FKWL

FRANKLIN WIRELESS CORP

NASDAQ · TECHNOLOGY · TELEPHONE & TELEGRAPH APPARATUS

2.19

+0.00 +0.00%

USD · close Oct 30

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Insiders, 90 days

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MKT CAP $25.8MP/E —DIV YIELD —FCF YIELD -12.57%REV TTM $35M −22.6%NET INCOME −$727KNET CASH —52W 2.17 – 5.18SEC XBRL · TTM TO Invalid Date

How FKWL rewrote its risk factors

10-K ITEM 1A · FY2025 → FY2026

Text kept

66%

of sentences unchanged

Added

new sentences

Dropped

sentences removed

Length

+773

words, now 4,204

New in FY2026

In this industry it should be expected that: o Latent design flaws can be discovered, even after a device has been certified; o Latent component defects can be discovered in critical systems, including batteries, LCDs, chargers, and other system; o Manufacturing defects and flaws may occur during device production.
The following are common dangers of lithium batteries. o Thermal Runaway: An uncontrollable chemical reaction that causes the cells to heat up rapidly, leading to intense fires, potential explosions, and the ejection of cells. o Fires and Explosions: The batteries contain volatile electrolytes that, when exposed to damage or high temperatures, can ignite, causing fires that reach extreme temperatures. o Toxic and Flammable Gases: When a battery malfunctions, it can release flammable and toxic gases, which can ignite and create a fire. o Hydrofluoric Acid Exposure: During combustion, fluorine can separate from lithium salts, forming hydrofluoric acid when mixed with water vapor, posing a severe health risk. o Burns: The extreme temperatures of lithium battery fires, reaching up to 1000°F or more, can cause severe third-degree burns. o Chemical Exposure: The chemicals inside the batteries, including toxic and flammable electrolytes, pose chemical hazards if released. o Choking Hazard: Small lithium-ion button batteries can cause severe chemical burns to the esophagus if ingeste.
This industry has numerous and significantly known risks.
In this industry it should be expected that: o Latent design flaws, coding errors, vulnerabilities and security defects may be discovered, including after software or a device has been tested, approved, or commercially deployed; o Code within a program may fail to operate as intended as a result of updates, modifications or changes to other software, hardware, networks, or systems; o Software may contain security vulnerabilities arising from coding errors, design flaws, third-party or open-source components, development tools or other dependencies, and such vulnerabilities may not be identified or remediated before they are exploited; and o Hacking, malware, unauthorized access and other malicious actions by third parties may exploit software vulnerabilities or otherwise compromise, damage or alter software, data, or system integrity.
Product security vulnerabilities, system security risks, data breaches, cyber-attacks, improper use of AI tools, and other threats and risks, could disrupt or otherwise compromise our products, services, internal operations or information technology systems, or those of third parties with whom we work.
Actual or perceived non-compliance with our privacy and security obligations could lead to regulatory investigations or actions, litigation, fines and penalties, business operation disruption, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse business consequences.
THE LOSS OF ANY OF OUR MATERIAL CUSTOMERS, OR A REDUCTION IN THEIR PURCHASES OF OUR PRODUCTS, COULD ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY, AND THEREFORE SHAREHOLDER VALUE.
For the year ended June 30, 2026, net revenues from our two largest customers represented 60.9% and 27.5% of our consolidated net sales, respectively.
During fiscal 2026, one of our major customers discontinued a hotspot product that we expected to generate significant revenues for us, resulting in a significant reduction in revenues from that customer.
We do not expect material future sales of that product to this customer.
Although we continue to maintain a relationship with this customer, there can be no assurance that it will purchase other products from us in quantities sufficient to replace the revenues associated with the discontinued product.
Our customers may discontinue products, reduce or delay purchases, transition to competing products, or otherwise reduce their business with us at any time.
Because of our customer concentration, the loss of a material customer or a significant reduction in purchases of one or more of our products by a material customer could materially adversely affect our revenues, profitability and financial condition.
We often experience long-lead times to ship products, often more than 160 days.
The availability and sale of those services would be harmed if any of these suppliers is not able to meet our demand and alternative suitable products are not available on acceptable terms, or at all. o Natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control could damage our facilities or the facilities of third parties on which we depend, and could impact consumer spending. o Disruptions in global transportation networks, including those resulting from geopolitical conflicts, could increase our shipping costs, delay deliveries and adversely affect demand for our products.
Our business depends on international transportation and logistics networks to transport components and finished products.
Geopolitical conflicts, including the ongoing conflict involving Iran and related instability in the Middle East, may disrupt shipping routes, increase freight, fuel, insurance and other transportation costs, or cause delays in the movement of goods.
To the extent we are unable to absorb these increased costs, we may seek to pass some or all of them on to our customers through higher prices, which could reduce demand for our products or adversely affect our competitive position.
Geopolitical conflicts may also have broader macroeconomic effects, including increased energy, transportation and other consumer costs, inflationary pressures and reduced consumer spending.
