Group 1: Market Outlook and Economic Indicators - Steven Wieting, chief investment strategist at CIO Group, suggests maintaining a long position in technology, particularly in cybersecurity software, citing double-digit earnings growth in tech over the past few years [1] - Wieting expects revenue growth in tech to continue but anticipates a slowdown, drawing parallels to the late 1990s tech boom [1] - The current state of asset classes is characterized as a mature bull market, with the S&P trading at 27 times trailing earnings, yet Wieting believes the economy is set to improve in the coming year [1] Group 2: AI Infrastructure and Economic Performance - AI infrastructure is experiencing a significant growth rate of 42%, the fastest since the invention of the personal computer, while other sectors like construction and industrial production are lagging [2] - Consumer spending has increased by 3.5% as of mid-third-quarter data, but business caution is evident, with 90% of industries in the ISM report expressing concerns about tariffs [2] Group 3: Hot Tech Stocks - A list of 12 hot tech stocks has been compiled based on performance over the past three months and upside potential, with stocks favored by elite hedge funds [3][5] - Franklin Wireless Corp. (NASDAQ:FKWL) has shown a 3-month performance of 23.44% and is positioned to benefit from the expanding mobile hotspot market due to the rise of hybrid work models [7][9] - Core Scientific Inc. (NASDAQ:CORZ) has a 3-month performance of 36.85%, with analysts raising price targets amid potential acquisition scenarios, indicating an attractive risk/reward profile [11][12]

Core Viewpoint - Franklin Wireless Corp. has demonstrated significant operational recovery and growth in fiscal 2025, with a notable increase in revenue and a reduction in net loss, indicating positive investor sentiment and confidence in the company's strategic initiatives [1][2][8]. Revenue & Earnings Performances - For the fiscal year ending June 30, 2025, Franklin Wireless reported net sales of $46.09 million, a 49.7% increase from $30.80 million in fiscal 2024 [2]. - The company recorded a net loss of $243,101, significantly narrower than the $3.96 million loss in the previous year, with basic and diluted loss per share improving from 34 cents to 2 cents [2]. Gross Profit and Margins - Gross profit increased to $7.92 million from $3.51 million, with gross margin improving from 11.4% to 17.2%, attributed to better cost control and an improved product mix [3]. Key Business Metrics - Cash and cash equivalents rose to $14.74 million from $12.27 million, while total assets increased to $51.33 million from $46.72 million, reflecting higher inventory and receivables [4]. - Total liabilities increased to $13.44 million from $10.34 million, primarily due to accrued officer bonuses [4]. Inventory and Shareholders' Equity - Inventories increased to $2.36 million from $1.43 million, indicating preparation for higher sales volumes in fiscal 2026 [5]. - Shareholders' equity rose to $37.89 million, supported by non-controlling interests from the Sigbeat joint venture [5]. Management Commentary - Management highlighted operational improvements, including successful supplier restructuring and the positive impact of new product introductions in wireless connectivity [6]. - The Sigbeat joint venture aims to enhance global reach in telecommunications modules and hardware solutions [6]. Legal and Settlement Matters - The resolution of multiple legal matters positively influenced fiscal 2025 performance, with a $2.4 million class-action settlement paid in May 2024, leading to reduced future litigation exposure [9]. Cost Management - Cost of goods sold increased to $38.17 million from $27.29 million, but was offset by sales growth, while research and development expenses decreased to $1.47 million from $3.40 million, indicating tighter cost control [10]. Future Outlook - Management expressed optimism for continued growth driven by a strengthened supply chain, recent product developments, and the ramp-up of the Sigbeat venture [11]. - The company aims to improve profitability through operational efficiencies and a focus on higher-margin products, supported by a stable cash position and low leverage [11]. Other Developments - In fiscal 2025, Franklin Wireless repurchased stock options from CEO OC Kim for $746,067, and formed the Sigbeat joint venture with a $3 million contribution [12]. - The company maintained compliance with the Sarbanes-Oxley Act, confirming effective internal control over financial reporting as of June 30, 2025 [13].

