Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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. Yesx No o

Indicate by check mark whether the registrant has submitted electronically, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yesx No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨Nox

The Registrant has ~~11,590,281~~11,594,280 shares of common stock outstanding as of ~~May 17,~~November 9, 2021.

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, ~~2020.~~2021. 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.


							September 30, 2021
	March 31, 2021 (Unaudited)			June 30, 2020			(Unaudited)			June 30, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	54,356,917		$	28,161,644		$	39,277,925		$	45,796,006
Certificates of deposit account		5,385,263			5,381,918			5,386,619			5,386,034
Accounts receivable, net		13,099,699			15,973,537
Accounts receivable								1,561,747			2,542,429
Other receivables, net		61,505			61,090			30,321			50,040
Inventories, net		1,429,503			11,783,403			727,943			975,519
Prepaid income taxes								102,055			0
Prepaid expenses and other current assets		49,244			21,588			34,440			44,984
Advance payments to vendors		48,114			27,838			128,744			40,630
Total current assets		74,430,245			61,411,018			47,249,794			54,835,642
Property and equipment, net		166,037			220,889			134,856			151,610
Intangible assets, net		1,372,553			1,125,152			1,189,924			1,246,750
Deferred tax assets, non-current		743,073			938,188			827,116			387,548
Goodwill		273,285			273,285			273,285			273,285
Right of use assets		853,397			1,139,670			662,629			753,263
Other assets		140,590			283,369			135,218			140,539
TOTAL ASSETS	$	77,979,180		$	65,391,571		$	50,472,822		$	57,788,637

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	27,852,776		$	42,083,255		$	3,562,323		$	9,718,989
Income tax payable		2,342,256			34,713			263,519			333,503
Unearned revenue from customers								125,701			–
Accrued liabilities		788,588			466,021			738,957			785,525
Lease liabilities, current		345,572			400,508			299,721			317,519
Total current liabilities		31,329,192			42,984,497			4,990,221			11,155,536
Lease liabilities, non-current		543,238			784,233			391,882			467,937
Notes payable, payroll protection plan loan		–			487,300
Total liabilities		31,872,430			44,256,030			5,382,103			11,623,473

Commitments and contingencies (Note 8)								0			0
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 March 31, 2021 and June 30, 2020		–			–
Common stock, par value $0.001 per share, authorized 50,000,000 shares; 11,590,281 and 10,605,912 shares issued and outstanding as of March 31, 2021, and June 30, 2020, respectively		14,068			14,007
Preferred stock, par value $0.001 per share, authorized 10,000,000 shares; NaN preferred stock issued and outstanding as of September 30, 2021 and June 30, 2021								0			0
Common stock, par value $0.001 per share, authorized 50,000,000 shares; 11,594,280 and 11,590,281 shares issued and outstanding as of September 30, 2021 and June 30, 2021, respectively								14,073			14,069
Additional paid-in capital		12,873,592			7,475,365			13,088,363			12,972,234
Retained earnings		35,743,583			18,028,059			34,623,489			35,727,094
Treasury stock, 2,549,208 and 3,472,286 shares as of March 31, 2021 and June 30, 2020		(3,554,893	)		(4,513,479	)
Treasury stock, 2,549,208 shares as of September 30, 2021 and June 30, 2021								(3,554,893	)		(3,554,893	)
Accumulated other comprehensive loss		(386,161	)		(650,426	)		(600,107	)		(472,502	)
Total Parent Company stockholders’ equity		44,690,189			20,353,526			43,570,925			44,686,002
Non-controlling interests		1,416,561			782,015			1,519,794			1,479,162
Total stockholders’ equity		46,106,750			21,135,541			45,090,719			46,165,164
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	77,979,180		$	65,391,571		$	50,472,822		$	57,788,637

~~(Unaudited)~~Consolidated Statements of Comprehensive Income (Loss) (unaudited)

	Three Months Ended						Nine Months Ended
	March 31,						March 31,						Three Months Ended September 30,
	2021			2020			2021			2020			2021			2020
Net sales	$	44,330,954		$	15,546,182		$	173,147,982		$	37,680,312		$	3,344,060		$	62,569,450
Cost of goods sold		36,764,858			12,511,391			142,618,200			30,033,382			2,851,096			50,898,219
Gross profit		7,566,096			3,034,791			30,529,782			7,646,930			492,964			11,671,231

Operating expenses:
Selling, general and administrative		1,136,761			988,096			4,067,246			2,606,600			1,077,815			1,521,459
Research and development		1,199,525			834,478			3,329,649			2,754,414			1,021,902			978,392
Total operating expenses		2,336,286			1,822,574			7,396,895			5,361,014			2,099,717			2,499,851
Income from operations		5,229,810			1,212,217			23,132,887			2,285,916

(Loss) income from operations														(1,606,753	)		9,171,380
Other income, net:
Interest income		1,954			38,679			6,608			134,270			1,923			2,894
Income from governmental subsidy		40,929			–			107,362			4,114			84,746			22,086
Gain from the forgiveness of payroll protection plan loan		–			–			487,300			–
Other income (loss), net		116,382			42,000			(52,670	)		68,378
Other income (expense), net														45,855			(18,178	)
Total other income, net		159,265			80,679			548,600			206,762			132,524			6,802
Income before provision for income taxes		5,389,075			1,292,896			23,681,487			2,492,678
Income tax provision		1,192,277			233,032			5,331,417			408,892
Net income		4,196,798		��	1,059,864			18,350,070			2,083,786
Less: non-controlling interests in net income of subsidiary at 35.8%		–			–			–			189,106
(Loss) income before provision for income taxes														(1,474,229	)		9,178,182
Income tax (benefit) provision														(411,256	)		2,000,734
Net (loss) income														(1,062,973	)		7,177,448
Less: non-controlling interests in net income of subsidiary at 33.7%		258,245			71,556			634,546			71,556			40,632			257,088
Net income attributable to Parent Company	$	3,938,553		$	988,308		$	17,715,524		$	1,823,124
Net (loss) income attributable to Parent Company													$	(1,103,605	)	$	6,920,360

Basic (loss) earnings per share attributable to Parent Company stockholders													$	(0.10	)	$	0.65
Diluted (loss) earnings per share attributable to Parent Company stockholders													$	(0.10	)	$	0.64

Basic income per share attributable to Parent Company stockholders	$	0.34		$	0.09		$	1.57		$	0.17
Diluted income per share attributable to Parent Company stockholders	$	0.33		$	0.09		$	1.54		$	0.17
Weighted average common shares outstanding - basic														11,593,006			10,666,059
Weighted average common shares outstanding - diluted														11,593,006			10,818,050

Weighted average common shares outstanding – basic		11,581,629			10,580,576			11,271,168			10,574,841
Weighted average common shares outstanding – diluted		11,792,292			10,699,773			11,481,830			10,694,038

Comprehensive income
Net income	$	4,196,798		$	1,059,864		$	18,350,070		$	2,083,786
Comprehensive (loss) income
Net (loss) income													$	(1,062,973	)	$	7,177,448
Translation adjustments		(20,255	)		(54,340	)		264,265			(35,590	)		(127,605	)		66,424
Comprehensive income		4,176,543			1,005,524			18,614,335			2,048,196
Comprehensive (loss) income														(1,190,578	)		7,243,872
Less: comprehensive income attributable to non-controlling interest		258,245			71,556			634,546			260,662			40,632			257,088
Comprehensive income attributable to controlling interest	$	3,918,298		$	933,968		$	17,979,789		$	1,787,534		$	(1,231,210	)	$	6,986,784

For the Three ~~and Nine~~ Months Ended ~~March 31,~~September 30, 2021 (unaudited)

For the Three ~~and Nine~~ Months Ended ~~March 31,~~September 30, 2020 (unaudited)

	Nine Months Ended March 31,
	2021			2020			Three Months Ended September 30,
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	18,350,070		$	2,083,786
							2021			2020
CASH FLOW FROM OPERATING ACTIVITIES:
Net income (loss)							$	(1,062,973	)	$	7,177,448
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		67,593			67,829			22,786			22,406
Amortization of intangible assets		342,070			344,382			93,694			127,640
Deferred tax		195,115			358,364
Amortization of right of use asset		286,273			48,290
Compensation expense related to stock options granted		282,116			–
Stock based compensation								94,538			85,987
Bad debt expense		338,485			–			0			93,151
Forgiveness of payroll protection plan loan		(487,300	)		–
Amortization of right of use assets								90,634			92,651
Deferred tax (benefit)								(439,568	)		84,871
Increase (decrease) in cash due to change in:
Accounts receivable		2,534,938			(7,108,734	)		1,000,401			(11,945,931	)
Inventories		10,353,900			234,208			247,576			9,018,037
Prepaid expenses and other current assets		(27,656	)		13,683			10,544			9,192
Prepaid income taxes								(102,055	)		0
Advance payments to vendors		(20,276	)		23,116			(88,114	)		(9,870	)
Other assets		142,779			(23,305	)		5,321			(2,925	)
Accounts payable		(14,230,479	)		5,685,328			(6,156,666	)		2,766,929
Income tax payable		2,307,543			49,145			(69,984	)		1,883,173
Unearned revenue from customers								125,701			0
Lease liabilities		(295,931	)		–			(93,853	)		(95,871	)
Accrued liabilities		322,567			103,444			(46,568	)		(148,193	)
Net cash provided by operating activities		20,461,807			1,879,536
Net cash (used) provided by operating activities								(6,368,586	)		9,158,695

