FRANKLIN WIRELESS CORP
For the period ended Mar 31, 2025. Filed May 15, 2025.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed May 15, 2025
FKWL$2.11-5.4%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-12-31; filed 2025-02-14.
0001683168-25-001052
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-05-15.
0001683168-25-003630
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 50 previous paragraphs and 48 current paragraphs.
24 unchanged; 19 reworded; 5 added; 5 removed; 2 previous and 0 current paragraphs rearranged.
Tables are not compared: 1 previous and 1 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Selling, general, and administrative expenses increased by $1,265,073 to $2,526,220 for the three months ended March 31, 2025, from $1,261,147 for the corresponding period of 2024. The increase in operating expenses was primarily due to the accrued incentive bonus of $1,250,000 to OC Kim, the President. Research and development expense decreased by $17,257 to $794,213 for the three months ended March 31, 2025, from $811,470 for the corresponding period of 2024. The decrease in research and development expense was primarily due to the decreased research and development payroll expense of approximately $58,000, which was offset by an increase in other research and development costs of approximately $41,000.
Current report
NINE MONTHS ENDED MARCH 31, 2025 COMPARED TO NINE MONTHS ENDED MARCH 31, 2024
Current report
Selling, general, and administrative expenses increased by $1,433,755 to $5,465,786 for the nine months ended March 31, 2025, from $4,032,031 for the corresponding period of 2024. The increase in operating expenses was primarily due to the accrued incentive bonus of $1,250,000 to OC Kim, the President and the increased shipping and handling charges of approximately $100,000.
Current report
The $1,030,351 in net cash provided by investing activities for nine months ended March 31, 2025 was primarily due to the contribution in noncontrolling interest by a partner of $2,000,000, which was offset by the purchase of short-term investments of $730,024 and payments for purchase of capitalized product development and intangible assets of $224,442. The $1,815,796 in net cash provided by investing activities for nine months ended March 31, 2024 was primarily due to the sales of short-term investments of $1,995,606, which was partially offset by payments for purchase of capitalized product development and intangible assets of $126,793 and purchase of property and equipment of $53,017.
Current report
FINANCING ACTIVITIES - Net cash provided by financing activities for the nine months ended March 31, 2025 and 2024 was $0 and $1,045, respectively.
Removed paragraphs (5)
Previous report
SIX MONTHS ENDED DECEMBER 31, 2024 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2023
Previous report
Selling, general, and administrative expenses increased by $168,682, or 6.1%, to $2,939,566 for the six months ended December 31, 2024, from $2,770,884 for the corresponding period of 2023. The increase in selling, general, and administrative expenses was primarily due to the increased payroll expenses, legal fees, and compensation expenses related to stock options of approximately $150,000, $85,000, and $66,000, respectively, which was offset by the decreased rent expense of the operating leases by approximately $130,000.
Previous report
The $2,631,817 in net cash provided by investing activities for the six months ended December 31, 2024 was primarily due to the sales of short-term investments of $2,685,688, which were offset by the payments for capitalized product development and property and equipment of $31,981 and $24,784, respectively.
Previous report
The $869,481 in net cash used in investing activities for the six months ended December 31, 2023 was primarily due to the purchase of short-term investments of $779,571 and the payments for capitalized product development of $68,733.
Previous report
FINANCING ACTIVITIES - Net cash used in financing activities for the six months ended December 31, 2024, and 2023 was $0 and $2,046, respectively. The $2,046 in net cash used in financial activities for the six months ended December 31, 2023 was from the increased loan interest to an employee.
Reworded paragraphs (19)
Previous wording
We have several critical accounting policies, which were described in our Annual Report on Form 10-K for the year ended June 30, 2024, that are both important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective, and complex judgments. Typically, the circumstances that make these judgments difficult, subjective, and complex have to do with making estimates about the effect of matters that are inherently uncertain. There were no material changes to our critical accounting policies for the three and six months ended December 31, 2024.
