FRANKLIN WIRELESS CORP
For the period ended Dec 31, 2025. Filed Feb 17, 2026.
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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.
Dec 31, 2025 · Filed Feb 17, 2026
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 2025-09-30; filed 2025-11-14.
0001683168-25-008378
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-12-31; filed 2026-02-17.
0001683168-26-001067
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 39 previous paragraphs and 48 current paragraphs.
21 unchanged; 12 reworded; 14 added; 6 removed; 0 previous and 1 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 (14)
Current report
We are also seeing that industry-wide shortages have occurred in the memory market, which may affect the availability and lead times of memory components used in our products. These conditions have resulted in increased complexity in managing our production schedules. Our ability to deliver products to customers on a timely basis is critical, particularly for our Tier-1 carrier customers, who are highly sensitive to delivery timing and reliability. Any delays or disruptions in our supply chain could impair our ability to meet customer delivery schedules, and failure to meet such requirements could negatively impact customer relationships, order volumes, or future business opportunities.
Current report
Selling, general, and administrative (“SG&A”) expenses decreased by $311,068, or 20.5%, to $1,208,525 for the three months ended December 31, 2025, from $1,519,593 for the corresponding period of 2024. This decrease was primarily driven by a reduction of approximately $200,000 in legal fees and an $80,000 decline in stock-based compensation expenses related to stock options.
Current report
Research and development (“R&D”) expense decreased by $150,420, or 16.2%, to $776,818 for the three months ended December 31, 2025, from $927,238 for the corresponding period of 2024. The decrease was mainly attributable to a $64,000 reduction in R&D operational costs and a decline of approximately $87,000 in associated payroll expenses. These variances primarily reflect the cyclical nature of the Company's R&D projects and the specific timing of project activities, which typically result in period-over-period fluctuations.
Current report
OTHER (EXPENSE) INCOME, NET- Other (expense) income, net increased by $1,165,163, or 163.9%, to $454,214 for the three months ended December 31, 2025 from ($710,949) for the corresponding period of 2024. The primary drivers for the increase were an $815,634 decrease in FTI’s foreign exchange losses and a $397,164 gain from debt forgiveness related to accounts payable and accruals, which was partially offset by a $42,456 decrease in interest income.
Current report
SIX MONTHS ENDED DECEMBER 31, 2025 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2024
Current report
Net sales in North America decreased by $6,489,573, or 20.8%, to $24,659,973 for the six months ended December 31, 2025 from $31,149,546 for the corresponding period of 2024. The decrease in net sales was primarily due to decreased demand from our major carrier customers. Net sales in Asia increased by $13,387, or 2,885.1%, to $13,851 for the six months ended December 31, 2025 from $464 for the corresponding period of 2024. The increase in net sales was primarily due to the revenue generated from material sales by FTI, which typically vary from period to period.
Current report
OPERATING EXPENSES– Operating expenses decreased by $586,383, or 12.0%, to $4,304,733 for the six months ended December 31, 2025 from $4,891,116 for the corresponding period of 2024.
Current report
Selling, general, and administrative (“SG&A”) expenses decreased by $361,403, or 12.3%, to $2,578,163 for the six months ended December 31, 2025, from $2,939,566 for the corresponding period of 2024. This decrease was primarily driven by a reduction of approximately $310,000 in legal fees.
Current report
Research and development (“R&D”) expense decreased by $224,980, or 11.5%, to $1,726,570 for the six months ended December 31, 2025, from $1,951,550 for the corresponding period of 2024. The decrease was mainly attributable to a $137,000 reduction in R&D operational costs and an approximately $88,000 decline in associated payroll expenses. These variances primarily reflect the cyclical nature of the Company's R&D projects and the specific timing of project activities, which typically result in period-over-period fluctuations.
Current report
OTHER INCOME, NET– Other income, net increased by $98,648, or 27.5%, to $457,018 for the six months ended December 31, 2025 from $358,370 for the corresponding period of 2024. The primary drivers for the increase were a $165,222 gain from debt forgiveness related to accounts payable and accruals, which was partially offset by the decrease in interest income.
Current report
INVESTING ACTIVITIES– Net cash provided by investing activities for the six months ended December 31, 2025 and 2024 was $704,977 and $2,631,817, respectively.
Current report
The $704,977 in net cash provided by investing activities for the six months ended December 31, 2025 was primarily due to the sales of short-term investments of $1,028,685, which were offset by the payments for capitalized product development and property and equipment of $316,780 and $6,928, respectively.
Current 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 $39,587 and $24,784, respectively.
