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<SEC-DOCUMENT>0001019687-06-001309.txt : 20060523
<SEC-HEADER>0001019687-06-001309.hdr.sgml : 20060523
<ACCEPTANCE-DATETIME>20060523140135
ACCESSION NUMBER:		0001019687-06-001309
CONFORMED SUBMISSION TYPE:	10QSB
PUBLIC DOCUMENT COUNT:		5
CONFORMED PERIOD OF REPORT:	20050930
FILED AS OF DATE:		20060523
DATE AS OF CHANGE:		20060523

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			FRANKLIN WIRELESS CORP
		CENTRAL INDEX KEY:			0000722572
		STANDARD INDUSTRIAL CLASSIFICATION:	COMPUTER COMMUNICATIONS EQUIPMENT [3576]
		IRS NUMBER:				953733534
		STATE OF INCORPORATION:			CA
		FISCAL YEAR END:			0630

	FILING VALUES:
		FORM TYPE:		10QSB
		SEC ACT:		1934 Act
		SEC FILE NUMBER:	001-14891
		FILM NUMBER:		06861005

	BUSINESS ADDRESS:	
		STREET 1:		9853 PACIFIC HEIGHTS BLVD #N
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92121
		BUSINESS PHONE:		858-623-0000

	MAIL ADDRESS:	
		STREET 1:		9853 PACIFIC HEIGHTS BLVD #N
		CITY:			SAN DIEGO
		STATE:			CA
		ZIP:			92121

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	FRANKLIN TELECOMMUNICATIONS CORP
		DATE OF NAME CHANGE:	19920703

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	ABM COMPUTER SYSTEMS
		DATE OF NAME CHANGE:	19870317

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	AUTOMATED BUSINESS MACHINES INC
		DATE OF NAME CHANGE:	19830802
</SEC-HEADER>
<DOCUMENT>
<TYPE>10QSB
<SEQUENCE>1
<FILENAME>franklin_10q-093005.txt
<TEXT>
<PAGE>


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
    ACT OF 1934

         For the quarterly period ended:     September 30, 2005


[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

         For the transition period from _______________ to ____________.

                         Commission file number 0-11616

                             FRANKLIN WIRELESS CORP.
                             -----------------------
              (Exact name of small business issuer in its charter)

                     California                       95-3733534
               ----------------------          ----------------------
           (State or other jurisdiction of        (I.R.S. Employer
           incorporation or organization)        Identification No.)

            9853 Pacific Heights Suite N, San Diego, California 92121
             ------------------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)
         Issuer's Telephone Number, Including Area Code: (858) 623-0000

           Securities registered pursuant to Section 12(b) of the Act:

                                      None
   Securities registered pursuant to Section 12(g) of the Act: Common Stock,
                                without par value
                                -----------------

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [ ] NO [X]

Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). YES [ ] NO [X]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:

   TITLE OF EACH CLASS OF COMMON STOCK          OUTSTANDING AT April 15, 2006
   -----------------------------------          -----------------------------
       Common Stock, no par value                        835,040,550

Transitional Small Business Disclosure format (Check one):    YES [ ] NO [X]



<PAGE>

                             FRANKLIN WIRELESS CORP.
                                      INDEX


                                                                        Page No.
                                                                        --------

                         PART I - Financial Information

Item 1:  Financial Statements  (Unaudited)
              Consolidated Statements of Operations (Unaudited)...........    3
              Consolidated Balance Sheets (Unaudited).....................    4
              Consolidated Statements of Cash Flows (Unaudited)...........    5
              Notes to Consolidated Financial Statements (Unaudited)......    6
Item 2:  Management's Discussion and Analysis or Plan of Operation........    11
Item 3:  Controls and Procedures..........................................    13


                           PART II - Other Information

Item 1:  Legal Proceedings................................................    15
Item 2:  Unregistered Sales of Equity Securities and Use of Proceeds......    15
Item 3:  Defaults Upon Senior Securities..................................    15
Item 4:  Submission of Matters to a Vote of Security Holders..............    15
Item 5:  Other Information ...............................................    15
Item 6:  Exhibits.........................................................    15

Signatures ...............................................................    16
Certifications ...........................................................    17


                                       2


<PAGE>


PART 1: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
                             FRANKLIN WIRELESS CORP.
                      Consolidated Statements of Operations
                                   (Unaudited)

                                                               Three Months Ended
                                                                  September 30,
                                                         --------------------------------
                                                             2005               2004
                                                         --------------------------------

<S>                                                      <C>                <C>
Net sales                                                $      79,890      $       6,130
Cost of goods sold                                              17,500              6,000
- -----------------------------------------------------------------------------------------
Gross profit                                                    62,390                130
- -----------------------------------------------------------------------------------------

Operating expenses:
    Selling, general and administrative                        103,734            313,391
    Research and development                                    36,300                 --
- -----------------------------------------------------------------------------------------
Total operating expenses                                       140,034            313,391
- -----------------------------------------------------------------------------------------