CASH FLOWS FROM INVESTING ACTIVITIES:
Short-term investments		(3,345	)		22,172
Purchases of shares of a subsidiary		–			(75,000	)
CASH FLOW FROM INVESTING ACTIVITIES:
Purchases of short-term investments								(585	)		(1,621	)
Purchases of property and equipment		(12,741	)		(157,688	)		(6,032	)		(5,704	)
Payments for capitalized development costs		(587,246	)		(343,360	)
Payments for capitalized product development costs								(35,543	)		(78,342	)
Purchases of intangible assets		(2,225	)		(151,218	)		(1,325	)		(938	)
Net cash used in investing activities		(605,557	)		(705,094	)		(43,485	)		(86,605	)

CASH FLOW FROM FINANCING ACTIVITIES:
Sales of treasury stock		6,000,008			–
Sales of common stock sold from treasury stock								0			6,000,008
Cash received from exercise of stock options		74,750			27,769			21,595			17,420
Net cash provided by financing activities		6,074,758			27,769			21,595			6,017,428

Effect of foreign currency translation		264,265			(35,590	)		(127,605	)		66,424
Net increase in cash and cash equivalents		26,195,273			1,166,621
Cash and cash equivalents, beginning of period		28,161,644			6,447,505
Cash and cash equivalents, end of period	$	54,356,917		$	7,614,126
Net (decrease) increase in cash and cash equivalents								(6,518,081	)		15,155,942
Cash and cash equivalents, beginning of year								45,796,006			28,161,644
Cash and cash equivalents, end of year							$	39,277,925		$	43,317,586

Supplemental disclosure of cash flow information:
Cash paid during the periods for:
Income taxes	$	2,800,825		$	800		$	(200,350	)	$	(7,335	)

The consolidated financial statements include the accounts of the Company and its subsidiary, Franklin Technology Inc. ("FTI"), with a majority voting interest of 66.3% ~~(33.7%~~(33.7% is owned by non-controlling interests) as of ~~March 31,~~September 30, 2021, and June 30, ~~2020.~~2021. 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 non-controlling interests.

As consolidated financial statements are based on the assumption that they represent the financial position and operating results of a single economic entity, 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 non-controlling interest is reported in the consolidated statement of financial position within equity, separately from the parent’s equity. There are 0 shares of the Company held by any subsidiaries as of September 30, 2021, or June 30, 2021.

As of ~~March 31,~~September 30, 2021, the non-controlling interest was ~~$1,416,561,~~$1,519,794, which represents a ~~$634,546~~$40,632 increase from ~~$782,015~~$1,479,162 as of June 30, ~~2020.~~2021. The increase in the non-controlling interest of ~~$634,546~~$40,632 was from income in the subsidiary of ~~$1,885,307~~$120,723 incurred for the ~~nine~~three months ended ~~March 31,~~September 30, 2021.

Accounting Standards Codification (“ASC”) 280, “Segment Reporting,” requires public companies to report financial and descriptive information about their reportable operating segments. We identify our operating segments based on how our chief operating decision maker internally evaluates separate financial information, business activities and management responsibility. We have one reportable segment, consisting of the sale of wireless access products.

We generate revenues from ~~three~~two geographic areas, consisting of North ~~America, the Caribbean and South~~ America and Asia. The following enterprise-wide disclosure is prepared on a basis consistent with the preparation of the consolidated financial statements. The following table contains certain financial information by geographic area:

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
Net sales:	2021		2020		2021		2020
Long lived assets by geographic area
Long-lived assets, net (property and equipment and intangible assets):									September 30, 2021		June 30, 2021
North America	$	44,054,824	$	15,444,110	$	172,853,744	$	37,342,577	$	1,272,674	$	1,349,320
Caribbean and South America		–		–		17,500		–
Asia		276,130		102,072		276,738		337,735		52,106		49,040
Totals	$	44,330,954	$	15,546,182	$	173,147,982	$	37,680,312	$	1,324,780	$	1,398,360

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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 revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

The carrying amounts of financial instruments such as cash equivalents, short-term investments, accounts receivable, accounts payable and debt approximate the related fair values due to the short-term maturities of these instruments. We invest our excess cash into financial instruments which are readily convertible into cash, such as money market funds and certificates of deposit.

Based upon our review of our collection history as well as the current balances associated with all significant customers and associated invoices, as of ~~March 31,~~September 30, 2021, ~~and June 30, 2020,~~ we did not believe an allowance for doubtful accounts was necessary.

In April 2016, the FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606) (ASU 2016-10), which amends and adds clarity to certain aspects of the guidance set forth in the original revenue standard (ASU 2014-09) related to identifying performance obligations and licensing. In May 2016, the FASB issued Accounting Standards Update No. 2016-11, Revenue Recognition (Topic 605), which amends and rescinds certain revenue recognition guidance previously released within ASU 2014-09. In May 2016 the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers (Topic 606) (ASU 2016-12), which provides narrow scope improvements and practical expedients related to ASU 2014-09.

On July 1, 2018, we adopted ASU 2014-09 using the modified retrospective method applied to those contracts that were not completed or substantially complete as of June 30, 2018. Results for the reporting period beginning after July 1, 2018 are presented under Topic 606. We recorded no change in retained earnings as of July 1, 2018 as a result of the cumulative impact of adopting Topic 606.

Revenue for sales of products and services is derived from contracts with customers. The products and services promised in contracts primarily consist of hotspot routers. Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or service. Payment terms are stated in the contract, primarily in the form of a purchase order. Since the customer typically agrees to a stated rate and price in the purchase order that does not vary over the life of the contract, the majority of our contracts do not contain variable consideration. We establish a provision for estimated warranty and returns. Using historical averages, that provision for the ~~nine months~~quarter ended ~~March 31,~~September 30, 2021 was not material.

In accordance with Topic 606, we disaggregate revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred. We determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606, which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

We perform our obligations under a contract with a customer by transferring products in exchange for consideration from the customer. We typically invoice our customers as soon as control of an asset is transferred, and a receivable is established. We, however, recognize a contract liability when a customer prepays for goods and/or services, or we have not delivered goods under the contract since we have not yet transferred control of the goods and/or services.

The balance of contract assets was immaterial as we did not have a significant amount of un-invoiced receivables in the periods ended September 30, 2021, and June 30, 2021.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of measurement in Topic 606. At contract inception, we assess the products and services promised in our contracts with customers. We then identify performance obligations to transfer distinct products or services to the customer. In order to identify performance obligations, we consider all the products or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Our performance obligations are primarily satisfied at a point in time. Revenue from products transferred to customers at a single point in time accounted for ~~99.7%~~99.9% of net sales for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021. Revenue recognized over a period of time for non-recurring engineering projects is based on the percent complete of a project and accounted for ~~0.3%~~0.1% of net sales for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021. The majority of our revenue recognized at a point in time is for the sale of hotspot router products. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer at completion of the shipping process.

As of ~~March 31,~~September 30, 2021, our contracts do not contain any unsatisfied performance obligations, except for undelivered products.

All costs associated with our contract manufacturers, as well as distribution, fulfillment and repair services, are included in our cost of goods sold. Cost of goods sold also includes amortization expenses of approximately ~~$82,000~~$78,000 and ~~$282,000~~$114,000 associated with capitalized product development costs associated with complete technology for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 ~~respectively,~~ and ~~$122,000 and $289,000 for the three and nine months ended March 31,~~ 2020, respectively.

Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other” includes software that is part of a product or process to be sold to a customer and is accounted for under Subtopic 985-20. Our products contain embedded software internally developed by FTI, which is an integral part of these products because it allows the various components of the products to communicate with each other and the products are clearly unable to function without this coding.

The costs of product development that are capitalized once technological feasibility is determined (noted as technology in progress in the Intangible Assets table in Note 3 to Notes to Consolidated Financial Statements) include related licenses, certification costs, payroll, employee benefits, and other headcount-related expenses associated with product development. We determine that technological feasibility for our products is reached after all high-risk development issues have been resolved. Once the products are available for general release to our customers, we cease capitalizing the product development costs and any additional costs, if any, are expensed. The capitalized product development costs are amortized on a product-by-product basis using the greater of straight-line amortization or the ratio of the current gross revenues to the current and anticipated future gross revenues. The amortization begins when the products are available for general release to our customers.

