UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM
| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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The Registrant has shares of common stock outstanding as of February 17, 2026.
FRANKLIN WIRELESS CORP.
FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED DECEMBER 31, 2025
INDEX
| 2 |
NOTE ON FORWARD LOOKING STATEMENTS
You should keep in mind the following points as you read this Report on Form 10-Q:
The terms “we,” “us,” “our,” “Franklin,” “Franklin Wireless,” or the “Company” refer to Franklin Wireless Corp.
This Report on Form 10-Q contains statements which, to the extent they do not recite historical fact, constitute “forward looking” statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward looking statements are used under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” and elsewhere in this Quarterly Report on Form 10-Q. You can identify these statements by the use of words like “may,” “will,” “could,” “should,” “project,” “believe,” “anticipate,” “expect,” “plan,” “estimate,” “forecast,” “potential,” “intend,” “continue,” and variations of these words or comparable words. Forward looking statements do not guarantee future performance and involve risks and uncertainties. Actual results may differ substantially from the results that the forward looking statements suggest for various reasons, including those discussed under the caption “Risk Factors” in Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2025. These forward looking statements are made only as of the date of this Report on Form 10-Q. We do not undertake to update or revise the forward looking statements, whether as a result of new information, future events or otherwise.
| 3 |
PART I – FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
FRANKLIN WIRELESS CORP.
Consolidated Balance Sheets
December 31, 2025 (Unaudited) | June 30, 2025 | |||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Short-term investments | ||||||||
| Accounts receivable, net | ||||||||
| Other receivable due from officer | ||||||||
| Inventories, net | ||||||||
| Other current assets | ||||||||
| Advance payments to vendors | ||||||||
| Total current assets | ||||||||
| Property and equipment, net | ||||||||
| Intangible assets, net | ||||||||
| Deferred tax assets, non-current | ||||||||
| Goodwill | ||||||||
| Right of use assets, net | ||||||||
| Other assets | ||||||||
| TOTAL ASSETS | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | $ | ||||||
| Contract liabilities and advance from customers | ||||||||
| Income tax payable | ||||||||
| Accrued liabilities, bonus payable to an officer | ||||||||
| Accrued liabilities, others | ||||||||
| Lease liabilities, current | ||||||||
| Total current liabilities | ||||||||
| Lease liabilities, non-current | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (Note 6) | ||||||||
| Stockholders’ equity: | ||||||||
| Parent Company stockholders’ equity | ||||||||
| Preferred stock, par value $ per share, authorized shares; issued and outstanding | ||||||||
| Common stock, par value $ per share, authorized shares; shares issued and outstanding | ||||||||
| Additional paid-in capital | ||||||||
| Retained earnings | ||||||||
| Treasury stock, shares | ( | ) | ( | ) | ||||
| Accumulated other comprehensive loss | ( | ) | ( | ) | ||||
| Total Parent Company stockholders’ equity | ||||||||
| Non-controlling interests | ||||||||
| Total stockholders’ equity | ||||||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | $ | ||||||
The accompanying notes are an integral part of these consolidated financial statements.
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FRANKLIN WIRELESS CORP.
Consolidated Statements of Comprehensive Income
(Unaudited)
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Gross profit | ||||||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | ||||||||||||||||
| Research and development | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Income from operations | ||||||||||||||||
| Other income (loss), net: | ||||||||||||||||
| Interest income | ||||||||||||||||
| Gain from the forgiveness of accounts payable and accrued liabilities | ||||||||||||||||
| Loss from foreign currency transactions | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income, net | ||||||||||||||||
| Total other income (loss), net | ( | ) | ||||||||||||||
| Income before provision for income taxes | ||||||||||||||||
| Income tax provision | ||||||||||||||||
| Net income (loss) | ( | ) | ||||||||||||||
| Less: noncontrolling interests in net loss of subsidiary at 33.7% | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: noncontrolling interests in net income (loss) of subsidiary at 40.0% | ( | ) | ( | ) | ||||||||||||
| Net income attributable to Parent Company | $ | $ | $ | $ | ||||||||||||
| Earnings per share attributable to Parent Company stockholders - basic | $ | $ | $ | $ | ||||||||||||
| Earnings per share attributable to Parent Company stockholders - diluted | $ | $ | $ | $ | ||||||||||||
| Weighted average common shares outstanding - basic | ||||||||||||||||
| Weighted average common shares outstanding - diluted | ||||||||||||||||
| Comprehensive income | ||||||||||||||||
| Net income | $ | $ | ( | ) | $ | $ | ||||||||||
| Translation adjustments | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive income | ( | ) | ||||||||||||||
| Less: comprehensive loss attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Less: foreign exchange translation attributable to non-controlling interest | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Comprehensive income attributable to controlling interest | $ | $ | $ | $ | ||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 5 |
FRANKLIN WIRELESS CORP.
Consolidated Statements of Changes in Stockholders' Equity
For the Three and Six Months Ended December
31, 2025
(Unaudited)
| Common Stock | Additional Paid-in | Retained | Treasury | Accumulated Other Comprehensive | Non- controlling | Total Stockholders | ||||||||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Stock | Loss | Interest | Equity | |||||||||||||||||||||||||
| Balance - June 30, 2025 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||
| Net income attributable to Parent Company | – | |||||||||||||||||||||||||||||||
| Foreign exchange translation | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Comprehensive loss attributable to non-controlling interest | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance – September 30, 2025 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||
| Net income attributable to Parent Company | – | |||||||||||||||||||||||||||||||
| Foreign exchange translation | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Comprehensive loss attributable to non-controlling interest | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Dividend declared and paid | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Balance – December 31, 2025 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
| 6 |
FRANKLIN WIRELESS CORP.
Consolidated Statements of Stockholders’ Equity
For the Three and Six Months Ended December 31, 2024
(Unaudited)
| Common Stock | Additional Paid-in | Retained | Treasury | Accumulated Other Comprehensive Income | Noncontrolling | Total Stockholders | ||||||||||||||||||||||||||
| Shares | Amount | Capital | Earnings | Stock | (Loss) | Interest | Equity | |||||||||||||||||||||||||
| Balance – June 30, 2024 | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||
| Net income attributable to Parent Company | – | |||||||||||||||||||||||||||||||
| Foreign exchange translation | – | |||||||||||||||||||||||||||||||
| Comprehensive income attributable to non-controlling interest | – | |||||||||||||||||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||||||||||||||
| Balance – September 30, 2024 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||
| Net income attributable to Parent Company | – | |||||||||||||||||||||||||||||||
| Foreign exchange translation | – | ( | ) | ( | ) | ( | ) | |||||||||||||||||||||||||
| Comprehensive loss attributable to non-controlling interest | – | ( | ) | ( | ) | |||||||||||||||||||||||||||
| Stock based compensation | – | |||||||||||||||||||||||||||||||
| Balance – December 31, 2024 (unaudited) | $ | $ | $ | $ | ( | ) | $ | ( | ) | $ | $ | |||||||||||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
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FRANKLIN WIRELESS CORP.
