty good answer on that one. One of the
other questions I have is last year I believe it was about the
middle of the year you had mentioned that you had a new California
client and they ordered about $1.6 million in radios. Is that
something that we can expect that type of client &#x2014; is this an
ongoing program for them, or is that a one and done, or is this
going to be more like the Alberta Health where every year they came
back for a couple of million dollars&#x2019; worth of
radios?</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Good
questions, Ed. Our goal is very, very simple in sales &#x2013; find
new customers that will be become repeatable customers. The
customer that we announced in California is a new county.
They&#x2019;ll be additional sales to that county as their funding
increases to augment their LMR purchases. Our goal is to duplicate
that process many, many times over.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">If you
look at it, there&#x2019;s 3,141 I think if my number is right,
counties in the country. Not every one of these counties buys
radios every year, but when you&#x2019;re looking at a base of
public safety and it&#x2019;s county based, you have a lot of
customers that you can go address. What we like about the county
business, once you get in with one group inside the county &#x2014;
let&#x2019;s say it&#x2019;s their fire management within the county
&#x2014; they see how our radios perform, other agencies within that
same county may be drifting over to our radio. That&#x2019;s the
goal, Ed, is to find new customers and not rely on the tried and
true 30 plus year customers that are our burn rate or our run rate
I should say. Our goal for growth is to go find new accounts that
are very much in the process of either changing on an existing old
system or starting over with a whole new system or just adding on
to a current system that are radios are in or operable
with.</font></div>
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<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Okay. Thank you. And then the last
question I have &#x2014; it&#x2019;s a follow-up somewhat of the
other questions that were out there &#x2014; is the sales funnel,
last year you had indicated that you thought there was a pretty
full sales funnel out there, funnel of opportunities that were
there. Obviously you indicated already on the call that some of
those were pushed to the right, and we got those orders in early
this year versus late last year. I just wanted to get an idea from
you as to what it looks like for the rest of the quarter and the
rest of the year here. Do you still see a full funnel out there of
opportunities that we just need to have the clients on the other
side move forward with, or is this something where it looks like
it&#x2019;s going to be a little bit more difficult as it was toward
the end of last year?</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">This
kind of is a tail end on the question I got earlier on the LMR
industry as a whole and do I see it leaking oil a little bit or is
this a growing industry. The LMR industry is in fact growing, and I
see it in our funnel in our pipeline. Our pipeline is more of our
activities that haven&#x2019;t reached the funnel stage where
it&#x2019;s an actual quote going out; we&#x2019;re in the process of
presenting to customers and testing radios and what have you. The
pipeline is our radar. That&#x2019;s the stuff that we know is
coming out; certain cities, counties, states or federal agencies
that have signaled that there will be an LMR purchase coming. Our
pipeline is not only steady, it is growing, and our funnel
engagements are actually increasing as well. So I&#x2019;m very
optimistic that the industry is indeed expanding.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">The
amount of our capability to capture the funnel engagements is
really what I&#x2019;m focusing on. You know just knowing it&#x2019;s
out there is one thing. Capturing it, Ed, that&#x2019;s the key. So
I&#x2019;m focusing a great deal of my time on what do we need to do
to actually capture these activities that we&#x2019;ve identified
and that are chasing.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
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<font style="font-family: Times New Roman; font-size: 13px"><font style="font-weight: bold">Q:</font> Okay. Thank you very much.
That&#x2019;s all I had for questions today. Thank you for taking my
call.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">You
bet. Thank you, Ed.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Operator</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">And
with no other questions holding, Mr. Vitou, I&#x2019;ll turn the
conference back to you for any additional or closing
comments.</font></div>
<div style="text-align: justify; margin-left: 0px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">&#xA0;</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Timothy Vitou &#x2013; President</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Thank
you, Jess. And thank you, all, for participating in today&#x2019;s
call. We look forward to talking with you again when we report our
Q1 &#x2019;20 results in May of 2020. All the best to all of you and
have a great day today.</font></div>
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<font style="text-decoration: underline; font-weight: bold; font-family: Times New Roman; font-size: 13px">
Operator</font></div>
<div style="text-align: left; margin-left: 48px; margin-right: 0px; text-indent: 0px">
<font style="font-family: Times New Roman; font-size: 13px">Ladies
and gentlemen, we thank you for your participation. You may
disconnect at this time and have a good day.</font></div>
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