As of ~~March 31,~~September 30, 2021, and June 30, ~~2020,~~2021, capitalized product development costs in progress were ~~$644,097~~$635,782 and ~~$140,192,~~$602,388, respectively, and the amounts are included in intangible assets in our consolidated balance sheets. ~~For~~During the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 ~~we incurred $54,100~~ and ~~$587,246, respectively, and for the three and nine months ended March 31,~~ 2020, we incurred ~~$9,692~~$35,543 and ~~$343,360,~~$78,342, respectively, in capitalized product development costs, and such amounts are primarily comprised of certifications and licenses. All costs incurred before technological feasibility is reached are expensed and included in our consolidated statements of comprehensive income.

Costs associated with research and development are expensed as incurred. Research and development costs were ~~$1,199,525~~$1,021,902 and ~~$834,478~~$978,392 for the three months ended ~~March 31, 2021 and 2020, respectively, and $3,329,649 and $2,754,414 for the nine months ended March 31,~~September 30, 2021 and 2020, respectively.

We provide a warranty for one year which is covered by our vendors and manufacturers under purchase agreements between the Company and the vendors. As a result, we believe we do not have any net warranty exposure and do not accrue any warranty expenses. Historically, the Company has ~~not~~0t experienced any material net warranty expenditures.

Costs associated with product shipping and handling are expensed as incurred. Shipping and handling costs, which are included in selling, general and administrative expenses on the consolidated statements of comprehensive income, were ~~$147,202~~$45,384 and ~~$115,731~~$282,066 for the three months ended ~~March 31,~~September 30, 2021 and 2020, ~~respectively, and $674,854 and $455,580 for the nine months ended March 31, 2021 and 2020,~~ respectively.

For purposes of the consolidated statements of cash flow, we consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. We invest our excess cash into financial instruments which management believes are readily convertible into cash, such as money market funds that are readily convertible to ~~cash.~~cash and have a $1.00 net asset value.

We have invested excess funds in short term liquid assets, such as certificates of deposit.

Our inventories consist of finished goods and are stated at the lower of cost or net realizable value, cost being determined on a first-in, first-out basis. We assess the inventory carrying value and reduce it, if necessary, to its net realizable value based on customer orders on hand, and internal demand forecasts using management’s best estimates given information currently available. Our customer demand is highly unpredictable and can fluctuate significantly caused by factors beyond ~~our control.~~the control of the Company. We may write down our inventory value for potential obsolescence and excess inventory. As of ~~March 31,~~September 30, 2021, and June 30, ~~2020,~~2021, we ~~have recorded an inventory~~did 0t record any reserve ~~in the amounts of $0 and $399,437, respectively,~~ for inventories that we have identified as obsolete or slow-moving.

Property and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

Goodwill and certain intangible assets were recorded in connection with the FTI acquisition in October 2009, and are accounted for in accordance with ASC 805, “Business Combinations.” Goodwill represents the excess of the purchase price over the fair value of the tangible and intangible net assets acquired. Intangible assets are recorded at their fair value at the date of acquisition. Goodwill and other intangible assets are accounted for in accordance with ASC 350, “Goodwill and Other Intangible Assets.” Goodwill and other intangible assets are tested for impairment at least annually and any related impairment losses are recognized in earnings when identified. NoNaN impairment was deemed necessary as of ~~March 31,~~September 30, 2021 or June 30, ~~2020.~~2021.

In accordance with ASC 360, “Property, Plant, and Equipment,” we review for impairment of long-lived assets and certain identifiable intangibles whenever events or circumstances indicate that the carrying amount of assets may not be recoverable. We consider the carrying value of assets may not be recoverable based upon our review of the following events or changes in circumstances: the asset’s ability to continue to generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the ~~asset;~~assets; significant changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount.

As of ~~March 31,~~September 30, 2021, and June 30, ~~2020,~~2021, we were not aware of any events or changes in circumstances that would indicate that the long-lived assets are impaired.

~~Our~~The Company’s employee share-based awards result in a cost that is measured at fair value on an award’s grant date, based on the estimated number of awards that are expected to vest. ~~Stock-based compensation is~~Compensation costs are recognized ~~on a straight-line basis~~ over the ~~award’s~~period that an employee provides service in exchange for the award, i.e. the vesting period. ~~We estimate~~The Company estimates the fair value of stock options using a Black-Scholes option pricing model. Transactions with non-employees in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Stock-based compensation costs are reflected in the accompanying consolidated statements of comprehensive income based upon the underlying recipients' ~~roles.~~roles within the Company.

~~We use~~The Company uses the asset and liability method of accounting for income taxes. Accordingly, deferred tax assets and liabilities are determined based on the difference between the financial statement and income tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets, unless it is more likely than not such assets will be realized. Current income taxes are based on the year’s taxable income for federal and state income tax reporting purposes and the annual change in deferred taxes.

~~We assess our~~The Company assesses its income tax positions and ~~record~~records tax benefits based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, ~~we record~~the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. ~~We classify~~The Company classifies interest and penalties associated with such uncertain tax positions as a component of income tax expense.

As of September 30, 2021, we have no material unrecognized tax benefits. We recorded ~~a provision for~~ income ~~taxes~~tax benefit of ~~$1,192,277 and $5,331,417~~$411,256 for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021, ~~respectively,~~ and ~~$233,032 and $408,892~~income tax provision of $2,000,734 for the three ~~and nine~~ months ended ~~March 31, 2020, respectively. For the three and nine months ended March 31, 2021, we~~September 30, 2020. We also recorded an increase ~~of $57,793 and a decrease of $119,115~~ in deferred tax asset, non-current, ~~respectively. For the three~~of $439,568 and ~~nine months ended March 31, 2020, we recorded~~ a decrease in deferred tax asset, non-current, of ~~$233,195~~$84,871 for the three months ended September 30, 2021 and ~~$358,364,~~2020, respectively.

Earnings per share is calculated by dividing the net income by the weighted-average number of common shares that were outstanding for the period, without consideration for potential common shares. Diluted earnings per share is calculated by dividing the net income by the sum of the weighted-average number of dilutive potential common shares outstanding for the period determined using the treasury-stock method or the as-converted method. Potentially dilutive shares are comprised of common stock options outstanding under our stock plan.

We extend credit to our customers and perform ongoing credit evaluations of such customers. We evaluate our accounts receivable on a regular basis for collectability and provide for an allowance for potential credit losses as deemed necessary. No reserve was required or recorded for any of the periods presented.

Substantially all of our revenues are derived from sales of wireless data products. Any significant decline in market acceptance of our products or in the financial condition of our existing customers could impair our ability to operate effectively.

A significant portion of our revenue is derived from a small number of customers. For the ~~nine~~three months ended ~~March 31,~~September 30, 2021, sales to our two largest customers accounted for ~~61%~~64% and ~~32%~~16% of our consolidated net sales, and 0%0% and ~~96%~~33% of our accounts receivable balance as of ~~March 31,~~September 30, 2021. In the same period inof 2020, sales to our two largest customers accounted for ~~42%~~48% and ~~32%~~43% of our consolidated net sales, and ~~53%~~4% and ~~25%~~91% of our accounts receivable balance as of ~~March 31,~~September 30, 2020. No other customers accounted for more than ten percent of total net sales for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and ~~2020, and no other customers accounted for more than ten percent of total accounts receivable as of March 31, 2021 and~~ 2020.

For the ~~nine~~three months ended ~~March 31,~~September 30, 2021, we purchased the majority of our wireless data products from two manufacturing companies located in Asia. If these manufacturing companies were to experience delays, capacity constraints or quality control ~~problem,~~problems, product shipments to our customers could be delayed, or our customers could consequently elect to cancel the underlying product purchase ~~orders,~~order, which would negatively impact ~~our~~the Company's revenue. For the ~~nine~~three months ended ~~March 31,~~September 30, 2021, we purchased wireless data products from ~~two~~these manufacturers in the amount of ~~$130,256,593,~~$2,473,117, or ~~99%~~99% of total purchases, and had related accounts payable of ~~$27,250,783~~$3,159,529 as of ~~March 31,~~September 30, 2021. ~~For~~In the ~~nine months ended March 31,~~same period of 2020, we purchased wireless data products from ~~one manufacturing company located in Asia~~these manufacturers in the amount of ~~$23,514,179,~~$41,210,624, or ~~77%~~98% of total purchases, and had related accounts payable of ~~$7,935,576~~$44,081,107 as of ~~March 31,~~September 30, 2020.

We maintain our cash accounts with established commercial banks. Such cash deposits exceed the Federal Deposit Insurance Corporation insured limit of $250,000 for each financial institution. However, we do not anticipate any losses on excess deposits.