These effects could reduce demand for wireless products and services generally and, consequently, reduce demand for our products. o We may be unable to adequately control the costs or maintain adequate supply of components and raw materials associated with our operations.
We have experienced increases in the costs of certain components used in our products, and such increases may continue.
Component costs and availability may be affected by a variety of factors outside our control, including inflation, shortages of raw materials, changes in supplier pricing, and changes in global demand and manufacturing capacity.
In particular, increased demand for components used in artificial intelligence and data center applications has caused certain component manufacturers to allocate production capacity toward higher-margin products, which may reduce the availability or increase the cost of components used in our products.
We have also experienced increased costs for certain chipsets and constraints in the availability of raw materials used in printed circuit boards.
If component costs continue to increase, we may be unable to fully offset those increases through reductions in other costs or increases in the prices charged to our customers.
Any resulting reduction in our gross margins could adversely affect our results of operations.
In addition, increases in the prices of our products could reduce customer or end-user demand, result in lower order volumes, or adversely affect our competitive position. o If we do not effectively manage our sales channel inventory and product mix, we may incur costs associated with excess inventory or lose sales from having too few products. o Product liability, product replacement or recall costs could adversely affect our business and financial performance. o We rely on third-party software and other intellectual property to develop and provide our solutions and significant increases in licensing costs or defects in third-party software could harm our business. o Our solutions integrate with third-party technologies and if our solutions become incompatible with these technologies, our solutions would lose functionality, and our customer acquisition and retention could be adversely affected.
LEGAL AND REGULATORY CHANGES THAT COULD REDUCE OR IMPAIR OUR ABILITY TO OPERATE. o Evolving regulations and changes in applicable laws relating to data privacy may increase our expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our business and adversely affect our financial condition. o Enhanced United States fiscal, tax and trade restrictions and executive and legislative actions could adversely affect our business, financial condition, and results of operations. o The increasing focus on environmental sustainability and social initiatives could increase our costs, harm our reputation and adversely impact our financial results. o An assertion by a third party that we are infringing its intellectual property could subject us to costly and time-consuming litigation or expensive licenses and our business could be harmed. o If we are unable to protect our intellectual property and proprietary rights, our competitive position and our business could be harmed. o Restrictions on foreign-manufactured telecommunications and networking equipment could adversely affect our ability to develop, manufacture or commercialize certain future products.
Recent regulatory developments in the United States have imposed or contemplated additional restrictions on certain foreign-manufactured telecommunications and networking equipment and on the entities involved in the manufacture of such equipment.
These restrictions, and any future expansion or interpretation of them, could affect the manufacturers, suppliers or other parties that we are permitted to use in connection with certain products and could affect our ability to obtain required regulatory approvals for, import or commercialize such products.
Compliance with these requirements may require us to use alternative manufacturers or suppliers, modify our supply chain or product designs, or incur additional manufacturing, development, certification or compliance costs.
Such changes could increase our costs, delay the introduction of new products or, in certain circumstances, prevent us from commercializing a product as planned.
These risks are particularly relevant to certain consumer and enterprise networking products included in our future product roadmap.
Based on currently available information, we believe our currently approved mobile hotspot products are not materially affected by these developments.
POTENTIAL EVENTS THAT COULD NEGATIVELY IMPACT THE VALUE OF OUR SECURITIES. o Our share price has been highly volatile in the past and could be highly volatile in the future. o Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited o The price of our stock may be vulnerable to manipulation, including through short sales. o Ownership of our common stock is concentrated, and as a result, certain stockholders may exercise significant influence over our decisions. o We do not currently pay recurring dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common stock. o If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could decline. o If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to report our financial results timely and accurately, which could adversely affect investor confidence in us, and in turn, our results of operations and our stock price. o If the accounting estimates we make, and the assumptions on which we rely, in preparing our financial statements prove inaccurate, our actual results may be adversely affected. o Changes to the accounting systems or new accounting system implementations may be ineffective or cause delays in our ability to record transactions and/or provide timely financial results. o Any changes to existing accounting pronouncements or taxation rules or practices may cause adverse fluctuations in our reported results of operations or affect how we conduct our business. o Our quarterly operating results have fluctuated in the past and may fluctuate in the future, which could cause declines or volatility in the price of our common stock.