Loss from operations                                           (77,644)          (313,261)

Other (expenses)                                                  (302)               (58)
- -----------------------------------------------------------------------------------------

Net loss before income taxes                                   (77,946)          (313,319)

Provision for income taxes                                          --                 --
- -----------------------------------------------------------------------------------------

Net loss                                                 $     (77,946)     $    (313,319)
=========================================================================================

Basic Loss per share                                     $     (0.0001)     $     (0.0004)
Diluted loss per share                                   $     (0.0001)     $     (0.0004)

Weighted average common shares outstanding - basic         793,040,050        773,040,050
Weighted average common shares outstanding - diluted       793,040,050        773,040,050


See accompanying notes to unaudited consolidated financial statements.


                                       3


<PAGE>

                                      FRANKLIN WIRELESS CORP.
                                    Consolidated Balance Sheets


                                                                  (Unaudited)
                                                                  September 30,      June 30,
                                                                      2005             2005
                                                                  ----------------------------
ASSETS
   Current assets:
      Cash and cash equivalents                                   $    63,847      $    39,542
      Accounts receivable                                                 800               --
- ----------------------------------------------------------------------------------------------
   Total current assets                                                64,647           39,542
   Property and equipment, net                                         13,371           14,921
   Intangible asset                                                    86,667           97,917
   Other assets                                                         2,107            2,107
- ----------------------------------------------------------------------------------------------
         Total assets                                             $   166,792      $   154,487
==============================================================================================

LIABILITIES AND STOCKHOLDERS' DEFICIT
   Current liabilities
      Accounts payable                                            $    97,927      $    17,926
      Accrued liabilities                                             160,397          150,147
      Notes payable to stockholders, current portion                  590,000          590,000
- ----------------------------------------------------------------------------------------------
          Total current liabilities                                   848,324          758,073
   Notes payable to stockholders, long-term portion                        --               --
   Other long-term liabilities                                          3,878            3,878
- ----------------------------------------------------------------------------------------------
   Total liabilities                                                  852,202          761,951
- ----------------------------------------------------------------------------------------------

Stockholders' deficit:
      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 -            --               --
      793,040,050 as of June 30, 2005 and September 30, 2005
      and no Preferred stock issued and outstanding
      Additional paid-in capital                                    3,784,393        3,784,393
      Stock subscription receivable                                   (17,395)         (17,395)
      Accumulated deficit                                          (4,452,408)      (4,374,462)
- ----------------------------------------------------------------------------------------------
          Total stockholders' deficit                                (685,410)        (607,464)
- ----------------------------------------------------------------------------------------------

- ----------------------------------------------------------------------------------------------
         Total liabilities and stockholders' deficit              $   166,792      $   154,487
==============================================================================================

See accompanying notes to unaudited consolidated financial statements.


                                                4


<PAGE>

                                      FRANKLIN WIRELESS CORP.
                               Consolidated Statements of Cash Flows
                                            (Unaudited)

                                                                        Three Months Ended
                                                                          September 30,
                                                                     ------------------------
                                                                       2005           2004
- ---------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                                        $ (77,946)     $(313,319)
       Adjustments to reconcile net loss to net cash provided by
       (used in) operating activities:
          Depreciation and amortization                                 12,800         12,800
          Increase (decrease) in cash due to change in:
              Accounts receivable                                         (800)       100,000
              Accounts payable                                          80,001              0
              Accrued Liabilities                                       10,250          5,284
- ---------------------------------------------------------------------------------------------

          Net cash provided by (used in) operating activities           24,305       (195,235)
- ---------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Purchases of property and equipment                                    --         (3,000)
- ---------------------------------------------------------------------------------------------
          Net cash used in investing activities                             --         (3,000)
- ---------------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Proceeds from issuance of common stock                                 --        120,450
- ---------------------------------------------------------------------------------------------
           Net cash provided by financing activities                        --        120,450
- ---------------------------------------------------------------------------------------------

Net increase (decrease) in cash                                         24,305        (77,785)
Cash and cash equivalents, beginning of year                            39,542        209,048
- ---------------------------------------------------------------------------------------------
Cash and cash equivalents, end of period                             $  63,847      $ 131,263
=============================================================================================

Supplemental disclosure of cash flow information:
      Cash paid during the period for:
             Interest                                                $      --      $      --
             Incomes taxes                                           $      --      $      --


See accompanying notes to unaudited consolidated financial statements.


                                                 5
</TABLE>


<PAGE>

                             FRANKLIN WIRELESS CORP.
              Notes to Unaudited Consolidated Financial Statements


NOTE 1 - NATURE OF OPERATIONS

Franklin Wireless Corp. ("Franklin" or the "Company") designs, builds, and
markets broadband high speed data communication products such as 3G wireless
modules and modems. Franklin is dedicated to serving the global wireless
community by becoming a leading developer/marketer of wireless communications
devices and enabling technologies, as well as an applications provider catering
to the dynamic needs of its customers, global wireless carriers In addition,
service for its technology is provided to vertical application companies.