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| CASH FLOW FROM OPERATING ACTIVITIES: | ||||||||
| Net income | $ | $ | ||||||
| Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||||||||
| Depreciation | ||||||||
| Amortization of intangible assets | ||||||||
| Loss from foreign currency transactions | ||||||||
| Loss from provision for slow-moving inventory | ||||||||
| Gain from trading a vehicle | ( | ) | ||||||
| Stock based compensation | ||||||||
| Forgiveness of debt | ( | ) | ( | ) | ||||
| Net change of right use assets and lease liabilities | ( | ) | ( | ) | ||||
| Deferred tax provision | ||||||||
| Increase (decrease) in cash due to change in: | ||||||||
| Accounts receivable | ( | ) | ( | ) | ||||
| Inventories | ( | ) | ||||||
| Other current assets | ( | ) | ||||||
| Advance to vendors | ( | ) | ( | ) | ||||
| Accounts payable | ||||||||
| Contract liabilities and advance from customers | ( | ) | ||||||
| Accrued liabilities | ( | ) | ||||||
| Net cash (used in) provided by operating activities | ( | ) | ||||||
| CASH FLOW FROM INVESTING ACTIVITIES: | ||||||||
| Sales of short-term investments | ||||||||
| Cash proceeds from sales of a vehicle | ||||||||
| Purchases of property and equipment | ( | ) | ( | ) | ||||
| Payments for capitalized product development costs and intangible assets | ( | ) | ( | ) | ||||
| Net cash provided by investing activities | ||||||||
| CASH FLOW FROM FINANCING ACTIVITIES: | ||||||||
| Dividend declared and paid | ( | ) | ||||||
| Net cash used in financing activities | ( | ) | ||||||
| Effect of foreign currency translation | ( | ) | ( | ) | ||||
| Net (decrease) increase in cash and cash equivalents | ( | ) | ||||||
| Cash and cash equivalents, beginning of period | ||||||||
| Cash and cash equivalents, end of period | $ | $ | ||||||
| Supplemental disclosure of cash flow information: | ||||||||
| Cash paid during the periods for: | ||||||||
| Income taxes | $ | ( | ) | $ | ( | ) | ||
The accompanying notes are an integral part of these consolidated financial statements.
| 8 |
FRANKLIN WIRELESS CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
This summary of significant accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements. The consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These accounting policies conform to GAAP and have been consistently applied in the preparation of the consolidated financial statements.
Principles of Consolidation
As of December 31, 2025
and 2024, the consolidated financial statements include the accounts of the Company and its subsidiaries, Franklin Technology Inc. (“FTI”)
and Sigbeat Inc. (“Sigbeat”), with majority voting interests of approximately
On May 14, 2024, the Company
entered into an Agreement for Formation of a Joint Venture Corporation (the “Agreement”). Under the terms of the Agreement,
the parties formed a Nevada corporation, Sigbeat, to be owned
Pursuant to the Agreement,
in July 2024, Sigbeat entered into a stock subscription agreement with Forge to purchase 400,000 shares of Common Stock, representing
40% of the total outstanding Common Stock of Sigbeat. On December 23, 2024, and January 9, 2025, the Company contributed $
Reclassifications
Certain amounts on the prior period’s consolidated financial statements were regrouped and reclassified to conform to current-year presentation, with no effect on total stockholders’ equity.
Non-controlling Interests in Consolidated Subsidiaries
As of December 31, 2025,
the Non-Controlling Interests (“NCI”) totaled $
The NCI in FTI decreased
by ($
| o | ($ | |
| o | ($ |
The NCI in Sigbeat increased by $
As of December 31, 2024, the
NCI was $
| 9 |
The NCI in FTI decreased
by ($
| o | ($ | |
| o | ($ |
The NCI in Sigbeat decreased by ($
Segment Reporting
Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” requires public companies to report financial and descriptive information about their reportable operating segments. We identify our operating segments based on how our chief operating decision maker internally evaluates separate financial information, business activities and management responsibility. We have reportable segment, consisting of the sale of wireless access products. The Chief Operating Decision Maker (“CODM”) assesses performance for the segment and allocates resources based on the consolidated net income (loss) of the company. The CODM uses the consolidated net income (loss) to evaluate the return on assets in deciding on resource allocation, monitor performance against budgets, and benchmark performance against competitors.
We generate revenues from two geographic areas, consisting of North America and Asia. The following enterprise-wide disclosure is prepared on a basis consistent with the preparation of the consolidated financial statements. The following table contains certain financial information by geographic area and a reconciliation of total revenues and significant expenses by geographic area to the Company’s measure of net income (loss).
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| Net sales: | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| North America | $ | $ | $ | $ | ||||||||||||
| Asia | ||||||||||||||||
| Totals | $ | $ | $ | $ | ||||||||||||
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| Items: | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Net sales | $ | $ | $ | $ | ||||||||||||
| Cost of goods sold | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Selling, general, and administrative expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Research and development expenses | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other segment items | ( | ) | ||||||||||||||
| Net Income (loss) | $ | $ | ( | ) | $ | $ | ||||||||||
| Long-lived assets, net (property and equipment and intangible assets): | December 31, 2025 | June 30, 2025 | ||||||
| North America | $ | $ | ||||||
| Asia | ||||||||
| Totals | $ | $ | ||||||
| 10 |
Fair Value of Financial Instruments
Fair value accounting is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the consolidated financial statements on a recurring basis (at least annually). Assets and liabilities recorded at fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure their fair value. Hierarchical levels, which are directly related to the amount of subjectivity, associated with the inputs to the valuation of these assets or liabilities are as follows:
| · | Level 1 – Observable inputs, such as unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date. | ||
| · | Level 2 – Observable inputs other than Level 1 quoted prices, such as quoted prices for similar assets or liabilities, quoted prices in markets that are not active or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. | ||
| · | Level 3 – Unobservable inputs that cannot be directly corroborated by observable market data and that typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. |
The carrying amounts of financial instruments such as cash equivalents, short-term investments, accounts receivable, other current assets, accounts payable, and accrued liabilities approximate the related fair values due to the short-term nature of these instruments. We invest our excess cash into financial instruments which are readily convertible into cash, such as money market funds and certificates of deposit.
Use of Estimates
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.