Current wording
We have several critical accounting policies, which were described in our Annual Report on Form 10-K for the year ended June 30, 2024, that are both important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective, and complex judgments. Typically, the circumstances that make these judgments difficult, subjective, and complex have to do with making estimates about the effect of matters that are inherently uncertain. There were no material changes to our critical accounting policies for the three and nine months ended March 31, 2025.
Previous wording
The following table sets forth, for the three and six months ended December 31, 2024 and 2023, our statements of comprehensive income (loss) (unaudited) including data expressed as a percentage of sales:
Current wording
The following table sets forth, for the three and nine months ended March 31, 2025 and 2024, our statements of comprehensive (loss) income (unaudited) including data expressed as a percentage of sales:
Previous wording
NET SALES- Net sales increased by $8,979,319, or 101.5%, to $17,827,098 for the three months ended December 31, 2024 from $8,847,779 for the corresponding period of 2023. For the three months ended December 31, 2024, net sales by geographic regions, consisting of North America and Asia, were $17,827,098 (100% of net sales) and $0 (0% of net sales), respectively. For the three months ended December 31, 2023, net sales by geographic regions, consisting of North America and Asia, were $8,753,451 (98.9% of net sales) and $94,328 (1.1% of net sales), respectively.
Current wording
NET SALES - Net sales increased by $1,833,120, or 29.7%, to $8,009,619 for the three months ended March 31, 2025 from $6,176,499 for the corresponding period of 2024. For the three months ended March 31, 2025, net sales by geographic regions, consisting of North America and Asia, were $8,007,037 (100.0% of net sales) and $2,582 (0.0%), respectively. For the three months ended March 31, 2024, net sales by geographic regions, consisting of North America and Asia, were $6,174,327 (100.0% of net sales) and $2,172 (0.0%), respectively.
Previous wording
Net sales in North America increased by $12,740,549, or 69.2%, to $31,149,546 for the six months ended December 31, 2024 from $18,408,997 for the corresponding period of 2023. The increase in net sales was primarily due to increased demand from our major carrier customers. Net sales in Asia decreased by $93,864, or 99.5%, to $464 for the six months ended December 31, 2024 from $94,328 for the corresponding period of 2023. The decrease in net sales was primarily due to the absence of revenue generated from Wi-Fi router sales by FTI, which typically vary from period to period.
Current wording
Net sales in North America increased by $1,832,710, or 29.7%, to $8,007,037 for the three months ended March 31, 2025 from $6,174,327 for the corresponding period of 2024. The increase in net sales was primarily due to increased demand from our major carrier customers. Net sales in Asia increased by $410, or 18.9%, to $2,582 for the three months ended March 31, 2025 from $2,172 for the corresponding period of 2024.
Previous wording
**GROSS PROFIT -**Gross profit increased by $2,404,987, or 287.3%, to $3,242,062 for the three months ended December 31, 2024 from $837,075 for the corresponding period of 2023. The gross profit in terms of net sales percentage was 18.2% for the three months ended December 31, 2024, compared to 9.5% for the corresponding period of 2023. The increase in gross profit and gross profit in terms of net sales percentage for the three months ended December 31, 2024, was primarily due to the increase in net sales as described above and the fact that the increased sales were of higher margin products. .
Current wording
**GROSS PROFIT -**Gross profit increased by $836,431, or 161.6%, to $1,353,880 for the three months ended March 31, 2025 from $517,449 for the corresponding period of 2024. The gross profit in terms of net sales percentage was 16.9% for the three months ended March 31, 2025 compared to 8.4% for the corresponding period of 2024. The increase in gross profit and gross profit in terms of net sales percentage for the three months ended March 31, 2025, was due to the increase in net sales as described above and the fact that the increased sales were of higher margin products.
Previous wording
OPERATING EXPENSES- Operating expenses increased by $53,815, or 2.2%, to $2,446,831 for the three months ended December 31, 2024 from $2,393,016 for the corresponding period of 2023.
