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Item 7. Management’s Discussion and Analysis

2020-09-18 compared with 2012-11-05 · 333 added, 458 removed, 55 unchanged (93% of the section changed)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULTS OF OPERATIONS.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion

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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.

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 light of these risks, uncertainties and assumptions,

the forward-looking events discussed in this report might not occur.

and under the caption “Factors That May Influence Future Results of

Operations”

In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report

might not occur.

BUSINESS OVERVIEW

We are engaged in the

design, manufacture and sale of broadband high speed wireless data communication products such as third generation (“3G”)

and fourth generation (“4G”) wireless modules and modems.

We focus primarily on wireless broadband Universal Serial

Bus (“USB”) modems, which provide a flexible way for consumers to connect to wireless broadband networks from laptop

or desktop computers.

Our broadband wireless data communication products are positioned at the convergence of wireless communications,

mobile computing and the Internet, each of which we believe represents a growing market.

We market and sell our

products through two channels:

directly to wireless operators, and indirectly through strategic partners and distributors.

global customer base extends primarily from the United States to South American and Caribbean countries.

Our USB modems

are certified by Sprint, C-Spire Wireless and other wireless operators located in the United States and also by wireless operators

located in Caribbean and South American countries.

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 5G/4G wireless technology.

We have a majority

ownership position in 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 the United States to countries in the Middle East and Africa ("EMEA") and Asia.

FACTORS THAT MAY INFLUENCE FUTURE RESULTS

OF OPERATIONS

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 for our new products, (4) new customer relationships and contracts, and (4)

our ability to meet customers’

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

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 for our new products, (4) new customer relationships and contracts,

and (5) our ability to meet customers’

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

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial

statements include the accounts of the Company, a wholly-owned subsidiary, and a subsidiary with a majority voting interest of

51.8% (48.2% is owned by non-controlling interests) and 51.5% (48.5% is owned by non-controlling interests) as of June 30, 2012

and June 30, 2011, respectively, and 50.6% (49.4% was owned by non-controlling interests) prior to January, 2011.

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 subsidiaries 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 a 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 noncontrolling interest is reported

in the consolidated statement of financial position within equity, separately from the parent’s equity.

There are no shares

of the Company held by the subsidiaries as of June 30, 2012 or June 30, 2011.

Segment Reporting

Accounting Standards Codification

(“ASC”) Topic 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 management 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 geographic areas, consisting of the United States, 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:

Fiscal Year Ended June 30,

United States

Caribbean and South America

Long-lived assets, net:

CRITICAL ACCOUNTING POLICIES

Revenue Recognition

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 upcoming 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.

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.

Through June 30, 2018,

we recognized revenue in accordance with Accounting Standards Codification ("ASC") 605, “Revenue Recognition,”

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, we recognized revenues from product sales upon shipment of

the products to the customers or when the products are received by the customers in accordance with shipping or delivery terms.

We provided a warranty for one year from the shipment or delivery date, which was covered by our vendors pursuant to purchase agreements.

Any net warranty related expenditures made by us have historically not been material.

Under our sales return policy, customers

may generally return products that are under warranty for repair or replacement.

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, while prior period amounts have not

been adjusted and continue to be reported in accordance with our historic accounting under Topic 605.

We recorded no change in

retained earnings as of July 1, 2018 as a result of the cumulative impact of adopting Topic 606.

Contracts with Customers

Revenue for sales

of products and services is derived from contracts with customers.

The products and services promised in contracts primarily consist

of hot spot 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.

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.

historical averages, that provision for the year ended June 30, 2020 was not material.

Disaggregation of

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

Contract Balances

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 balances of our

trade receivables are as follows:

June 30, 2020

June 30, 2019

United States

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

Actual results could materially differ from those estimates.

Reclassifications

Certain reclassifications

have been made to prior period amounts to conform to the current period presentation.

This reclassification relates to amortization

expense associated with capitalized product development previously reported as selling, general and administrative expense that

has been reclassified to cost of goods sold for all periods presented.

The amortization expense included in cost of goods sold

for the years ended June 30, 2012 and 2011 is $716,180 and $714,082, respectively.

This reclassification does not affect previously

reported net sales, net income (loss), earnings per share, or any portion of our consolidated balance sheets or consolidated statements

of cash flow for any period presented.

