When an item with controls in the item template is collapsed, the AJAX settings are broken as the control's DOM element is moved because the MoreButton dropdown is not part of the Toolbar element itself. 

The solution is to set the overflow property of the item to Never - <telerik:RadToolBarButton OverFlow="Never"> 
https://docs.telerik.com/devtools/aspnet-ajax/controls/toolbar/mobile-support/responsive-design#preventing-items-from-being-collapsed