Current wording
OPERATING EXPENSES - Operating expenses increased by $1,247,816, or 60.2%, to $3,320,433 for the three months ended March 31, 2025 from $2,072,617 for the corresponding period of 2024.
Previous wording
OTHER (EXPENSE) INCOME, NET- Other (expense) income, net decreased by $1,402,074, or 202.9%, to ($710,949) for the three months ended December 31, 2024 from $691,125 for the corresponding period of 2023. The decrease was primarily due to the increased loss of $1,355,984 from the unfavorable changes in foreign currency exchange rates in FTI.
Current wording
OTHER INCOME (LOSS), NET - Other income (loss), net increased by $1,399,355, or 2,060.4%, to $1,331,439 for the three months ended March 31, 2025 from ($67,916) for the corresponding period of 2024. The increase was primarily due to the gains from the legal settlement amount owed by OC Kim, the President, of $1,000,000 as well as the favorable changes in foreign currency exchange rates in FTI of approximately $400,000, respectively.
Previous wording
NET SALES- Net sales increased by $12,646,685, or 68.3%, to $31,150,010 for the six months ended December 31, 2024 from $18,503,325 for the corresponding period of 2023. For the six months ended December 31, 2024, net sales by geographic regions, consisting of North America and Asia, were $31,149,546 (100% of net sales) and $464 (0.0% of net sales), respectively. For the six months ended December 31, 2023, net sales by geographic regions, consisting of North America and Asia, were $18,408,997 (99.5% of net sales) and $94,328 (0.5% of net sales), respectively.
Current wording
NET SALES - Net sales increased by $14,479,805, or 58.7%, to $39,159,629 for the nine months ended March 31, 2025 from $24,679,824 for the corresponding period of 2024. For the nine months ended March 31, 2025, net sales by geographic regions, consisting of North America and Asia, were $39,156,583 (100.0% of net sales) and $3,046 (0.0% of net sales), respectively. For the nine months ended March 31, 2024, net sales by geographic regions, consisting of North America and Asia, were $24,583,324 (99.6% of net sales) and $96,500 (0.4% of net sales), respectively.
Previous wording
Net sales in North America increased by $9,073,647, or 103.7%, to $17,827,098 for the three months ended December 31, 2024 from $8,753,451 for the corresponding period of 2023. The increase in net sales was primarily due to increased demand from our major carrier customers. Net sales in Asia decreased by $94,328, or 100%, to $0 for the three months ended December 31, 2023 from $94,328 for the corresponding period of 2023. The decrease in net sales was primarily due to the absence of revenue generated from Wi-Fi router sales by FTI, which typically vary from period to period.
Current wording
Net sales in North America increased by $14,573,259, or 59.3%, to $39,156,583 for the nine months ended March 31, 2025 from $24,583,324 for the corresponding period of 2024. The increase in net sales was primarily due to increased demand from our major carrier customers. Net sales in Asia decreased by $93,454, or 96.8%, to $3,046 for the nine months ended March 31, 2025 from $96,500 for the corresponding period of 2024. The decrease in net sales was primarily due to the absence of revenue generated from Wi-Fi router sales by FTI, which typically vary from period to period.
Previous wording
**GROSS PROFIT –**Gross profit increased by $2,963,329, or 126.1%, to $5,313,564 for the six months ended December 31, 2024 from $2,350,235 for the corresponding period of 2023. The gross profit in terms of net sales percentage was 17.1% for the six months ended December 31, 2023 compared to 12.7% for the corresponding period of 2023. The increase in gross profit and gross profit in terms of net sales percentage for the six months ended December 31, 2024, was primarily due to the change in net sales as described above. The amortization expenses associated with the completed capitalized product development costs that are included in the cost of goods sold declined the gross profits and gross profits in terms of net sales percentages in both periods.