PART I [Item 1: Business](index=5&type=section&id=Item%201%3A%20Business) Franklin Wireless Corp. provides global 5G/4G LTE wireless solutions, including mobile hotspots and MDM, operating as a single segment with R&D and sales subsidiaries - Franklin Wireless (Franklin Access) is a **global provider of integrated 5G/4G LTE wireless solutions**, including mobile hotspots, fixed wireless routers, and MDM, also focusing on IoT and M2M applications[13](index=13&type=chunk)[221](index=221&type=chunk) - The company holds **66.3% ownership in FTI** (South Korea-based R&D) and **60% in Sigbeat Inc.** (San Diego-based sales, marketing, and operations for telecommunications modules)[14](index=14&type=chunk)[16](index=16&type=chunk)[222](index=222&type=chunk)[225](index=225&type=chunk) - Franklin Wireless operates as a **single reportable segment** focused on wireless access product sales, with performance assessed by the CODM based on consolidated net income (loss)[18](index=18&type=chunk)[230](index=230&type=chunk) Geographic Area | Geographic Area | Fiscal Year Ended June 30, 2025 | Fiscal Year Ended June 30, 2024 | | :---------------- | :------------------------------ | :------------------------------ | | **Net Sales:** | | | | North America | $46,081,244 | $30,699,727 | | Asia | $5,657 | $96,963 | | **Totals** | **$46,086,901** | **$30,796,690** | | | | | | **Net Loss:** | **$(140,429)** | **$(4,166,671)** | | | | | | **Long-lived assets, net:** | **June 30, 2025** | **June 30, 2024** | | North America | $929,173 | $1,218,139 | | Asia | $157,821 | $206,426 | | **Totals** | **$1,086,994** | **$1,424,565** | - Product offerings include **5G/4G LTE Wi-Fi Mobile Hotspots**, **Fixed Wireless Routers**, Smart Box Solutions (M2M Gateway, On-Device AI), Quvo Family Guardian Solutions, and JEXtream MDM/NMS Solutions[22](index=22&type=chunk)[23](index=23&type=chunk)[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk)[27](index=27&type=chunk)[28](index=28&type=chunk) - As of June 30, 2025, Franklin Wireless had **67 total employees** across its entities, with the majority of product manufacturing outsourced to two independent companies in Asia[32](index=32&type=chunk)[33](index=33&type=chunk) [Item 1A: Risk Factors](index=9&type=section&id=Item%201A%3A%20Risk%20Factors) The company faces significant risks from financing needs, IP infringement, intense competition, product defects, customer concentration, and international operations - Additional financing may be required for product development and commercialization, with potential for unfavorable terms, program delays, or stockholder dilution[35](index=35&type=chunk) - Operating in an IP-rich industry, the company faces infringement claims that could result in substantial damages, sales prohibitions, or costly licensing[36](index=36&type=chunk)[39](index=39&type=chunk) - The highly competitive wireless broadband market demands continuous investment in R&D, sales, and marketing; ineffective competition could lead to price reductions and smaller orders[41](index=41&type=chunk) - Operating in high-risk telecom, hardware, and software industries, the company faces challenges like design flaws, manufacturing defects, and rapidly changing technology, impacting product quality and market acceptance[42](index=42&type=chunk)[43](index=43&type=chunk)[44](index=44&type=chunk)[45](index=45&type=chunk)[46](index=46&type=chunk) - Product demand is highly dependent on wireless network capacity and subject to dramatic fluctuations from events like pandemics, which also disrupt supply chains[47](index=47&type=chunk)[48](index=48&type=chunk) - The company relies on a small number of customers, with the **two largest accounting for 60.9% and 33.5% of FY2025 net sales**, posing a material risk to revenues and profitability if business is lost[51](index=51&type=chunk)[274](index=274&type=chunk) - International operations expose the company to risks including credit management, regulatory changes, **tariffs (10-80%)**, IP uncertainties, foreign currency fluctuations, and political instability[54](index=54&type=chunk)[55](index=55&type=chunk)[58](index=58&type=chunk)[63](index=63&type=chunk) [Item 1B: Unresolved Staff Comments](index=16&type=section&id=Item%201B%3A%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC - No unresolved staff comments[66](index=66&type=chunk) [Item 1C: Cybersecurity](index=16&type=section&id=Item%201C%3A%20Cybersecurity) Cybersecurity risk management is integrated into the enterprise risk program, overseen by the Board and Audit Committee, with no material incidents identified as of June 30, 2025 - Cybersecurity risk management is an integral part of the company's enterprise risk management program, designed to assess, identify, and manage threats and incidents, including those from third parties[67](index=67&type=chunk) - The Board of Directors oversees significant risks, with the Audit Committee specifically overseeing cybersecurity risks, while management handles day-to-day identification and management[68](index=68&type=chunk) - As of June 30, 2025, no cybersecurity incidents were identified that materially affected business strategy, results of operations, or financial condition[73](index=73&type=chunk) [Item 2: Properties](index=17&type=section&id=Item%202%3A%20Properties) The company leases executive offices in San Diego and FTI leases office space in Seoul, with **FY2025 rent expenses totaling $469,910** - The company leases **11,400 square feet of office space in San Diego** at a monthly rent of **$27,789**, under a 65-month lease commencing January 1, 2024[74](index=74&type=chunk)[293](index=293&type=chunk) - FTI, the Korea-based subsidiary, leases **12,682 square feet of office space in Seoul**, with leases extended to August 31, 2026[76](index=76&type=chunk)[295](index=295&type=chunk) Rent Expense Summary | Fiscal Year Ended June 30, | 2025 | 2024 | | :------------------------- | :---------- | :---------- | | Total