In February 2018, the FASB issued Accounting Standards Update (ASU) 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income. Under the amendments in ASU 2018-02, an entity may elect to reclassify the income tax effects of the Tax Cuts and Jobs Act on items within AOCI to retained earnings. We do not expect that the adoption of this update will impact the Company’s consolidated financial statements.

We are a leading provider of intelligent wireless solutions including mobile hotspots, routers, trackers, and other devices. Our designs integrate innovative hardware and software enabling machine-to-machine (M2M) applications and the Internet of Things (IoT). Our M2M and IoT solutions include embedded modules, modems and gateways built to deliver reliable always-on connectivity supporting a broad spectrum of applications based on fifth generation and fourth generation (5G/4G) wireless technology.

We have a majority ownership position in Franklin Technology Inc. ("FTI"), a research and development company located in Seoul, South Korea. FTI primarily provides design and development services to us for our wireless products.

Our products are generally marketed and sold directly to wireless operators, and indirectly through strategic partners and distributors. Our global customer base extends primarily from North America to ~~the Caribbean and South America and~~ Asia.

The accompanying unaudited consolidated financial statements of Franklin Wireless Corp. have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q. In the opinion of management, the financial statements included herein contain all adjustments, including normal recurring adjustments, considered necessary to present fairly the financial position, the results of operations and comprehensive income (loss) and cash flows of the Company for the periods presented. These financial statements and notes hereto should be read in conjunction with the financial statements and notes thereto for the fiscal year ended June 30, ~~2020~~2021 included in our Form 10-K filed on September ~~17, 2020.~~28, 2021. The operating results or cash flows for the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year.

The definite lived intangible assets consisted of the following as of ~~March 31,~~September 30, 2021:

The definite lived intangible assets consisted of the following as of June 30, ~~2020:~~2021:

Definite lived intangible assets:	Expected Life	Average Remaining life	Gross Intangible Assets		Less Accumulated Amortization		Net Intangible Assets			Expected Life	Average Remaining life		Gross Intangible Assets			Less Accumulated Amortization			Net Intangible Assets
Complete technology	3 years	1.8 years		18,397		7,666		10,731	3 years		0.5 years	$	18,397		$	15,331		$	3,066
Technology in progress	Not Applicable	–		140,192		–		140,192	Not Applicable		–		602,388			0			602,388
Software	5 years	2.9 years		525,930		338,593		187,337	5 years		3.0 years		399,811			268,495			131,316
Patents	10 years	7.0 years		20,734		10,821		9,913	10 years		3.9 years		21,105			12,951			8,154
Certifications & licenses	3 years	1.9 years		4,038,764		3,261,785		776,979	3 years		1.6 years		1,070,770			568,944			501,826
Total as of June 30, 2020			$	4,744,017	$	3,618,865	$	1,125,152
Total as of June 30, 2021													$	2,112,471		$	865,721		$	1,246,750

Amortization expense recognized ~~for~~during the three months ended ~~March 31,~~September 30, 2021 and 2020 was ~~$101,535~~$93,694 and ~~$146,114 respectively, and for the nine months ended March 31, 2021 and 2020 was $342,070 and $344,382,~~$127,640, respectively.

The amortization expenses of the definite lived intangible assets for the future are as follows:

Schedule of property and equipment
	March 31, 2021			June 30, 2020			September 30, 2021			June 30, 2021
Machinery and facility	$	364,877		$	364,054
Machinery and Commercial Equipment							$	67,305		$	67,044
Office equipment		421,485			420,941			296,962			291,191
Molds		940,165			940,165			575,552			575,552
		1,726,527			1,725,160			939,819			933,787
Less accumulated depreciation		(1,560,490	)		(1,504,271	)		(804,963	)		(782,177	)
Total	$	166,037		$	220,889		$	134,856		$	151,610

Depreciation expense associated with property and equipment was ~~$22,254~~$22,786 and ~~$23,958~~$22,406 for the three months ended ~~March 31,~~September 30, 2021 and 2020, ~~respectively, and $67,593 and $67,829 for the nine months ended March 31, 2021 and 2020,~~ respectively. ~~As of March 31, 2021, we disposed the fully depreciated office equipment in the amount of $11,374.~~

We report earnings per share in accordance with ASC 260, “Earnings Per Share.” Basic earnings per share are computed using the weighted average number of shares outstanding during the period. Diluted earnings per share represent basic earnings per share adjusted to include the potentially dilutive effect of outstanding stock options by using the treasury stock method that the proceeds we receive from an in-the-money option exercise are used towards repurchasing common shares in the market. For the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021, we were in a net loss position and have excluded 477,001 stock options from the calculation of diluted net loss per share because these securities are anti-dilutive. For the three months ended September 30, 2020, we have calculated the diluted effect of common stock arising from ~~485,000 and 255,291~~537,291 stock ~~options, respectively.~~options.

The weighted average number of shares outstanding used to compute ~~loss~~earnings per share is as follows:

Schedule of earnings per share
	Three Months ended March 31,				Nine Months Ended March 31,				Three Months Ended September 30,
	2021		2020		2021		2020		2021			2020
Net income attributable to Parent Company	$	3,938,553	$	988,308	$	17,715,524	$	1,823,124
Net (loss) income attributable to Parent Company									$	(1,103,605	)	$	6,920,360

Weighted-average shares of common stock outstanding:
Basic shares outstanding		11,581,629		10,580,576		11,271,168		10,574,841		11,593,006			10,666,059
Dilutive effect of common stock equivalents arising from stock options		210,663		119,197		210,662		119,197		–			151,991
Diluted shares outstanding		11,792,292		10,699,773		11,481,830		10,694,038		11,593,006			10,818,050
Basic income per share	$	0.34	$	0.09	$	1.57	$	0.17
Diluted income earnings per share	$	0.33	$	0.09	$	1.54	$	0.17
Basic (loss) earnings per share									$	(0.10	)	$	0.65
Diluted (loss) earnings per share									$	(0.10	)	$	0.64

Our Korea-based subsidiary, FTI leases approximately 10,000 square feet of office space, located in Seoul, Korea, at a monthly rent of approximately $8,000 ~~that expires on August 31, 2021. Beginning on June 12, 2015, FTI leased~~and the additional office space consisting of approximately 2,682 square feet, also located in Seoul, Korea, at a monthly rent of approximately $2,700 that ~~expires~~expired on August 31, ~~2021.~~2021, and extended by an additional twelve months to August 31, 2022. We lease one corporate housing facility, located in Seoul, Korea, primarily for our employees who travel, under a non-cancelable operating lease that expired on September 4, 2021, and extended by an additional twelve months to September 4, 2022. Rent expense related to these leases was approximately ~~$32,100~~$32,100 for the three months ended ~~March 31, 2021 and 2020, and approximately $96,300 for the nine months ended March 31,~~September 30, 2021 and 2020. This facility is also covered by an appropriate level of insurance, and we believe it to be suitable for our use and adequate for our present needs.

We lease one corporate housing facility, located in Seoul, Korea, primarily for our employees who travel, under a non-cancelable operating lease that ~~expires~~expired on September 4, ~~2021.~~2021, and extended by an additional twelve months to September 4, 2022. Rent expense related to this lease was ~~approximately $2,316~~$2,223 and ~~$2,146~~$2,190 for the three months ended ~~March 31,~~September 30, 2021 and 2020, ~~and approximately $6,843 and $6,667 for the nine months ended March 31, 2021 and 2020.~~respectively.

As of ~~March 31, 2021,~~September 30, 2020, we used discount rates of ~~4.0%~~4.0% and ~~2.8%~~2.8% in determining our operating lease liabilities for the office spaces in San Diego, California, and South Korea, respectively. These rates represented our incremental borrowing rates at that time. Short-term leases with initial terms of twelve months or less are not capitalized. Both our San Diego and Korean office leases were extensions of previous leases and neither contains any further extension provisions.

Schedule of Future Minimum Rental Payments for Operating Leases
		Operating Leases				Operating Leases
Fiscal 2021	$	111,770
Fiscal 2022		342,788
Fiscal 2022 remaining nine months					$	241,448
Fiscal 2023		321,930			321,930
Fiscal 2024		160,965			160,965
Total lease payments		937,453			724,343
Less imputed interest		(48,643	)		(32,740	)
Total	$	888,810		$	691,603

We are from time to time involved in certain legal proceedings and claims arising in the ordinary course of business. ~~Management does not expect any material adverse outcome.~~

On April 8^th, Verizon issued a press release announcing that it is working with the U.S. Consumer Product Safety Commission (CPSC) to conduct a voluntary recall of certain Verizon Ellipsis Jetpack mobile hotspot devices, indicating ~~that~~ that the lithium-ion battery in the devices can overheat, posing a fire and burn hazard. According to the CPSC release, the recall affects approximately 2.5 million devices. We import the devices and supply them to Verizon.