The Company's products are marketed through Original Equipment Manufacturers
("OEMs") and distributors, as well as directly to operators and end users. The
Company's customers are located primarily in the United States, Canada, South
America, Asia, and parts of Europe in a wide range of industries including
cellular operators, government, PC maker, and application integrator. In
summary, the Company's products are marketed to cellular operators for end-users
as well as computer/handheld computing industry, automotive industry, telemetry,
other vertical markets.


NOTE 2 - GOING CONCERN MATTERS

The accompanying consolidated financial statements have been prepared in
conformity with U.S. generally accepted accounting principles ("GAAP"), which
contemplate continuation of the Company as a going concern. The Company incurred
a net loss of $77,946 during the three months ended September 30, 2005. This
factor raises substantial doubt about the Company's ability to continue as a
going concern.

Recovery of the Company's assets is dependent upon future events, the outcome of
which is indeterminable. The Company's attainment of profitable operations is
dependent upon its obtaining adequate debt and equity financing and achieving a
level of sales adequate to support the Company's cost structure. In addition,
realization of a major portion of the assets in the accompanying balance sheet
is dependent upon the Company's ability to meet its financing requirements and
the success of its plans to sell its products. The financial statements do not
include any adjustments relating to the recoverability and classification of
recorded asset amounts or amounts and classification of liabilities that might
be necessary should the Company be unable to continue in existence. Management
plans to raise additional equity capital, continue to develop its products, and
market the products.


NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION AND SEGMENT REPORTING

The accompanying consolidated financial statements include the accounts of
Franklin and ARG. ARG is a wholly owned subsidiary in South Korea that designs
the cellular phone. All inter-company balances and transactions have been
eliminated in consolidation.

The Company has two reportable segments as defined by SFAS No. 131, Disclosure
About Segments of an Enterprise and Related Information. The Company's
subsidiary located in South Korea, ARG, was not active and in operation during
the three months ended September 30, 2005 and 2004. Furthermore, all of its
subsidiary's assets were written off during the fiscal year 2004 as the
operation was shut-down during the period. As a result, the Company's
consolidated financial statements include $550,000 of debt from ARG financial
statements. During the latter part of 2003, the Company discontinued its
financial support and operations of ARG but kept the business as an inactive
subsidiary for future use. The subsidiary will be used for supporting
manufacturing and sourcing new product and business in the future.

                                       6


<PAGE>

USE OF ESTIMATES

The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
periods. Actual results could differ from those estimates.

REVENUE RECOGNITIONH

The Company recognizes revenue when persuasive evidence of an arrangement
exists, the price is fixed or determinable, collection is reasonably assured and
delivery of products has occurred or services have been rendered. Accordingly,
the Company recognizes revenues from product sales upon shipment of the product
to the customers. The Company does not allow the right of return on product
sales but warrant the products over one year from the shipment. Allowance for
doubtful accounts is estimated based on estimates of losses related to customer
receivable balances. Estimates are developed by using standard quantitative
measures based on historical losses, adjusting for current economic conditions
and, in some cases, evaluating specific customer accounts for risk of loss. The
establishment of reserves requires the use of judgment and assumptions regarding
the potential for losses on receivable balances. Though the Company considers
these balances adequate and proper, changes in economic conditions in specific
markets in which the Company operates could have a material effect on reserve
balances required.

CASH AND CASH EQUIVALENTS

For purposes of the statements of cash flows, the Company considers all highly
liquid investments purchased with original maturities of three months or less to
be cash equivalents.

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. The Company provides for depreciation
using the straight-line method over the estimated useful lives as follows:

         Computers and software             5 years
         Machinery and equipment            5 years
         Furniture and fixtures             5 years

Expenditures for maintenance and repairs are charged to operations as incurred
while renewals and betterments are capitalized. Gains or losses on the sale of
property and equipment are reflected in the statements of operations.

INTANGIBLE ASSETS - LICENSES

Licenses are stated at cost and are amortized using the straight-line method
over the license periods of five years or life of the license.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company, in accordance with Statement of Financial Accounting Standards No.
144, "Accounting for Impairment on Disposal of Long-lived Assets", reviews for
impairment of long-lived assets and certain identifiable intangibles whenever
events or circumstances indicate that the carrying amount of the asset may not
be recoverable. An impairment loss would be recognized when estimated future
cash flows expected to result from the use of the asset and its eventual
disposition is less than its carrying amount. As of September 30, 2005, the
Company is not aware of any events or changes in circumstances that would
indicate that the long-lived assets are impaired.

WARRANTIES

The Company does not provide any warranties on its products. However, the
manufacturer provides limited warranties up to one year from the date of the
sale to the Company's customers. These products are shipped directly from the
manufacturer to the customers. As a result, the Company is not required to and
does not accrue any warranty expenses.

