Franklin Wireless(US:FKWL)2025-11-14 14:31Financial 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]