Franklin Wireless Announces First Quarter Fiscal 2012 Financial Results

SAN DIEGO, CA--(Marketwire - Nov 14, 2011) - Franklin Wireless Corp. (OTCBB: FKWL), the market leader in dual-mode WiMAX and CDMA modems for 3G and 4G wireless broadband data communications, today announced financial results for the first quarter of fiscal year 2012 ended September 30, 2011.

The Company reported net sales of $3.1 million for the quarter, compared with $16.6 million in net sales for the corresponding period of 2010. Gross margin for the first quarter of fiscal 2012 was 23.2%, compared with 29.5% for the same quarter last year. Total operating expenses were $1.7 million in the first quarter of fiscal 2012, down from $2.9 million in the first quarter of fiscal 2011. The Company reported a net loss of approximately $453,000, or $0.04 per basic and diluted share, compared with net income of $1.1 million, or $0.08 per basic and diluted share, for the same quarter last year. The Company ended the first quarter of fiscal 2012 with cash and cash equivalents of $14.4 million, compared with $11.6 million at the end of the same quarter last year and $11.4 million at the end of fiscal 2011.

The decrease in net sales year-over-year was due to several factors including increased competition in the dual-mode (3G and 4G) USB modem market, as well as competition from other similar products, which negatively affected volume and price. Net sales were also affected by delays in launching new products due to longer than expected schedules associated with design, testing and certification efforts. In addition, net sales in the South American and Latin American regions were down significantly due to timing of orders placed by a relatively small number of customers as well as the fact that some carrier customers are transitioning from CDMA to LTE or HSPA+ networks, which affected the quantity of CDMA related products sold during the first quarter of fiscal 2012.

"As we had indicated following the release of our fiscal 2011 year-end results, weakness in revenues was expected during the first and second quarters of fiscal 2012, and obviously this is what took place this past quarter," said OC Kim, president of Franklin Wireless. "We can reaffirm that continued weakness is expected in our second quarter of fiscal 2012, as we transition to new 4G technologies including LTE, but revenues are expected to ramp up during the second half of the fiscal year, driven by our planned new product roll-outs. We are encouraged by the progress currently being made with respect to new product introductions as well as our potential to sign new carrier customers. During this transition period, I am pleased that our balance sheet remains strong, including $14.4 million in cash, which is up from $11.4 million just three months ago as of the end fiscal 2011."

The Company's 10-Q filing for the three month period ending September 30, 2011 is on file with the SEC (www.sec.gov).

FRANKLIN WIRELESS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
UNAUDITED
(IN THOUSANDS)
			September 30,				June 30,
			2011				2011
ASSETS
	Cash and cash equivalents		$	14,435			$	11,358
	Accounts receivable			2,611				6,916
	Inventories			129				935
	Intangible assets, net			2,477				2,275
	Deferred tax assets, net			1,855				1,679
	Property and equipment, net			401				440
	Advance payment to vendor			17				41
	Other assets			662				527
TOTAL ASSETS			$	22,587			$	24,171
LIABILITIES AND STOCKHOLDERS' EQUITY
	Trade accounts payable		$	1,528			$	2,782
	Accrued liabilities			211				319
	Other liabilities			1,950				2,098
TOTAL LIABILITIES				3,689				5,199
Stockholders' equity
	Common stock			14				14
	Additional paid-in capital			6,472				6,420
	Retained earnings			13,075				13,527
	Treasury stock			(1,873	)			(1,873	)
	Non-controlling interest			1,162				901
	Other			48				(17	)
Total stockholders' equity				18,898				18,972
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY			$	22,587			$	24,171

FRANKLIN WIRELESS CORP.
CONSOLIDATED STATEMENT OF OPERATIONS
UNAUDITED
(IN THOUSANDS, EXCEPT PER SHARE DATA)
			THREE MONTHS ENDED
			September 30
			2011				2010
Net sales			$	3,123			$	16,563
Cost of goods sold				2,397				11,673
Gross profit				726				4,890
Operating Expenses
	Selling, general and administrative			1,664				2,951
Total Operating Expenses				1,664				2,951
Income from operations				(938	)			1,939
Other income (expense)
	Interest income			9				13
	Other income (expense), net			19				161
Total other income (expense)				28				174
Income before taxes				(910	)			2,113
Income tax provision/(benefit)				(176	)			1,150
Non-controlling interests in net loss of subsidiary				281				164
Net Income			$	(453	)		$	1,127
Basic earnings per share			$	(0.04	)		$	0.08
Diluted earnings per share			$	(0.04	)		$	0.08
Weighted average common shares outstanding - basic				11,832				13,464
Weighted average common shares outstanding - diluted				12,037				13,629

About Franklin Wireless

Franklin Wireless Corp. (OTCBB: FKWL) is engaged in the design, manufacture and sale of high speed wireless data products including third generation ("3G") and fourth generation ("4G") modems, routers and modules. Our current products are focused on widely deployed cellular technologies including CDMA EVDO Rev A, HSPA, WiMAX and LTE. We were the world's first supplier of both CDMA EVDO Rev A and dual-mode (CDMA EVDO Rev A/WiMAX) Universal Serial Bus (USB) modems. Franklin's other products include Wi-Fi "hotspot" routers (which operate over WiMAX or CDMA networks) and wireless modules that are generally sold to original equipment manufacturers (OEMs). Our company's primary customers are wireless carriers who seek innovative, reliable and cost effective technology solutions for their subscribers. Our customer base extends from the United States to South America and the Caribbean.

Franklin Wireless is headquartered in San Diego, California and has a majority ownership position in Franklin Technology Inc. (FTI), a research and development facility located in Seoul, South Korea. FTI provides design, development and manufacturing services to Franklin for its wireless data products. For additional information, please visit www.franklinwireless.com.

Safe Harbor Statement:

Certain statements in this press release constitute "forward-looking statements" within the meaning of section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements, expressed or implied by such forward-looking statements.