Current report
FINANCING ACTIVITIES - Net cash used in financing activities for the six months ended December 31, 2025, and 2024 was $471,371 and $0, respectively. The $471,371 in net cash used in financial activities for the six months ended December 31, 2025 was attributable to the payment of cash dividends.
Removed paragraphs (6)
Previous report
Selling, general, and administrative expenses decreased by $50,335, or 3.5%, to $1,369,638 for the three months ended September 30, 2025, from $1,419,973 for the corresponding period of 2024. The decrease in selling, general, and administrative expenses was primarily due to the reduction in legal expense and stock option expense of approximately $115,000 and $87,000, respectively, which was offset by increased delivery charges of approximately $110,000.
Previous report
Research and development expense decreased by $74,560, or 7.3%, to $949,752 for the three months ended September 30, 2025, from $1,024,312 for the corresponding period of 2024. The decrease in research and development expense was primarily due to the reduction of approximately $73,000 in direct R&D costs (such as expenses for materials and third-party services), which typically fluctuate from period to period.
Previous report
TOTAL OTHER INCOME, NET - Other income, net decreased by $1,066,515, or 99.7%, to $2,804 for the three months ended September 30, 2025 from $1,069,319 for the corresponding period of 2024. The decrease was primarily due to the unfavorable changes in foreign currency and the loss from the appreciation on the currency exchange rates in FTI of approximately $740,000 and the absence of a one-time gain of approximately $230,000 recognized in the prior-year period related to the write-off of a forgiven accrued commission to a customer.
Previous report
INVESTING ACTIVITIES – Net cash provided by investing activities for the three months ended September 30, 2025 was $143,315, and net cash used in investing activities for the three months ended September 30, 2024 was $334,785.
Previous report
The $143,315 in net cash provided by investing activities for the three months ended September 30, 2025 was primarily due to the sale of short-term investments of $197,386, which was partially offset by purchases related to capitalized product development costs and intangible assets of $53,167.
Previous report
The $334,785 in net cash used in financial activities for the three months ended September 30, 2024 was primarily due to the purchase of short-term investments of $291,869, the purchase of property and equipment of $21,544, and the purchase of capitalized product development costs and intangible assets of $21,372, respectively.
Reworded paragraphs (12)
Previous wording
We are also seeing that demand from end-users has been shifting in the post-pandemic economy as remote education and work from home trends are declining. Current demand for mobile device management (MDM) services has been declining. We are working to improve and further enhance our software service offerings to address this change in the market.
Current wording
We are seeing that demand from end-users has been shifting in the post-pandemic economy as remote education and work from home trends are declining. Current demand for mobile device management (MDM) services has been declining. We are working to improve and further enhance our software service offerings to address this change in the market.
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, 2025, 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 months ended September 30, 2025.
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, 2025, 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, 2025.
Previous wording
The following table sets forth, for the three months ended September 30, 2025 and 2024, our statements of comprehensive income including data expressed as a percentage of sales:
Current wording
The following table sets forth, for the three and six months ended December 31, 2025 and 2024, our statements of comprehensive income (unaudited) including data expressed as a percentage of sales:
Previous wording
NET SALES - Net sales decreased by $577,952, or 4.3%, to $12,744,960 for the three months ended September 30, 2025 from $13,322,912 for the corresponding period of 2024. For the three months ended September 30, 2025, net sales by geographic regions, consisting of North America and Asia, were $12,733,051 (99.9% of net sales) and $11,909 (0.1% of net sales), respectively. For the three months ended September 30, 2024, net sales by geographic regions, consisting of North America and Asia, were $13,322,448 (100.0% of net sales) and $464 (0.0% of net sales), respectively.
Current wording
NET SALES- Net sales decreased by $5,898,234, or 33.1%, to $11,928,864 for the three months ended December 31, 2025 from $17,827,098 for the corresponding period of 2024. For the three months ended December 31, 2025, net sales by geographic regions, consisting of North America and Asia, were $11,926,922 (100.0% of net sales) and $1,942 (0.0% of net sales), respectively. 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.
Previous wording
Net sales in North America decreased by $589,397, or 4.4%, to $12,733,051 for the three months ended September 30, 2025 from $13,322,448 for the corresponding period of 2024. The decrease in net sales in North America was primarily due to decreased demand from our major carrier customers, which typically varies from period to period. Net sales in Asia increased by $11,445, or 2,466.6%, to $11,909 for the three months ended September 30, 2025 from $464 for the corresponding period of 2024.
