Core Insights - Franklin Wireless Corp. (FKWL) shares have declined 12.4% since the first quarter earnings report for fiscal 2026, underperforming the S&P 500's 1.7% decrease during the same period [1] - The company reported quarterly revenues of $12.7 million, a decrease of 4.3% from $13.3 million a year ago, while net income attributable to the parent company rose to $640,478, resulting in EPS of 5 cents compared to 4 cents a year earlier [2] - The gross profit increased by 40.5% year over year to $2.9 million, with gross margin improving to 22.8% from 15.5% in the prior-year period [2][3] Financial Performance - Operating expenses decreased by 5.1% to $2.3 million, with administrative costs declining due to lower legal expenditures and reduced stock-based compensation [4] - Other income dropped significantly to $2,804 from $1.07 million last year, primarily due to unfavorable foreign-currency movements affecting the South Korean subsidiary [5] - Despite a decline in other income, net income of $550,536 was reported, although it was below last year's $648,656 [6] Market Conditions and Demand - The company noted that post-pandemic shifts in end-user behavior are reshaping demand, particularly for mobile device management (MDM) services [7] - Demand patterns from major carrier customers can fluctuate significantly, with two major customers representing 90.4% of consolidated net sales during the quarter [8] Operational Insights - Inventory management and supply-chain relationships were key contributors to the quarter's operating performance, with inventories declining meaningfully [10] - The company benefited from controlled production expenses, although higher shipping and delivery charges partially offset these efficiencies [11] - Franklin Wireless continued to operate its joint venture, Sigbeat, which focuses on telecommunications modules and contributed modest net income during the period [12]

Financial Performance - Net sales for the three months ended September 30, 2025, were $12,744,960, a decrease of 4.3% compared to $13,322,912 for the same period in 2024[17] - Gross profit increased to $2,909,770, representing a gross margin of approximately 22.8%, compared to $2,071,502 in the prior year[17] - Operating expenses decreased to $2,319,390, down 5.1% from $2,444,285 in the previous year[17] - Income from operations was $590,380, a significant improvement from a loss of $372,783 in the same quarter last year[17] - Net income attributable to the Parent Company was $640,478, compared to $515,187 for the same period in 2024, reflecting a year-over-year increase of 24.3%[17] - Comprehensive income for the quarter was $463,776, down from $776,780 in the same quarter of the previous year[17] - Earnings per share attributable to Parent Company stockholders were $0.05, compared to $0.04 for the same period in 2024[17] - The net loss for the three months ended September 30, 2025, was $550,536 compared to a net income of $648,656 for the same period in 2024[36] Assets and Liabilities - Total current assets increased to $47,392,530, up from $45,180,290 as of June 30, 2025[14] - Total liabilities rose to $14,926,406, compared to $13,435,727 at the end of the previous quarter, indicating an increase of 11.1%[14] - Retained earnings increased to $25,534,586, up from $24,894,108 as of June 30, 2025[14] - Cash and cash equivalents at the end of the year were $13,380,124, down from $14,618,062 at the end of 2024, representing a decrease of 8.5%[25] - As of September 30, 2025, accounts receivable, net, was $6,782,714, compared to $1,330,504 as of June 30, 2025[52] - Total accrued liabilities as of September 30, 2025, amounted to $3,864,897, an increase from $3,797,044 as of June 30, 2025[90] Research and Development - Research and development expenses decreased to $949,752 for the three months ended September 30, 2025, from $1,024,312 in 2024, a reduction of 7.3%[36] - Research and development costs were $949,752 for the three months ended September 30, 2025, compared to $1,024,312 for the same period in 2024[61] Cash Flow - The company reported a net cash used in operating activities of $(1,488,908) for the three months ended September 30, 2025, compared to net cash provided of $2,670,900 in 2024[25] - Cash flows from operations, investing, and financing activities are reported in accordance with ASC 230, using the indirect method to adjust net income for non-cash transactions[41] Joint Ventures and Partnerships - The company entered into a joint venture with Forge International Co., Ltd., forming Sigbeat, with a total capital contribution of $5,000,000[29] - A joint venture, Sigbeat, was formed with a total capital contribution of $5,000,000, with Franklin owning 60%[122] Legal Matters - The company is involved in ongoing litigation related to the Verizon Jetpack recall, affecting approximately 2.5 million devices[102] - The jury returned a verdict of $2,000,000 in favor of the company against its CEO for "short-swing" profits[112] Inventory and Purchases - The company purchased wireless data products from one manufacturer for $7,553,627, representing 93.0% of total purchases for the three months ended September 30, 2025[78] - The Company purchased wireless data products from Forge amounting to approximately $7.6 million for the three months ended September 30, 2025, compared to $1.6 million for the same period in 2024[146] Operating Expenses - Shipping and handling costs increased to $188,843 for the three months ended September 30, 2025, from $78,113 in 2024[63] - Total rent expenses for the three months ended September 30, 2025, were $119,339, an increase of 5.2% from $112,757 in 2024[98] - Operating lease expense for the three months ended September 30, 2025, was $112,060, compared to $110,713 in 2024, reflecting a 1.2% increase[98] Stock and Equity - The aggregate intrinsic value of stock options outstanding as of September 30, 2025, was $144,060 based on a closing stock price of $4.36[137] - As of September 30, 2025, the Company had 11,784,280 shares of common stock issued and outstanding[141] - The Company has been authorized to issue 50,000,000 shares of common stock, with a par value of $0.001[140] - The Company had 2,549,208 shares of treasury stock valued at $3,554,893 as of September 30, 2025[143] Incentives and Bonuses - The company accrued an incentive bonus of $125,000 for each quarter, totaling $1,500,000 as of September 30, 2025[120] - The Company accrued a deferred incentive bonus of $1,250,000 to Mr. Kim on January 16, 2025, with no payment made as of September 30, 2025[125] - Mr. Kim earned an incentive bonus of $1,250,000 for securing a joint venture agreement, which he agreed to defer under a Forbearance Agreement[124] Other Financial Information - The company holds a 66.3% ownership in Franklin Technology Inc. (FTI), which focuses on design and development services for wireless products[85] - The company has approximately $27 million in uninsured cash deposits in the U.S. and $10.9 million in Korea, exceeding the insured limits[73] - The company is currently exempt from international tariffs on products manufactured in Vietnam[126] - A cash dividend of $0.04 per share was declared on November 4, 2025, payable on December 2, 2025[149]