Revenue Recognition

We recognize revenue in

accordance with ASC 605, “Revenue Recognition,”

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.

we recognize revenues from product sales upon shipment of the products to the customers or when the products are received by the

customers in accordance with shipping or delivery terms.

We provide a factory warranty for one year, which is covered by our vendors

under the purchase agreements.

Research and Development Costs

Costs associated with research

and development are expensed as incurred.

Research and development costs were approximately $1,360,000 and $2,450,000 for the years

ended June 30, 2012 and June 30, 2011, respectively.

Accounts Receivable

The balance of contract

assets was immaterial as we did not have a significant amount of un-invoiced receivables in the periods ended June 30, 2020 and

June 30, 2019.

Our contract liabilities,

which are included in accrued liabilities on our balance sheet, are as follows:

June 30, 2020

June 30, 2019

Undelivered products

Performance Obligations

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.

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

Our performance obligations

are satisfied at a point in time.

Revenue from products transferred to customers at a single point in time accounted for 99% of

net sales for the year ended June 30, 2020.

Revenue for non-recurring engineering projects is based on the percentage completion

of a project and accounted for 1% of net sales for the year ended June 30, 2020.

Most of our revenue that is recognized at a point

in time is for the sale of hot-spot router products.

Revenue from these contracts is recognized when the customer can 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 June 30, 2020,

our contracts do not contain any unsatisfied performance obligations, except for undelivered products.

Capitalized Product

Development Costs

Standards Codification (“ASC”) Topic 350, “Intangibles –

ASC Topic 350, “Intangibles

- Goodwill and Other”

includes software

that is part of a product or process to be sold to a customer and shall be accounted for under Subtopic 985-20 .

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

costs of product development that are capitalized once technological feasibility is determined (noted as Technology in progress

in the Intangible Assets table, in Note 2 to Notes to Financial Statements) include 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.

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 the Company’s customers.

As of June 30, 2012 and

June 30, 2011, capitalized product development costs in progress were $1,258,500 and $127,304, respectively, and these amounts

includes software that is part of a product or process to be sold to a customer and shall be 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 2 to Notes to Consolidated Financial Statements) include certifications, licenses, 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 straight-line amortization.

The amortization begins

when the products are available for general release to our customers.

As of June 30, 2020,

and June 30, 2019, capitalized product development costs in progress were $140,193 and $465,352, respectively, and these amounts

are included in intangible assets in our consolidated balance sheets.

During the year ended June 30, 2020, we incurred $343,360

in capitalized product development costs in progress and transferred $281,714 to complete technology following the completion of

certain product development efforts.

All expenses incurred before technological feasibility is reached are expensed and included

in our consolidated statements of operations.

Goodwill and Intangible

and certain intangible assets are recorded in connection with the FTI acquisition and are accounted for in accordance with ASC

Topic 805, “Business Combinations.”

Goodwill represents 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

Indefinite-lived Intangible assets and goodwill are accounted for in accordance with ASC Topic 350, “Intangibles

Goodwill and Other ”

(formerly SFAS No.

142, Goodwill and Other Intangibles ) which does not permit the

amortization of goodwill.

Rather, these items must be tested for impairment annually and when events occur or circumstances change

that would indicate the carrying amount may be impaired.

Goodwill is recorded as the excess of purchase price over the fair value

of the identifiable net assets acquired.

Our valuation methodology

for assessing impairment, using both the discounted cash flows approach and the market approach, requires management to make judgments

and assumptions based on historical experience and projections of future operating performance.

Our annual impairment review performed

on June 30, 2012 did not indicate that goodwill was impaired.

Long-lived Assets

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:

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 assets;

significant changes in the Company’s 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 is less than its carrying amount.

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:

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 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.

We tested the long-lived

assets for impairment as of June 30, 2012 by comparing the discounted cash flows of the assets to their carrying values and concluded

that, as of June 30, 2012, no impairment existed.

Deferred income tax assets

and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities that will

result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which the differences

are expected to affect taxable income.

Valuation allowances are established when necessary to reduce deferred tax assets to the

amount expected to be realized.

We have evaluated the available evidence supporting the realization of our gross deferred tax assets,

including the amount and timing of future taxable income, and have determined it is more likely than not that the assets will be

fully realized and no valuation allowance is necessary as of June 30, 2012.

As of June 30, 2012, we have federal and state net

operating loss carryforwards of approximately $4.4 million and $1.7 million, which expire through 2023 and 2017, respectively.

