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 Company’s 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 Company’s 10-Q filing for the period ending December 31, 2020 is on file with the SEC (www.sec.gov).
About Franklin Wireless
Franklin 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 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.
Contact:
Franklin Wireless Corp.
+1 858 623 0000
ir@franklinwireless.com
FRANKLIN WIRELESS CORP.
CONSOLIDATED BALANCE SHEETS
| December 31, 2020 (Unaudited) | June 30, 2020 | |||||||
| 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 bad debt of $61,890 and $0, respectively | 16,366,586 | 15,973,537 | ||||||
| Other 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 December 31, 2020 and June 30, 2020 | – | – | ||||||
| Common stock, par value $0.001 per share, authorized 50,000,000 shares; 11,576,281 and 10,605,912 shares issued and outstanding as of December 31, 2020, and June 30, 2020, respectively | 14,054 | 14,007 | ||||||
| Additional paid-in capital | 12,756,959 | 7,475,365 | ||||||
| Retained earnings | 31,805,030 | 18,028,059 | ||||||
| Treasury stock, 2,549,208 and 3,472,286 shares as of December 31, 2020 and June 30, 2020 | (3,554,893 | ) | (4,513,479 | ) | ||||
| Accumulated 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 sold | 54,955,123 | 10,672,228 | 105,853,342 | 17,521,991 | ||||||||||||
| Gross profit | 11,292,455 | 2,591,627 | 22,963,686 | 4,612,139 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Selling, general and administrative | 1,409,026 | 769,743 | 2,930,485 | 1,618,504 | ||||||||||||
| Research and development | 1,151,732 | 1,024,424 | 2,130,124 | 1,919,936 | ||||||||||||
| Total operating expenses | 2,560,758 | 1,794,167 | 5,060,609 | 3,538,440 | ||||||||||||
| Income from operations | 8,731,697 | 797,460 | 17,903,077 | 1,073,699 | ||||||||||||
| Other income (loss), net: | ||||||||||||||||
| Interest income | 1,760 | 40,561 | 4,654 | 95,591 | ||||||||||||
| Income from governmental subsidy | 44,347 | 33 | 66,433 | 4,126 | ||||||||||||
| Gain from the forgiveness of payroll protection plan loan | 487,300 | – | 487,300 | – | ||||||||||||
| Other income (loss), net | (150,874 | ) | 10,774 | (169,052 | ) | 26,366 | ||||||||||
| Total other income (loss), net | 382,533 | 51,368 | 389,335 | 126,083 | ||||||||||||
| Income before provision for income taxes | 9,114,230 | 848,828 | 18,292,412 | 1,199,782 | ||||||||||||
| Income tax provision | 2,138,406 | 114,886 | 4,139,140 | 175,860 | ||||||||||||
| Net income | 6,975,824 | 733,942 | 14,153,272 | 1,023,922 | ||||||||||||
| Less: non-controlling interests in net income of subsidiary at 33.7% | 119,213 | – | 376,301 | – | ||||||||||||
| Less: non-controlling interests in net income of subsidiary at 35.8% | – | 153,064 | – | 189,106 | ||||||||||||
| Net income attributable to Parent Company | $ | 6,856,611 | $ | 580,878 | $ | 13,776,971 | $ | 834,816 | ||||||||
| Basic income per share attributable to Parent Company stockholders | $ | 0.59 | $ | 0.05 | $ | 1.24 | $ | 0.08 | ||||||||
| Diluted income per share attributable to Parent Company stockholders | $ | 0.58 | $ | 0.05 | $ | 1.22 | $ | 0.08 | ||||||||
| Weighted average common shares outstanding – basic | 11,566,309 | 10,570,203 | 11,118,511 | 10,570,203 | ||||||||||||
| Weighted average common shares outstanding – diluted | 11,727,282 | 10,708,028 | 11,279,483 | 10,708,028 | ||||||||||||
| Comprehensive income | ||||||||||||||||
| Net income | $ | 6,975,824 | $ | 733,942 | $ | 14,153,272 | $ | 1,023,922 | ||||||||
| Translation adjustments | 218,096 | 37,067 | 284,520 | 18,750 | ||||||||||||
| Comprehensive income | 7,193,920 | 771,009 | 14,437,792 | 1,042,672 | ||||||||||||
| Less: comprehensive income attributable to non-controlling interest | 119,213 | 153,064 | 376,301 | 189,106 | ||||||||||||
| Comprehensive income attributable to controlling interest | $ | 7,074,707 | $ | 617,945 | $ | 14,061,491 | $ | 853,566 | ||||||||