SOURCE: Franklin Wireless Corporation

Franklin Wireless Corporation

October 12, 2010 17:59 ET

Franklin Wireless Announces Record Financial Results for Fiscal 2010

Revenue Exceeds $100 Million for the Year; Income From Operations Exceeds $7 Million

SAN DIEGO, CA--(Marketwire - October 12, 2010) - 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 record financial results for the fiscal year ended June 30, 2010, driven by strong demand for the company's dual-mode USB modems.

Net sales were $101.9 million for fiscal 2010, which represents a $77.9 million increase, or 324%, over fiscal 2009 net sales of $24.0 million. The company also reported strong income from operations of $7.7 million, compared to $2.3 million for fiscal 2009.

"During fiscal 2010, Franklin Wireless successfully maintained its leadership position in the dual-mode USB modem market, which resulted in record financial and operating results for the year," said OC Kim, president of Franklin Wireless. "In addition, we achieved several significant milestones during the fiscal year including broadening our product offerings and completing a strategic investment in our research and development facility in South Korea."

Key milestones:

  • During fiscal 2010, the company completed the acquisition of approximately 51% of the outstanding stock of South Korea-based Diffon Inc. in October, 2009. Diffon operates as Franklin's research and development facility and allows the company to directly manage its product design and development efforts. Following the end of the fiscal year, the company announced it had increased its ownership to approximately 58%, had control rights of Diffon and changed the name to Franklin Technology Inc. (FTI).
  • On August 2, 2010, the company announced that it had reached an agreement with C-Motech to repurchase all of C-Motech's 3,370,356 Franklin Wireless shares, which represent approximately 24% of Franklin's outstanding shares. 1,803,684 shares were repurchased and transferred on September 14, 2010 and the remaining shares will be repurchased by December 31, 2010. Following the repurchase of all of the shares, the company will have approximately 10.4 million shares outstanding.
  • On September 2, 2010 the company announced the launch of its new U600 dual-mode USB modem with Sprint. This device is the company's 3rd generation dual-mode USB modem and is the first one developed by FTI.

The company's 10-K filing for the twelve month period ending June 30, 2010 is on file with the SEC (www.sec.gov).

FRANKLIN WIRELESS CORP.
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)


                                                        June 30,  June 30,
                                                          2010      2009
                                                        --------  ---------
ASSETS

  Cash and cash equivalents                             $ 16,108  $   6,253
  Accounts receivable                                      3,119      2,813
  Inventories                                                198      2,618
  Intangible assets, net                                   2,859          -
  Deferred tax assets, net                                 1,672      2,050
  Property and equipment, net                                985         90
  Other assets                                               954         34
                                                        --------  ---------
TOTAL ASSETS                                            $ 25,895  $  13,858
                                                        ========  =========

LIABILITIES AND STOCKHOLDERS' EQUITY

  Trade accounts payable                                $  6,418  $   4,512
  Accrued liabilities                                        732         76
  Other liabilities                                        3,076         34
                                                        --------  ---------
TOTAL LIABILITIES                                         10,226      4,622
                                                        --------  ---------

Stockholders' equity
  Common stock                                                14         13
  Additional paid-in capital                               5,556      5,019
  Retained earnings                                        8,982      4,204
  Non-controlling interest                                 1,130          -
  Other                                                      (13)         -
                                                        --------  ---------
Total stockholders' equity                                15,669      9,236
                                                        --------  ---------

                                                        --------  ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $ 25,895  $  13,858
                                                        ========  =========






FRANKLIN WIRELESS CORP.
STATEMENT OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

                                                      TWELVE MONTHS ENDED
                                                            June 30
                                                        2010       2009
                                                      ---------  ---------

  Net sales                                           $ 101,898  $  24,001

  Cost of goods sold                                     87,873     18,824

                                                      ---------  ---------
  Gross profit                                           14,025      5,177
                                                      ---------  ---------

  Operating Expenses
    Selling, general and administrative                   6,359      2,860
                                                      ---------  ---------
  Total Operating Expenses                                6,359      2,860

                                                      ---------  ---------
  Income from operations                                  7,666      2,317
                                                      =========  =========

  Other income (expense)
    Interest income                                          79         85
    Other income (expense), net                            (164)        15
                                                      ---------  ---------
  Total other income (expense)                              (85)       100
                                                      ---------  ---------

  Income before taxes                                     7,581      2,417

  Income tax provision/(benefit)                          2,954     (1,222)

  Non-controlling interests in net loss of subsidiary       151          -

                                                      ---------  ---------
  Net Income                                          $   4,778  $   3,639
                                                      =========  =========

  Basic earnings per share                            $    0.35  $    0.28
  Diluted earnings per share                          $    0.35  $    0.27

  Weighted average common shares outstanding - basic     13,584     13,231
  Weighted average common shares outstanding -
   diluted                                               13,741     13,250


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.

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