Franklin Wireless Corp. (FKWL) is a leading provider of integrated wireless solutions, offering a range of products including mobile hotspots, routers, fixed wireless routers, and various trackers. The company has majority ownership of Franklin Technology Inc. (FTI), a research and development company based in Seoul, South Korea, which primarily provides design and development services for Franklin Wireless' products.
Business Overview
Franklin Wireless' products are generally marketed and sold directly to wireless operators and indirectly through strategic partners and distributors. The company's global customer base primarily extends from North America to Asia. Franklin Wireless' integrated software subscription services provide users with remote capabilities, including mobile device management (MDM) and software-defined wide area networking (SD-WAN).Financial Performance
For the fiscal year ended June 30, 2023, Franklin Wireless reported annual revenue of $45,948,516, a decrease from the prior year. The company's annual net income was -$2,863,021, and its annual operating cash flow and free cash flow were -$1,882,114 and -$3,599,643, respectively.In the most recent quarter ended March 31, 2024, the company's net sales decreased by 47.9% to $6,176,499, compared to $11,851,971 in the same period of the prior year. This decline was primarily due to a significant decrease in sales to one of the company's major carrier customers, which was partially offset by increased sales to another major carrier customer.
Gross profit for the three months ended March 31, 2024, decreased by 74.7% to $517,449, with the gross profit margin declining from 17.3% in the prior-year period to 8.4%. The decrease in gross profit margin was mainly attributable to the competitive selling prices and increased production costs, as well as higher amortization expenses associated with the company's capitalized product development costs.
Operating expenses for the three-month period ended March 31, 2024, decreased by 17.6% to $2,072,617, primarily due to lower compensation expenses related to stock options granted to employees. Research and development expenses decreased by 22.9% to $811,470, reflecting the timing of research and development activities and the number of active projects.
Geographic Breakdown
For the nine months ended March 31, 2024, net sales in North America accounted for 99.6% of the company's total revenue, while Asia contributed 0.4%. Net sales in North America decreased by 14.6% compared to the same period in the prior year, primarily due to decreased demand from the company's two largest major carrier customers. Net sales in Asia decreased by 41.9% during the same period, mainly due to lower demand for a newly launched wireless product from a customer in the region.