FRANKLIN WIRELESS CORP
For the period ended Jun 30, 2026. Filed Sep 28, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Sep 28, 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-K
Period ended 2025-06-30; filed 2025-09-29.
0001683168-25-007288
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2026-06-30; filed 2026-09-28.
0001683168-26-007446
Item 7. 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 65 previous paragraphs and 75 current paragraphs.
42 unchanged; 19 reworded; 13 added; 4 removed; 0 previous and 1 current paragraphs rearranged.
Tables are not compared: 5 previous and 9 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 (13)
Current report
During the six months ended June 30, 2026, we experienced a significant reduction in expected future demand from one of our major customers related to a legacy hotspot product. This decrease in demand was caused by difficulties working with an intermediary company regarding late payments, as well as other matters. In response to this, we are accelerating our strategic focus toward commercial and industrial routers and telecommunications modules through our subsidiary. These product lines are in earlier stages of commercialization, and there can be no assurance regarding the timing or level of future revenues from these initiatives.
Current report
We are also experiencing industry-wide supply constraints and cost increases affecting certain components used in our products, including memory components and raw materials used in printed circuit boards. These conditions may affect component availability, lead times and pricing and have resulted in increased complexity in managing our production schedules and product costs. 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
Recent regulatory developments involving restrictions on certain foreign-manufactured telecommunications and networking equipment may affect the approval, importation, or commercialization of certain future wireless products. We are evaluating the applicability of these developments to our product roadmap, including upcoming consumer and enterprise networking products. Based on currently available information, we believe our approved mobile hotspot products are not materially affected by these developments.
Current report
We evaluate the available positive and negative evidence supporting the realization of our gross deferred tax assets, including historical financial results, the scheduled reversal of deferred tax liabilities, and the amount and timing of forecasted future taxable income. Based on this evaluation, management determined that it is more likely than not that our U.S. federal and state deferred tax assets will be fully realized, and accordingly, no valuation allowance was recorded for U.S. deferred tax assets as of June 30, 2026, or 2025.
Current report
Conversely, during the fiscal year ended June 30, 2026, based on the weight of available evidence, including cumulative losses incurred by our foreign subsidiary, management determined that it was no longer more likely than not that the foreign deferred tax assets would be realized. Consequently, a 100% valuation allowance was recorded against all foreign deferred tax assets as of June 30, 2026, whereas no valuation allowance was recorded against foreign deferred tax assets as of June 30, 2025.
Current report
Selling, general, and administrative expenses decreased by $977,128, or 14.6%, to $5,698,950 for the year ended June 30, 2026, from $6,676,078 for the corresponding period of 2025. The primary contributor to the decrease was the non-recurrence of a $1,250,000 accrued incentive bonus to OC Kim, President, in the prior year. In addition, operating expenses incurred by Sigbeat during the year ended June 30, 2026 increased, which partially offset the decrease described above.
Current report
Research and development expenses decreased by $868,869, or 21.2%, to $3,233,791 for the year ended June 30, 2026, from $4,102,660 for the corresponding period of 2025. The decrease was primarily driven by reductions of approximately $610,000 in R&D payroll expenses and $260,000 in direct project-related R&D costs. These fluctuations stem from the timing of R&D activities and the number of active projects, which typically vary from period to period.
Current report
TOTAL OTHER INCOME (EXPENSE), NET – Total Other income (expense), net decreased by $7,058,467, or 263.6%, to ($4,380,394) for the year ended June 30, 2026, from $2,678,073 for the corresponding period of 2025. This change was primarily driven by the following factors:
Current report
OPERATING ACTIVITIES – Net cash (used in) provided by operating activities for the years ended June 30, 2026 and 2025 were ($6,296,906) and $1,844,360, respectively.
Current report
The ($6,296,906) in net cash used in operating activities for the year ended June 30, 2026 was primarily driven by the changes, including increases in inventories and accounts receivable of $2,998,397 and $1,751,615, respectively, and a decrease in accounts payable of $1,102,139, as well as our net loss adjusted for depreciation, amortization, losses from litigation contingency and foreign currency transactions, and other non-cash charges.
Current report
INVESTING ACTIVITIES – Net cash provided by investing activities for the years ended June 30, 2026 and 2025 were $5,510,683 and $1,006,398, respectively.