Allowance for Doubtful Accounts
On July 1, 2023, we adopted
ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the
incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”)
methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized
cost, including loan receivables and held to maturity debt securities. It also applies to Off-Balance Sheet (“OBS”) credit
exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments)
and net investments and leases recognized by a lessor in accordance with Topic 842 on leases. Upon adoption of ASC 326 and based upon
our review of historical collections and current receivable balances, the Company determined that no additional allowance for doubtful
accounts was required for the six months ended December 31, 2025 and 2024. The allowance for doubtful accounts remained $
Cash Flows Reporting
We follow ASC 230, Statements of Cash Flows, which requires that cash receipts and payments be classified as operating, investing, or financing activities and provides definitions for each category. We use the indirect or reconciliation method (“Indirect method”) as defined by ASC 230. Under this method, net income is adjusted for the effects of non-cash transactions, deferrals or accruals of past or future operating cash receipts and payments, and items classified as investing or financing cash flows.
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Related Parties
We follow ASC 850, “Related Party Disclosures,” for the identification of related parties and disclosure of related party transactions. Related parties are any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of our management and policies of the Company. (Refer to NOTE 10–RELATED PARTY TRANSACTIONS)
Foreign Currency Translations
We have a majority-owned subsidiary in a foreign country, South Korea. Fluctuations in foreign currency impact the amount of total assets, liabilities, earnings and cash flows that we report for our foreign subsidiary upon the translation of these amounts into U.S. Dollars for, and as of the end of, each reporting period. In particular, the strengthening of the U.S. Dollar generally will reduce the reported amount of our foreign-denominated cash, cash equivalents, total revenues and total expense that we translate into U.S. Dollars and report in our consolidated financial statements for, and as of the end of, each reporting period. However, a majority of our consolidated revenue is denominated in U.S. Dollars, and therefore, our revenue is not directly subject to foreign currency risk.
In accordance with ASC 830, when an operation has transactions denominated in a currency other than its functional currency, they are measured in the functional currency. Changes in the expected functional currency cash flows caused by changes in exchange rates are included in net income (loss) for the period.
Leases
In accordance with ASC 842, we determine whether an arrangement contains a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in exchange for consideration. For identified leases, we determine whether it should be classified as an operating or finance lease. Operating leases are recorded in the balance sheet as right-of-use asset (“ROU asset”) and operating lease obligation. ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payment arising from the lease ROU assets and operating lease liabilities are recognized at the commencement date of the lease and measured based on the present value of lease payment over the lease term. The ROU asset also includes deferred rent liabilities. Our lease arrangements generally do not provide an implicit interest rate. As a result, in such situations, we use its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We include options to extend or terminate the lease when it is reasonably certain that it will exercise that option in the measurement of its ROU assts and liabilities.
Lease expense for operating leases is recognized on a straight-line basis over the lease term. We are also electing not to apply the recognition requirements to short-term leases of twelve months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term.
Revenue Recognition
The Company accounts for its revenue according to ASC 606, “Revenue from Contracts with Customers”, pursuant to which, revenue is recognized when the control of the promised goods or services is transferred to the customers, and the performance obligations under the contract have been satisfied, in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.
The Company determines revenue recognition through the following steps: (1) identify the contract(s) with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.
| 12 |
Contracts with Customers
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 six months ended December 31, 2025 and 2024 presented, these expenditures were not material.
Disaggregation of Revenue
In accordance with Topic 606, we disaggregate revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred. We determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606, which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.
Contract Balances
We perform our obligations under a contract with a customer by transferring products in exchange for consideration from the customer. We typically invoice our customers as soon as control of an asset is transferred, and a receivable is established. We, however, recognize a contract liability when a customer prepays for goods and/or services, or we have not delivered goods under the contract since we have not yet transferred control of the goods and/or services.
The balances of our trade receivables are as follows:
| December 31, 2025 | June 30, 2025 | |||||||
| Accounts Receivable, net | $ | $ | ||||||
We did not have any un-invoiced receivables for the periods ended December 31, 2025, and June 30, 2025.
Our contract liabilities are as follows:
| December 31, 2025 | June 30, 2025 | |||||||
| Undelivered products | $ | $ | ||||||
Performance Obligations
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.
| 13 |
The majority of our revenue
recognized at a point in time is for the sale of hotspot router products, accounting for
As of December 31, 2025 and 2024, our contracts do not contain any unsatisfied performance obligations, except for undelivered products.
Cost of Goods Sold
All costs associated with
our contract manufacturers, as well as distribution, fulfillment and repair services, are included in our cost of goods sold. Cost of
goods sold also includes amortization expenses of $
Capitalized Product Development Costs
Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other” includes software that is part of a product or process to be sold to a customer and is accounted for under Subtopic 985-20. Our products contain embedded software internally developed by FTI, which is an integral part of these products because it allows the various components of the products to communicate with each other and the products are clearly unable to function without this coding.
The costs of product development that are capitalized once technological feasibility is determined (noted as technology in progress in the Intangible Assets table in NOTE 4-INTANGIBLE ASSETS, NET) include related licenses, certification costs, payroll, employee benefits, and other headcount-related expenses associated with product development. We determine that technological feasibility for our products is reached after all high-risk development issues have been resolved. Once the products are available for general release to our customers, we cease capitalizing the product development costs and any additional costs, if any, are expensed. The capitalized product development costs are amortized on a product-by-product basis using the straight-line amortization. The amortization begins when the products are available for general release to our customers.
As of December 31, 2025, and
June 30, 2025, capitalized product development costs in progress were $
Research and Development Costs
Costs associated with research
and development are expensed as incurred. Research and development costs were $
Warranties
We provide a warranty for one year which is covered by our vendors and manufacturers under purchase agreements between the Company and the vendors. As a result, we believe we do not have any net warranty exposure and do not accrue any warranty expenses. Historically, the Company has not experienced any material net warranty expenditures.
| 14 |
Shipping and Handling Costs
Costs associated with product
shipping and handling are expensed as incurred. Shipping and handling costs, which are included in selling, general and administrative
expenses on the consolidated statements of comprehensive income, were $
Cash and Cash Equivalents
For the purposes of the consolidated balance sheets and the consolidated statements of cash flow, we consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.
Short Term Investments
We have invested excess funds in short-term liquid assets, such as certificates of deposit or money market funds.