Verizon first advised us of one alleged Jetpack device failure at the end of February 2021. We immediately began meeting with Verizon and requested access to the device. We also began internal testing to evaluate device performance. We did not receive any further incident information until the last week of March 2021. On April 1 we issued a press release announcing that we had received reports from Verizon about potential issues with the batteries in the devices. On April 9 we issued a press release announcing the voluntary recall by Verizon.

As of the date of this report, we have been unable to recreate any device failures of the type identified by Verizon. All internal testing conducted to date has confirmed that the Jetpack devices are performing within normal parameters. We are not currently aware of any aspect of the Jetpack design that could cause the devices to fail in the way described in Verizon’s recall notice.

We are continuing to investigate the alleged device failures. At the time of the recall announcement, only two of the devices involved in the 15 alleged incidents had been physically inspected by Verizon. We have not yet had the opportunity to inspect any of these devices, but we have retained an expert to assist in the process.

We are actively discussing ways to resolve the consequences of the recall, including the costs to Verizon of conducting the recall, impacts on our manufacturing partners and our future business relationship with Verizon. Our suppliers and component manufacturers, as well as relevant insurance carriers, have been notified and are also participating.

We ~~continue to work with Verizon on future devices and plan to continue working with our manufacturing partners and component suppliers~~need to resolve ~~all matters relating~~the recall to ensure future sales to Verizon. Discussions are ongoing but no agreement for future products have been reached at this time. We are striving to avoid litigation arising from the ~~Jetpack recall.~~recall and have not received court filings from any of the parties involved at this time.

We are not currently able to estimate the financial impact of the recall on our future operations. At this time, we do not have information that identifies the cause of the alleged incidents. We also do not have any specific legal claims or theories of causation for device failure incidents that would allow us to estimate the ultimate cost of potential future litigation. Although the recall notice identified 2.5 million devices, we are unable to predict the number of units that may be returned or the ~~cost of investigating~~costs and ~~defending our interests~~damages that may be alleged in ~~this matter.~~the future.

~~We have been made aware~~A shareholder action, Ali vs. Franklin Wireless Corp. et al. Case #3:21-cv-00687-AJB-MSB, was filed in the U.S. District Court, Southern District of ~~legal actions~~California (San Diego) on April 16, 2021, alleging, among other things, that we had prior knowledge that the recall was likely and that we did not disclose that information to investors in a timely manner. We believe these allegations are not supported by the facts and we will vigorously defend against such claims.

A legal action was filed in the U.S. District Court, Southern District of California (San Diego) against Franklin, as a nominal defendant, Nosirrah Management LLC v. Franklin Wireless et al. Case # 3:21-cv-01316-CAB-JLB, on or about July 22, 2021, claiming that our Chief Executive Officer, OC Kim, violated Section 16(b)b of the Securities Exchange Act of 1934 for receiving “short-swing” profits from a sale and purchase of Franklin shares, in violation of the Act. We believe the allegations are not supported by the facts and we intend to vigorously defend against these claims.

We entered into a Professional Services Agreement with Anydata Corp. (“Anydata”) for the product ACT233F Smart Link OBD device on May 5, 2017, for a minimum purchase commitment of 250,000 units. We have delivered approximately 25,000 units and 7,000 units during our second and fourth quarters of fiscal 2018, respectively, and an additional 18,000 units during our first quarter of fiscal 2019. Sales to Anydata were approximately $1.8 million for the year ended June 30, 2019. We have received information that Anydata may not be able to fulfill the entire purchase commitment for which parts have already been ordered with our main vendor, Quanta. We believe that the Company will be able to supply some of the products to another customer and has received personal guarantees from the ownership group of Anydata. As of June 30, 2019, the remaining unfulfilled purchase commitment was approximately ~~$3.1~~$3.1 million. The total product purchase commitment with Quanta was approximately ~~$2.9~~$2.9 million. We have not recorded a receivable from Anydata, nor a liability owed to Quanta. Management believes that, at this time, a loss contingency is reasonably possible but not estimable as to how much ultimately would be paid to Quanta. As of June 30, 2020, we paid ~~$100,000~~$100,000 for the right to call on inventory and recorded an additional ~~$49,580~~$49,580 as a prepaid expense related to pricing adjustments, which has been agreed with Quanta for other products to ensure demand is met, and for the quarter ended December 31, 2020, the prepaid expense of ~~$149,580~~$149,580 has been recorded as a cost of goods sold. As of ~~March 31,~~June 30, 2021, there is a reasonable possibility we may incur a loss; however, the amount is not estimable at this time. On January 25^th, 2021, we commenced legal action against Anydata and its principal officers in San Diego Superior Court, case number 37-2021-00003468-CU-BC-CTL.

In March 2020, the World Health Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States. On March 19, 2020, the Governor of California declared a health emergency and issued an order to close all nonessential businesses until further notice. As a maker of wireless connectivity devices, we are deemed to be an essential business. Nonetheless, out of concern for our workers and pursuant to the government order, we reduced the scope of our operations and, where possible, certain workers began telecommuting from their homes. The continued spread of COVID-19 may result in a period of business disruption, including delays or disruptions in our supply chain. The spread of COVID-19, or another infectious disease, could also negatively affect the operations at our third-party manufacturers, which could result in delays or disruptions in the supply of our products. While we expect this situation may increase demand for its products, the related impact cannot be reasonably estimated at this time.

On ~~October 1, 2020,~~September 21, 2009, we entered into Change of Control Agreements with OC Kim, our President, and Yun J. (David) Lee, our Chief Operating Officer. Each Change of Control Agreement provides for a lump sum payment to the officer in case ~~we experience~~of a change of ~~control.~~control of the Company. The term includes the acquisition of ~~our~~ Common Stock of the Company resulting in one person or company owning more than 50% of the outstanding shares, a significant change in the composition of the Board of Directors of the Company during any 12-month period, a reorganization, merger, consolidation or similar transaction resulting in the transfer of ownership of more than fifty percent (50%) of ~~our~~the Company's outstanding Common Stock, or a liquidation or dissolution of the Company or sale of substantially all of ~~our~~the Company's assets.

The Change of Control Agreement with Mr. Kim calls for a payment of $5 million upon a change of ~~control, and~~control; the agreement with Mr. Lee calls for a payment of $2 million upon a change of control.

The Board of Directors has approved extension of the Change of Control Agreements with Mr. Kim and Mr. Lee through October 1, 2024. On October 1, 2021, the Board of Directors renewed Franklin’s management agreement with its Chief Executive Officer, OC Kim.

We believe that our products are currently exempt from international tariffs upon import from our manufacturers to the United States. If this were to change at any point, a tariff of 10%-25% of the purchase price would be imposed. If such tariffs are imposed, they could have a materially adverse effect on sales and operating results.

Under purchase orders and contracts for the sale of our products we may provide indemnification to our customers for potential intellectual property infringement claims for which we may have no corresponding recourse against our third-party licensors. This potential liability, if realized, could materially adversely affect our business, operating results and financial condition.

We apply the provisions of ASC 718, “Compensation - Stock Compensation,” ~~using a modified prospective application,~~to all of our stock-based compensation awards, and use the Black-Scholes option pricing model to value stock options. Under this application, we record compensation expense for all awards granted. ~~Compensation costs will be recognized over the period that an employee provides service in exchange for the award, i.e. the vesting period.~~

In 2009, we adopted the Stock Incentive Plan (“2009 Plan”), which provided for the grant of incentive stock options and non-qualified stock options to our employees and directors. Options granted under the 2009 Plan generally have a term of ten years and generally vest and become exercisable at the rate of 33% after one year and 33% on the second and third anniversaries of the option grant dates. Historically, some stock option grants have included shorter vesting periods ranging from one to two years.

In July of 2020, the Board of Directors adopted the 2020 Franklin Wireless Corp. Stock Option Plan (the “2020 Plan”), which covers 800,000 shares of Common Stock. The 2020 Plan provide for the grant of incentive stock options, non-qualified stock options and restricted stock to our employees, directors, and independent contractors. These options will have such vesting or other provisions as may be established by the Board of Directors at the time of each grant.

The estimated forfeiture rate considers historical turnover rates stratified into employee pools in comparison with an overall employee turnover rate, as well as expectations about the future. We periodically revise the estimated forfeiture rate in subsequent periods if actual forfeitures differ from those estimates. There were ~~$282,116~~$94,538 and $0$85,987 compensation expenses recorded under this method for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and 2020, respectively.

