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    Hot OTCBB on the Move – Franklin Wireless Soars on Record FY 2010 Results

    Following the October 12 announcement of record financial results for the fiscal year ended June 30, 2010, Franklin Wireless Corp. (OTCBB: FKWL) stock increased 42% and reached the 2010 maximum of $2.84 on October 21. The company is currently trading in the range of $2.65, with an average daily trading volume of 100,000.

    Franklin Wireless is engaged in the design, manufacture and sale of broadband high-speed wireless data communication products such as 3G and 4G wireless modules and modems. The company focuses primarily on wireless broadband USB modems, which provide a flexible way for consumers to connect to wireless broadband networks from laptop or desktop computers. Franklin Wireless’ broadband wireless data communication products are positioned at the convergence of growing markets of wireless communications, mobile computing and the Internet.

    The company holds a leadership position in the dual-mode USB modem market, which resulted in record financial and operating results for FY2010. For fiscal 2010, Franklin Wireless reported net sales of $101.9 million, which represents a $77.9 million increase, or 324%, over fiscal 2009 net sales of $24.0 million. Franklin Wireless also reported strong income from operations of $7.7 million, compared to $2.3 million for fiscal 2009. Net income per share reached $0.35 for FY 2010, compared to $0.27 for FY 2009. The overall increase in net sales was primarily due to increased demand for the company’s dual-mode (3G and 4G) wireless USB modems.

    Franklin Wireless enjoys tremendous success with its dual-mode WiMAX/CDMA USB modems; however, the company expanded its offering by launching in October a WiMAX only USB modem. Franklin Wireless’ U310 single-mode WiMAX USB modem operates over both 2.3GHz and 2.5GHz frequency bands, is easy to use and features both a Web-based and standard user interface, which the company believes is a first for a USB modem in the U.S.

    During fiscal 2010, the company completed the acquisition of approximately 51% of the outstanding stock of South Korea-based Diffon Inc. 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. This move would allow Franklin Wireless to directly oversee all of the important initiatives taking place at this facility and could result in a modest increase in profit margins.

    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 Wireless’ 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.

    The latest developments concerning taking full control rights of Diffon Corporation and repurchase of C-Motech’s F Franklin Wireless’ shares are targeting the improvement of the company’s bottom line. FKWL is anticipated to further deliver strong growth due to growing demand for high-speed dual-mode wireless data devices. A better margins and earnings management would allow Franklin Wireless to fully benefit from revenue momentum and bring significant improvement to the company’s valuation.

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