Current wording
**GROSS PROFIT -**Gross profit increased by $3,799,760, or 132.5%, to $6,667,444 for the nine months ended March 31, 2025 from $2,867,684 for the corresponding period of 2024. The gross profit in terms of net sales percentage was 17.0% for the nine months ended March 31, 2025 compared to 11.6% for the corresponding period of 2024. The increase in gross profit and gross profit in terms of net sales percentage for the nine months ended March 31, 2025, was primarily due to the change in net sales and the sales of higher margin products as described above. .
Previous wording
OPERATING EXPENSES– Operating expenses increased by $400,423, or 8.9%, to $4,891,116 for the six months ended December 31, 2024 from $4,490,693 for the corresponding period of 2023.
Current wording
OPERATING EXPENSES - Operating expenses increased by $1,648,239, or 25.1%, to $8,211,549 for the nine months ended March 31, 2025 from $6,563,310 for the corresponding period of 2024.
Previous wording
Research and development expense increased by $231,741, or 13.5%, to $1,951,550 for the six months ended December 31, 2024, from $1,719,809 for the corresponding period of 2023. The increase in research and development expense was primarily due to the increased research and development costs and the related payroll expense of approximately $216,000 and $16,000, respectively, which is the mixed result of the timing of research and development activities and the number of active projects and typically vary from period to period.
Current wording
Research and development expense increased by $214,484 to $2,745,763 for the nine months ended March 31, 2025, from $2,531,279 for the corresponding period of 2024. The increase in research and development expense was primarily due to the increased research and development costs of approximately $260,000, which was offset by the decreased related payroll expense of approximately $42,000 from the mixed result of the timing of research and development activities and the number of active projects and typically vary from period to period.
Previous wording
OTHER INCOME, NET– Other income, net decreased by $530,011, or 59.7%, to $358,370 for the six months ended December 31, 2024 from $888,381 for the corresponding period of 2023. The decrease was primarily due to the increased loss of $705,063 from the unfavorable changes in foreign currency exchange rates in FTI and the decreased interest income of approximately $50,000 from deposits, which was partially offset by the increased forgiven liabilities of approximately $250.000.
Current wording
OTHER INCOME, NET - Other income, net increased by $869,344, or 106.0%, to $1,689,809 for the nine months ended March 31, 2025 from $820,465 for the corresponding period of 2024. The increase was primarily due to the gains from the legal settlement amount owed by OC Kim, the President, and the forgiven liability of $1,000,000 and $247,592, respectively, which was offset by the loss from the unfavorable changes in foreign currency exchange rates of approximately $300,000.
Previous wording
Our principal source of liquidity as of December 31, 2024 consisted of cash and cash equivalents, as well as short-term investments, of $42,160,072. We believe we have sufficient available capital to cover our existing operations and obligations through at least one year from the date of the filing of this Form 10-Q. Our long-term future cash requirements will depend on numerous factors, including our revenue base, profit margins, product development activities, market acceptance of our products, future expansion plans and ability to control costs. If we are unable to achieve our current business plan or secure additional funding that may be required, we would need to curtail our operations or take other similar actions outside the ordinary course of business in order to continue to operate as a going concern.
Current wording
Our principal source of liquidity as of March 31, 2025 consisted of cash and cash equivalents, as well as short-term investments, of $38,139,337. We believe we have sufficient available capital to cover our existing operations and obligations through at least one year from the date of the filing of this Form 10-Q. Our long-term future cash requirements will depend on numerous factors, including our revenue base, profit margins, product development activities, market acceptance of our products, future expansion plans and ability to control costs. If we are unable to achieve our current business plan or secure additional funding that may be required, we would need to curtail our operations or take other similar actions outside the ordinary course of business in order to continue to operate as a going concern.
Previous wording
OPERATING ACTIVITIES– Net cash provided by operating activities for the six months ended December 31, 2024 was $5,412,542, and net cash used in operating activities for the six months ended December 31, 2023 was $6,193,534.
Current wording
OPERATING ACTIVITIES - Net cash used in operating activities for the nine months ended March 31, 2025 and 2024 was $490,230 and $6,972,515, respectively.
