Franklin Wireless Corp Files 10-Q for Period Ending December 31, 2023

TL;DR

<b>Franklin Wireless Corp filed its quarterly 10-Q report on February 14, 2024, detailing financial performance for the period ending December 31, 2023.</b>

AI Summary

FRANKLIN WIRELESS CORP (FKWL) filed a Quarterly Report (10-Q) with the SEC on February 14, 2024. Franklin Wireless Corp filed a 10-Q report for the period ending December 31, 2023. The filing was made on February 14, 2024. The company's fiscal year ends on June 30. Franklin Wireless Corp is incorporated in Nevada. The company's SIC code is 3661 for Telephone & Telegraph Apparatus.

Why It Matters

For investors and stakeholders tracking FRANKLIN WIRELESS CORP, this filing contains several important signals. This 10-Q filing provides investors with an updated view of Franklin Wireless Corp's financial health and operational performance for the most recent quarter. The detailed financial information within the report is crucial for stakeholders to assess the company's current standing and make informed investment decisions.

Risk Assessment

Risk Level: low — FRANKLIN WIRELESS CORP shows low risk based on this filing. The filing is a standard 10-Q report, which is routine for publicly traded companies and does not indicate any unusual or high-risk events.

Analyst Insight

Review the detailed financial statements and management discussion within the 10-Q to understand Franklin Wireless Corp's performance and outlook.

Key Numbers

• 2023-12-31 — Period End Date (Conformed Period of Report)
• 2024-02-14 — Filing Date (Filed as of Date)
• 06-30 — Fiscal Year End (Fiscal Year End)
• 3661 — SIC Code (Standard Industrial Classification)

Key Players & Entities

• FRANKLIN WIRELESS CORP (company) — Filer
• 0001683168-24-000962 (filing_id) — Accession Number
• 20231231 (date) — Conformed Period of Report
• 20240214 (date) — Filed as of Date
• 0000722572 (company_id) — Central Index Key
• 3661 (industry_code) — Standard Industrial Classification
• NV (state) — State of Incorporation
• 9707 WAPLES STREET, SUITE 150 (address) — Business Address

FAQ

Industry Context

Franklin Wireless Corp operates in the Telephone & Telegraph Apparatus industry, as indicated by its SIC code 3661. This sector involves the manufacturing of communication equipment.

Regulatory Implications

The filing is a Form 10-Q, which is a mandatory quarterly report filed by public companies with the U.S. Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934.

What Investors Should Do

1. Analyze the financial statements within the 10-Q for revenue, expenses, and profitability trends.
2. Review any management discussion and analysis (MD&A) sections for insights into operational performance and future outlook.
3. Check for any new risk factors or updates to existing ones disclosed in the filing.

Key Dates

• 2024-02-14: Filing Date — Submission of the 10-Q report for the period ending 2023-12-31.
• 2023-12-31: Reporting Period End — End date for the financial information presented in the 10-Q.
• 2023-06-30: Fiscal Year End — Indicates the end of the company's annual fiscal cycle.

Year-Over-Year Comparison

This is a 10-Q filing, providing quarterly financial updates. A comparison to the previous quarter's 10-Q or the prior year's 10-Q would be necessary to identify specific changes.

Filing Documents

• franklin_i10q-123123.htm (10-Q) — 733KB
• franklin_ex3101.htm (EX-31.1) — 10KB
• franklin_ex3102.htm (EX-31.2) — 10KB
• franklin_ex3201.htm (EX-32.1) — 4KB
• franklin_ex3202.htm (EX-32.2) — 4KB
• 0001683168-24-000962.txt (&nbsp;) — 4294KB
• fkwl-20231231.xsd (EX-101.SCH) — 30KB
• fkwl-20231231_cal.xml (EX-101.CAL) — 53KB
• fkwl-20231231_def.xml (EX-101.DEF) — 99KB
• fkwl-20231231_lab.xml (EX-101.LAB) — 274KB
• fkwl-20231231_pre.xml (EX-101.PRE) — 212KB
• franklin_i10q-123123_htm.xml (XML) — 675KB

– Financial Information

PART I – Financial Information Item 1: Consolidated Financial Statements (unaudited) Consolidated Balance Sheets as of December 31, 2023 (unaudited) and June 30, 2023 4 Consolidated Statements of (Loss) Income and Comprehensive (Loss) Income (unaudited) for the three and six months ended December 31, 2023 and 2022 5 Consolidated Statements of Stockholders' Equity (unaudited) for the three and six months ended December 31, 2023 and 2022 6-7 Consolidated Statements of Cash Flows (unaudited) for the six months ended December 31, 2023 and 2022 8

