GlobeNewswire Inc | Feb 17, 2021 08:30AM EST

February 17, 2021

Strong Demand Amidst Covid-19 Pandemic Drives Nearly 400% Gain in Year-over-Year Sales

Net Income Rises to $0.58 Per Basic Share

Cash and Short-Term Investments Increase to $76.4 Million with No Financial Debt

SAN DIEGO, Feb. 17, 2021 (GLOBE NEWSWIRE) -- Franklin Wireless Corp.(FKWL), a market leader in broadband data communications including hardware and software solutions for M2M and the IoT (Internet of Things), today announced record second quarter results for the period ended December 31, 2020.

Financial and Operational Highlights (second fiscal quarter of 2021 vs. second fiscal quarter of 2020):

-- Revenues increased 399.5% to $66.2 million, a record amount for any quarter in the Companys history.

-- Income before provision for taxes of $9.1 million versus $848,828 in the second quarter last year.

-- Net income increased to $6.9 million, a positive swing of $6.3 million versus the second quarter last year.

The continued record revenue and net income demonstrates the tireless work of our entire team to maximize opportunities during this challenging and difficult time for the global economy brought about by the Covid-19 global pandemic, said OC Kim, president of Franklin Wireless. Our manufacturing partners, suppliers and staff have done a great job overcoming supply chain delays and have consistently delivered our products on time, without increasing the cost of operations. It appears likely that the pandemic has caused long term changes to the way we work and learn, and these changes will increase demand for our wireless solutions for years to come. Operationally and financially, we are extremely well positioned to meet this demand for our products and solutions, with the strongest balance sheet in our history and a profitable business generating cash flow. We will keep working hard to take advantage of opportunities and deliver solutions to our customers to help them navigate these unprecedented times.

Second Quarter Financial Results (three months ended December 31, 2020 compared to three months ended December 31, 2019)

The Company reported net sales of $66.2 million, compared with $13.3 million in net sales in the same period last year. The 399.5% year-over-year growth in net sales was primarily from increased demand for wireless connectivity due to the effect of both remote working and remote school attendance in the wake of the Covid-19 global pandemic.

Net income was approximately $6.9 million, or $0.58 per basic share, compared to approximately $581,000, or $0.05 per basic share last year.

The Companys 10-Q filing for the period ending December 31, 2020 is on file with the SEC (www.sec.gov).

About Franklin WirelessFranklin Wireless Corp.(FKWL)is a global leader in innovative hardware and software products that support machine-to-machine (M2M) applications and the Internet of Things (IoT), as well as intelligent wireless solutions including mobile hotspots, routers and modems. For more information, please visitwww.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.

Contact:

Franklin Wireless Corp.+1 858 623 0000ir@franklinwireless.com

FRANKLIN WIRELESS CORP.CONSOLIDATED BALANCE SHEETS

December 31, June 30, 2020 2020 (Unaudited)ASSETS Current assets: Cash and cash equivalents $ 71,025,316 $ 28,161,644 Certificates of deposit account 5,384,496 5,381,918 Accounts receivable, net of allowance for 16,366,586 15,973,537 bad debt of $61,890 and $0, respectivelyOther receivables, net 50,244 61,090 Inventories, net 13,176,140 11,783,403 Prepaid expenses and other current assets 14,049 21,588 Advance payments to vendors 42,113 27,838 Total current assets 106,058,944 61,411,018 Property and equipment, net 185,563 220,889 Intangible assets, net 1,419,166 1,125,152 Deferred tax assets, non-current 685,280 938,188 Goodwill 273,285 273,285 Right of use assets 955,732 1,139,670 Other assets 144,964 283,369 TOTAL ASSETS $ 109,722,934 $ 65,391,571 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 63,939,629 $ 42,083,255 Income tax payable 1,970,289 34,713 Accrued liabilities 316,520 466,021 Advance payments from customers 688,572 ? Lease liabilities, current 376,574 400,508 Total current liabilities 67,291,584 42,984,497 Lease liabilities, non-current 617,790 784,233 Notes payable, payroll protection plan loan ? 487,300 Total liabilities 67,909,374 44,256,030 Commitments and contingencies (Note 8) Stockholders? equity: Parent Company stockholders? equity Preferred stock, par value $0.001 per share,authorized 10,000,000 shares; No preferred ? ? stock issued and outstanding as of December31, 2020 and June 30, 2020Common stock, par value $0.001 per share,authorized 50,000,000 shares; 11,576,281 and10,605,912 shares issued and outstanding as 14,054 14,007 of December 31, 2020, and June 30, 2020,respectivelyAdditional paid-in capital 12,756,959 7,475,365 Retained earnings 31,805,030 18,028,059 Treasury stock, 2,549,208 and 3,472,286shares as of December 31, 2020 and June 30, (3,554,893 ) (4,513,479 )2020Accumulated other comprehensive loss (365,906 ) (650,426 )Total Parent Company stockholders? equity 40,655,244 20,353,526 Non-controlling interests 1,158,316 782,015 Total stockholders? equity 41,813,560 21,135,541 TOTAL LIABILITIES AND STOCKHOLDERS? EQUITY $ 109,722,934 $ 65,391,571

FRANKLIN WIRELESS CORP.CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (Unaudited)

Three Months Ended Six Months Ended December 31, December 31, 2020 2019 2020 2019 Net sales $ 66,247,578 $ 13,263,855 $ 128,817,028 $ 22,134,130 Cost of goods 54,955,123 10,672,228 105,853,342 17,521,991 soldGross profit 11,292,455 2,591,627 22,963,686 4,612,139 Operating expenses:Selling,general and 1,409,026 769,743 2,930,485 1,618,504 administrativeResearch and 1,151,732 1,024,424 2,130,124 1,919,936 developmentTotal operating 2,560,758 1,794,167 5,060,609 3,538,440 expensesIncome from 8,731,697 797,460 17,903,077 1,073,699 operations Other income (loss), net:Interest income 1,760 40,561 4,654 95,591 Income fromgovernmental 44,347 33 66,433 4,126 subsidyGain from theforgiveness ofpayroll 487,300 ? 487,300 ? protection planloanOther income (150,874 ) 10,774 (169,052 ) 26,366 (loss), netTotal otherincome (loss), 382,533 51,368 389,335 126,083 netIncome beforeprovision for 9,114,230 848,828 18,292,412 1,199,782 income taxesIncome tax 2,138,406 114,886 4,139,140 175,860 provisionNet income 6,975,824 733,942 14,153,272 1,023,922 Less:non-controllinginterests in 119,213 ? 376,301 ? net income ofsubsidiary at33.7%Less:non-controllinginterests in ? 153,064 ? 189,106 net income ofsubsidiary at35.8%Net incomeattributable to $ 6,856,611 $ 580,878 $ 13,776,971 $ 834,816 Parent Company Basic incomeper shareattributable to $ 0.59 $ 0.05 $ 1.24 $ 0.08 Parent CompanystockholdersDiluted incomeper shareattributable to $ 0.58 $ 0.05 $ 1.22 $ 0.08 Parent Companystockholders Weightedaverage commonshares 11,566,309 10,570,203 11,118,511 10,570,203 outstanding ?basicWeightedaverage commonshares 11,727,282 10,708,028 11,279,483 10,708,028 outstanding ?diluted Comprehensive incomeNet income $ 6,975,824 $ 733,942 $ 14,153,272 $ 1,023,922 Translation 218,096 37,067 284,520 18,750 adjustmentsComprehensive 7,193,920 771,009 14,437,792 1,042,672 incomeLess:comprehensiveincome 119,213 153,064 376,301 189,106 attributable tonon-controllinginterestComprehensiveincomeattributable to $ 7,074,707 $ 617,945 $ 14,061,491 $ 853,566 controllinginterest