                                       7


<PAGE>

ADVERTISING AND MARKETING COSTS

The company expenses the costs of advertising and marketing as incurred. The
Company incurred no advertising and marketing expenses during the three months
ended September 30, 2005 and 2004.

INCOME TAXES

The Company accounts for income taxes under the asset and liability method of
accounting. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A valuation
allowance is required when it is less likely than not that the Company will be
able to realize all or a portion of its deferred tax assets.

LOSS PER SHARE

The Company reports loss per share in accordance with Statement of Financial
Accounting Standards No. 128, "Earnings Per Share". Basic loss per share is
computed using the weighted average number of shares outstanding during the
year. Diluted earnings per share include the potentially dilutive effect of
outstanding common stock options and warrants which are convertible to common
shares.

CONCENTRATIONS OF CREDIT RISK

The Company sells its products throughout the United States and South America
and extends credit to its customers and performs ongoing credit evaluations of
such customers. The Company evaluates its accounts receivable on a regular basis
for collectibility and provides for an allowance for potential credit losses as
deemed necessary.


NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment at September 30, 2005 and June 30, 2005 consisted of the
following:

                                                     (Unaudited)
                                                     September 30,      June 30,
                                                         2005            2005
                                                       --------        --------
             Computers and software                    $ 22,224        $ 22,224
             Machinery and equipment                      3,000           3,000
             Furniture and fixtures                       8,713           8,713
                                                       --------        --------
                                                         33,937          33,937
             Less accumulated depreciation              (20,566)        (19,016)
                                                       --------        --------
                 TOTAL                                 $ 13,371        $ 14,921
                                                       ========        ========


NOTE 5 - INVESTMENT IN SUBSIDIARY

In April 2002, the Company invested $384,615 to its wholly owned subsidiary in
South Korea for R&D and manufacturing support. Since August 2003 and as of
September 30, 2005 and June 30, 2005, ARG has been inactive.

                                       8


<PAGE>

NOTE 6 - INTANGIBLE ASSETS

The Company purchased licenses to design phone and data communication products.
Below are the details for the licenses.

                                                    (Unaudited)
                                                    September 30,      June 30,
                                                       2005             2005
                                                     ---------        ---------
         GSM software license                        $ 200,000        $ 200,000
         Text input methods licenses                    25,000           25,000
                                                     ---------        ---------
                                                       225,000          225,000
         Less accumulated amortization                (138,333)        (127,083)
                                                     ---------        ---------
         Net Balance                                 $  86,667        $  97,917
                                                     =========        =========

Amortization expense associated with intangible assets was $11,250 for the three
months ended September 30, 2005 and 2004.

GSM software license was contracted with a supplier for the Company to design
GSM phone and module and was paid in September of 2002. This software license
has an approximate life of 5 years based on the life of the GSM software.

Text input method license was paid in October of 2002 and has an approximate
life of 5 yeas or the life of the text input license.


NOTE 7 - OTHER ASSETS

Other assets as of September 30, 2005 and June 30, 2005 consisted of facility
lease and utility deposits.


NOTE 8 - NOTES PAYABLE TO STOCKHOLDERS
                                                   (Unaudited)
                                                   September 30,      June 30,
                                                       2005             2005
                                                     ---------        ---------
         Promissory Note                             $  10,000        $  10,000
         Promissory Note                                30,000           30,000
         Non-interest Bearing Note                     550,000          550,000
                                                     ---------        ---------
         Total                                         590,000          590,000
                  Less current portion                (590,000)        (590,000)
                                                     ---------        ---------
                      Long-term portion              $      --        $      --
                                                     =========        =========

The Company issued a non-interest bearing promissory note in the amount of
$10,000 to the Company's former chief technology officer on  June 30, 2004.
This note is due upon demand.

During June 2005, the Company issued a promissory note to its stockholder in the
amount of $30,000 with no interest. The note is convertible to the Company's
common stocks upon issuance at the option of the holder at exercise price on the
date of issuance, or $0.005. The note was converted to the Company's common
stock at $0.005 on November 11, 2005.

On August 20, 2002, the Company's wholly owned subsidiary, ARG, issued a
promissory note to a stockholder in the amount of $550,000, bearing interest at
10%, due on March 20, 2004. The Company and the stockholder agreed to change the
promissory note to a convertible promissory note during the year ended June 30,
2004. The note is convertible into shares of common stock at the option of the
holder at a conversion price equal to the fair value of the Company's common
stock on the date of issuance, or $0.005 per share. As of December 31, 2005,
this note was outstanding and had not been converted.