Inventories, Net
Our inventories consist of
finished goods and are stated at the lower of cost or net realizable value, cost being determined on a first-in, first-out basis. We assess
the inventory carrying value and reduce it, if necessary, to its net realizable value based on customer orders on hand, and internal demand
forecasts using management’s best estimates given information currently available. Our customer demand is highly unpredictable and
can fluctuate significantly caused by factors beyond the Company’s control. We may write down our inventory value for potential
obsolescence and excess inventory. For the six months ended December 31, 2025 and 2024, we recorded $
Property and Equipment, Net
Property and equipment are recorded at cost. Significant additions or improvements extending the useful lives of assets are capitalized. Expenditures for maintenance and repairs are expensed as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:
| Machinery | ||
| Office equipment, including software | ||
| Molds | ||
| Vehicles | ||
| Furniture and fixtures | ||
| Facilities improvements |
We account for stock options and other equity-based compensation issued in accordance with ASC 718 “Stock Compensation”, which requires the measurement and recognition of compensation expense related to the fair value of equity-based compensation awards that are ultimately expected to vest. Stock-based compensation expense recognized includes the compensation cost for all share-based compensation payments granted to employees and non-employees, net of estimated forfeitures, over the employees’ requisite service period or the non-employees’ performance period based on the grant date fair value estimated in accordance with the provision of ASC 718. ASC 718 is also applied to awards modified, repurchased, or cancelled during the periods reported.
| 15 |
Income Taxes
We use the asset and liability method of accounting for income taxes. Accordingly, deferred tax assets and liabilities are determined based on the difference between the financial statement and income tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets, unless it is more likely than not such assets will be realized. Current income taxes are based on the year’s taxable income for federal and state income tax reporting purposes and the annual change in deferred taxes.
We assess income tax positions and record tax benefits based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, we record the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. We classify interest and penalties associated with such uncertain tax positions as a component of income tax expense.
As of December 31, 2025, we
have no material unrecognized tax benefits. We recorded income tax provisions of $
For the three and six months
ended December 31, 2025, we recorded a decrease of $
In comparison, for the three
and six months ended December 31, 2024, non-current deferred tax assets decreased by $
Concentrations of Credit Risk
We maintain our cash accounts
with established commercial banks in the United States of America (the “U.S.”) and Korea. Such cash deposits exceed the Federal
Deposit Insurance Corporation insured limit of $250,000 and the Korea Deposit Insurance Corporation insured limit of approximately $
We extend credit to our customers and perform ongoing credit evaluations of such customers. We evaluate our accounts receivable on a regular basis for collectability and provide an allowance for potential credit losses as deemed necessary. No reserve was required or recorded for any of the periods presented.
Substantially all of our revenues
are derived from sales of wireless data products. Any significant decline in market acceptance of our products or in the financial condition
of our existing customers could impair our ability to operate effectively. A significant portion of our revenue is derived from a small
number of customers. For the six months ended December 31, 2025, sales to our top two customers accounted for
| 16 |
For the six months ended December
31, 2025, we purchased the majority of our wireless data products from a manufacturing company located in Asia. If this manufacturing
company were to experience delays, capacity constraints or quality control problems, product shipments to our customers could be delayed,
or our customers could consequently elect to cancel the underlying product purchase order, which would negatively impact on our revenue.
For the six months ended December 31, 2025, we purchased wireless data products from this manufacturer in the amount of $
Recently Issued Accounting Pronouncements
In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements once adopted.
In November 2024, the FASB issued ASU No. 2024-03, Expense Disaggregation Disclosures (Subtopic 220-40). The ASU requires disclosure of specified information about certain costs and expenses. This includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The ASU is effective on a prospective or retrospective basis for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements, once adopted.
In January 2025, the FASB issued ASU 2025-01, which revises the effective date of ASU 2024-03, “to clarify that all public business entities are required to adopt the guidance in annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027.” Entities within the ASU’s scope are permitted to early adopt the ASU. This ASU will likely result in the required additional disclosures being included in our consolidated financial statements once adopted.
On July 30, 2025, the FASB issued ASU 2025-05, which amends ASC 326-20 to provide a practical expedient for all entities and an accounting policy election for non-public business entities in estimating expected credit losses on current accounts receivable and current contract assets arising from transactions accounted for under ASC 606. We are currently evaluating whether to adopt the practical expedient under ASU 2025-05. We expect that the effect, if there are any, on our allowance for credit losses will depend on the mix and aging of our current receivables and contract assets under ASC 606, the timing of collections after period end, and whether macroeconomic forecasts materially deviate from current conditions.
In December 2025, the FASB issued Accounting Standards Update (“ASU”) 2025-11, Interim Reporting (Topic 270): Improvements to Interim Disclosure Requirements. This ASU improves the organization and clarity of interim reporting guidance and introduces a disclosure principle requiring entities to disclose events that occur after the most recent annual reporting period that have a material impact on interim financial statements. The ASU is effective for interim periods within annual periods beginning after December 15, 2027, which for the Company corresponds to fiscal year 2029. Early adoption is permitted. The Company is currently evaluating the impact of this ASU on its interim financial statement disclosures and does not expect the adoption to have a material impact on its consolidated financial position, results of operations, or cash flows.
In December 2025, the FASB issued Accounting Standards Update (“ASU”) 2025-12, Codification Improvements. This ASU includes amendments to the FASB Accounting Standards Codifications intended to clarify, correct, and make minor improvements to various Topics. The ASU is effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods within those annual reporting periods, which for the Company corresponds to fiscal year 2028. Early adoption is permitted. The Company does not expect adoption of this ASU to have a material impact on its consolidated financial statements.
| 17 |
NOTE 2 – BUSINESS OVERVIEW
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.
We hold a 66.3% ownership in Franklin Technology Inc. (“FTI”), a research and development company based in Seoul, South Korea. FTI primarily provides design and development services for our wireless products. We hold a 60% ownership interest in Sigbeat Inc., based in San Diego, California (“Sigbeat”), which will engage in worldwide sales, marketing, customer support and operations for telecommunications modules. Our products are generally marketed and sold directly to wireless operators and indirectly through strategic partners and distributors. Our primary markets are in North America and Asia.
NOTE 3 – BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of Franklin Wireless Corp. have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q. In the opinion of management, the financial statements included herein contain all adjustments, including normal recurring adjustments, considered necessary to present fairly the financial position, the results of operations and comprehensive income (loss) and cash flows of the Company for the periods presented. These financial statements and notes hereto should be read in conjunction with the financial statements and notes thereto for the fiscal year ended June 30, 2025 included in our Form 10-K filed on September 29, 2025. The operating results or cash flows for the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year.