Lease Expense | $469,910 | $538,258 | - The company is reviewing a **$96,704 invoice for additional rent** from a prior landlord for a lease expired in December 2023, recorded as an accrued liability in FY2024[75](index=75&type=chunk)[294](index=294&type=chunk) [Item 3: Legal Proceedings](index=17&type=section&id=Item%203%3A%20Legal%20Proceedings) The company is involved in various legal proceedings and claims arising in the ordinary course of business, with details in Note 6 to the Consolidated Financial Statements - The company is involved in legal proceedings and claims arising in the ordinary course of business, with further details in Note 6 of the Consolidated Financial Statements[78](index=78&type=chunk)[300](index=300&type=chunk) [Item 4: Mine Safety Disclosures](index=17&type=section&id=Item%204%3A%20Mine%20Safety%20Disclosures) There are no mine safety disclosures applicable to the company - No mine safety disclosures[79](index=79&type=chunk) PART II [Item 5: Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=18&type=section&id=Item%205%3A%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's Common Stock trades on Nasdaq under "FKWL," with **11.78 million shares outstanding** and equity compensation plans including **392,001 outstanding options** at a **$4.64 weighted-average exercise price** - The company's Common Stock is traded on the Nasdaq National Market System under the symbol **"FKWL"**[81](index=81&type=chunk) - As of September 29, 2025, the company had **11,784,280 shares of common stock outstanding**[7](index=7&type=chunk) Equity Compensation Plan Information (as of June 30, 2025) | Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans | | :---------------------------------------------- | :------------------------------------------------------------------------ | :------------------------------------------------------------------------ | :------------------------------------------------------------------------------------------- | | Equity compensation plans approved by security holders | 392,001 | $4.64 | 604,000 | | Equity compensation plans not approved by security holders | – | N/A | – | | **Total** | **392,001** | **$4.64** | **604,000** | [Item 6: Selected Financial Data](index=18&type=section&id=Item%206%3A%20Selected%20Financial%20Data) This item is reserved and contains no selected financial data - Item 6 is reserved and contains no selected financial data[83](index=83&type=chunk) [Item 7: Management's Discussion and Analysis of Financial Condition and Results of Operations](index=18&type=section&id=Item%207%3A%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) FY2025 saw significant increases in net sales and gross profit, while operating expenses rose and other income surged from a legal settlement and foreign currency gains, with **$40.6 million in liquidity** - Net sales increased by **$15.29 million (49.6%)** to **$46.09 million** for FY2025, primarily due to increased demand from major North American carrier customers[108](index=108&type=chunk) - Gross profit increased by **$4.41 million (125.6%)** to **$7.92 million** for FY2025, with the gross profit margin improving to **17.2%** from 11.4% in FY2024[110](index=110&type=chunk) - Operating expenses increased by **$1.33 million (14.1%)** to **$10.78 million** in FY2025, mainly due to increased payroll and direct R&D costs[111](index=111&type=chunk)[112](index=112&type=chunk) - Other income (expense), net, increased by **$1.85 million (225.1%)** to **$2.68 million** in FY2025, driven by a **$1 million legal settlement gain**, **$247,592 from forgiven liability**, and **$683,132 from favorable foreign currency exchange**[113](index=113&type=chunk) Consolidated Statements of Comprehensive Loss (as a percentage of sales) | Item | 2025 | 2024 | | :---------------------------------------- | :-------- | :-------- | | Net sales | 100.00% | 100.00% | | Cost of goods sold | (82.80%) | (88.60%) | | Gross profit | 17.20% | 11.40% | | Operating expenses | 23.40% | 30.70% | | Loss from operations | (6.20%) | (19.30%) | | Other income (expense), net | 5.80% | 2.70% | | Net loss before income taxes | (0.40%) | (16.60%) | | Income tax benefit | (0.10%) | (3.10%) | | Net loss | (0.30%) | (13.50%) | | Less: non-controlling interest in net (loss) income of subsidiary | 0.20% | (0.60%) | | Net loss attributable to Parent Company stockholders | (0.50%) | (12.90%) | - Principal liquidity as of June 30, 2025, was **$40.63 million in cash and short-term investments**, deemed sufficient to cover operations through at least June 30, 2026[115](index=115&type=chunk)[127](index=127&type=chunk) Cash Flow from Activities | Activity | Fiscal Year Ended June 30, 2025 | Fiscal Year Ended June 30, 2024 | | :------------------- | :------------------------------ | :------------------------------ | | Operating Activities | $1,844,360 (provided) | $(773,360) (used) | | Investing Activities | $1,006,398 (provided) | $723,858 (provided) | | Financing Activities | $(408,663) (used) | $91,057 (provided) | Warranty Repairs and Return Rates (as of June 30, 2025) | Device Type | Return Rate | Warranty Repairs | | :---------------- | :---------- | :--------------- | | 4G Wireless Devices | 0.10% | 0.01% | | 5G Wireless Devices | 0.55% | 0.13% | [Item 7A: Quantitative and Qualitative Disclosures About Market Risk](index=25&type=section&id=Item%207A%3A%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This item is not applicable to the company - This item is not applicable[128](index=128&type=chunk) [Item 8: Financial Statements and Supplementary Data](index=25&type=section&id=Item%208%3A%20Financial%20Statements%20and%20Supplementary%20Data) The required financial statements and supplementary data are included in the report, starting on page F-1 - The financial statements and supplementary financial information are listed in the Index to Financial Statements beginning