A summary of the status of our stock options is presented below as of ~~March 31,~~September 30, 2021:

Schedule of Stock Option Activity
							Weighted-									Weighted-
							Average									Average
				Weighted-			Remaining							Weighted-		Remaining
				Average			Contractual		Aggregate					Average		Contractual		Aggregate
				Exercise			Life		Intrinsic					Exercise		Life		Intrinsic
Options	Shares			Price			(In Years)		Value		Shares			Price		(In Years)		Value

Outstanding as of June 30, 2020		251,291		$	1.05			1.95	$	1,124,525
Outstanding as of June 30, 2021												484,000		$	3.67		2.83	$	2,662,830
Granted		299,000			5.40			–		–		0			0		–		0
Exercised		(61,291	)		(1.22	)		–		–		(3,999	)		5.40		–		0
Cancelled		–			–			–		–		0			0		–		0
Forfeited or Expired		(4,000	)		(5.40	)		–		–
Outstanding as of March 31, 2021		485,000		$	3.67			3.08	$	8,088,910
Forfeited or expired												(3,000	)		5.40		–		0
Outstanding as of September 30, 2021												477,001		$	3.64		2.56	$	1,725,372

Exercisable as of March 31, 2021		190,000		$	0.99			1.20	$	3,678,650
Exercisable as of September 30, 2021												303,622		$	2.64		0.70	$	1,402,888

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon ~~our~~the Company’s closing stock price of ~~20.35~~$7.26 as of ~~March 31,~~September 30, 2021, which would have been received by the option holders had all option holders exercised their options as of that date. The weighted-average grant-date fair value of stock options outstanding as of ~~March 31,~~September 30, 2021, in the amount of ~~485,000~~477,001 shares was ~~$3.02~~$3.00 per share. As of ~~March 31,~~September 30, 2021, there was unrecognized compensation cost of ~~$909,276~~$700,605 related to non-vested stock options granted.

ASC 855, “Subsequent Events. ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued, May 17, 2021. During these periods, we do not have any quantifiable subsequent events required to be disclosed other than those disclosed in Note 7

A summary of the ~~notes to consolidated financial statements~~status of our stock options is presented below as of ~~March 31, 2021, and for~~September 30, 2020:

The aggregate intrinsic value in the ~~three and nine months ended March 31, 2021.~~preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $15.99 as of September 30, 2020, which would have been received by the option holders had all option holders exercised their options as of that date. The weighted-average grant-date fair value of stock options outstanding as of September 30, 2020, in the amount of 537,291 shares, was $2.65 per share. As of September 30, 2020, there was 0 unrecognized compensation cost related to non-vested stock options granted.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report. This report contains certain forward-looking statements relating to future events or our future financial performance. These statements are subject to risks and uncertainties which could cause actual results to differ materially from those discussed in this report. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. We are not obligated to publicly update this information, whether as a result of new information, future events or otherwise, except to the extent we are required to do so in connection with our obligation to file reports with the SEC. For a discussion of the important risks to our business and future operating performance, see the discussion under the caption “Item 1A. Risk Factors” and under the caption “Factors That May Influence Future Results of Operations” in ~~our~~the Company’s Form 10-K for the year ended June 30, ~~2020,~~2021, filed on September ~~17, 2020.~~28, 2021. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.

We believe that our revenue growth will be influenced largely by (1) the successful maintenance of our existing customers, (2) the rate of increase in demand for wireless data products, (3) customer acceptance of our new products, (4) new customer relationships and contracts, and (5) our ability to meet customers’ demands.

We have entered into and expect to continue to enter into new customer relationships and contracts for the supply of our products, and this may require significant demands on our resources, resulting in increased operating, selling, and marketing expenses associated with such new customers.

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Management evaluates these estimates and assumptions on an ongoing basis. Our estimates and assumptions have been prepared on the basis of the most current reasonably available information. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates under different assumptions and conditions.

We have several critical accounting policies, which were described in our Annual Report on Form 10-K for the year ended June 30, ~~2020,~~2021, that are both important to the portrayal of our financial condition and results of operations and require management’s most difficult, subjective and complex judgments. Typically, the circumstances that make these judgments difficult, subjective and complex have to do with making estimates about the effect of matters that are inherently uncertain. There were no material changes to our critical accounting policies during the ~~nine~~three months ended ~~March 31,~~September 30, 2021.

The following table sets forth, for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 and 2020, our statements of comprehensive income including data expressed as a percentage of sales:

	Three Months Ended				Nine Months Ended				Three Months Ended
	March 31,				March 31,				September 30,
	2021		2020		2021		2020		2021			2020

Net sales		100.0%		100.0%		100.0%		100.0%		100.0%			100.0%
Cost of goods sold		82.9%		80.5%		82.4%		79.7%		85.3%			81.3%
Gross profit		17.1%		19.5%		17.6%		20.3%		14.7%			18.7%
Operating expenses		5.3%		11.7%		4.2%		14.2%		62.8%			4.0%
Income from operations		11.8%		7.8%		13.4%		6.1%
Other income (expense), net		0.4%		0.5%		0.3%		0.5%
(Loss) income from operations										(48.1%	)		14.7%
Other income, net										4.0%			0.0%
Net income before income taxes		12.2%		8.3%		13.7%		6.6%		(44.1%	)		14.7%
Income tax provision		2.7%		1.5%		3.1%		1.1%
Net income		9.5%		6.8%		10.6%		5.5%
Income tax (benefit) provision										(12.3%	)		3.2%
Net (loss) income										(31.8%	)		11.5%
Less: non-controlling interest in net income of subsidiary		0.6%		0.4%		0.4%		0.7%		1.2%			0.4%
Net income attributable to Parent Company stockholders		8.9%		6.4%		10.2%		4.8%
Net (loss) income attributable to Parent Company stockholders										(33.0%	)		11.1%

THREE MONTHS ENDED ~~MARCH 31,~~SEPTEMBER 30, 2021 COMPARED TO THREE MONTHS ENDED ~~MARCH 31,~~SEPTEMBER 30, 2020

NET SALES - Net sales ~~increased~~decreased by ~~$28,784,772,~~$59,225,390, or ~~185.2%~~94.7%, to ~~$44,330,954~~$3,344,060 for the three months ended ~~March 31,~~September 30, 2021 from ~~$15,546,182~~$62,569,450 for the corresponding period of 2020. For the three months ended ~~March 31,~~September 30, 2021, net sales by geographic regions, consisting of the North America and Asia, were ~~$44,054,824 (99.4%~~$3,171,198 (94.8% of net sales) and ~~$276,130 (0.6%~~$172,862 (5.2% of net sales), respectively. For the three months ended ~~March 31,~~September 30, 2020, net sales by geographic regions, consisting of North America and Asia, were ~~$15,444,110 (99.3%~~$62,569,138 (100.0% of net sales) and ~~$102,072 (0.7%~~$312 (0.0% of net sales), respectively.

Net sales in North America ~~increased~~decreased by ~~$28,610,714,~~$59,397,940, or ~~185.3%~~94.9%, to ~~44,054,824~~$3,171,198 for the three months ended ~~March 31,~~September 30, 2021 from ~~$15,444,110~~$62,569,138 for the corresponding period of 2020. The ~~increase~~decrease in net sales in North America ~~resulted~~was primarily ~~from increased~~due to the reduction of demand for wireless ~~connectivity~~products from two major carrier customers, principally due to ~~people working and attending school remotely. Net sales also increased due to~~the unprecedently high volume of demand for wireless products during the prior period, which coincided with the early stages of the Covid-19 Pandemic period, as well as the delayed launch of a ~~product and the timing of orders placed by a carrier customer, from which a significant portion of our revenue was derived. (approximately 67% of our consolidated net sales for this period).~~new product. Net sales in Asia increased by ~~$174,058,~~$172,550, or ~~170.5%~~55,304.5%, to ~~$276,130~~$172,862 for the three months ended ~~March 31,~~September 30, 2021 from ~~$102,072~~$312 for the corresponding period of 2020. The increase in net sales was primarily due to ~~commission~~the revenue generated from the material sales and product development service by FTI, which typically ~~varies~~vary from period to period.

GROSS PROFIT - Gross profit ~~increased~~decreased by ~~$4,531,305,~~$11,178,267, or ~~149.3%~~95.8%, to ~~$7,566,096~~$492,964 for the three months ended ~~March 31,~~September 30, 2021 from ~~$3,034,791~~$11,671,231 for the corresponding period of 2020. The gross profit in terms of net sales percentage was ~~17.1%~~14.7% for the three months ended ~~March 31,~~September 30, 2021 compared to 19.5% for the corresponding period of 2020. The increase in gross profit was primarily due to the change in net sales as described above. The decrease in gross profit and gross profit in terms of net sales percentage was primarily due to competitive selling prices and the increase in production costs.

~~OPERATING EXPENSES~~ - Operating expenses increased by $513,712, or 28.2%, to $2,336,286 for the three months ended March 31, 2021 from $1,822,574 for the corresponding period of 2020. The increase in operating expenses was primarily due to the increased research and development costs, payroll expense for employees, and compensation costs related to the granted options.

~~OTHER INCOME (LOSS), NET~~ - Other income (loss), net increased by $78,586, or 97.4%, to $159,265 for the three months ended March 31, 2021 from $80,679 for the corresponding period of 2020. The increase was primarily due to the increased product development funding received by FTI from a government entity and the gain from the favorable changes in foreign currency exchange rates in FTI, which is partially offset by the decreased interest income earned from the money market accounts and certificates of deposit.