NOTE 4 – LIVED INTANGIBLE ASSETS, NET
The definite lived intangible assets consisted of the following as of December 31, 2025:
| Intangible assets: | Expected Life | Average Remaining life | Gross Intangible Assets | Less Accumulated Amortization | Net Intangible Assets | |||||||||||||
| Technology in progress | Not Applicable | – | $ | $ | $ | |||||||||||||
| Software | ||||||||||||||||||
| Patents | ||||||||||||||||||
| Certifications & licenses | ||||||||||||||||||
| Total as of December 31, 2025 | $ | $ | $ | |||||||||||||||
| 18 |
The definite lived intangible assets consisted of the following as of June 30, 2025:
| Intangible assets: | Expected Life | Average Remaining life | Gross Intangible Assets | Less Accumulated Amortization | Net Intangible Assets | |||||||||||||
| Technology in progress | Not Applicable | – | $ | $ | $ | |||||||||||||
| Software | | |||||||||||||||||
| Patents | ||||||||||||||||||
| Certifications & licenses | ||||||||||||||||||
| Total as of June 30, 2025 | $ | $ | $ | |||||||||||||||
Amortization expenses recognized
for the three months ended December 31, 2025 and 2024 were $
The amortization expenses of the definite lived intangible assets for the future are as follows:
| FY2026 | FY2027 | FY2028 | FY2029 | FY2030 | Thereafter | |||||||||||||||||||
| Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
NOTE 5 – ACCRUED LIABILITIES
Accrued liabilities consist of the following as of:
| December 31, 2025 | June 30, 2025 | |||||||
| Accrued payroll deductions owed to government entities | $ | $ | ||||||
| Accrued bonuses to an officer – related party (1) | ||||||||
| Accrued salaries | ||||||||
| Accrued vacation | ||||||||
| Accrued expenses for service providers | ||||||||
| Accrued marketing development funds (2) | ||||||||
| Other accrued liabilities | ||||||||
| Total | $ | $ | ||||||
| (1) |
On November 10, 2022, the Company and OC Kim, its President, entered into an amendment of the employment agreement dated September 7, 2021. The amendment provides for the payment of an incentive to Mr. Kim, of $125,000 for each calendar quarter during the remaining four-year term of the employment agreement, for an aggregate total of $2 million, with the first such bonus accrued on December 31, 2022. Incentive bonuses of $250,000 have been accrued for six months ended December, 2025, resulting in accrued bonus balances of $1,625,000 and $1,375,000 as of December 31, 2025, and June 30, 2025, respectively.
| 19 |
On September 23, 2024, the Board acknowledged that Mr. Kim had earned an incentive bonus of $1,250,000 for negotiating and securing a joint venture agreement which resulted in the organization of Sigbeat. The Company and Mr. Kim entered into a Forbearance Agreement, dated September 23, 2024, under which Mr. Kim agreed to defer the bonus, in exchange for the Company’s agreement to allow Mr. Kim to defer payment of the $1,000,000 settlement amount owed by Mr. Kim to the Company under a Settlement Agreement, dated June 12, 2024. On January 16, 2025, there was a completed contribution for Common Stock of Sigbeat, and the Company accrued the deferred incentive bonus of $1,250,000 to Mr. Kim.
| (2) |
NOTE 6 – COMMITMENTS AND CONTINGENCIES
Leases
We adopted ASC 842 new lease accounting on July 1, 2019. We have operating leases for both the Company and FTI, in accordance with ASC 842.
We determine whether an arrangement contains a lease at inception. A lease is a contract that provides the right to control an identified asset for a period of time in exchange for consideration. Operating leases are recorded in the balance sheet as right-of-use asset (“ROU asset”) and operating lease obligation. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payment arising from the lease ROU assets and operating lease liabilities are recognized at the commencement date of the lease and measured based on the present value of lease payment over the lease term. The ROU asset also includes deferred rent liabilities. Our lease arrangements generally do not provide an implicit interest rate. As a result, in such situations, we use its incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments. We include lease extension or termination options in the measurement of our right-of-use (“ROU”) assets and lease liabilities when it is reasonably certain that such options will be exercised. Lease expense for operating lease is recognized on a straight-line basis over the lease term. We are also electing not to apply the recognition requirements to short-term leases of twelve months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term.
| 20 |
We used discount rates of
Total rent expenses for the
six months ended December 31, 2025 and 2024 were $
| Six Months Ended December 31, | ||||||||
| 2025 | 2024 | |||||||
| Operating lease expense | $ | $ | ||||||
| Vehicle lease expense | ||||||||
| Short term lease cost | ||||||||
| Total lease expense | $ | $ | ||||||
In accordance with ASC 842, future minimum payments under operating leases are as follows:
| Operating Lease | ||||
| Fiscal 2026 | $ | |||
| Fiscal 2027 | ||||
| Fiscal 2028 | ||||
| Fiscal 2029 | ||||
| Total lease payments | ||||
| Less imputed interest | ( | ) | ||
| Total | $ | |||
| Remaining lease term-operating lease in San Diego, California | ||||
| Discount rate-operating lease in San Diego, California | ||||
| Remaining lease term-operating lease in South Korea | ||||
| Discount rate-operating lease in South Korea | ||||
| Remaining lease term-vehicle lease in San Diego, California | ||||
| Discount rate-vehicle lease in San Diego, California | ||||
WARRANTY REPAIRS
We provide a warranty for one year which is covered by our vendors and manufacturers under purchase agreements between the Company and the vendors. As a result, we believe we do not have any net warranty exposure and do not accrue any warranty expenses. Historically, the Company has not experienced any material net warranty expenditures.
The following table sets forth the accumulated percentages of return rates and warranty repairs for all products currently marketed, in the aggregate, from the date each product was introduced through December 31, 2025.
| Current Devices | ||
| Device Type | Return Rate | Warranty Repairs |
| 4G Wireless Devices | ||
| 5G Wireless Devices | ||
| 21 |
Litigation
We are from time to time involved in certain legal proceedings and claims arising in the ordinary course of business.
FTI Litigation in Korea
In January of 2025 our South
Korea-based subsidiary, FTI was sued by Partron Co., Ltd., a South Korean manufacturer of electronic parts for mobile and telecommunication
devices (“Partron”). The complaint, filed in Seoul Central District Court, alleges that FTI requested Partron to prepare semiconductor
components to be included in FTI’s products for resale to third parties. The complaint also alleges that FTI and Partron had entered
into a Confidentiality Agreement under which Partron shared the login credentials for its Qualcomm account and that FTI used such access
for the design of the products but contracted with another vendor to produce the components. It further alleges that Partron ordered a
large quantity of semiconductor components from its business partners, such as Qualcomm and Dasaron Corporation, in reliance on such requests
from FTI, but FTI failed to complete the purchase of such components from Partron. Parton alleges that it paid its suppliers for such
components, but that FTI failed to purchase the components from Partron, resulting in damages, including interest, of $
The Company owns approximately
Shareholder Litigation
Pape
A legal action was filed in the Second Judicial District Court of Nevada in the County of Washoe against Franklin, as a nominal defendant, Barbara Pape, derivatively on behalf of nominal defendant Franklin Wireless Corp. v. O.C. Kim, et al., Case # CV22-00471, on or about March 21, 2022, claiming among other things, that we had prior knowledge that the recall was likely and that we did not disclose that information to investors in a timely manner. Following the jury verdict in the consolidated Harwood and Martin action finding only nominal damages, the parties agreed to dismiss this action. On August 12, 2025, the court formally dismissed the case.