Gone since FY2025

In this industry it should be expected that: o Latent design flaws can be discovered, even after a device has been certified; o Latent component defects can be discovered in critical systems, including batteries, LCDs, chargers, and other systems; o Manufacturing defects and flaws will occur during device production.
The following are common dangers of lithium batteries. o Thermal Runaway: An uncontrollable chemical reaction that causes the cells to heat up rapidly, leading to intense fires, potential explosions, and the ejection of cells. o Fires and Explosions: The batteries contain volatile electrolytes that, when exposed to damage or high temperatures, can ignite, causing fires that reach extreme temperatures. o Toxic and Flammable Gases: When a battery malfunctions, it can release flammable and toxic gases, which can ignite and create a fire. o Hydrofluoric Acid Exposure: During combustion, fluorine can separate from lithium salts, forming hydrofluoric acid when mixed with water vapor, posing a severe health risk. o Burns: The extreme temperatures of lithium battery fires, reaching up to 1000°F or more, can cause severe third-degree burns. o Chemical Exposure: The chemicals inside the batteries, including toxic and flammable electrolytes, pose chemical hazards if released. o Choking Hazard: Small lithium-ion button batteries can cause severe chemical burns to the esophagus if ingested.
This industry has numerous and significant known risks.
In this industry it should be expected that: o Latent design flaws and security defects will be discovered, even after a device has been tested and approved; o Code within a program will fail to operate as intended due to updates or changes in other systems; o Hacking and malicious actions by outside parties can damage or alter coding and system integrity.
THE LOSS OF ANY OF OUR MATERIAL CUSTOMERS COULD ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY, AND THEREFORE SHAREHOLDER VALUE.
For the year ended June 30, 2025, net revenues from our two largest customers represented 60.9% and 33.5% of our consolidated net sales, respectively.
If these customers were to reduce their business with us, our revenues and profitability could materially decline.
We often experience long-lead times to ship products, often more than 45 days.
The availability and sale of those services would be harmed if any of these suppliers is not able to meet our demand and alternative suitable products are not available on acceptable terms, or at all. o Natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control could damage our facilities or the facilities of third parties on which we depend, and could impact consumer spending. o If disruptions in our transportation network occur or our shipping costs substantially increase, we may be unable to sell or timely deliver our products, and our operating expenses could increase. o We may be unable to adequately control the costs or maintain adequate supply of components and raw materials associated with our operations. o If we do not effectively manage our sales channel inventory and product mix, we may incur costs associated with excess inventory or lose sales from having too few products. o Product liability, product replacement or recall costs could adversely affect our business and financial performance. o We rely on third-party software and other intellectual property to develop and provide our solutions and significant increases in licensing costs or defects in third-party software could harm our business. o Our solutions integrate with third-party technologies and if our solutions become incompatible with these technologies, our solutions would lose functionality, and our customer acquisition and retention could be adversely affected.
LEGAL AND REGULATORY CHANGES THAT COULD REDUCE OR IMPAIR OUR ABILITY TO OPERATE. o Evolving regulations and changes in applicable laws relating to data privacy may increase our expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our business and adversely affect our financial condition. o Enhanced United States fiscal, tax and trade restrictions and executive and legislative actions could adversely affect our business, financial condition, and results of operations. o The increasing focus on environmental sustainability and social initiatives could increase our costs, harm our reputation and adversely impact our financial results. o An assertion by a third party that we are infringing its intellectual property could subject us to costly and time-consuming litigation or expensive licenses and our business could be harmed. o If we are unable to protect our intellectual property and proprietary rights, our competitive position and our business could be harmed.
POTENTIAL EVENTS THAT COULD NEGATIVELY IMPACT THE VALUE OF OUR SECURITIES. o Our share price has been highly volatile in the past and could be highly volatile in the future. o Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited o The price of our stock may be vulnerable to manipulation, including through short sales. o Ownership of our common stock is concentrated, and as a result, certain stockholders may exercise significant influence over the Company. o We do not currently pay recurring dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common stock. o If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could decline. o If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to report our financial results timely and accurately, which could adversely affect investor confidence in us, and in turn, our results of operations and our stock price. o If the accounting estimates we make, and the assumptions on which we rely, in preparing our financial statements prove inaccurate, our actual results may be adversely affected. o Changes to the accounting systems or new accounting system implementations may be ineffective or cause delays in our ability to record transactions and/or provide timely financial results. o Any changes to existing accounting pronouncements or taxation rules or practices may cause adverse fluctuations in our reported results of operations or affect how we conduct our business. o Our quarterly operating results have fluctuated in the past and may fluctuate in the future, which could cause declines or volatility in the price of our common stock.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2025 ↗, FY2026 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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