on page F-1[129](index=129&type=chunk) [Item 9: Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=25&type=section&id=Item%209%3A%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) There have been no changes in or disagreements with accountants on accounting and financial disclosure - No changes in and disagreements with accountants on accounting and financial disclosure[130](index=130&type=chunk) [Item 9A: Controls and Procedures](index=25&type=section&id=Item%209A%3A%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during Q4 FY2025 - Management concluded that the company's disclosure controls and procedures were **effective as of June 30, 2025**[131](index=131&type=chunk) - No material changes in internal controls over financial reporting occurred during the fourth quarter of fiscal year ended June 30, 2025[132](index=132&type=chunk) - Management maintained **effective internal control over financial reporting** as of June 30, 2025, based on the COSO 2013 framework[134](index=134&type=chunk) [Item 9B: Other Information](index=26&type=section&id=Item%209B%3A%20Other%20Information) No director or officer adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025 - No director or officer adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter ended June 30, 2025[135](index=135&type=chunk) [Item 9C: Disclosure Regarding Foreign Jurisdictions That Prevent Inspections](index=26&type=section&id=Item%209C%3A%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20That%20Prevent%20Inspections) This item is not applicable to the company - This item is not applicable[136](index=136&type=chunk) PART III [Item 10: Directors, Executive Officers and Corporate Governance](index=27&type=section&id=Item%2010%3A%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) The company's leadership includes OC Kim (President, CEO) and Johnathan Chee (Chairman), with the Board operating with Audit, Compensation, and Nominating Committees, supported by a Code of Ethics and Insider Trading Policy - Key executive officers and directors include **OC Kim (President, CEO)**, **Johnathan Chee (Chairman)**, Heidy Chow (Audit Committee Chair), Reid Granados (Acting CFO), and Bill Bauer (Secretary, General Counsel)[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk)[145](index=145&type=chunk)[146](index=146&type=chunk) - The Board of Directors held **four meetings in FY2025 with 100% attendance**, operating with an Audit Committee, a Compensation Committee, and a Nominating Committee[149](index=149&type=chunk) - The company adopted a Code of Ethics and an Insider Trading Policy prohibiting trading on material nonpublic information, restricting blackout period trading, and requiring pre-clearance for certain individuals[148](index=148&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) - No directors or executive officers adopted, modified, or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during FY2025[150](index=150&type=chunk) [Item 11: Executive Compensation](index=29&type=section&id=Item%2011%3A%20Executive%20Compensation) Executive compensation includes base salary, incentives, and stock options, aligned with stockholder interests, with a Mandatory Recoupment Policy; OC Kim's FY2025 compensation increased significantly due to bonuses and an option repurchase, alongside Change of Control and Forbearance Agreements - Executive officers are compensated through a mix of base salary, incentive compensation, and stock options, aligning management incentives with stockholder interests[176](index=176&type=chunk) - A **Mandatory Recoupment Policy** was adopted on October 13, 2023, to recover incentive compensation paid to executive officers in connection with financial restatements[154](index=154&type=chunk)[180](index=180&type=chunk) Summary Compensation for Named Executive Officers | Name and Principal Position | Fiscal Year | Salary ($) | Paid Bonus ($) | Accrued Bonus ($) | Stock Option Repurchase Payment ($) | Option Awards ($) | Total ($) | | :-------------------------- | :---------- | :--------- | :------------- | :---------------- | :---------------------------------- | :---------------- | :-------- | | OC Kim, President, CEO and a Director | 2024 | 300,000 | – | 500,000 | – | – | 800,000 | | | 2025 | 300,000 | 25,001 | 1,750,000 | 746,067 | – | 2,821,068 | | Reid Granados, Acting Chief Financial Officer | 2024 | – | – | – | – | – | – | | | 2025 | 141,013 | – | 3,000 | – | – | 144,013 | | William Bauer, Secretary, General Counsel | 2024 | 145,000 | – | 75,000 | – | – | 220,000 | | | 2025 | 158,061 | – | 3,000 | – | – | 161,061 | | Yun J. (David) Lee, Senior Vice President of Sales | 2024 | 300,000 | – | 120,000 | – | – | 420,000 | | | 2025 | 300,000 | – | 3,000 | – | – | 303,000 | - Change of Control Agreements provide lump sum payments of **$5 million for OC Kim** and **$2 million for Yun J. (David) Lee** upon a change of control, extended through October 2027[169](index=169&type=chunk)[170](index=170&type=chunk)[318](index=318&type=chunk)[319](index=319&type=chunk) - A Forbearance Agreement with OC Kim (September 23, 2024) deferred a **$1.25 million incentive bonus** in exchange for deferring a **$1 million settlement owed by Mr. Kim**, partially offset by a **$337,404 option repurchase**, leaving a **$662,596 balance owed** as of June 30, 2025[174](index=174&type=chunk)[175](index=175&type=chunk)[185](index=185&type=chunk)[186](index=186&type=chunk)[187](index=187&type=chunk)[312](index=312&type=chunk)[314](index=314&type=chunk)[325](index=325&type=chunk)[326](index=326&type=chunk)[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk) [Item 12: Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=33&type=section&id=Item%2012%3A%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) As of September 30, 2025, OC Kim beneficially owned **9.3%** of the company's Common Stock, while all directors and executive officers as a group beneficially owned **28.4%** Shares