“Short-Swing” Profits Litigation
A legal action was filed in the U.S. District Court, Southern District of California (San Diego) against Franklin, as a nominal defendant, Nosirrah Management LLC v. Franklin Wireless et al., Case # 3:21-cv-01316-RSH-JLB, on or about July 22, 2021, claiming that our Chief Executive Officer, O.C. Kim, violated Section 16(b) of the Securities Exchange Act of 1934 for receiving “short-swing” profits from a sale and purchase of Franklin shares, in violation of that Act. On October 19, 2023, the jury returned a verdict of $2,000,000 in favor of the Company against the Company’s Chief Executive Officer, O.C. Kim. Mr. Kim. Subsequently, the parties entered into a settlement agreement on June 12, 2024, for Mr. Kim to pay $1,000,000, and the appeal by OC Kim was dismissed. On September 23, 2024 the Company and Mr. Kim entered into a Forbearance Agreement to defer payment of the settlement in exchange for deferment of a $1,250,000 bonus for securing a joint venture agreement to allow Mr. Kim time to pursue remedies with the State of Nevada.
| 22 |
On January 16, 2025, the
Company accrued the deferred incentive bonus of $
Loan Agreement with Subsidiary, FTI
On March 21, 2022, Franklin
Wireless Corp. (the “Company”) entered into a Loan Agreement with its South Korean subsidiary, FTI, under which the Company
agreed to loan US$
The purpose of the loan is to allow FTI to purchase a facility in South Korea to house its operations, and to provide it with additional working capital. The purchase of such a facility with the loan proceeds is subject to the Company’s reasonable approval. Upon acquisition of the facility, FTI is required to grant the Company a mortgage on it to secure payment of the Note. The Note is for a term of five years, provides for annual payments of interest at 2% per annum, and is due and payable upon maturity. The Note and Loan Agreement includes customary provisions for default and acceleration upon default, and a default interest rate of 7% per annum. FTI has not yet acquired a facility for its operations.
The loan proceeds are subject to foreign exchange fluctuations as the funds are being held in Korea at a Korean bank. Should the exchange rate rise or fall during the term of the agreement the return value in the United States Dollar (“USD”) could decrease resulting in a potential loss of value.
Employment Contracts
On October 1, 2020, we entered into Change of Control Agreements with OC Kim, our President, and Yun J. (David) Lee, our Senior Vice President of Sales who previously served as Chief Operating Officer. Each Change of Control Agreement provides for a lump sum payment to the officer in case of a change of control of the Company. The term includes the acquisition of Common Stock of the Company resulting in one person or company owning more than 50% of the outstanding shares, a significant change in the composition of the Board of Directors of the Company during any 12-month period, a reorganization, merger, consolidation or similar transaction resulting in the transfer of ownership of more than fifty percent (50%) of the Company’s outstanding Common Stock, or a liquidation or dissolution of the Company or sale of substantially all of the Company’s assets.
The Change of Control Agreement with Mr. Kim calls for a payment of $5 million upon a change of control, and the agreement with Mr. Lee calls for a payment of $2 million upon a change of control. These agreements were for an initial term of three years but have now been extended through October 2027.
On November 10, 2022, the Company and OC Kim, its President, entered into an amendment of the employment agreement dated September 7, 2021. The amendment provides for a severance payment of $3 million if Mr. Kim voluntarily terminates his employment with the Company or if he voluntarily terminates his employment due to a “change in circumstances,” generally defined as a material breach by the Company of its salary and benefit obligations or a significant reduction in Mr. Kim’s title or responsibilities. In the case of a termination of employment by the Company for cause (generally defined as conviction of a felony, or a misdemeanor where imprisonment is imposed, commission of any act of theft, fraud, dishonesty, or material falsification of any employment or Company records, or improper disclosure of the Company’s confidential or proprietary information), the Company is to make a severance payment of $1,500,000. In either case, any unvested options become immediately vested.
| 23 |
In the amendment, Mr. Kim
also agrees that, for a period of two years after termination, he will not disparage the Company or its officers, solicit any of its employees
to terminate their employment, or disclose any of the Company’s proprietary information. In addition, the amendment provides for
the payment of an incentive bonus to Mr. Kim of $125,000 for each calendar quarter during the remaining four-year term of the employment
agreement, with the first such bonus due on December 31, 2022. Incentive bonuses of $
The employment agreement with OC Kim was renewed and extended by the Board in September 2024 and will continue through October 2027.
Joint Venture Agreement
On May 14, 2024, the Company
entered into an Agreement for Formation of a Joint Venture Corporation (the “Agreement”). Under the terms of the Agreement,
the parties formed a Nevada corporation, Sigbeat, to be owned 60% by Franklin and 40% by its EMS partner, Forge. The parties contributed
a total of $
Pursuant to the Agreement,
in July 2024, Sigbeat entered into a stock subscription agreement with Forge to purchase 400,000 shares of Common Stock, representing
40% of the total outstanding Common Stock of Sigbeat. On December 23, 2024, and January 9, 2025, the Company contributed $
Forbearance Agreement
On September 23, 2024, the
Board acknowledged that Mr. Kim had earned an incentive bonus of $
On January 16, 2025, the
Company accrued the deferred incentive bonus of $
International Tariffs
Our products are currently manufactured in Vietnam. We believe that our products are currently exempt from international tariffs upon import from our manufacturers to the United States.
If tariffs are imposed on our products either based on type of product or the country of manufacture, they could significantly increase our costs to import devices and potentially reduce or even eliminate our ability to earn profits from the sale of our devices. Should we be required to use device manufacturing companies located outside of tariffed countries we will incur significant delays in production and possibly lose sales as a result of those changes and delays.
| 24 |
Given the unpredictable timing of tariff implementation, it is possible that sales could be in process and become subject to a tariff that would result in losses on those transactions. Any such reduction in profit margins, lost sales and or increased costs would likely have a negative impact on the price of our shares in the market.
Customer Indemnification
Under purchase orders and contracts for the sale of our products we may provide indemnification to our customers for potential intellectual property infringement claims for which we may have no corresponding recourse against our third-party licensors. This potential liability, if realized, could materially adversely affect our business, operating results and financial condition.
NOTE 7 – CYBERSECURITY.