Notes to Consolidated Financial Statements (unaudited)

Notes to Consolidated Financial Statements (unaudited) 9 Item 2:

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 26 Item 3:

Quantitative and Qualitative Disclosures About Market Risk

Quantitative and Qualitative Disclosures About Market Risk 31 Item 4:

Controls and Procedures

Controls and Procedures 32

– Other Information

PART II – Other Information Item 1:

Legal Proceedings

Legal Proceedings 33 Item 1A:

Risk Factors

Risk Factors 33 Item 2: Unregistered Sales of Equity Securities and Use of Proceeds 33 Item 3: Defaults Upon Senior Securities 33 Item 4: Mine Safety Disclosures 3 3 Item 5: Other Information 33 Item 6: Exhibits 33

Signatures

Signatures 34 2 NOTE ON FORWARD LOOKING STATEMENTS You should keep in mind the following points as you read this Report on Form 10-Q: The terms "we," "us," "our," "Franklin," "Franklin Wireless," or the "Company" refer to Franklin Wireless Corp. This Report on Form 10-Q contains statements which, to the extent they do not recite historical fact, constitute "forward looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward looking statements are used under the caption "Management's Discussion and Analysis of Financial Condition and Results of Operation," and elsewhere in this Quarterly Report on Form 10-Q. You can identify these statements by the use of words like "may," "will," "could," "should," "project," "believe," "anticipate," "expect," "plan," "estimate," "forecast," "potential," "intend," "continue," and variations of these words or comparable words. Forward looking statements do not guarantee future performance and involve risks and uncertainties. Actual results may differ substantially from the results that the forward looking statements suggest for various reasons, including those discussed under the caption "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended June 30, 2023. These forward looking statements are made only as of the date of this Report on Form 10-Q. We do not undertake to update or revise the forward looking statements, whether as a result of new information, future events or otherwise. 3

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Consolidated Financial Statements

ITEM 1. Consolidated Financial Statements FRANKLIN WIRELESS CORP. Consolidated Balance Sheets December 31, 2023 (Unaudited) June 30, 2023 ASSETS Current assets: Cash and cash equivalents $ 5,241,868 $ 12,241,286 Short-term investments 27,507,884 26,728,313 Accounts receivable 13,445,440 8,949,802 Advance to vendors 110,666 53,875 Other receivables, prepaid expenses, and other current assets 136,534 51,125 Inventories, net 1,159,955 3,741,637 Prepaid income taxes 124,583 – Loan to an employee 93,103 91,057 Total current assets 47,820,033 51,857,095 Property and equipment, net 96,539 101,088 Intangible assets, net 1,764,589 2,180,884 Deferred tax assets, non-current 2,501,707 2,235,515 Goodwill 273,285 273,285 Right of use assets – 152,665 Other assets 138,606 126,546 TOTAL ASSETS $ 52,594,759 $ 56,927,078 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 9,081,306 $ 12,950,497 Income tax payable – 6,556 Contract liabilities 246,056 117,351 Advance from customers 13,213 29,137 Accrued legal contingency expense 2,400,000 2,400,000 Accrued liabilities 1,221,793 849,605 Lease liabilities, current – 159,104 Total current liabilities 12,962,368 16,512,250 Total liabilities 12,962,368 16,512,250 Commitments and contingencies (Note 6) – – Stockholders' equity: Parent Company stockholders' equity Preferred stock, par value $ 0.001 per share, authorized 10,000,000 shares; none issued and outstanding as of December 31, and June 30, 2023 – – Common stock, par value $ 0.001 per share, authorized 50,000,000 shares; 11,784,280 shares issued and outstanding as of December 31, and June 30, 2023, respectively 14,263 14,263 Additional paid-in capital 14,576,976 14,438,196 Retained earnings 28,078,914 29,101,225 Treasury stock, 2,549,208 shares as of December 31, and June 30, 2023 ( 3,554,893 ) ( 3,554,893 ) Accum