~~NINE MONTHS ENDED MARCH 31, 2021 COMPARED TO NINE MONTHS ENDED MARCH 31, 2020~~

~~NET SALES~~ - Net sales increased by $135,467,670, or 359.5%, to $173,147,982 for the nine months ended March 31, 2021 from $37,680,312 for the corresponding period of 2020. For the nine months ended March 31, 2021, net sales by geographic regions, consisting of North America, the countries in the Caribbean and South America, and Asia, were $172,853,744 (99.8% of net sales), $17,500 (0.0% of net sales), and $276,738 (0.2% of net sales), respectively. For the nine months ended March 31, 2020, net sales by geographic regions, consisting of North America, the countries in the Caribbean and South America, and Asia were $37,342,577 (99.1% of net sales), $0 (0.0% of net sales) and $337,735 (0.0% of net sales), respectively.

Net sales in North America increased by $135,511,167, or 362.9%, to $172,853,744 for the nine months ended March 31, 2021 from $37,342,577 for the corresponding period of 2020. The increase in net sales in North America resulted primarily from increased demand for wireless connectivity due to people working and attending school remotely. Net sales also increased due to a newly launched product and the timing of orders placed by a new carrier customer, from which a significant portion of our revenue was derived. (approximately 61% of our consolidated net sales for this period). Net sales in the Caribbean and South America increased by $17,500, or 100%, to $17,500 for the nine months ended March 31, 2021 from $0 for the corresponding period of 2020. The increase in net sales was primarily due to the general nature of sales in these regions, which often fluctuate significantly from period to period due to timing of orders placed by a relatively small number of customers. Net sales in Asia decreased by $60,997, or 18.1%, to $276,738 for the nine months ended March 31, 2020 from $337,73518.7% for the corresponding period of 2020. The decrease in ~~net sales was primarily due to the discontinued product development service revenue generated by FTI, which typically varies from period to period and was partially offset by a commission revenue~~.

~~GROSS PROFIT~~ - Gross profit increased by $22,882,852, or 299.2%, to $30,529,782 for the nine months ended March 31, 2021 from $7,646,930 for the corresponding period of 2020. The gross profit in terms of net sales percentage was 17.6% for the nine months ended March 31, 2021, compared to 20.3% for the corresponding period of 2020. The increase in gross profit was primarily ~~due to increased demand for wireless connectivity due to people working and attending school remotely. Net sales also increased~~ due to the change in net sales as described above. The decrease in gross profit in terms of net sales percentage was primarily due to ~~competitive selling prices and~~ the ~~increase in production costs.~~revenues generated from material sales by FTI, which involved higher costs of goods sold.

OPERATING EXPENSES- Operating expenses ~~increased~~decreased by ~~$2,035,881,~~$400,134, or ~~38.0%~~16.0%, to ~~$7,396,895~~$2,099,717 for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 from ~~$5,361,014~~$2,499,851 for the corresponding period of 2020. The ~~increase~~decrease in operating expenses was primarily due to the ~~increased research and development costs, payroll expense for employees, and~~decreased shipping and handling costs related to the ~~increased~~reduced volume of product shipments and sales, by approximately $235,000, as well as ~~the increased~~decreased bad debt ~~expenses and compensation costs related to the granted options.~~expense.

OTHER INCOME, ~~(LOSS),~~ NET- Other income, ~~(loss),~~ net increased by ~~$341,838,~~$125,722, or ~~165.3%~~1,848.3%, to ~~$548,600~~$132,524 for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 from ~~$206,762~~$6,802 for the corresponding period of 2020. The increase was primarily due to ~~the gain from the forgiveness of the Payroll Protection Plan loan and increased~~ product development funding received by FTI from a government entity, which was partially offset by the loss from the unfavorable changes in foreign currency exchange rates in FTI and the decreased interest income earned from the money market accounts and certificates of deposit.entity.

Our historical operating results, capital resources and financial position, in combination with current projections and estimates, were considered in management's plan and intentions to fund our operations over a reasonable period of time, which we define as the twelve-month period ending from the date of the filing of this Form 10-Q. For purposes of liquidity disclosures, we assess the likelihood that we have sufficient available working capital and other principal sources of liquidity to fund our operating activities and obligations as they become due.

Our principal source of liquidity as of ~~March 31,~~September 30, 2021 consisted of cash and cash equivalents as well as short-term investments of ~~$59,742,180.~~$44,664,544. We believe we have sufficient available capital to cover our existing operations and obligations through at least one year from the date of the filing of this Form 10-Q. Our long-term future cash requirements will depend on numerous factors, including our revenue base, profit margins, product development activities, market acceptance of our products, future expansion plans and ability to control costs. If we are unable to achieve our current business plan or secure additional funding that may be required, we would need to curtail our operations or take other similar actions outside the ordinary course of business in order to continue to operate as a going concern.

OPERATING ACTIVITIES - Net cash ~~provided~~used in operating activities for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 ~~and~~was $6,368,586, compared to net cash provided by operating activities for the three months ended September 30, 2020 ~~was $20,461,807 and $1,879,536.~~of $9,158,695.

The ~~$20,461,807~~$6,368,586 in net cash used by operating activities for the three months ended September 30, 2021 was primarily due to the decrease in accounts payable of $6,156,666 as well as our operating results (net loss adjusted for depreciation, amortization, and other non-cash charges), which was partially offset by a decrease in accounts receivable of $1,000,401.

The $9,158,695 in net cash provided by operating activities for the ~~nine~~three months ended ~~March 31, 2021~~September 30, 2020 was primarily due to the decrease in ~~inventory~~inventories of $9,018,037 and increases in accounts ~~receivable~~payable and income tax payable of ~~$10,353,900~~$2,766,929 and ~~$2,534,938,~~$1,883,173, respectively, as well as our operating results (net income of $18,350,070 adjusted for depreciation, amortization, and other non-cash charges) and the increase in income tax payable of $2,307,543, which were partially offset by the decrease in accounts payable of $14,230,479. The $1,879,536 in net cash provided by operating activities for the nine months ended March 31, 2020 was primarily due to the increase in accounts payable of $5,685,328 and our operating results of $2,902,651 (net income adjusted for depreciation, amortization, and other non-cash charges), which ~~were~~was partially offset by the increase in accounts receivable of ~~$7,098,137.~~$11,945,931.

INVESTING ACTIVITIES - Net cash used in investing activities for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and 2020 was ~~$605,557~~$43,485 and ~~$705,094,~~$86,605, respectively.

The ~~$605,557 in net cash used in investing activities for nine months ended March 31, 2020 was primarily due to the payments for purchase of capitalized product development of $587,246. The $705,094~~$43,485 in net cash used in investing activities for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 was primarily due to the payments for capitalized product development of $35,543, and the $86,605 in net cash used in investing activities for the three months ended September 30, 2020 was primarily due to the payments for capitalized product development ~~intangible assets, and property and equipment~~ of ~~$343,360, $151,218, and $157,688, respectively, as well as the payments for purchase of additional shares of the subsidiary of $75,000.~~$78,342.

FINANCING ACTIVITIES - Net cash provided by financing activities for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and 2020 was ~~$6,074,758~~$21,595 and ~~$27,769,~~$6,017,428, respectively.

The ~~$6,074,758~~$21,595 in net cash provided by financial activities for the three months ended September 30, 2021 was from cash received from exercise of stock options. The $6,017,428 in net cash provided by financing activities for the ~~nine~~three months ended ~~March 31, 2021~~September 30, 2020 was primarily due to the ~~$6,000,008 aggregate purchase price, which was paid to us in cash, by investors for~~ issuance of 923,078 shares of Common Stock ~~and $74,750 received from the exercise of stock options. The $27,769~~to investors for $6,000,008 in ~~net cash provided by financing activities for the nine months ended March 31, 2020 was primarily due to the cash received from the exercise of stock options.~~cash.

On September 9, 2015, we signed a lease for new office space consisting of approximately 12,775 square feet, located in San Diego, California, at a monthly rent of $23,115, which commenced on October 28, 2015. In addition to monthly rent, the new lease includes payment for certain common area costs. The term of the lease for the new office space was four years from the lease commencement date and was then extended by an additional fifty months, to December 31, 2023. Our ~~facility is~~Korea-based subsidiary, FTI, leases approximately 10,000 square feet of office space, at a monthly rent of approximately $8,000, and additional office space consisting of approximately 2,682 square feet at a monthly rent of approximately $2,700, both located in Seoul, Korea. These leases expired on August 31, 2021 but were extended by an additional twelve months to August 31, 2022. In addition to monthly rent, the leases provide for periodic cost of living increases in the base rent and payment for certain common area costs. These facilities are covered by an appropriate level of insurance and we believe itthem to be suitable for our use and adequate for our present needs. Our Korea-based subsidiary, FTI leases approximately 10,000 square feet of office space, located in Seoul, Korea, at a monthly rent of approximately $8,000 that expires on August 31, 2021. Beginning on June 12, 2015, FTI leased additional office space consisting of approximately 2,682 square feet, also located in Seoul, Korea, at a monthly rent of approximately $2,700 that expires on August 31, 2021.