The utilization of net operating loss carryforwards may be subject to limitations under the provisions of the Internal Revenue

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 (loss).

Deferred income tax

assets and liabilities are recorded for differences between the financial statement and tax basis of the assets and liabilities

that will result in taxable or deductible amounts in the future based on enacted laws and rates applicable to the periods in which

the differences are expected to affect taxable income.

Valuation allowances are established when necessary to reduce deferred tax

assets to the amount expected to be realized.

As of June 30, 2020, we have federal and state net operating loss carryforwards of

approximately $1.2 million and no state net operating loss carryforwards.

Under the Tax Cuts and Jobs Act (the “Act”),

which was signed into law on December 22, 2017, the federal net operating loss recognized on or after January 1, 2018 will carry

forward indefinitely.

The federal net operating loss of $1.2 million, which was recognized on or before December 31, 2017, will

expire through 2035, and the federal net operating loss recognized on or after January 1, 2018, which will carry forward indefinitely,

The utilization of net operating loss carryforwards may be subject to limitations under provisions of the Internal Revenue

Code Section 382 and similar state provisions.

adopted the provision of ASC 740 “A pplication of the Uncertain Tax Position Provisions”

related to accounting for uncertain tax positions effective July 1, 2007, which prescribes a recognition threshold and measurement

process for recording in the financial statements, uncertain tax positions taken or expected to be taken in a tax return.

this provision, the impact of an uncertain income tax position on the income tax return must be recognized at the largest amount

that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.

Tax benefits of an uncertain tax position

will not be recognized if it has less than a 50% likelihood of being sustained based on technical merits.

Under the provision

of ASC 740 “Application of the Uncertain Tax Position Provisions”

related to accounting for uncertain tax positions,

which prescribes a recognition threshold and measurement process for recording in the financial statements, uncertain tax positions

taken or expected to be taken in a tax return, the impact of an uncertain income tax position on the income tax return must

be recognized at the largest amount that is more-likely-than-not to be sustained upon audit by the relevant taxing authority.

benefits of an uncertain tax position will not be recognized if it has less than a 50% likelihood of being sustained based on technical

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In June 2011, the Financial Accounting

Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05, Presentation of Comprehensive Income, eliminates the option

of presenting the components of other comprehensive income (OCI) as part of the statement of changes in stockholders’

The ASU instead permits an entity to present the total of comprehensive income, the components of net income, and the components

of OCI either in a single continuous statement of comprehensive income or in two separate but consecutive statements.

format, the entity is required to present each component of net income along with total net income, each component of OCI along

with the total for OCI, and a total amount for comprehensive income.

Also, the ASU requires entities to present, for either format,

reclassification adjustments for items that are reclassified from OCI to net income in the statement(s) where the components of

net income and the components of OCI are presented.

This ASU is to be applied retrospectively.

For public entities, the ASU is

effective for interim and annual periods beginning after December 15, 2011.

Early adoption is permitted, since compliance with

the amendments is already permitted.

We have adopted this guidance and note that it does not have any material impact on our consolidated

financial statements.

In September 2011, the FASB issued

ASU 2011-08, Testing Goodwill for Impairment, which permits entities to determine first whether it is necessary to apply the traditional

two-step goodwill impairment test, based on qualitative factors.

An entity also has the option to bypass the qualitative assessment

for any reporting unit in any period and proceed directly to the first step of the two-step goodwill impairment test;

may resume performing the qualitative assessment in any subsequent period.

Also under the amendments, an entity is no longer permitted

to carry forward its detailed calculation of a reporting unit’s fair value from a prior year.

The ASU also includes examples

of events and circumstances for an entity to consider in evaluating whether it is more likely than not that the fair value of a

reporting unit is less than its carrying amount, which supersede the previous examples of events and circumstances that an entity

should consider when testing goodwill for impairment between annual tests.

An entity having a reporting unit with a zero or negative

carrying amount will also consider the revised list of factors in determining whether to perform the second step of the impairment

The ASU is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December

Early adoption is permitted, including for annual and interim goodwill impairment tests performed as of a date before

September 15, 2011, if an entity’s financial statements for the most recent annual or interim period have not yet been issued.

We have adopted this guidance and note that it does not have any material impact on our consolidated financial statements.

Refer to NOTE 2 -

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES in the Consolidated Financial Statements.