Previous wording
The $6,193,534 in net cash used in operating activities for the six months ended December 31, 2023 was primarily due to the increase in accounts receivable of $4,495,638 and the decrease in accounts payable of $3,869,191 as well as our operating results (net loss adjusted for depreciation, amortization, and other non-cash charges), which was partially offset by the decrease in inventories of $2,581,682.
Current wording
The $490,230 in net cash used in operating activities for the nine months ended March 31, 2025 was primarily due to the increases in accounts receivable of $1,957,056 as well as the decrease in accounts payable of $1,025,639, which was offset by the increase in accrued liabilities of $2,376,154. The $6,972,515 in net cash used in operating activities for the nine months ended March 31, 2024 was primarily due to the decrease in accounts payable of $6,668,572 as well as our operating results (net loss of $2,297,180 adjusted for depreciation, amortization, and other non-cash charges), which was partially offset by a decrease in inventories of $2,605,602.
Previous wording
INVESTING ACTIVITIES– Net cash provided by investing activities for the six months ended December 31, 2024 was $2,631,817, and net cash used in investing activities for the six months ended December 31, 2023 was $869,481.
Current wording
INVESTING ACTIVITIES - Net cash provided by investing activities for the nine months ended March 31, 2025 and 2024 was $1,030,351 and $1,815,796.
Previous wording
Our Korea-based subsidiary, FTI, leases approximately 10,000 square feet of office space, at a monthly rent of approximately $8,000, and additional office space consisting of approximately 2,682 square feet at a monthly rent of approximately $2,700, both located in Seoul, South Korea. These leases expired on August 31, 2024, and were extended for an additional 24 months to August 31, 2026. In addition to monthly rent, the leases provide for periodic cost of living increases in the base rent and payment for certain common area costs. These facilities are covered by an appropriate level of insurance, and we believe them to be suitable for our use and adequate for our present needs.
Current wording
Our Korea-based subsidiary, FTI, leases approximately 10,000 square feet of office space, at a monthly rent of approximately $6,600, and additional office space consisting of approximately 2,682 square feet at a monthly rent of approximately $2,200, both located in Seoul, South Korea. These leases expired on August 31, 2024, and were extended for an additional 24 months to August 31, 2026. In addition to monthly rent, the leases provide for periodic cost of living increases in the base rent and payment for certain common area costs. These facilities are covered by an appropriate level of insurance, and we believe them to be suitable for our use and adequate for our present needs.
Previous wording
Rent expenses for the three months ended December 31, 2024 and 2023 were $112,352 and $254,402, respectively. Rent expenses for the six months ended December 31, 2024 and 2023 were $225,109 and $365,829, respectively.
Current wording
Rent expenses for the three months ended March 31, 2025 and 2024 were $125,687 and $117,486, respectively. Rent expenses for the nine months ended March 31, 2025 and 2024 were $350,796 and $483,305, respectively.
Rearranged previous paragraphs (2)
Previous report — wording carried elsewhere
Selling, general, and administrative expenses decreased by $20,569, or 1.3%, to $1,519,593 for the three months ended December 31, 2024, from $1,540,162 for the corresponding period of 2023. Research and development expense increased by $74,384, or 8.7%, to $927,238 for the three months ended December 31, 2024, from $852,854 for the corresponding period of 2023. The increase in research and development expense was primarily due to the increased research and development costs and the related payroll expense of approximately $64,000 and $10,000, respectively, which is the mixed result of the timing of research and development activities and the number of active projects and typically vary from period to period.
Previous report — wording carried elsewhere
The $5,412,542 in net cash provided by operating activities for the six months ended December 31, 2024 was primarily due to the increase in accounts payable and accrued liabilities of $6,501,820 and $838,564 as well as our operating results (net income adjusted for depreciation, amortization, and other non-cash charges), which was partially offset by the increase in inventories of $2,751,477.