                                       9


<PAGE>

NOTE 9 - ACCRUED LIABILITIES

Accrued liabilities at September 30, 2005 and June 30, 2005 consisted of the
following:

                                                      (Unaudited)
                                                      September 30,     June 30,
                                                         2005             2005
                                                        --------        --------
            Salaries                                    $121,250        $111,000
            Other accrued liabilities                     39,147          39,147
                                                        --------        --------
                      TOTAL                             $160,397        $150,147
                                                        ========        ========


NOTE 10 - COMMITMENTS AND CONTINGENCIES

OPERATING LEASES

The Company leases its administrative facilities under a non-cancelable
operating lease that expire on April 30, 2007. In addition to the minimum annual
rental commitments, the leases provide for periodic cost of living increases in
the base rent and payment by the Company of common area costs. Rent expense
related to the operating lease was $6,168 and $13,846 for the three months ended
September 30, 2005 and 2004, respectively.

LITIGATION

During June 2005, the Company's landlord filed a suit against the Company
alleging that the Company defaulted under the terms and conditions of the
Company's lease agreement when the Company failed to pay for its facility lease
valued at $18,221. Both parties have settled at $9,308 to be paid in twelve
equal monthly installments on December 6, 2005.

In addition, the Company is involved in certain legal proceedings and claims
which arise in the normal course of business. Management does not believe that
the outcome of these matters will have any material adverse effect on the
Company's consolidated financial condition.

SUPPLY AND PURCHASE AGREEMENTS

In May 2005, the Company entered into a contract for low cost GSM phone and a
worldwide distribution agreement with a design and manufacturing company. The
agreement provides for a one-year term and may be extended on a year-to-year
basis thereafter.


NOTE 11 - EARNINGS PER SHARE

Basic earnings per share ("EPS") excludes dilution and is computed by dividing
net income or loss attributable to common shareholders by the weighted-average
number of common shares outstanding for the period. As of September 30, 2005 and
June 30, 2005, the Company did not have any dilutive common stock shares.


NOTE 12 - SUBSEQUENT EVENTS

ISSUANCE OF COMMON STOCK

November 11, 2005 - A stockholder converted a $30,000 note payable by the
Company into Common Stock. The Company issued 6,000,000 shares in connection
with the conversion at $0.005 per share.

                                       10


<PAGE>

November 11, 2005 - The Company issued 36,000,000 shares of Common Stock, at
$0.0085. in the total amount of $305,000. to an unaffiliated investor.

REPURCHASE OF SHARES

The Company has agreed to repurchase the shares held by Hanjin Jhun, its former
Chief Executive Officer, for the price paid by Mr. Jhun, $.005 per share. Mr.
Jhun, who resigned during the third quarter of fiscal 2006, holds approximately
2,000,000 shares. The Company plans to repurchase the shares for cash during the
fourth quarter of its 2006 fiscal year.


ITEM 2:  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion should be read in conjunction with the consolidated
financial statements and notes thereto included in Item 1 of this filing and the
financial statements and notes thereto and Management's Discussion and Analysis
of Financial Condition and Results of Operations contained in the Company's Form
10-KSB for the year ended June 30, 2005.

BUSINESS OVERVIEW

Franklin Wireless Corp. ("Franklin" or the "Company") designs, builds, and
markets broadband high speed data communication products such as 3G wireless
modules and modems. Franklin is dedicated to serving the global wireless
community by becoming a leading developer/marketer of wireless communications
devices and enabling technologies, as well as an applications provider catering
to the dynamic needs of its customers, global wireless carriers In addition,
service for its technology is provided to vertical application companies.

The Company's products are marketed through Original Equipment Manufacturers
("OEMs") and distributors, as well as directly to operators and end users. The
Company's customers are located primarily in the United States, Canada, South
America, Asia, and parts of Europe in a wide range of industries including
cellular operators, government, PC maker, and application integrator. In
summary, the Company's products are marketed to cellular operators for end-users
as well as computer/handheld computing industry, automotive industry, telemetry,
other vertical markets.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company believes the following critical accounting policies affect the
Company's more significant judgments and estimates used in the preparation of
the financial statements.

USE OF ESTIMATES

The preparation of financial statements requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the reporting
periods. Actual results could differ from those estimates.

REVENUE RECOGNITION

The Company recognizes revenue when persuasive evidence of an arrangement
exists, the price is fixed or determinable, collection is reasonably assured and
delivery of products has occurred or services have been rendered. Accordingly,
the Company recognizes revenues from product sales upon shipment of the product
to the customers. The Company does not allow the right of return on product
sales but warrant the products over one year from the shipment. Allowance for
doubtful accounts is estimated based on estimates of losses related to customer
receivable balances. Estimates are developed by using standard quantitative
measures based on historical losses, adjusting for current economic conditions
and, in some cases, evaluating specific customer accounts for risk of loss. The
establishment of reserves requires the use of judgment and assumptions regarding
the potential for losses on receivable balances. Though the Company considers
these balances adequate and proper, changes in economic conditions in specific
markets in which the Company operates could have a material effect on reserve
balances required.