Cybersecurity risk management is an integral part of our overall enterprise risk management program. We manage cybersecurity and data protection through a continuously evolving program. Our cybersecurity risk management program is designed to provide a framework for assessing, identifying and managing cybersecurity threats and incidents, including threats and incidents associated with the use of services provided by third-party service providers, and to facilitate coordination across different departments of our Company. Our processes include steps for assessing the severity of a cybersecurity threat, identifying the source of a cybersecurity threat, including whether the cybersecurity threat is associated with a third-party service provider, and implementing cybersecurity countermeasures and mitigation strategies and informing management and the board of directors of material cybersecurity threats and incidents.
The Board of Directors has oversight for the most significant risks facing us and for our processes to identify, prioritize, assess, manage and mitigate those risks. The Audit Committee of the Board of Directors (the “Audit Committee”) has been designated to oversee cybersecurity risks. The Audit Committee receives regular updates on cybersecurity and information technology matters and related risk exposures from our management. The Board of Directors also receives periodic updates from management and the Audit Committee on cybersecurity risks. Management is responsible for identifying, considering and assessing material cybersecurity risks on an ongoing basis, establishing processes designed to ensure that such potential cybersecurity risk exposures are monitored, putting in place mitigation measures and maintaining cybersecurity programs. Our cybersecurity programs are under the direction of our Chief Executive Officer. Management regularly updates the Audit Committee on our cybersecurity programs, which includes cybersecurity risks and mitigation strategies, vulnerability management, and on-going cybersecurity projects.
As of December 31, 2025, we did not identify any cybersecurity incidents that materially affected or are reasonably likely to materially affect our business strategy, results of operations, or financial condition. However, despite our efforts, we cannot eliminate all risks from cybersecurity threats or provide assurances that we have not experienced an undetected cybersecurity incident. It is possible that we may not implement appropriate controls if we do not detect a particular risk. In addition, security controls, no matter how well designed or implemented, may only mitigate and not fully eliminate the risks. Even when a risk is detected, disruptive events may not always be immediately and thoroughly interpreted and acted upon.
We apply the provisions of ASC 718, “Compensation - Stock Compensation,” to all of our stock-based compensation awards and use the Black-Scholes option pricing model to value stock options. The fair value of each share option award on the date of grant was estimated using the Black-Scholes method based on the following weighted average assumptions: The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for periods corresponding with the expected term of options award; the expected term represents the period of time that options granted are expected to be outstanding, taking into account the vesting provisions and historical exercise patterns of participants; the expected volatility is based upon historical volatility; and the dividend yield is based upon the company’s dividend rate at the time fair value is measured and future expectations. Under this application, we record compensation expense for all awards granted.
| 25 |
In July of 2020, the Board of Directors adopted the 2020 Franklin Wireless Corp. Stock Option Plan (the “2020 Plan”), which covers shares of Common Stock. The 2020 Plan provides for the grant of incentive stock options, non-qualified stock options and restricted stock to our employees, directors, and independent contractors. These options will have such vesting or other provisions as they may be established by the Board of Directors or Plan Administrator at the time of each grant.
The estimated forfeiture rate considers historical turnover rates stratified into employee pools in comparison with an overall employee turnover rate, as well as expectations about the future. We periodically revise the estimated forfeiture rate in subsequent periods if actual forfeitures differ from those estimates. There were $ and $ compensation expenses recorded under this method for the six months ended December 31, 2025 and 2024, respectively.
A summary of the status of our stock options is presented below as of December 31, 2025:
| Weighted- | ||||||||||||||||
| Average | ||||||||||||||||
| Weighted- | Remaining | |||||||||||||||
| Average | Contractual | Aggregate | ||||||||||||||
| Exercise | Life | Intrinsic | ||||||||||||||
| Options | Shares | Price | (In Years) | Value | ||||||||||||
| Outstanding as of June 30, 2025 | $ | $ | ||||||||||||||
| Granted | – | – | ||||||||||||||
| Exercised | – | – | ||||||||||||||
| Cancelled | – | – | ||||||||||||||
| Forfeited or expired (1) | ( |
– | – | |||||||||||||
| Outstanding as of December 31, 2025 | $ | $ | ||||||||||||||
| Exercisable as of December 31, 2025 | $ | $ | ||||||||||||||
| (1) |
The aggregate intrinsic value
in the preceding table represents the total pretax intrinsic value, based upon our closing stock price of $4.37 as of December 31, 2025,
which would have been received by the option holders had all option holders exercised their options as of that date. The weighted-average
grant-date fair value of stock options outstanding as of December 31, 2025, in the amount of
A summary of the status of our stock options is presented below as of December 31, 2024:
| Weighted- | ||||||||||||||||
| Average | ||||||||||||||||
| Weighted- | Remaining | |||||||||||||||
| Average | Contractual | Aggregate | ||||||||||||||
| Exercise | Life | Intrinsic | ||||||||||||||
| Options | Shares | Price | (In Years) | Value | ||||||||||||
| Outstanding as of June 30, 2024 | $ | $ | ||||||||||||||
| Granted | – | – | ||||||||||||||
| Exercised | – | – | ||||||||||||||
| Cancelled | – | – | ||||||||||||||
| Forfeited or expired | ( |
) | – | – | ||||||||||||
| Outstanding as of December 31, 2024 | $ | $ | ||||||||||||||
| Exercisable as of December 31, 2024 | $ | $ | ||||||||||||||
| 26 |
The aggregate intrinsic value
in the preceding table represents the total pretax intrinsic value, based upon our closing stock price of $4.90 as of December 31, 2024,
which would have been received by the option holders had all option holders exercised their options as of that date. The weighted-average
grant-date fair value of stock options outstanding as of December 31, 2024, in the amount of
NOTE 9 – STOCKHOLDERS’ EQUITY
Common Stock
We are authorized to issue shares of common stock, $ par value. Each share of issued and outstanding common stock shall entitle the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock, as well as in the net assets of the corporation upon liquidation or dissolution.
For the six months ended December 31, 2025, shares of common stock were issued, and there were shares issued and outstanding as of December 31, 2025, and June 30, 2025.
Preferred Stock
We have been authorized to issue shares of preferred stock. $0.01 par value, but preferred stock is issued and outstanding as of December 31, 2025, and June 30, 2025.
Treasury Stock
We
had shares of treasury stock, valued at $
Cash Dividends
On November 4, 2025, our Board
of Directors declared a cash dividend of $ per share on our common stock, totaling $
NOTE 10 – RELATED PARTY TRANSACTIONS
We entered into a Forbearance
Agreement with Mr. Kim on September 23, 2024, under which Mr. Kim agreed to defer a $
| 27 |
On May 14, 2024, we entered
into an Agreement for Formation of a Joint Venture Corporation (the “Agreement”). Under the terms of the Agreement, the parties
formed a Nevada corporation, Sigbeat, to be owned
For the three and six months
ended December 31, 2025, we purchased wireless data products from Forge in the amount of approximately $
Excluding what was previously described, there have not been any transactions entered into or have been a participant in which a related person had or will have a direct or indirect material interest.