Current report
The $5,510,683 in net cash provided by investing activities for the year ended June 30, 2026 was primarily due to the sales of short-term investments of $6,041,785, which was partially offset by the payments for purchase of capitalized product development and intangible assets of $502,239.
Current report
The ($471,371) in net cash used in financial activities for the year ended June 30, 2026 was attributable to the payment of cash dividends.
Removed paragraphs (4)
Previous report
Selling, general, and administrative expenses increased by $634,723 to $6,676,078 for the year ended June 30, 2025, from $6,041,355 for the corresponding period of 2024. The increase in selling, general, and administrative expenses was primarily due to the increased payroll and related expense of approximately $1.1 million, which was offset by the decreased legal expense of approximately $500,000. Research and development expenses increased by $695,910 to $4,102,660 for the year ended June 30, 2025, from $3,406,750 for the corresponding period of 2024. The increase in research and development expense was primarily driven by two factors: an approximate $370,000 increase in direct R&D costs (such as for materials and third-party services) and a $320,000 increase in related payroll expense. This fluctuation is a natural result of the varying timing and number of active R&D projects from one period to the next.
Previous report
OTHER INCOME (EXPENSE), NET - Other income (expense), net increased by $1,854,289, or 225.1%, to $2,678,073 for the year ended June 30, 2025, from $823,784 for the corresponding period of 2024. The increase was primarily due to the gain from the legal settlement owed by OC Kim, the President, the forgiven accrued marketing development fund liability, and favorable foreign currency exchange rate changes in FTI of $1,000,000, $247,592, and $683,132, respectively.
Previous report
OPERATING ACTIVITIES – Net cash provided by (used in) operating activities for the years ended June 30, 2025 and 2024 were $1,844,360 and ($773,360), respectively.
Previous report
INVESTING ACTIVITIES – Net cash provided by investing activities for the years ended June 30, 2025 and 2024 were $1,006,398 and $723,858, respectively.
Reworded paragraphs (19)
Previous wording
Doing business as “Franklin Access”, we are a leading global provider of integrated wireless solutions utilizing the latest 5G (fifth generation) and 4G LTE (fourth generation long-term evolution) technologies including mobile hotspots, fixed wireless routers, and mobile device management (MDM) solutions. We are a leading enabler of the Digital Divide initiative, and our expertise extends to innovation in Internet of Things (IOT) and machine-to-machine (M2M) applications, driving forward seamless communication and connectivity for both individuals and enterprises.
Current wording
Doing business as “Franklin Access”, we are a leading global provider of integrated wireless solutions utilizing the latest 5G (fifth generation) and 4G LTE (fourth generation long-term evolution) technologies including mobile hotspots, fixed wireless routers, and mobile device management (MDM) solutions. During the six months ended June 30, 2026, we began implementing a strategic shift to reduce our reliance on mobile hotspot products and increase our focus on fixed wireless routers and telecommunications modules. This shift was accelerated following a significant decline in demand for certain legacy hotspot products. We are a leading enabler of the Digital Divide initiative, and our expertise extends to innovation in Internet of Things (IOT) and machine-to-machine (M2M) applications, driving forward seamless communication and connectivity for both individuals and enterprises. While we intend to integrate artificial intelligence (“AI”)-compatible hardware, we have not commercially implemented AI technology within our current products.
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
Revenue from sales of products and services is derived from contracts with customers. The products and services covered by contracts primarily consist of hot spot routers. Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or service. Payment terms are stated in the contract, primarily in the form of a purchase order. Since the customer typically agrees to a stated rate and price in the purchase order that does not vary over the life of the contract, the majority of our contracts do not contain variable consideration. We establish a provision for estimated warranty and returns. Using historical averages, provisions for the years ended June 30, 2025 and 2024, were not material.
Current wording
Revenue from sales of products and services is derived from contracts with customers. The products and services promised in contracts primarily consist of hotspot routers. Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or service. Payment terms are stated in the contract, primarily in the form of a purchase order. Since the customer typically agrees to a stated rate and price in the purchase order that does not vary over the life of the contract, the majority of our contracts do not contain variable consideration. While we continuously monitor product returns, we do not establish a formal provision for estimated warranties and returns because such costs are covered by our manufacturers. For the years ended June 30, 2026 and 2025, these expenditures were not material.