Beneficially Owned (as of September 30, 2025) | Name and Address | Number of Shares | Percent | | :-------------------------------------------------- | :--------------- | :------ | | Joon Won Jyoung (3940 Ruffin Road, Suite C, San Diego, CA 92123) | 1,004,948 | 8.5% | | OC Kim (3940 Ruffin Road, Suite C, San Diego, CA 92123) | 1,096,695 | 9.3% | | The Estate of Gary Nelson (3940 Ruffin Road, Suite C, San Diego, CA 92123) | 314,008 | 2.7% | | Yun J. (David) Lee (3940 Ruffin Road, Suite C, San Diego, CA 92123) | 185,000 | 1.6% | | Johnathan Chee (3940 Ruffin Road, Suite C, San Diego, CA 92123) | 13,500 | 0.1% | | Paul Packer (7100 West Camino Real, Suite 302-48, Boca Raton, FL 33433) | 727,794 | 6.2% | | All directors and executive officers as a group | 3,341,945 | 28.4% | [Item 13: Certain Relationships and Related Transactions, and Director Independence](index=35&type=section&id=Item%2013%3A%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Key related party transactions include the Forbearance Agreement and Option Repurchase Agreement with President OC Kim, involving a deferred **$1.25 million bonus** and partial settlement of a **$1 million receivable**, and **$13.7 million in EMS purchases** from Forge International Co., Ltd. in FY2025 - The company entered a Forbearance Agreement with President OC Kim on September 23, 2024, deferring a **$1.25 million bonus** in exchange for deferring a **$1 million settlement payment** owed by Mr. Kim[185](index=185&type=chunk)[341](index=341&type=chunk) - On May 8, 2025, the company repurchased vested options from Mr. Kim for **$746,067**, with **$337,404** of net proceeds offsetting his receivable balance[187](index=187&type=chunk)[343](index=343&type=chunk) - The company purchased **$13.7 million in electronic manufacturing services (EMS)** from Forge International Co., Ltd., its joint venture partner in Sigbeat, in FY2025, a significant increase from **$177,000 in FY2024**[188](index=188&type=chunk)[346](index=346&type=chunk) [Item 14: Principal Accountant Fees and Services](index=35&type=section&id=Item%2014%3A%20Principal%20Accountant%20Fees%20and%20Services) Audit fees billed by Simon & Edward, LLP were **$104,378 for FY2025** and **$126,350 for FY2024**, with all services approved in advance by the Board or Audit Committee Principal Accountant Fees | Fee Type | FY 2025 | FY 2024 | | :--------- | :--------- | :--------- | | Audit Fees | $104,378 | $126,350 | | Total Fees | $104,378 | $126,350 | - All services provided by the external auditor, Simon & Edward, LLP, were approved in advance by the Board of Directors or the Audit Committee[188](index=188&type=chunk) PART IV [Item 15: Exhibits, Financial Statement Schedules](index=36&type=section&id=Item%2015%3A%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists all exhibits and financial statement schedules filed as part of, or incorporated by reference into, the Form 10-K report - This section provides an index to financial statements and a list of exhibits filed as part of, or incorporated by reference into, the Form 10-K report[190](index=190&type=chunk) [Item 16: Form 10-K Summary](index=38&type=section&id=Item%2016%3A%20Form%2010-K%20Summary) This item is not applicable to the company - This item is not applicable[193](index=193&type=chunk) [Signatures](index=39&type=section&id=Signatures) The report is signed by OC Kim (President, Principal Executive Officer), Reid Granados (Acting CFO), and other directors, affirming compliance with the Securities Exchange Act of 1934 - The report is signed by **OC Kim (President and Principal Executive Officer)**, **Reid Granados (Acting Chief Financial and Accounting Officer)**, and other directors, dated September 29, 2025[196](index=196&type=chunk)[197](index=197&type=chunk) [Index to Financial Statements](index=40&type=section&id=Index%20to%20Financial%20Statements) This section indexes consolidated financial statements, including the auditor's report which highlights legal proceedings as a critical audit matter, and comprehensive notes for FY2025 and FY2024 - The index lists the Consolidated Balance Sheets, Statements of Comprehensive Loss, Statements of Changes in Stockholders' Equity, Statements of Cash Flows, and Notes to Consolidated Financial Statements for FY2025 and FY2024[199](index=199&type=chunk) - The Report of Independent Registered Public Accounting Firm (Simon & Edward, LLP) provides an unqualified opinion and identifies **legal proceedings as a critical audit matter** due to high auditor judgment in evaluating liabilities and disclosures[201](index=201&type=chunk)[205](index=205&type=chunk)[207](index=207&type=chunk) - Notes to Consolidated Financial Statements provide detailed information on business overview, significant accounting policies, accrued liabilities, earnings per share, commitments and contingencies, long-term incentive plan awards, stockholders' equity, related party transactions, and subsequent events[220](index=220&type=chunk)[224](index=224&type=chunk)[280](index=280&type=chunk)[281](index=281&type=chunk)[288](index=288&type=chunk)[291](index=291&type=chunk)[331](index=331&type=chunk)[337](index=337&type=chunk)[341](index=341&type=chunk)[347](index=347&type=chunk)

Core Insights - Franklin Access has launched the RG350, a next-generation 5G RedCap mobile hotspot, certified on AT&T's nationwide 5G network, featuring the Qualcomm Snapdragon® X35 5G Modem-RF System [1][4] Product Features - The RG350 is designed for remote professionals, small teams, and IoT deployments, supporting up to 15 simultaneous connections and includes features like remote device management, VPN pass-through, and MAC address filtering [2] - Key features include dual-band Wi-Fi 6, support for 5G NR-Light (RedCap) and fallback to LTE Cat 4, a 3000mAh rechargeable battery, and a password-protected web admin portal [6] Company Overview - Franklin Access is a leader in integrated wireless solutions, offering advanced 4G LTE and 5G technologies, including mobile hotspots, routers, and mobile device management tools [5]

