SOURCE: Franklin Wireless Corporation

November 16, 2006 15:51 ET

Franklin Wireless Reports First Quarter 2007 Results

Rise in First Quarter Profit Due to New Product Launches and Increased Sales of Mobile Broadband USB Modems in USA and South American Markets

SAN DIEGO, CA -- (MARKET WIRE) -- November 16, 2006 -- Franklin Wireless Corp. (PINKSHEETS: FKLT) posted its first quarter 2007 results on Nov 13, 2006. Franklin Wireless shows rise in first quarter profit due to the launch of the CDU-550 in USA and Mexico, and increase in sales of the CCU-550 mobile broadband USB modems in South American markets.

The results were prepared in accordance with United States generally accepted accounting principles.

Our net sales for the three months ended September 30, 2006 amounted to $969,528, gross profit was $293,678, or 30.3% of revenue, operating expenses were $199,264 and net income were $98,923, or basic earnings per share of $0.0001. Our balance sheet remains satisfactory with $1.16 million of cash and cash equivalents.

Results for the first quarter of 2007, compared to the first quarter of 2006 are as follows:

Net sales increased by 1113.6% to $969,528 for the three months ended September 30, 2006 from $79,890 for the same period of 2005. Gross profit was 30.3% of net sales for the three months ended September 30, 2006, compared to 78.1% for the same period in 2005. Selling, general, and administrative expenses increased by 92.1% to $199,264 for the three months ended September 30, 2006 from $103,734 for the same period of 2005. Net income was $98,923, or basic earnings per share of $0.0001 for the three months ended September 30, 2006, compared to a net loss of $77,946, or loss per share of $0.0001, in the same period of 2005.

About Franklin Wireless

Franklin Wireless Corporation (PINKSHEETS: FKLT) designs, builds, and markets broadband high speed data communication products. It offers third generation wireless modules and modems. The company's wireless broadband data products include wireless USB dongles, PC cards, embedded modules, and stand-alone broadband modems used for high speed data services. It also provides wireless solutions to electronic consumer product companies. The company offers its products to various industries, including cellular operators, government agencies, personal computer makers, and application integrators, as well as computer/handheld computing industry, automotive industry, and telemetry markets. It markets its products through original equipment manufacturers (OEMs) and distributors, as well as directly to operators and end users in the United States, Canada, South America, Asia, and parts of Europe. The company was founded in 1984 and is headquartered in San Diego, California. For more information about Franklin Wireless, please visit www.fklt.com


                         FRANKLIN WIRELESS CORP.
                  Consolidated Statements of Operations
                                (Unaudited)

                                           Three Months Ended
                                              September 30,
                                           2006           2005

Net sales                           $      969,528 $      79,890
Cost of goods sold                         675,850        17,500
Gross profit                               293,678        62,390

Operating expenses:
 Selling, general, and
  administrative                           199,264       103,734
 Research and development                        -        36,300
Total operating expenses                   199,264       140,034

Income (Loss) from operations               94,414       (77,644)

Other income (expense):
 Interest income                             5,284            30
 Other income                                   25            17
 Other expenses                                  -          (349)
Total other income (expense), net            5,309          (302)

Net income (loss) before income
 taxes                                      99,723       (77,946)

Provision for income taxes                     800             -

Net income (loss)                   $       98,923 $     (77,946)


Basic earnings (loss) per share     $       0.0001 $     (0.0001)
Diluted earnings (loss) per share   $       0.0001 $     (0.0001)

Weighted average common shares
 outstanding - basic                   796,958,771   793,040,050
Weighted average common shares
 outstanding - diluted                 796,958,771   793,040,050



See accompanying notes to unaudited consolidated financial statements.

                          FRANKLIN WIRELESS CORP.
                        Consolidated Balance Sheets

                                              ----------------------------
                                              (Unaudited)
                                              September 30,     June 30,
                                                  2006           2006
                                              -------------  -------------
ASSETS
 Current assets:
    Cash and cash equivalents                 $   1,161,618  $     568,387
    Inventory                                       197,250              -
    Accounts receivable                             244,352          1,750
                                              -------------  -------------
    Total current assets                          1,603,220        570,137
 Property and equipment, net                         12,439         12,715
 Intangible assets, net                             138,974        104,195
 Other assets                                         4,452          4,452
                                              -------------  -------------
 TOTAL ASSETS                                 $   1,759,085  $     691,499
                                              =============  =============


LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities
    Accounts payable                          $     573,531  $         585
    Accrued liabilities                             186,685        190,968
    Other current liability                         400,000              -
    Notes payable to stockholders, current
     portion                                        540,000        540,000
                                              -------------  -------------
    Total current liabilities                     1,700,216        731,553
                                              -------------  -------------

 Stockholders’ equity
 Common stock, no par value, authorized
  900,000,000 shares and Preferred stock, no
  par value, authorized 10,000,000 shares;
  Common stock issued and outstanding -
  882,040,050 as of September 30, 2006 and
  June 30, 2006, and no Preferred stock
  issued and outstanding                                  -              -
 Additional paid-in capital                       4,629,393      4,629,393
 Stock subscription receivable                      (17,395)       (17,395)
 Accumulated deficit                             (4,553,129)    (4,652,052)
                                              -------------  -------------
 Total stockholders’ equity (deficit)                58,869        (40,054)
                                              -------------  -------------

 Total liabilities and stockholders’ equity   $   1,759,085  $     691,499
                                              =============  =============



See accompanying notes to unaudited consolidated financial statements.



                         FRANKLIN WIRELESS CORP.
                  Consolidated Statements of Cash Flows
                                (Unaudited)

                                              ----------------------------
                                                   Three Months Ended
                                                      September 30,
                                              ----------------------------
                                                  2006           2005
                                              -------------  -------------

CASH FLOWS FROM OPERATIONS ACTIVITIES:
 Net Income (loss)                            $      98,923  $     (77,946)
 Adjustments to reconcile net income (loss)
  to net cash provided by operating
  activities:
   Depreciation                                       1,436          1,550
   Amortization of intangible assets                 19,001         11,250
   Increase (decrease) in cash due to change
    in:
     Accounts receivable                           (242,602)          (800)
     Inventory                                     (197,250)
     Intangible assets                              (53,780)             -
     Accounts payable                               572,946         80,001
     Accrued liabilities                             (4,283)        10,250
                                              -------------  -------------
Net cash provided by operating activities           194,391         24,305
                                              -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of property and equipment                 (1,160)             -
                                              -------------  -------------
Net cash used in investing activities                (1,160)             -
                                              -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
 Payment received for future stock issuance         400,000              -
                                              -------------  -------------
Net cash provided by financing activities           400,000              -
                                              -------------  -------------

Net increase in cash and cash equivalents           593,231         24,305
Cash and cash equivalents, beginning of
 period                                             568,387         39,542
                                              -------------  -------------
Cash and cash equivalents, end of period      $   1,161,618  $      63,847
                                              =============  =============

Supplemental disclosure of cash flow
 information:
 Cash paid during the year for:
   Interest                                   $           -  $           -
   Income taxes                               $           -  $           -



See accompanying notes to unaudited consolidated financial statements.

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