Previous wording
A performance obligation is a promise in a contract to transfer a distinct good and/or service to the customer and is the unit of measurement in Topic 606. At contract inception, we assess the products and/or services promised in our contracts with customers. We then identify performance obligations to transfer distinct products and/or services to the customer. To identify performance obligations, we consider all the products or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.
Current wording
A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of measurement in Topic 606. At contract inception, we assess the products and services promised in our contracts with customers. We then identify performance obligations to transfer distinct products or services to the customer. In order to identify performance obligations, we consider all the products or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.
Previous wording
Our performance obligations are satisfied at a point in time. Revenue from products transferred to customers at a single point in time accounted for 99.2% and 98.8% of net sales for the years ended June 30, 2025 and 2024. Revenue recognized over a period of time is based on the percent completion of a project and accounted for under 1.0% and 1.2% of net sales for the years ended June 30, 2025 and 2024, respectively. The majority of our revenue recognized at a point in time is for the sale of hotspot router products. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product, which generally coincides with title transfer at completion of the shipping process.
Current wording
Revenue recognized over a period of time is based on the percent completion of a project and accounted for under 0.7% and 0.8% of net sales for the years ended June 30, 2026 and 2025, respectively. The majority of our revenue recognized at a point in time is for the sale of hotspot router products. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product, which generally coincides with title transfer at completion of the shipping process.
Previous wording
As of June 30, 2025, and June 30, 2024, capitalized product development costs in progress were $452,676 and $0, respectively, and these amounts are included in intangible assets in our consolidated balance sheets. For the years ended June 30, 2025 and 2024, we incurred $520,202 and $123,359, respectively in capitalized product development costs, and all costs incurred before technological feasibility is reached are expensed and included in our consolidated statements of comprehensive income (loss).
Current wording
As of June 30, 2026, and June 30, 2025, capitalized product development costs in progress were $22,582 and $452,676, respectively, and these amounts are included in intangible assets in our consolidated balance sheets. For the years ended June 30, 2026 and 2025, we incurred $462,136 and $520,202, respectively, in capitalized product development costs, and all costs incurred before technological feasibility is reached are expensed and included in our consolidated statements of comprehensive (loss) income.
Previous wording
Deferred income tax assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized. As of June 30, 2025, we have federal and state net operating loss carryforwards of approximately $2.7 million and $0.7 million, respectively. As of June 30, 2024, we have federal and state net operating loss carryforwards of approximately $5.8 million and $0.5 million, respectively.
Current wording
Deferred income tax assets and liabilities are recorded for differences between the financial statement and tax basis of assets and liabilities that will result in taxable or deductible amounts in the future based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
Previous wording
Under the Tax Cuts and Jobs Act (the “Act”), which was signed into law on December 22, 2017, the federal net operating loss of approximately $2.7 million, which was recognized on or after January 1, 2018, will carry forward indefinitely. The state net operating loss of approximately $0.7 million will begin to expire in 2043. The utilization of net operating loss carryforwards may be subject to limitations under provisions of the Internal Revenue Code Section 382 and similar state provisions.
Current wording
As of June 30, 2026, we had federal and state net operating loss carryforwards of approximately $1.1 million and $0.6 million, respectively. As of June 30, 2025, we had federal and state net operating loss carryforwards of approximately $2.7 million and $0.7 million, respectively. Under current U.S. federal tax law, federal net operating loss carryforwards generated in tax years ending after December 31, 2017, of approximately $1.1 million, carry forward indefinitely. We have no federal net operating loss carryforwards that pre-date the Tax Cuts and Jobs Act of 2017 (“TCJA”). State net operating loss carryforwards of approximately $0.6 million will begin to expire in 2043. The utilization of net operating loss carryforwards may be subject to annual limitations under Section 382 of the Internal Revenue Code of 1986, as amended, and similar state tax provisions.
Previous wording
Under the provision of ASC 740 “Application of the Uncertain Tax Position Provisions” related to accounting for uncertain tax positions, which prescribes a recognition threshold and measurement process for recording in the financial statements, uncertain tax positions taken or expected to be taken in a tax return, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. Tax benefits of an uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained based on technical merits.