Core Points - Franklin Wireless Corp. has announced a one-time special dividend of $0.04 per share, payable on December 2, 2025, to shareholders of record as of November 14, 2025 [1] - The approval of the special dividend reflects the company's commitment to creating value for shareholders and appreciation for their continued support [2] - Franklin Wireless is focused on long-term growth through innovation and operational excellence [2] Company Overview - Franklin Wireless Corp. is a leading provider of wireless broadband and IoT solutions, designing and marketing wireless connectivity devices such as mobile hotspots and routers [2] - The company was founded in 1981 and is headquartered in San Diego, California, serving major operators, distributors, and system integrators globally [3]

Core Insights - Franklin Wireless Corp has launched the JEXtream CG890, a next-generation 5G Fixed Wireless Access (FWA) router aimed at providing reliable, high-speed connectivity for service providers and community-focused organizations [1][2]. Product Features - The CG890 is designed for versatility, catering to cost-conscious consumers, small businesses, nonprofits, and ISPs looking for redundant network solutions [2]. - Key features include Auto Failover, which ensures service continuity during primary network interruptions, and dual 1Gb Ethernet ports that are WAN/LAN switchable [4]. - The device supports CBRS compatibility for flexible deployment and private LTE networks, along with remote management tools for scalable network administration [4]. Market Positioning - The CG890 reflects Franklin Access' commitment to digital inclusion, enabling ISPs and community organizations to provide dependable and secure internet access, thereby bridging the digital divide [2]. - The product is now available through select distribution partners, with plans for broader availability later this quarter [3].

Group 1 - Franklin Wireless Corp. has been initiated with a Buy rating and a price target of $6 by Lake Street, indicating positive sentiment from Wall Street analysts [1][2] - The company is expected to benefit from the expanding mobile hotspot market, driven by hybrid work models, the need for reliable backup internet, and increasing demand for mobile connectivity [2] - Franklin Wireless is positioned as a lower-cost provider with a US-based headquarters, which enhances its market traction [2][3] Group 2 - Franklin Wireless offers integrated wireless solutions, including 5G/4G broadband products such as portable Wi-Fi mobile hotspot routers and fixed wireless routers [3]

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]