RESULTS OF OPERATIONS

The following table sets

forth, for the years ended June 30, 2012, 2011 and 2010, our statements of operations including data expressed as a percentage

Year Ended June 30,

The following table

sets forth, for the years ended June 30, 2020, 2019, and 2018, our statements of operations including data expressed as a percentage

(as a percentage of sales)

Cost of goods sold

Selling, general and administrative expenses (including research and development)

Operating expenses

Income (loss) from operations

Other (loss) income, net

Other income (expense), net

Net income (loss) before income taxes

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Net income (loss)

Non-controlling interest in net loss of subsidiary

Net income (loss) attributable to parent company

YEAR ENDED JUNE 30, 2012 COMPARED TO YEAR

ENDED JUNE 30, 2011

NET SALES - Net

sales decreased by $22,247,892, or 47.8%, to $24,266,604 for the year ended June 30, 2012 from $46,514,496 for the corresponding

non-controlling interest in net income (loss) of subsidiary

Net income (loss) attributable to Parent Company stockholders

YEAR ENDED JUNE 30, 2020 COMPARED TO YEAR ENDED JUNE 30,

Net sales increased by $38,603,398, or 105.9%, to $75,072,298 for the year ended June 30, 2020 from $36,468,900 for the corresponding

period of 2019.

For the year ended June 30, 2012, net sales by geographic regions, consisting of South America and the

Caribbean, the United States, and Asia were $6,450,174 (26.6% of net sales), $13,851,066 (57.1% of net sales), and $3,965,364 (16.3%

For the year ended June 30, 2020, net sales by geographic regions, consisting of the United States, EMEA

(Europe, the Middle East and Africa) and Asia were $74,839,778 (99.7% of net sales), $0 (0.0% of net sales), and $232,520 (0.3%

of net sales), respectively.

Net sales in the South

American and Caribbean regions decreased by $4,893,347, or 43.1%, to $6,450,174 for the year ended June 30, 2012, from $11,343,521

for the corresponding period of 2011.

The decrease was primarily due to the general nature of sales in these regions,

which often fluctuate significantly from period to period due to by timing of orders placed by a relatively small number of customers.

In addition, some carrier customers in these regions are transitioning from CDMA to LTE or HSPA+ networks, which affected the quantity

of CDMA related products that were sold during the year ended June 30, 2012.

Net sales in the United States decreased by $20,948,698,

or 60.2%, to $13,851,066 for the year ended June 30, 2012, from $34,799,764 for the corresponding period of 2011.

in net sales was due to several factors, including increased competition in the dual-mode (3G and 4G) USB modem market, as well

as competition from other similar products, which negatively affected volume and price.

Sales during the year ended June 30, 2012,

were also affected by delays in launching new products.

During the year ended June 30, 2012 the Company was developing new products

that are expected to be released during the first half of fiscal 2013.

Net sales in Asia increased by $3,593,953, or 968.2%, to

$3,965,164 for the year ended June 30, 2012, from $371,211 for the corresponding period of 2011.

The increase in net sales was

primarily due to the addition of a new customer in this region which purchased production quantities of the Company’s M600

dual-mode (3G and 4G) embedded modules as well as other product and component sales generated by FTI.

GROSS PROFIT –

Gross profit decreased by $9,115,991, or 63.6%, to $5,228,258 for the year ended June 30 2012, from $14,344,249 for the corresponding

For the year ended June 30, 2019, net sales by geographic regions, consisting of the United States,

EMEA (Europe, the Middle East and Africa) and Asia were $36,217,387 (99.3% of net sales), $224,427 (0.6% of net sales) and $27,086

(0.1% of net sales), respectively.

Net sales in the United

States increased by $38,622,391, or 106.6%, to $74,839,778 for the year ended June 30, 2020, from $36,217,387 for the corresponding

period of 2019.

The decrease was primarily due to the change in net sales as discussed above.

gross profit in terms of net sales percentage was 21.5% for the year ended June 30, 2012, compared to 30.8% for the corresponding

The increase in net sales in the United States resulted primarily from increased demand for wireless connectivity

due to people working and attending school remotely.

High volume sales to school districts rapidly rolling out remote learning

programs was a significant driver for increased sales through our primary customers during the Covid-19 Pandemic period.

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.

(46% of our consolidated net sales for the year ended June 30, 2020).

Net sales in EMEA decreased

by $224,427, or 100.0%, to $0 for the year ended June 30, 2020, from $224,427 for the corresponding period of 2019.

in net sales was due to the discontinued orders for a product placed by a carrier customer in Africa compared to the corresponding

period of 2019.