IMPAIRMENT OF LONG-LIVED ASSETS

The Company, in accordance with Statement of Financial Accounting Standards No.
144, "Accounting for Impairment on Disposal of Long-lived Assets", reviews for
impairment of long-lived assets and certain identifiable intangibles whenever
events or circumstances indicate that the carrying amount of the asset may not


                                       11


<PAGE>

be recoverable. An impairment loss would be recognized when estimated future
cash flows expected to result from the use of the asset and its eventual
disposition is less than its carrying amount. As of September 30, 2005 and June
30, 2005, the Company was not aware of any events or changes in circumstances
that would indicate that the long-lived assets are impaired.

INCOME TAXES

The Company accounts for income taxes under the asset and liability method of
accounting. Under this method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized in income in the period that includes the enactment date. A valuation
allowance is required when it is less likely than not that the Company will be
able to realize all or a portion of its deferred tax assets.

RESULTS OF OPERATIONS

The results of the interim periods are not necessarily indicative of results for
the entire fiscal year

COMPARISON OF FIRST QUARTER 2005 TO 2004

NET SALES - Net sales increased by $73,760, or 1,203.3%, to $79,890 for the
three months ended September 30, 2005 from $6,130 for the corresponding period
of 2004. The overall increase can be attributed to the Company's business
strategy that shifted from being a product engineering company to a product
development/marketing company, and an increase in sales of module products, due
to an increase in demand.

GROSS PROFIT - Gross profit increased in terms of net sales percentage as the
percentage of gross profit, which was 75.1% for the three months ended September
30, 2005, compared to 2.1% for the corresponding period of 2004. The gross
profit percentage increase can be attributed to the shift from being a product
engineering company to a product development/marketing company, as well as the
fact that the module products have higher gross profit margins compared to other
products.

SELLING, GENERAL, AND ADMINISTRATIVE - Selling, general, and administrative
expenses decreased by $209,657, or 66.9%, to $103,734 for the three months ended
September 30, 2005 from $313,391 for the corresponding period of 2004. The
decrease can be attributed to decreased sales/marketing efforts, a reduction of
engineering personnel, accounting charges and reduced costs from cutting back
the general and administrative infrastructure.

RESEARCH AND DEVELOPMENT - Research and development expenses of $36,300, mainly
attributable to the design of CDMA modules and modems (not for full GSM phone
design), were incurred during the three months ended September 30, 2005. No
research and development costs were incurred during the three months ended
September 30, 2004.

OTHER EXPENSE - Other expense increased by $244, or 418.1%, to $302 for the
three months ended September 30, 2005 from $58 for the corresponding period of
2004. The increase was due to higher interest expense.

LIQUIDITY AND CAPITAL RESOURCES

The Company's cash and cash equivalents increased by $24,305, to $63,847 as of
September 30, 2005 compared to $39,542 as of June 30, 2005. The increase was
primarily from the advance from a private investor, $80,000, that this stock was
issued in November 2005.

The Company believes that its current negative working capital of $783,677 and
anticipated working capital to be generated by future operations will not be
sufficient to support the Company's working capital requirements through June
30, 2006. Accordingly, the Company will have to rely on outside financing

                                       12


<PAGE>

OPERATING ACTIVITIES - Net cash provided by operating activities amounted to
$24,305 and net cash used in operating activities amounted to $195,235 for the
three months ended September 30, 2005 and 2004, respectively. The decrease from
the prior period relates mainly to reduced selling, general, and administrative
costs due to not ready to sell the products.

INVESTING ACTIVITIES - Net cash used in investing activities totaled $3,000 for
the three months ended September 30, 2004, consisting of capital expenditures.

FINANCING ACTIVITIES - Net cash provided by financing activities totaled
$120,450 for the three months ended September 30, 2004, consisting of proceeds
from issuances of common stock.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

The Company's principal future obligations and commitments as of September 30,
2005, include the following:

         LEASES

         The Company leases its administrative facilities under a non-cancelable
         operating lease that expires on April 30, 2007. In addition to the
         minimum annual rental commitments, the lease provides for periodic cost
         of living increases in the base rent and payment by the Company of
         common area costs. Rent expense related to the operating lease was
         $6,168 and $13,846 for the three months ended September 30, 2005 and
         2004, respectively.

         LITIGATION

         During June 2005, the Company's landlord filed a suit against the
         Company alleging that the Company defaulted under the terms and
         conditions of the Company's lease agreement when the Company failed to
         pay for its facility lease valued at $18,221. The parties have settled
         at $9,308, to be paid in twelve equal monthly installments on December
         6, 2005.

         In addition, the Company is involved in certain legal proceedings and
         claims which arise in the normal course of business. Management does
         not believe that the outcome of these matters will have any material
         adverse effect on the Company's consolidated financial condition.