Core Viewpoint - Zacks Investment Research has initiated coverage of Franklin Wireless Corp. (FKWL) with a "Neutral" recommendation, marking the first Wall Street research report on the company [1] Company Overview - Franklin Wireless operates under the brand "FranklinAccess," focusing on the 5G and 4G LTE ecosystem with a portfolio that includes mobile hotspots, fixed routers, and IoT gateways [2] Financial Performance - The company reported a significant 58.7% year-over-year revenue growth, reaching $39.16 million through March 31, 2025, driven by strong demand from major North American telecom customers [3] - Third-quarter revenues increased by 30% year over year, indicating resilience amid a general post-pandemic demand decline in the hardware sector [3] - Gross margin improved to 17% from 11.6% year over year, attributed to a strategic shift towards premium devices, suggesting increased pricing power [4] - Franklin Wireless has a strong balance sheet with $38.14 million in cash, no debt, and a current ratio exceeding 4.3X, providing exceptional liquidity for R&D investments or acquisitions [5] Growth Drivers - The upcoming May 2024 launch of Sigbeat Inc., a joint venture with Forge International, is expected to diversify revenue streams and enhance international exposure [6] Risks and Challenges - The company faces significant customer concentration risk, with 95% of sales derived from just two clients, which limits visibility and increases contract risks [7] - Ongoing executive compensation disputes related to legal settlements raise corporate governance concerns [7] - Other risks include unresolved shareholder lawsuits from a 2021 device recall, a $10 million unsecured intercompany loan exposed to foreign exchange losses, and rising operating costs that exceed revenue growth [8] - Declining R&D investment and an aging IP portfolio indicate a need for renewed innovation to stay competitive [8] Valuation - Franklin Wireless trades at a deep discount relative to peers, with an EV/Sales ratio of 0.21X and negative EV/EBITDA, reflecting both its microcap status and structural challenges [9]

Financial Performance - Net sales for the three months ended March 31, 2025, were $8,009,619, representing a 29.6% increase from $6,176,499 in the same period of 2024[15] - Gross profit for the nine months ended March 31, 2025, was $6,667,444, compared to $2,867,684 for the same period in 2024, indicating a significant increase[15] - The company reported a net loss of $637,706 for the three months ended March 31, 2025, compared to a net loss of $1,310,320 for the same period in 2024, showing an improvement[15] - Total net sales for the nine months ended March 31, 2025, reached $39,159,629, up 58.8% from $24,679,824 in the same period of 2024[34] - The net loss attributable to the Parent Company for the nine months ended March 31, 2025, was $72,495, a significant improvement compared to a net loss of $2,297,180 for the same period in 2024[23] - Comprehensive loss for the three months ended March 31, 2025, was $641,515, compared to a comprehensive loss of $1,457,081 in the same period of 2024[15] Assets and Liabilities - Total current assets increased to $43,943,839 as of March 31, 2025, up from $40,220,460 as of June 30, 2024[13] - Total liabilities rose to $11,377,761 as of March 31, 2025, compared to $10,343,831 as of June 30, 2024[13] - The company’s cash and cash equivalents increased to $12,802,614 as of March 31, 2025, from $12,266,556 as of June 30, 2024[13] - As of March 31, 2025, the total stockholders' equity was $38,333,973, an increase from $36,375,998 as of June 30, 2024, reflecting a growth of approximately 5%[18] - Total current liabilities increased to $10.26 million as of March 31, 2025, compared to $9.09 million as of June 30, 2024, reflecting an increase of approximately 12.9%[13] Research and Development - Research and development expenses for the nine months ended March 31, 2025, were $2,745,763, up from $2,531,279 in the same period of 2024[15] - Research and development costs were $794,213 for the three months ended March 31, 2025, slightly down from $811,470 for the same period in 2024[15] Income and Expenses - The company recorded a litigation settlement income of $1,000,000 during the three months ended March 31, 2025[15] - The company recorded an income tax expense of $218,199 for the nine months ended March 31, 2025, compared to an income tax benefit of $577,981 for the same period in 2024[72] - The company recorded an income tax expense of $2,592 for the three months ended March 31, 2025, compared to an income tax benefit of $312,764 for the same period in 2024, indicating a shift in tax position[72] Cash Flow - The company reported a net cash used in operating activities of $490,230 for the nine months ended March 31, 2025, a significant reduction from $6,972,515 in the same period of the previous year[23] - The company reported a net cash increase of $536,058 for the nine months ended March 31, 2025, contrasting with a decrease of $5,236,792 in the previous year[24] Inventory and Receivables - The company’s accounts receivable increased to $3,004,809 as of March 31, 2025, from $1,155,060 as of June 30, 2024[50] - Contract liabilities totaled $765,316 as of March 31, 2025, compared to $158,771 as of June 30, 2024, indicating a significant increase in undelivered products and accrued marketing development funds[51] - As of March 31, 2025, the company recorded inventory reserves of $91,482 for obsolete or slow-moving inventory[64] Joint Ventures and Partnerships - The company formed a joint venture corporation, Sigbeat, with a total capital contribution of $5 million, where it owns 60%[122] - The company entered into a joint venture with Forge International Co., Ltd., forming Sigbeat, which is expected to