The decrease in gross profit in terms of net sales percentage was due to variations in customer and

product mix, competitive selling prices and product costs which generally vary from period to period.

In addition, because certain

fixed costs relating to amortization of intangible assets are included in cost of goods sold, the gross profit for the year ending

June 30, 2012 was negatively affected by this due to lower net sales compared to the year ending June 30, 2011.

OPERATING EXPENSES

Operating expenses decreased by $1,205,504, or 13.8%, to $7,485,670 for the year ended June 30, 2012, from $8,691,174

Net sales in Asia increased by $205,434, or 105.9%, to $232,520 for the year ended June 30, 2020, from $27,086

for the corresponding period of 2019.

The decrease was primarily due to lower share-based compensation expense (a significant

portion of the value of the options previously granted was expensed in prior periods), a decrease of $576,236, research and development

expense (due to the amount of costs being expensed versus capitalized) and other items including marketing and shipping expense

(due to lower sales volumes).

Operating expenses for the year ended June 30, 2012 included $440,000 relating to the premium paid

on the repurchase of Company stock that took place on September 27, 2012.

The premium was the difference between the $1.84 paid

to repurchase the shares and $1.55 which was the market price of our shares on September 19, 2012, the effective date of the agreement

to repurchase the shares.

OTHER INCOME (LOSS),

Other income (loss), net decreased by $1,920,382 to $123,715 for the year ended June 30, 2012, from $2,044,097

The increase in net sales was primarily due to product development service revenue generated

by FTI, which typically varies from period to period.

GROSS PROFIT -

Gross profit increased by $8,784,996, or 153.1%, to $14,524,485 for the year ended June 30, 2020, from $5,739,489 for the corresponding

period of 2019.

The gross profit in terms of net sales percentage was 19.3% for the year ended June 30, 2020, compared to 15.7%

for the corresponding period of 2019.

For the year ended June 30, 2011, other income (loss), net included the payment from C-Motech

in the amount of $1,873,065, of which $1,581,457 was classified as other income.

The portion classified as other income represented

amounts owed to the Company for certain marketing funds for products previously purchased by the Company from C-Motech for the

year ended June 30, 2011.

In addition, other income (loss), net for the year ended June 30, 2011 included the gain on the sale

of property and equipment of $212,303 by our Korea-based subsidiary, FTI.

YEAR ENDED JUNE 30, 2011 COMPARED TO YEAR

ENDED JUNE 30, 2010

NET SALES - Net

sales decreased by $55,383,623, or 54.4%, to $46,514,496 for the year ended June 30, 2011 from $101,898,119 for the corresponding

The increase in gross profit was primarily due to the change in net sales as described

The increase in gross profit and gross profit in terms of net sales percentage was primarily due to a newly launched product,

with a higher selling price, as well as the product development service revenues generated by Franklin and FTI, which involve lower

costs of goods sold.

OPERATING EXPENSES

- Operating expenses decreased by $400,585, or 5.1%, to $7,446,361 for the year ended June 30, 2020, from $7,846,946 for the corresponding

period of 2019.

For the year ended June 30, 2011, net sales by geographic regions, consisting of South America and

the Caribbean, the United States, and Asia, were $11,343,521 (24.4% of net sales), $34,799,764 (74.8% of net sales) and $371,211

(0.8% of net sales), respectively.

The overall decrease in

net sales was due to several factors including increased competition in the United States in the dual-mode (3G and 4G) USB modem

market and the fact that, during the 2010 fiscal year, our largest customer was in the process of rolling out a significant portion

of its 4G (WiMAX) network, which had a favorable effect on our net sales during this period.

Net sales in the South American and

Caribbean regions increased by $8,485,296, or 296.9%, to $11,343,521 for the year ended June 30, 2011 from $2,858,225 for the

corresponding period of 2010.

The increase was due to the addition of a new customer as well as the general nature

of sales in these regions, which often fluctuate significantly from year to year due to timing of orders placed by a relatively

small number of customers.

Net sales in the United States decreased by $63,605,204, or 64.6%, to $34,799,764 for the

year ended June 30, 2011, from $98,404,968 for the corresponding period of 2010.

The decrease in net sales was due to several

factors, including increased competition in the dual-mode (3G and 4G) USB modem market, which negatively affected volume and price.

