FRANKLIN WIRELESS CORP SEC 10-K Report

Franklin Wireless Corp, a leading global provider of integrated wireless solutions specializing in 5G and 4G LTE technologies, has released its annual 10-K report for the fiscal year ended June 30, 2025. The report highlights significant improvements in financial performance, strategic initiatives aimed at future growth, and the challenges and risks the company faces in a highly competitive market.

Financial Highlights

• Net Sales: $46.09 million, increased by 49.6% from the previous year primarily due to increased demand from major carrier customers.
• Gross Profit: $7.92 million, increased by 125.6% with a gross profit margin of 17.2%, up from 11.4% in the previous year, driven by higher sales and a greater proportion of higher margin products.
• Loss from Operations: ($2.86 million), improved from a loss of ($5.94 million) in the previous year, reflecting better cost management and increased sales.
• Net Loss: ($0.14 million), significantly reduced from a net loss of ($4.16 million) in the previous year, aided by gains from legal settlements and favorable foreign currency exchange rates.
• Net Loss Attributable to Parent Company Stockholders: ($0.23 million), improved from a net loss of ($3.97 million) in the previous year.

Business Highlights

• Business Overview: Franklin Wireless Corp offers products such as mobile hotspots, fixed wireless routers, and mobile device management solutions, with a focus on bridging the Digital Divide and advancing IoT and M2M applications.
• Geographical Performance: North America accounted for nearly all of the company's net sales, with a significant increase in demand from major carrier customers. Conversely, sales in Asia saw a substantial decline due to the absence of revenue from Franklin Technology Inc.
• Product Lines: The company offers a range of products including 5G/4G LTE Wi-Fi mobile hotspots, fixed wireless routers, and smart box solutions. New products in development include 4G/5G M2M gateways and on-device AI solutions to enhance IoT applications.
• New Product Launches: Franklin Wireless is working on smart box solutions, including 4G/5G M2M gateways and on-device AI, which are in development to support industrial applications and enhance real-time data processing.
• Sales and Marketing: The company markets its products primarily to wireless operators in North America and Asia through direct sales and strategic partnerships, supported by various marketing activities including trade shows and public relations.
• Production and Manufacturing: The majority of the company's products are manufactured by two independent companies located in Asia, ensuring a reliable supply chain for its wireless solutions.
• Future Outlook: Franklin Wireless anticipates that its revenue growth will be influenced by maintaining existing customer relationships, increasing demand for wireless data products, and the successful introduction of new products. The company is also focused on enhancing its software service offerings to address changing market demands post-pandemic.
• Employees: As of June 30, 2025, Franklin Wireless employed 67 people across its operations, with additional support from consultants and contract workers as needed.

Strategic Initiatives

• Strategic Focus: The company is focusing on expanding its customer base and entering new customer relationships and contracts, which may require significant demands on resources, resulting in increased operating, selling, and marketing expenses. Additionally, the company is enhancing its software service offerings to address declining demand for mobile device management services in the post-pandemic economy.
• Capital Management: Franklin Wireless has a principal source of liquidity consisting of cash, cash equivalents, and short-term investments totaling $40.6 million as of June 30, 2025. The company repurchased 200,000 vested stock options from its President, OC Kim, under the 2020 employee stock option plan and received a contribution in noncontrolling interest by a partner amounting to $2,000,000.
• Future Outlook: The company believes it has sufficient available capital to cover its existing operations and obligations through at least June 30, 2026. It anticipates requiring in excess of $2 million for capital expenditures, software licenses, and for testing and certifying new products over the next twelve months. The company plans to continue its focus on maintaining good relationships with manufacturing partners and suppliers to support its growth strategy.

Challenges and Risks

• Financial Risks: The need for additional financing for product development is uncertain, and failure to secure adequate funds could adversely affect operations.
• Intellectual Property Risks: Potential infringement on third-party intellectual property rights could lead to costly litigation and impact product sales.
• Market Risks: The wireless broadband data access market is intensely competitive, with larger competitors potentially outspending Franklin Wireless in R&D and marketing.
• Operational Risks: The company operates in high-risk sectors such as telecom, hardware design, and software, where latent defects and security vulnerabilities can arise.
• Product Risks: Products containing lithium batteries pose safety risks, including thermal runaway and toxic gas emissions.
• Supply Chain Risks: Dependence on third-party manufacturers and sole source suppliers exposes the company to risks of supply disruptions.
• Regulatory Risks: Changes in government regulations could increase costs and impact the ability to sell products.
• International Risks: Expansion into international markets introduces risks such as regulatory changes, currency fluctuations, and political instability.
• Revenue Fluctuations: The post-pandemic decline in remote work and education has reduced demand for mobile device management services.
• Customer Concentration: A significant portion of revenue is derived from a small number of customers, posing a risk if these customers reduce their business with Franklin Wireless.
• Product Development: The company must continue to innovate and introduce new products to maintain competitive advantage and meet customer demands.
• Liquidity and Capital Resources: While current liquidity is sufficient, future cash requirements depend on various factors, including market acceptance of products and cost control.

SEC Filing: FRANKLIN WIRELESS CORP [ FKWL ] - 10-K - Sep. 29, 2025