enhance its market presence in telecommunications modules[28] Operational Efficiency - The company anticipates continued growth in net sales and improvements in operational efficiency in the upcoming quarters[11] - The company accrued a commission of $643,656 to a customer for marketing support during the nine months ended March 31, 2025, compared to $247,592 for the same period in 2024, representing an increase of approximately 159%[87] Legal Matters - FTI, a subsidiary, is involved in litigation with Partron Co., Ltd., claiming damages of $8,126,786 under the South Korean Unfair Competition Prevention Act[105] - The company agreed to a settlement of $2.4 million related to a shareholder litigation, which is reflected in liabilities under "accrued legal contingency expense"[107] Cybersecurity and Compliance - The company has a cybersecurity risk management program in place, with no identified incidents materially affecting operations as of March 31, 2025[132] - The company has no material unrecognized tax benefits as of March 31, 2025, suggesting a stable tax compliance environment[72]

Product Launch - Franklin Access has launched the Seiona – RT410S, a new product designed for secure and reliable connectivity in edge applications, targeting the multi-billion-dollar IoT market [1][2] - The Seiona – RT410S is aimed at various industries including digital signage, healthcare, ATMs, kiosks, vending machines, and EV charging stations, enhancing operational efficiency through seamless data exchange [1] Competitive Advantage - The Seiona series integrates full access to the Pintrac Mobile Device Management (MDM) platform, allowing for comprehensive remote management of devices, which reduces on-site servicing time and costs [2] - The Seiona – RT410S is the first in a series of upcoming devices that will utilize LTE technology and will be available in various physical configurations [2] Technical Features - The Seiona – RT410S incorporates cellular, Wi-Fi, and GPS technologies to ensure robust performance, with a compact and portable design suitable for diverse deployment scenarios [3] - The product is currently undergoing technical evaluation with leading national retailers for kiosk applications and is in the process of U.S. wireless carrier certification [3]

Group 1 - Franklin Wireless Corp. has appointed Ira Greenstein to its Board of Directors effective February 17, 2025, enhancing the board's expertise in strategic decision-making and governance [1][2] - Ira Greenstein is a Founding Partner of Pierson Ferdinand LLP and has held significant positions including Deputy Assistant and Strategist to the President during the first Trump Administration, and President of IDT Corporation and Genie Energy Ltd [1][2] - Greenstein will replace Gary Nelson on the Board, who is resigning to spend more time with his family [2] Group 2 - Franklin Wireless specializes in integrated connectivity solutions utilizing 4G LTE and 5G technologies, offering mobile device management and network management solutions [3]

Financial Performance - Net sales for the three months ended December 31, 2024, reached $17,827,098, a significant increase of 100.5% compared to $8,847,779 in the same period of 2023[16] - Gross profit for the six months ended December 31, 2024, was $5,313,564, up from $2,350,235 in 2023, reflecting a growth of 126.5%[16] - The company reported a net income attributable to Parent Company of $228,740 for the three months ended December 31, 2024, compared to a net loss of $764,615 in the same period of 2023[16] - For the six months ended December 31, 2024, the net income was $565,211 compared to a net loss of $986,860 for the same period in 2023[23] - Earnings per share attributable to Parent Company stockholders for the three months ended December 31, 2024, was $0.02, compared to a loss of $0.06 in the same period of 2023[16] - Net sales increased by $8,979,319, or 101.5%, to $17,827,098 for the three months ended December 31, 2024, compared to $8,847,779 for the same period in 2023[156] - Gross profit increased by $2,404,987, or 287.3%, to $3,242,062 for the three months ended December 31, 2024, with a gross profit margin of 18.2% compared to 9.5% in 2023[158] - For the six months ended December 31, 2024, net sales increased by $12,646,685, or 68.3%, to $31,150,010 from $18,503,325 in 2023[162] - Gross profit for the six months ended December 31, 2024, increased by $2,963,329, or 126.1%, to $5,313,564, with a gross profit margin of 17.1% compared to 12.7% in 2023[164] Assets and Liabilities - Total current assets increased to $48,586,348 as of December 31, 2024, compared to $40,220,460 on June 30, 2024, representing a rise of 20.5%[14] - Total liabilities increased to $17,474,880 as of December 31, 2024, compared to $10,343,831 on June 30, 2024, marking a rise of 68.5%[14] - Cash and cash equivalents rose to $20,262,886 as of December 31, 2024, compared to $12,266,556 on June 30, 2024, indicating a growth of 65.5%[14] - Total stockholders' equity increased to $36,975,488 as of December 31, 2024, from $36,375,998 on June 30, 2024, reflecting a growth of 1.6%[14] - The company reported accounts receivable of $1,912,369 as of December 31, 2024, compared to $1,155,060 as of June 30, 2024, indicating a significant increase in receivables[51] - Total accrued liabilities as of December 31, 2024, amounted to $2,002,924, an increase from $1,425,146 as of June 30, 2024[89] Cash Flow - Operating cash flow for the six months ended December 31, 2024, was $5,412,542, a significant improvement from a cash outflow of $6,193,534 in the prior year[23] - For the six months ended December 31, 2024, net cash provided by operating activities was $5,412,542, primarily due to an increase in accounts payable and accrued liabilities of $6,501,820 and $838,564, respectively[173] - For the six months ended December 31, 2023, net cash used in operating activities was $6,193,534, mainly