ITEM 3:  CONTROLS AND PROCEDURES

At the end of the period covered by this Form 10-QSB, the Company carried out an
evaluation, under the supervision and with the participation of members of our
management, including our Chief Executive Officer and Chief Financial Officer,
of the effectiveness of the design and operation of our company's disclosure
controls and procedures pursuant to Rule 13a-15(b) of the U.S. Securities
Exchange Act of 1934 (the "Exchange Act"). Based on this evaluation, our Chief
Executive Officer and Chief Financial Officer concluded that, as of September
30, 2005, our disclosure controls and procedures, related to internal control
over financial reporting and the recording of certain equity transactions, were
not effective in light of the material weaknesses described below.

    1.   Inadequate Financial Statement Preparation and Review Procedures - We
         do not have adequate procedures and controls to ensure that accurate
         financial statements can be prepared and reviewed on a timely basis,
         including insufficient
              a.   review and supervision within the accounting and finance
                   departments;
              b.   underlying accurate data to ensure that balances are properly
                   summarized and posted to the general ledger; and
              c.   technical accounting resources.

    2.   Inadequate Segregation of Duties - We do not have adequate procedures
         and controls in place to ensure proper segregation of duties within the
         accounting department. As a result, adjustments in the financial
         statements could occur and not be prevented or detected by our controls
         in a timely manner.

                                       13


<PAGE>

    3.   Inadequate Technical Accounting Expertise - We lacked the necessary
         depth of personnel with adequate technical accounting expertise to
         ensure the preparation of interim and annual financial statements in
         accordance with GAAP. This material weakness represented more than a
         remote likelihood that a material misstatement of our annual or interim
         financial statements for fiscal 2005 would not have been prevented or
         detected.

Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Also, projection of any evaluation of
effectiveness to future periods is subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.


                                       14

<PAGE>

                           PART II - OTHER INFORMATION

ITEM 1:  LEGAL PROCEEDINGS

None.


ITEM 2: UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.


ITEM 3:  DEFAULTS UPON SENIOR SECURITIES

None.


ITEM 4:  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.


ITEM 5:  OTHER INFORMATION

None.


ITEM 6:  EXHIBITS

         31.1 Certificate of Chief Executive Officer pursuant to Section 302 of
              the Sarbanes-Oxley Act of 2002.

         31.2 Certificate of Acting Chief Financial Officer pursuant to Section
              302 of the Sarbanes-Oxley Act of 2002.

         32.1 Certificate of Chief Executive Officer pursuant to Section 906 of
              the Sarbanes-Oxley Act of 2002

         32.2 Certificate of Acting Chief Financial Officer pursuant to Section
              906 of the Sarbanes-Oxley Act of 2002



                                       15


<PAGE>

                                   SIGNATURES

         Pursuant to the requirements of Section 13 of 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                Franklin Wireless Corp.

                                By: /s/ OC Kim
                                    -----------------------------
                                    OC Kim
                                    President and Acting Chief Financial Officer

Dated: May 19, 2006


                                       16

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>franklin_10qex31-1.txt
<TEXT>
<PAGE>

Exhibit 31.1


              CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, OC Kim, President (chief executive officer) of Franklin Wireless Corp.,
certify that:

         1)   I have reviewed this quarterly report on Form 10-QSB of Franklin
              Wireless Corp.;

         2)   Based on my knowledge, this quarterly report does not contain any
              untrue statement of a material fact or omit to state a material
              fact necessary to make the statements made, in light of the
              circumstances under which such statements were made, not
              misleading with respect to the period covered by this report;

         3)   Based on my knowledge, the financial statements, and other
              financial information included in this report, fairly present in
              all material respects the financial condition, results of
              operations and cash flows of the small business issuer as of, and
              for, the periods presented in this report;

         4)   I am responsible for establishing and maintaining disclosure
              controls and procedures (as defined in Exchange Act Rules
              13a-15(e) and 15d-15(e)) for the small business issuer and have:

                   a)   Designed such disclosure controls and procedures, or
                        caused such disclosure controls and procedures to be
                        designed under our supervision, to ensure that material
                        information relating to the small business issuer,
                        including its consolidated subsidiaries, is made known
                        to us by others within those entities, particularly
                        during the period in which this report is being
                        prepared;

                   b)   Evaluated the effectiveness of the registrant's
                        disclosure controls and procedures and presented in this
                        report my conclusions about the effectiveness of the
                        disclosure controls and procedures, as of the end of the
                        period covered by this report based on such evaluation;
                        and

                   c)   Disclosed in this report any change in the small
                        business issuer's internal control over financial
                        reporting that occurred during the small business
                        issuer's most recent fiscal quarter (the small business
                        issuer's fourth fiscal quarter in the case of an annual
                        report) that has materially affected, or is reasonably
                        likely to materially affect, the small business issuer's
                        internal control over financial reporting; and

         5)   I have disclosed, based on my most recent evaluation of internal
              control over financial reporting, to the small business issuer's
              auditors and the audit committee of the small business issuer's
              board of directors (or persons performing the equivalent
              functions):

                   a)   All significant deficiencies and material weaknesses in
                        the design or operation of internal control over
                        financial reporting which are reasonably likely to
                        adversely affect the small business issuer's ability to
                        record, process, summarize and report financial
                        information; and

                   b)   Any fraud, whether or not material, that involves
                        management or other employees who have a significant
                        role in the small business issuer's internal control
                        over financial reporting.

