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