Current wording
Net sales in North America decreased by $5,900,176, or 33.1%, to $11,926,922 for the three months ended December 31, 2025 from $17,827,098 for the corresponding period of 2024. The decrease in net sales in North America was primarily due to decreased demand from our major carrier customers, which typically varies from period to period. Net sales in Asia increased by $1,942, or 100%, to $1,942 for the three months ended December 31, 2025 from $0 for the corresponding period of 2024.
Previous wording
**GROSS PROFIT -**Gross profit increased by $838,268, or 40.5%, to $2,909,770 for the three months ended September 30, 2025 from $2,071,502 for the corresponding period of 2024. The gross profit in terms of net sales percentage was 22.8% for the three months ended September 30, 2025 compared to 15.5% for the corresponding period of 2024.
Current wording
**GROSS PROFIT -**Gross profit decreased by $1,208,002, or 37.3%, to $2,034,060 for the three months ended December 31, 2025 from $3,242,062 for the corresponding period of 2024. The gross profit in terms of net sales percentage was 17.1% for the three months ended December 31, 2025, compared to 18.2% for the corresponding period of 2024. The decrease in gross profit and gross profit in terms of net sales percentage for the three months ended December 31, 2025, was primarily due to the decrease in net sales as well as a shift in sales mix toward lower-margin products during the period.
Previous wording
OPERATING EXPENSES - Operating expenses decreased by $124,895, or 5.1%, to $2,319,390 for the three months ended September 30, 2025 from $2,444,285 for the corresponding period of 2024.
Current wording
OPERATING EXPENSES- Operating expenses decreased by $461,488, or 18.9%, to $1,985,343 for the three months ended December 31, 2025 from $2,446,831 for the corresponding period of 2024.
Previous wording
The increase in gross profit and in gross profit margin in terms of net sales was primarily driven by an increased proportion of high-margin sales and decreased production costs while overall sales decreased for the three months ended September 30, 2025 compared to the corresponding period of 2024.
Current wording
**GROSS PROFIT –**Gross profit decreased by $369,734, or 7.0%, to $4,943,830 for the six months ended December 31, 2025 from $5,313,564 for the corresponding period of 2024. The gross profit in terms of net sales percentage was 20.0% for the six months ended December 31, 2025 compared to 17.1% for the corresponding period of 2024. The decrease in gross profit for the six months ended December 31, 2025, was primarily due to the change in net sales as described above. The increase in gross profit margin in terms of net sales was primarily driven by an increased proportion of high-margin sales and decreased production costs while overall sales decreased for the six months ended December 31, 2025 compared to the corresponding period of 2024.
Previous wording
Our principal source of liquidity as of September 30, 2025 consisted of cash and cash equivalents, as well as short-term investments, of $38,714,635. 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 December 31, 2025 consisted of cash and cash equivalents, as well as short-term investments, of $33,623,292. 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 used in operating activities for the three months ended September 30, 2025 was $1,488,908, and net cash provided by operating activities for the three months ended September 30, 2024 was $2,670,900.
Current wording
OPERATING ACTIVITIES– Net cash used in operating activities for the six months ended December 31, 2025 was $5,574,688, and net cash provided by operating activities for the six months ended December 31, 2024 was $5,412,542.
Previous wording
The $1,488,908 in net cash used in operating activities for the three months ended September 30, 2025, was primarily due to the increase of accounts receivable of $5,487,322, which was partially offset by the increase in accounts payable of $1,521,184 and the decrease in inventories of $1,358,115 as well as our operating results (net income adjusted for depreciation, amortization, and other non-cash charges of $1,065,379).
Current wording
The $5,574,688 in net cash used in operating activities for the six months ended December 31, 2025 was primarily due to the increase in accounts receivable of $9,084,042, which was partially offset by the increase in accounts payable of $2,522,942 as well as our operating results (net income adjusted for depreciation, amortization, and other non-cash charges. Notably, for the six months ended December 31, 2025, we recorded a total write-off of $412,814 from forgiven accounts payable and accrued liabilities.)
Previous wording
The $2,670,900 in net cash provided by operating activities for the three months ended September 30, 2024 was primarily due to the increase in accounts payable of $3,550,907 as well as our operating results (net income adjusted for depreciation, amortization, and other non-cash charges), which was partially offset by the increase of inventories of $1,127,477.
Current wording
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.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
NET SALES- Net sales decreased by $6,476,186, or 20.8%, to $24,673,824 for the six months ended December 31, 2025 from $31,150,010 for the corresponding period of 2024. For the six months ended December 31, 2025, net sales by geographic regions, consisting of North America and Asia, were $24,659,973 (99.9% of net sales) and $13,851 (0.1% of net sales), respectively. 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.