financial statements

financial statements. 6 FRANKLIN WIRELESS CORP. Consolidated For the Three and Six Months Ended December 31, 2022 (Unaudited) Common Stock Additional Paid-in Retained Treasury Accumulated Other Comprehensive Income Non-controlling Total Stockholders Shares Amount Capital Earnings Stock (Loss) Interest Equity Balance - June 30, 2022 11,684,280 $ 14,163 $ 13,593,426 $ 31,964,246 $ ( 3,554,893 ) $ ( 984,152 ) $ 1,569,605 $ 42,602,395 Net loss attributable to Parent Company – – – ( 1,126,991 ) – – – ( 1,126,991 ) Foreign exchange translation – – – – – ( 314,218 ) – ( 314,218 ) Comprehensive loss attributable to non-controlling interest – – – – – – ( 299,579 ) ( 299,579 ) Stock based compensation – – 180,745 – – – – 180,745 Balance – September 30, 2022 (unaudited) 11,684,280 $ 14,163 $ 13,774,171 $ 30,837,255 $ ( 3,554,893 ) $ ( 1,298,370 ) $ 1,270,026 $ 41,042,352 Net loss attributable to Parent Company – – – ( 378,324 ) – – – ( 378,324 ) Foreign exchange translation – – – – – 388,257 – 388,257 Comprehensive income attributable to non-controlling interest – – – – – – 294,533 294,533 Issuance of stock related to stock option exercised 100,000 100 133,900 – – – – 134,000 Stock based compensation – – 179,780 – – – – 179,780 Balance – December 31, 2022 (unaudited) 11,784,280 $ 14,263 $ 14,087,851 $ 30,458,931 $ ( 3,554,893 ) $ ( 910,113 ) $ 1,564,559 $ 41,660,598 See accompanying notes to consolidated

financial statements

financial statements. 7 FRANKLIN WIRELESS CORP. Consolidated Statements of Cash Flows (Unaudited) Six Months Ended December 31, 2023 2022 CASH FLOW FROM OPERATING ACTIVITIES: Net loss $ ( 986,860 ) $ ( 1,510,361 ) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 20,510 30,025 Amortization of intangible assets 490,244 360,893 Stock based compensation 138,780 360,525 Forgiveness of debt – ( 165,000 ) Amortization of right of use assets 152,665 146,436 Deferred tax (benefit) provision ( 266,192 ) 14,683 Increase (decrease) in cash due to change in: Accounts receivable ( 4,495,638 ) ( 6,748,926 ) Advance to vendors ( 56,791 ) ( 100,270 ) Other receivables, prepaid expenses, and other current assets ( 85,409 ) ( 5,106 ) Prepaid income taxes ( 124,583 ) – Inventories 2,581,682 ( 3,191,635 ) Other assets ( 12,060 ) ( 2,024 ) Accounts payable ( 3,869,191 ) 3,771,831 Income tax payable ( 6,556 ) ( 4,853 ) Contract liabilities 128,705 27,649 Lease liabilities ( 159,104 ) ( 152,876 ) Advance from customers ( 15,924 ) 12,905 Accrued liabilities 372,188 57,914 Net cash used in operating activities ( 6,193,534 ) ( 7,098,190 ) CASH FLOW FROM INVESTING ACTIVITIES: Purchases of short-term investments ( 779,571 ) ( 293,545 ) Purchases of property and equipment ( 15,961 ) ( 45,483 ) Payments for capitalized product development costs ( 68,733 ) ( 1,046,980 ) Purchases of intangible assets ( 5,216 ) ( 7,756 ) Net cash used in investing activities ( 869,481 ) ( 1,393,764 ) CASH FLOW FROM FINANCING ACTIVITIES: Loan to an employee ( 2,046 ) ( 89,000 ) Cash received from exercise of stock options – 134,000 Net cash (used in) provided by financing activities ( 2,046 ) 45,000 Effect of foreign currency translation 65,643 74,039 Net decrease in cash and cash equivalents ( 6,999,418 ) ( 8,372,915 ) Cash and

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial interest of 66.3 % (approximately 33.7 % is owned by noncontrolling interests) as of December 31, 2023 and 2022. In the preparation of consolidated financial statements of the Company, intercompany transactions and balances are eliminated and net earnings are reduced by the portion of the net earnings of the subsidiary applicable to noncontrolling interests. As consolidated financial the retained earnings or deficit of the subsidiary at the date of acquisition, October 1, 2009, by the parent are excluded from consolidated retained earnings. When a subsidiary is consolidated, the consolidated financial statements include the subsidiary's revenues, expenses, gains, and losses only from the date the subsidiary is initially consolidated, and the noncontrolling interest is reported in the consolidated statement of financial position within equity, separately from the parent's equity. There are no shares of the Company held by any subsidiaries as of December 31, 2023, or June 30, 2023. Reclassifications Certain amounts on the prior year's consolidated balance sheets were reclassified to conform to current-year presentation, with no effect on ending stockholders' equity. Noncontrolling Interest in a Consolidated Subsidiary As of December 31, 2023, the noncontrolling interest was $ 1,523,418 , which represents a $ 35,451 increase from $ 1,487,967 as of June 30, 2023. The increase in the noncontrolling interest of $ 35,451 was from income in the subsidiary of $ 105,329 incurred for the six months ended December 31, 2023. Segment Reporting Account

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