Current wording
We apply the provisions of ASC 740 related to accounting for uncertain tax positions, which prescribes a recognition threshold and measurement process for recording in the financial statements uncertain tax positions taken or expected to be taken in a tax return. Under this provision, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority. Tax benefits of an uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained based on technical merits.
Previous wording
NET SALES - Net sales increased by $15,290,211, or 49.6%, to $46,086,901 for the year ended June 30, 2025 from $30,796,690 for the corresponding period of 2024. The increase in net sales was primarily due to increased demand from our major carrier customers. For the year ended June 30, 2025, net sales by geographic regions, consisting of North America and Asia, were $46,081,244 (100.0% of net sales) and $5,657 (0.0% of net sales), respectively. For the year ended June 30, 2024, net sales by geographic regions, consisting of North America and Asia, were $30,699,727 (99.7% of net sales) and $96,963 (0.3% of net sales), respectively.
Current wording
NET SALES - Net sales decreased by $9,572,496, or 20.8%, to $36,514,405 for the year ended June 30, 2026 from $46,086,901 for the corresponding period of 2025. For the year ended June 30, 2026, net sales by geographic regions, consisting of North America and Asia, were $36,478,002 (99.9% of net sales) and $36,403 (0.1% of net sales), respectively. For the year ended June 30, 2025, net sales by geographic regions, consisting of North America and Asia, were $46,081,244 (100.0% of net sales) and $5,657 (0.0% of net sales), respectively.
Previous wording
Net sales in North America increased by $15,381,517, or 50.1%, to $46,081,244 for the year ended June 30, 2025, from $30,699,727 for the corresponding period of 2024. The increase in net sales in North America was primarily due to increased demand from our major carrier customers. Net sales in Asia decreased by $91,306, or 94.2%, to $5,657 for the year ended June 30, 2025, from $96,963 for the corresponding period of 2024. The decrease in net sales was primarily due to the absence of revenue generated by FTI, which typically varies from period to period.
Current wording
Net sales in North America decreased by $9,603,242, or 20.8%, to $36,478,002 for the year ended June 30, 2026, from $46,081,244 for the corresponding period of 2025. The decrease in net sales in North America was primarily due to the discontinuation of a key product by a major carrier customer, which was expected to contribute a significant portion of revenue following its recent launch, as well as the timing of large deliveries in prior periods that resulted in reduced current-period demand as customers worked through existing inventory. As a result of the product discontinuation, we do not expect material future sales of this product to this customer. Net sales in Asia increased by $30,746, or 543.5%, to $36,403 for the year ended June 30, 2026, from $5,657 for the corresponding period of 2025. The increase in net sales was primarily due to the revenue generated by FTI, which typically varies from period to period.
Previous wording
GROSS PROFIT- Gross profit increased by $4,406,719, or 125.6%, to $7,915,069 for the year ended June 30, 2025, from $3,508,350 for the corresponding period of 2024. The gross profit in terms of net sales percentage was 17.2% for the year ended June 30, 2025, compared to 11.4% for the corresponding period of 2024. The increase in gross profit and gross profit in terms of net sales percentage for the year ended June 30, 2025, was primarily due to the increase in net sales, a greater proportion of higher margin products sold, and lower per-unit costs.
Current wording
GROSS PROFIT- Gross profit decreased by $1,659,938, or 21.0%, to $6,255,131 for the year ended June 30, 2026, from $7,915,069 for the corresponding period of 2025. The gross profit in terms of net sales percentage was 17.1% for the year ended June 30, 2026, compared to 17.2% for the corresponding period of 2025. The decrease in gross profit and gross profit in terms of net sales percentage for the year ended June 30, 2026, was primarily attributable to the decrease in net sales, which was driven in part by the discontinuation of a key product by a major customer.
Previous wording
OPERATING EXPENSES - Operating expenses increased by $1,330,633, or 14.1%, to $10,778,738 for the year ended June 30, 2025, from $9,448,105 for the corresponding period of 2024.
Current wording
OPERATING EXPENSES - Operating expenses decreased by $1,845,997, or 17.1%, to $8,932,741 for the year ended June 30, 2026, from $10,778,738 for the corresponding period of 2025.
Previous wording
Our principal source of liquidity as of June 30, 2025, consisted of cash and cash equivalents as well as short-term investments of $40,628,201. We believe we have sufficient available capital to cover our existing operations and obligations through at least June 30, 2026. 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.