NOTE 11 – SUBSEQUENT EVENTS
The FASB issued ASC 855, “Subsequent Events.” ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. We have evaluated all events or transactions that occurred after December 31, 2025, up through the date the financial statements were available to be issued. During these periods, we did not have any material recognizable subsequent events required to be disclosed in the financial statements as of February 17, 2026.
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report. This report contains certain forward-looking statements relating to future events or our future financial performance. These statements are subject to risks and uncertainties which could cause actual results to differ materially from those discussed in this report. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. We are not obligated to publicly update this information, whether as a result of new information, future events or otherwise, except to the extent we are required to do so in connection with our obligation to file reports with the SEC. For a discussion of the important risks to our business and future operating performance, see the discussion under the caption “Item 1A. Risk Factors” and under the caption “Factors That May Influence Future Results of Operations” in the Company’s Form 10-K for the year ended June 30, 2025, filed on September 29, 2025. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.
BUSINESS OVERVIEW
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.
We hold a 66.3% ownership in Franklin Technology Inc. (“FTI”), a research and development company based in Seoul, South Korea. FTI primarily provides design and development services for our wireless products. We hold a 60% ownership interest in Sigbeat Inc., based in San Diego, California (“Sigbeat”), which will engage in worldwide sales, marketing, customer support and operations for telecommunications modules. Our products are generally marketed and sold directly to wireless operators and indirectly through strategic partners and distributors. Our primary markets are in North America and Asia.
FACTORS THAT MAY INFLUENCE FUTURE RESULTS OF OPERATIONS
We believe that our revenue growth will be influenced largely by (1) the successful maintenance of our existing customers, (2) the rate of increase in demand for wireless data products, (3) customer acceptance of our new products, (4) new customer relationships and contracts, (5) our ability to meet customers’ demands, (6) our ability to maintain good relationships with our manufacturing partners and suppliers, and (7) the defect rates experienced by end users of our hardware and software products.
We have entered into and expect to continue to enter into new customer relationships and contracts for the supply of our products, and this may require significant demands on our resources, resulting in increased operating, selling, and marketing expenses associated with such new customers.
We continuously evaluate the performance of our hardware and software products to discover defects that can adversely affect our revenue, income, and the price of our stock. If defects occur that customers believe are either severe in nature or excessively frequent in occurrence, customers could stop buying our products and services and the value of our stock may decrease.
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.
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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.
CRITICAL ACCOUNTING POLICIES
Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Management evaluates these estimates and assumptions on an ongoing basis. Our estimates and assumptions have been prepared on the basis of the most current reasonably available information. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates under different assumptions and conditions.
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.
RESULTS OF OPERATIONS
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:
| Three Months Ended | Six Months Ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Net sales | 100.0% | 100.0% | 100.0% | 100.0% | ||||||||||||
| Cost of goods sold | (82.9% | ) | (81.8% | ) | (80.0% | ) | (82.9% | ) | ||||||||
| Gross profit | 17.1% | 18.2% | 20.0% | 17.1% | ||||||||||||
| Operating expenses | 16.7% | 13.7% | 17.4% | 15.7% | ||||||||||||
| Income from operations | 0.4% | 4.5% | 2.6% | 1.4% | ||||||||||||
| Other income (expense), net | 3.8% | (4.0% | ) | 1.9% | 1.1% | |||||||||||
| Net income before income taxes | 4.2% | 0.5% | 4.5% | 2.5% | ||||||||||||
| Income tax provision | 0.3% | 0.9% | 0.4% | 0.7% | ||||||||||||
| Net income (loss) | 3.9% | (0.4% | ) | 4.1% | 1.8% | |||||||||||
| Less: non-controlling interest in net (loss) income of subsidiaries | (0.6% | ) | (1.7% | ) | (0.6% | ) | (0.6% | ) | ||||||||
| Net income attributable to Parent Company stockholders | 4.5% | 1.3% | 4.7% | 2.4% | ||||||||||||
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THREE MONTHS ENDED DECEMBER 31, 2025 COMPARED TO THREE MONTHS ENDED DECEMBER 31, 2024
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.
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.
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.
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.
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.
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.
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.
SIX MONTHS ENDED DECEMBER 31, 2025 COMPARED TO SIX MONTHS ENDED DECEMBER 31, 2024
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.
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.
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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.
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.
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.
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.
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.
LIQUIDITY AND CAPITAL RESOURCES
Our historical operating results, capital resources and financial position, in combination with current projections and estimates, were considered in management's plan and intentions to fund our operations over a reasonable period of time, which we define as the twelve-month period ending from the date of the filing of this Form 10-Q. For purposes of liquidity disclosures, we assess the likelihood that we have sufficient available working capital and other principal sources of liquidity to fund our operating activities and obligations as they become due.
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.
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.
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.)
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.
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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.
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.
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.
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.
CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS
Leases
Refer to NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES in the Consolidated Financial Statements.
Recently Issued Accounting Pronouncements
Refer to NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES in the Consolidated Financial Statements.
OFF-BALANCE SHEET ARRANGEMENTS
None.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a “smaller reporting company,” the Company is not required to respond to this item.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Our management has evaluated, under the supervision and with the participation of OC Kim, our President, and Reid Granados, our Acting Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our President and the Acting Chief Financial Officer have concluded that, as of December 31, 2025, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and (ii) accumulated and communicated to our management, including our principal executive and principal financial and accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 and as a result of adopting Topic 842) for the six months ended December 31, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART II – OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We have provided information about legal proceedings in which we are involved in Note 6 of the notes to consolidated financial statements for the six months ended December 31, 2025, contained within this Quarterly Report on Form 10-Q.
ITEM 1A. RISK FACTORS
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.
Shortages of components, such as memory, could significantly disrupt our production schedules and adversely affect our relationship with key customers. 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.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
None.
ITEM 5. OTHER INFORMATION
During the quarter ended December
31, 2025, no director or officer of the Company
ITEM 6. EXHIBITS
|
Exhibit Number |
Description |
| 31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 31.2 | Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. |
| 32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 32.2 | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. |
| 101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document |
| 104 | Cover Page Interactive Data File (formatted in inline XBRL, and included in exhibit 101) |
| 34 |
SIGNATURES
In accordance with Section 13 of 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Franklin Wireless Corp. | ||
| By: | /s/ OC Kim | |
|
OC Kim President (Principal Executive Officer) | ||
| By: | /s/ Reid Granados | |
| Reid Granados | ||
|
Dated: February 17, 2026 |
Acting Chief Financial Officer (Principal Financial Officer) | |
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