/s/ OC KIM
- ----------
OC Kim
President
May 19, 2006

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>franklin_10qex31-2.txt
<TEXT>
<PAGE>

Exhibit 31.2


           CERTIFICATION OF ACTING CHIEF FINANCIAL OFFICER PURSUANT TO
                  SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002


I, OC Kim, Acting Chief Financial Officer of Franklin Wireless Corp., certify
that:

         1)   I have reviewed this quarterly report on Form 10-QSB of Franklin
              Wireless Corp.;

         2)   Based on my knowledge, this quarterly report does not contain any
              untrue statement of a material fact or omit to state a material
              fact necessary to make the statements made, in light of the
              circumstances under which such statements were made, not
              misleading with respect to the period covered by this report;

         3)   Based on my knowledge, the financial statements, and other
              financial information included in this report, fairly present in
              all material respects the financial condition, results of
              operations and cash flows of the small business issuer as of, and
              for, the periods presented in this report;

         4)   I am responsible for establishing and maintaining disclosure
              controls and procedures (as defined in Exchange Act Rules
              13a-15(e) and 15d-15(e)) for the small business issuer and have:

                   (a)  Designed such disclosure controls and procedures, or
                        caused such disclosure controls and procedures to be
                        designed under our supervision, to ensure that material
                        information relating to the small business issuer,
                        including its consolidated subsidiaries, is made known
                        to us by others within those entities, particularly
                        during the period in which this report is being
                        prepared;

                   (b)  Evaluated the effectiveness of the registrant's
                        disclosure controls and procedures and presented in this
                        report my conclusions about the effectiveness of the
                        disclosure controls and procedures, as of the end of the
                        period covered by this report based on such evaluation;
                        and

                   (c)  Disclosed in this report any change in the small
                        business issuer's internal control over financial
                        reporting that occurred during the small business
                        issuer's most recent fiscal quarter (the small business
                        issuer's fourth fiscal quarter in the case of an annual
                        report) that has materially affected, or is reasonably
                        likely to materially affect, the small business issuer's
                        internal control over financial reporting; and

         5)   I have disclosed, based on my most recent evaluation of internal
              control over financial reporting, to the small business issuer's
              auditors and the audit committee of the small business issuer's
              board of directors (or persons performing the equivalent
              functions):

                   (a)  All significant deficiencies and material weaknesses in
                        the design or operation of internal control over
                        financial reporting which are reasonably likely to
                        adversely affect the small business issuer's ability to
                        record, process, summarize and report financial
                        information; and

                   (b)  Any fraud, whether or not material, that involves
                        management or other employees who have a significant
                        role in the small business issuer's internal control
                        over financial reporting.

/s/ OC KIM
- ----------
OC Kim
Acting Chief Financial Officer
May 19, 2006

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>franklin_10qex32-1.txt
<TEXT>
<PAGE>

Exhibit 32.1

                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Franklin Wireless Corp. (the
"Company") on Form 10-QSB for the three months ended September 30, 2005 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, OC Kim, President of the Company, certify, pursuant to 18 U.S.C. ss. 1350, as
adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of 2002, that to my
knowledge:

(1)      The Report fully complies with the requirements of section 13(a) or
         15(d) of the Securities Exchange Act of 1934; and

(2)      The information contained in the Report fairly presents, in all
         material respects, the financial condition and result of operations of
         the Company.


/s/ OC KIM
- ----------
OC Kim
President
May 19, 2006

A signed copy of this written statement required by section 906 of the
Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>franklin_10qex32-2.txt
<TEXT>
<PAGE>

Exhibit 32.2

                            CERTIFICATION PURSUANT TO
                  SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Franklin Wireless Corp. (the
"Company") on Form 10-QSB for the three months ended September 30, 2005 as filed
with the Securities and Exchange Commission on the date hereof (the "Report"),
I, OC Kim, Acting Chief Financial Officer of the Company, certify, pursuant to
18 U.S.C. ss. 1350, as adopted pursuant to ss. 906 of the Sarbanes-Oxley Act of
2002, that to my knowledge:

(1)      The Report fully complies with the requirements of section 13(a) or
         15(d) of the Securities Exchange Act of 1934; and

(2)      The information contained in the Report fairly presents, in all
         material respects, the financial condition and result of operations of
         the Company.


/s/ OC KIM
- ----------
OC Kim
Acting Chief Financial Officer
May 19, 2006

A signed copy of this written statement required by section 906 of the
Sarbanes-Oxley Act of 2002 has been provided to the Company and will be retained
by the Company and furnished to the Securities and Exchange Commission or its
staff upon request.





</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
-----END PRIVACY-ENHANCED MESSAGE-----