Current wording
Our principal source of liquidity as of June 30, 2026, consisted of cash and cash equivalents as well as short-term investments of $31,954,396. We believe we have sufficient available capital to cover our existing operations and obligations through at least June 30, 2026. 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.
Previous wording
The $1,844,360 in net cash provided by operating activities for the year ended June 30, 2025 was primarily due to the increase in accrued liabilities and accounts payable of $2,615,116 and $855,382, respectively, which was offset by our operating results (net loss adjusted for depreciation, amortization, and other non-cash charges) and the increase in inventories and accounts receivable of $993,069 and $311,767. The ($773,360) in net cash used in operating activities for the year ended June 30, 2024 was primarily due to the decrease in accounts payable and accrued legal contingency expense of $5,685,087 and $2,400,000, respectively, as well as our operating results (net loss adjusted for depreciation, amortization, and other non-cash charges), which was offset by the decrease of accounts receivable and inventories of $7,722,229 and $2,290,211, respectively.
Current wording
The $1,844,360 in net cash provided by operating activities for the year ended June 30, 2025 was primarily due to the increase in accrued liabilities and accounts payable of $2,615,116 and $855,382, respectively, which was offset by our operating results (net loss adjusted for depreciation, amortization, and other non-cash charges) and the increase in inventories and accounts receivable of $993,069 and $311,767.
Previous wording
The $1,006,398 in net cash provided by investing activities for the year ended June 30, 2025 was primarily due to the contribution in noncontrolling interest by a partner of $2,000,000, which was offset by the payments for the purchase of capitalized product development and intangible assets of $533,563 and the purchase of short-term investments of $437,774. The $723,858 in net cash provided by investing activities for the year ended June 30, 2024 was primarily due to the proceeds from the sale of short-term investments of $910,034, which was offset by purchases related to capitalized product development costs of $123,359.
Current wording
The $1,006,398 in net cash provided by investing activities for the year ended June 30, 2025 was primarily due to the contribution in noncontrolling interest by a partner of $2,000,000, which was offset by the payments for the purchase of capitalized product development and intangible assets of $533,563 and the purchase of short-term investments of $437,774.
Previous wording
FINANCING ACTIVITIES – Net cash (used in) provided by financing activities for the years ended June 30, 2025 and 2024 was ($408,663) and $91,057, respectively.
Current wording
FINANCING ACTIVITIES – Net cash used in provided by financing activities for the years ended June 30, 2026 and 2025 was ($471,371) and ($408,663), respectively.
Previous wording
The ($408,663) in net cash used in financing activities for the year ended June 30, 2025 was the repurchase of 200,000 vested stock options from OC Kim, our President, which had been previously granted under the 2020 employee stock option plan. The $91,057 in net cash provided by financing activities for the year ended June 30, 2024 was a repayment received for a loan made to an employee of $91,057.
Current wording
The ($408,663) in net cash used in financing activities for the year ended June 30, 2025 was the repurchase of 200,000 vested stock options from OC Kim, our President, which had been previously granted under the 2020 employee stock option plan. The ($408,663) in net cash used in financing activities for the year ended June 30, 2025 was the repurchase of 200,000 vested stock options from OC Kim, our President, which had been previously granted under the 2020 employee stock option plan.
Previous wording
For the next twelve months, we may require in excess of $2 million for capital expenditures, software licenses and for testing and certifying new products. The Company believes its balances of cash, cash equivalents, and short-term investments, which totaled $40.6 million as of June 30, 2025, along with cash generated by ongoing operations will be sufficient to satisfy its cash requirements over the next 12 months.
Current wording
For the next twelve months, we may require in excess of $2 million for capital expenditures, software licenses and for testing and certifying new products. We believe our balances of cash, cash equivalents, and short-term investments, which totaled $32.0 million as of June 30, 2026, along with cash generated by ongoing operations will be sufficient to satisfy its cash requirements over the next 12 months.
Rearranged current paragraphs (1)
Current report — wording carried from elsewhere
Our performance obligations are satisfied at a point in time. Revenue from products transferred to customers at a single point in time accounted for 99.3% and 99.2% of net sales for the years ended June 30, 2026 and 2025, respectively.