Rent expense for the three months ended ~~March 31,~~September 30, 2021 and 2020 was ~~$111,679~~$111,586 and ~~$111,509, respectively. Rent expense for the nine months ended March 31, 2021 and 2020 was $334,932 and $324,198,~~$111,553, respectively.

Refer to NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES in the Consolidated Financial Statements.

As a “smaller reporting company,” ~~we are~~the Company is not required to respond to this item.

Our management has evaluated, under the supervision and with the participation of our President and Acting Chief Financial Officer, the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based upon that evaluation, our President and our Acting Chief Financial Officer have concluded that, as of ~~March 31,~~September 30, 2021, our disclosure controls and procedures were effective in ensuring that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act of 1934 is (i) recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the SEC and (ii) accumulated and communicated to our management, including our principal executive and principal accounting officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

There have been no changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934 and as a result of adopting Topic 842) during the ~~nine~~three months ended ~~March 31,~~September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

We have provided information about legal proceedings in which we are involved in Note 78 of the notes to consolidated financial statements for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021, contained within this Quarterly Report on Form 10-Q.

Our Annual Report on Form 10-K for the fiscal year ended June 30, ~~2020,~~2021, filed with the SEC on September ~~17, 2020~~28, 2021 (the “Annual Report”), includes a detailed discussion of our risk factors under the heading “PART I, ITEM 1A – RISK FACTORS.” You should carefully consider the risk factors discussed in our Annual Report, as well as other information in this quarterly report. Any of these risks could cause our business, financial condition, results of operations and future growth prospects to suffer. We are not aware of any material changes from the risk factors previously disclosed.

In accordance with Section 13 of 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Title of each class	Trading symbol(s)	Name of each exchange on which registered
Common Stock, par value $.001 per share	FKWL	The Nasdaq Stock Market LLC

		Page
PART I – Financial Information

Item 1:	Consolidated Financial Statements (unaudited)
	Consolidated Balance Sheets as of ~~March 31,~~September 30, 2021 (unaudited) and June 30, ~~2020~~2021	4
	Consolidated Statements of Income and Comprehensive Income (unaudited) for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 and 2020	5
	Consolidated Statements of Stockholders' Equity (unaudited) for the three ~~and nine~~ months ended ~~March 31,~~September 30, 2021 and 2020	6-7
	Consolidated Statements of Cash Flows (unaudited) for the ~~nine~~three months ended ~~March 31,~~September 30, 2021 and 2020	8
	Notes to Consolidated Financial Statements	9
Item 2:	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2024
Item 3:	Quantitative and Qualitative Disclosures About Market Risk	2427
Item 4:	Controls and Procedures	2427

PART II – Other Information

Item 1:	Legal Proceedings	2428
Item 1A:	Risk Factors	2428
Item 2:	Unregistered Sales of Equity Securities and Use of Proceeds	2428
Item 3:	Defaults Upon Senior Securities	2428
Item 4:	Mine Safety Disclosures	2428
Item 5:	Other Information	2428
Item 6:	Exhibits	2428

Signatures		2529

Schedule of contract liabilities
	September 30, 2021		June 30, 2021
Undelivered products	$	265,701	$	140,000

~~Machinery~~Useful lives of property and equipment	~~6 years~~
~~Office equipment~~Machinery	5	6 years
~~Molds~~Office equipment	3	5 years
~~Vehicles~~Molds	5	3 years
Vehicles		5 years
Computers and software		5 years
Furniture and fixtures		7 years
Facilities improvements		5 years or life of the lease, whichever is shorter

		FY2021				FY2022				FY2023				FY2024				FY2025				Thereafter
Total		$	150,521			$	579,236			$	385,122			$	189,389			$	26,745			$	41,540

	Common Stock				Additional Paid-in		Retained		Treasury			Accumulated Other Comprehensive			Non-controlling		Total Stockholders
	Shares		Amount		Capital		Earnings		Stock			Loss			Interest		Equity
Balance - June 30, 2020		10,605,912	$	14,007	$	7,475,365	$	18,028,059	$	(4,513,479	)	$	(650,426	)	$	782,015	$	21,135,541
Net income attributable to Parent Company		–		–		–		13,776,971		–			–			–		13,776,971
Foreign exchange translation		–		–		–		–		–			284,520			–		284,520
Issuance of stock related to stock option exercised		47,291		47		55,943		–		–			–			–		55,990
Compensation expense related to stock option granted		–		–		184,229		–		–			–			–		184,229
Sales of treasury stock		923,078		–		5,041,422		–		958,586			–			–		6,000,008
Comprehensive income attributable to non-controlling interest		–		–		–		–		–			–			376,301		376,301
Balance – December 31, 2020 (unaudited)		11,576,281	$	14,054	$	12,756,959	$	31,805,030	$	(3,554,893	)	$	(365,906	)	$	1,158,316	$	41,813,560
Net income attributable to Parent Company		–		–		–		3,938,553		–			–			–		3,938,553
Foreign exchange translation		–		–		–		–		–			(20,255	)		–		(20,255	)
Issuance of stock related to stock option exercised		14,000		14		18,746		–		–			–			–		18,760
Compensation expense related to stock option granted		–		–		97,887		–		–			–			–		97,887
Comprehensive income attributable to non-controlling interest		–		–		–		–		–			–			258,245		258,245
Balance – March 31, 2021 (unaudited)		11,590,281	$	14,068	$	12,873,592	$	35,743,583	$	(3,554,893	)	$	(386,161	)	$	1,416,561	$	46,106,750

	Common Stock				Additional Paid-in		Retained		Treasury			Accumulated Other Comprehensive			Non- controlling		Total Stockholders
	Shares		Amount		Capital		Earnings		Stock			Loss			Interest		Equity
Balance at June 30, 2020		10,605,912	$	14,007	$	7,475,365	$	18,028,059	$	(4,513,479	)	$	(650,426	)	$	782,015	$	21,135,541
Net income attributable to Parent Company		–		–		–		6,920,360		–			–			–		6,920,360
Foreign exchange translation		–		–		–		–		–			66,424			–		66,424
Issuance of stock related to stock option exercised		13,000		13		17,407		–		–			–			–		17,420
Compensation expense related to stock option granted						85,987												85,987
Sales of treasury stock		923,078		–		5,041,422		–		958,586			–			–		6,000,008
Comprehensive income attributable to non-controlling interest		–		–		–		–		–			–			257,088		257,088
Balance at September 30, 2020 (unaudited)		11,541,990	$	14,020	$	12,620,181	$	24,948,419	$	(3,554,893	)	$	(584,002	)	$	1,039,103	$	34,482,828

Segment information by geographic areas
	Three Months Ended September 30,
Net sales:	2021		2020
North America	$	3,171,198	$	62,569,138
Asia		172,862		312
Totals	$	3,344,060	$	62,569,450

Schedule of receivables
	September 30, 2021		June 30, 2021
Accounts Receivable	$	1,561,747	$	2,542,429

Schedule of definite lived intangible assets
Definite lived intangible assets:	Expected Life	Average Remaining life		Gross Intangible Assets		Less Accumulated Amortization		Net Intangible Assets
Complete technology	3 years		0.3 years	$	18,397	$	16,864	$	1,533
Technology in progress	Not Applicable		–		635,782		0		635,782
Software	5 years		2.9 years		401,136		279,625		121,511
Patents	10 years		3.7 years		21,105		13,483		7,622
Certifications & licenses	3 years		1.4 years		1,072,919		649,443		423,476
Total as of September 30, 2021				$	2,149,339	$	959,415	$	1,189,924

Schedule of finite- lived intangible assets, future amortization expense
	FY2022		FY2023		FY2024		FY2025		FY2026		Thereafter
Total	$	406,199	$	341,849	$	199,660	$	148,422	$	14,192	$	79,602

Schedule of accrued liabilities
	September 30, 2021		June 30, 2021
Accrued payroll deductions owed to government entities	$	64,486	$	66,307
Accrued commission to a customer		417,567		451,898
Accrued vacation		67,480		73,900
Accrued undelivered inventory		140,000		140,000
Accrued commission for service providers		48,750		52,500
Other accrued liabilities		674		920
Total	$	738,957	$	785,525

31.1		Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2		Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1		Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (formatted in iXBRL, and included in exhibit 101).

	Franklin Wireless Corp.

	By:	/s/ OC Kim
		OC Kim President (Principal Chief Executive Officer)

	By:	/s/ David Brown
		David Brown
Dated: November 9, 2021		Acting Chief Financial Officer ~~(Principal Financial Officer)~~