due to an increase in accounts receivable of $4,495,638 and a decrease in accounts payable of $3,869,191[174] - Net cash provided by investing activities for the six months ended December 31, 2024, was $2,631,817, primarily from sales of short-term investments totaling $2,685,688[175] - Net cash used in investing activities for the six months ended December 31, 2023, was $869,481, mainly due to the purchase of short-term investments of $779,571[177] - Net cash used in financing activities for the six months ended December 31, 2024, was $0, compared to $2,046 in 2023, which was related to increased loan interest to an employee[178] Expenses - Research and development expenses for the six months ended December 31, 2024, totaled $1,951,550, an increase of 13.5% from $1,719,809 in 2023[16] - Operating expenses increased by $53,815, or 2.2%, to $2,446,831 for the three months ended December 31, 2024[159] - Operating expenses for the six months ended December 31, 2024, increased by $400,423, or 8.9%, to $4,891,116 from $4,490,693 in 2023[166] - The company reported stock-based compensation of $170,583 for the six months ended December 31, 2024, compared to $138,780 in the prior year[23] - Shipping and handling costs for the three months ended December 31, 2024, were $94,742, up from $51,498 in the same period of 2023, representing an increase of approximately 83.7%[63] - The company incurred amortization expenses of approximately $208,917 for the three months ended December 31, 2024, compared to $239,688 for the same period in 2023, showing a decrease of approximately 12.8%[56] - Amortization expense for definite lived intangible assets was $217,591 for the three months ended December 31, 2024, compared to $245,326 for the same period in 2023[87] Subsidiaries and Investments - The company formed a new subsidiary, Sigbeat, with a 60% ownership stake, contributing $5,000,000 in capital for its establishment[27] - The company holds a 66.3% ownership in Franklin Technology Inc., which provides design and development services for wireless products[85] - The company holds a 66.3% ownership in Franklin Technology Inc. and a 60% ownership in Sigbeat Inc., expanding its market presence in North America and Asia[147] Legal and Compliance - The company is involved in litigation related to a recall affecting approximately 2.5 million devices, with no current estimate of the financial impact[104] - A legal action against the company resulted in a settlement payment of $2.4 million related to shareholder litigation[110] - The company has no material unrecognized tax benefits as of December 31, 2024[74] - The company recorded a decrease in deferred tax asset of $166,927 for the three months ended December 31, 2024, compared to an increase of $215,332 for the same period in 2023[74] - The company has not reported any changes in internal controls over financial reporting that materially affect its operations during the six months ended December 31, 2024[188] Lease and Rent - The company leased approximately 12,775 square feet of office space in San Diego, California, at a monthly rent of $25,754, which will increase to $27,789 for a new lease of 11,400 square feet starting January 1, 2024[93] - Rent expense for the San Diego office space was $83,367 for the three months ended December 31, 2024, compared to $77,263 for the same period in 2023, reflecting an increase of 13.6%[93] - Rent expenses for the three months ended December 31, 2024, were $112,352, a decrease from $254,402 in the same period of 2023[183] - Rent expenses for the six months ended December 31, 2024, were $225,109, down from $365,829 in 2023[183] - Rent expenses for the Korea-based subsidiary's leases were approximately $26,475 for the three months ended December 31, 2024, down from approximately $32,100 in 2023, a decrease of 17.5%[95] - Total lease expense for the six months ended December 31, 2024, was $225,109, a decrease of 38.5% from $365,829 in 2023[99] Market and Strategy - The company is a leading global provider of integrated wireless solutions, focusing on 5G and 4G LTE technologies[84] - The company is focusing on enhancing its software service offerings to adapt to the declining demand for mobile device management services in the post-pandemic economy[151] - The company plans to replace one model this year and another next year that are reaching end of life with new models, which may impact future growth prospects[192] Miscellaneous - The return rate for 5G wireless devices is 0.57%, with warranty repairs at 0.10%[102] - The company is currently exempt from international tariffs on products manufactured in Vietnam, but potential future tariffs could significantly impact costs and profits[127] - As of December 31, 2024, no material cybersecurity incidents were identified that could affect the Company's business strategy or financial condition[132]

Core Insights - Franklin Access has successfully funded a joint venture named Sigbeat to develop 4G/5G modules and AI-powered solutions [1] - Sigbeat will focus on designing, marketing, and certifying advanced 4G/5G modules with on-device AI capabilities [2] - The joint venture aims to enhance security, image processing, and video streaming functionalities while reducing reliance on cloud computing [2][3] Company Overview - Franklin Access specializes in integrated connectivity solutions utilizing 4G LTE and 5G technologies [5] - The company provides mobile device management (MDM), network management solutions (NMS), and innovative wireless products [5] Joint Venture Details - Sigbeat will leverage technological expertise from its partners and Franklin Access's leadership in wireless solutions [3] - The modules will combine edge computing with multi-network capabilities to enhance customization and efficiency for various industries [3][4] - Sigbeat aims to deliver reliable and future-ready connectivity through scalable and customizable designs [4]