FRANKLIN WIRELESS CORP

Our Annual Report on Form 10-K for the fiscal year ended June 30, 2025, filed with the SEC on September 29, 2025 (the “Annual Report”), includes a detailed discussion of our risk factors under the heading “PART I, ITEM 1A – RISK FACTORS.” You should carefully consider the risk factors discussed in our Annual Report, as well as other information in this quarterly report. Any of these risks could cause our business, financial condition, results of operations and future growth prospects to suffer. Except as set forth below, we are not aware of any material changes from the risk factors previously disclosed in our Annual Report.

Industry-wide memory shortages and supply chain disruptions may adversely affect our operations. 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 shortages are primarily driven by a significant increase in demand for specialized memory chips used in artificial intelligence (AI) applications. While the specific memory components we utilize differ from those used by AI companies, many memory manufacturers have reallocated their production capacity toward higher-margin AI-related products. This shift in manufacturing focus has decreased the available supply and extended lead times for the specific memory components required for our products.

Such 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.

We have experienced a significant reduction in demand from a major customer, which has materially impacted our revenue, and we may not be able to replace this revenue. During the quarter ended March 31, 2026, a major customer discontinued a key product that historically represented a significant portion of our revenue. We do not expect material future sales of this product to this customer. Our ability to replace this lost revenue depends on the successful development and commercialization of new products, including fixed wireless routers and telecommunications modules, which are in earlier stages of market adoption.