During the year ended June 30, 2010, we benefited from being the only supplier of dual-mode (CDMA Rev A/WiMAX) USB modems in North

America, which continued until approximately June, 2011 at which time a competitor entered the market.

during the 2010 fiscal year, our largest customer was in the process of rolling out a significant portion of its 4G (WiMAX) network,

which had a favorable effect on our net sales during this period.

Net sales in Asia decreased by $263,715, or 41.5%, to $371,211

Selling, general, and administrative decreased by $1,191,506 to $3,699,859 for the year ended June 30, 2020,

from $4,891,365.

The decrease in selling, general, and administrative was primarily due to the decreased payroll expense for employees

involved in selling, general, and administrative by approximately $700,000 as well as the significant decrease in shipping and

handling costs within selling, general, and administrative costs by $497,298, resulting from the positively restructured shipping

terms with a major vendor despite the increased volume of product shipments.

Research and development increased by $790,921 to

$3,746,502 for the year ended June 30, 2020, from $2,955,581.

The increase in research and development was primarily due to the

increased reimbursement in payroll expense for employees involved in research and development.

OTHER INCOME, NET

- Other income, net increased by $15,810, or 7.71%, to $220,764 for the year ended June 30, 2020, from $204,954 for the corresponding

period of 2019.

The increase was primarily due to the increased interest income earned from money market accounts and certificates

of deposit, as well as the gain from appreciation on favorable foreign currency change, which is partially offset by the decreased

product development funding received by FTI from a government entity.

YEAR ENDED JUNE 30, 2019 COMPARED TO YEAR ENDED JUNE 30,

Net sales increased by $6,403,067, or 21.3%, to $36,468,900 for the year ended June 30, 2019 from $30,065,833 for the corresponding

period of 2018.

For the year ended June 30, 2019, net sales by geographic regions, consisting of the United States, South

America and the Caribbean, EMEA (Europe, the Middle East and Africa) and Asia were $36,217,387 (99.3% of net sales), $0 (0.0% of

net sales), $224,427 (0.6% of net sales) and $27,086 (0.1% of net sales), respectively.

Net sales in the United

States increased by $6,982,376, or 23.9%, to $36,217,387 for the year ended June 30, 2019, from $29,235,011 for the corresponding

period of 2018.

The increase in net sales was primarily due to the average of 46% increased product demand from four major carrier

customers, which was increased by the favorable effect of sales that fluctuate significantly from period to period due to timing

of orders placed by several customers.

Net sales in the South American and Caribbean regions decreased by $238,970, or 100%, to

$0 for the year ended June 30, 2019, from $238,970 for the corresponding period of 2018.

The decrease in net sales was primarily due

to reduced revenue generated from engineering services for FTI, which typically vary from year to year.

GROSS PROFIT –

The decrease 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 EMEA decreased by $111,418, or 33.2%, to $224,427 for the year ended June

30, 2019, from $335,845 for the corresponding period of 2018.

The decrease in net sales was due to the discontinued orders of a

product placed by a carrier customer in Africa.

Net sales in Asia decreased by $228,921, or 89.4%, to $27,086 for the year ended

June 30, 2019, from $256,007 for the corresponding period of 2018.

The decrease in net sales was primarily due to lower component

sales generated by FTI, which typically vary from period to period in connection with its customers’

production schedule.

GROSS PROFIT -

Gross profit increased by $547,775, or 10.6%, to $5,739,489 for the year ended June 30, 2019, from $5,191,714 for the corresponding

period of 2018.

The increase was primarily due to a higher proportion of products supplied by our subsidiary FTI (vs.

third party suppliers) which, despite the decrease in net sales, resulted in an increase in gross profit.

The gross profit in terms

of net sales percentage was 30.8% for the year ended June 30, 2011, compared to 13.6% for the corresponding period of 2010.

The increase in gross profit in terms of net sales for the year ended June 30, 2011 was due to several factors including a higher

proportion of products supplied by our subsidiary FTI (vs.

third party suppliers) as well as the overall product and customer

mix, which vary from year to year.

The gross profit in terms of net sales percentage was 15.7% for the year ended June 30, 2019, compared to 17.3%

for the corresponding period of 2018.

The increase in gross profit was primarily 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 variations in customer and product mix, competitive

selling prices and product costs which generally vary from period to period and region to region.

OPERATING EXPENSES

- Operating expenses increased by $2,497,230, or 40.3%, to $8,691,174 for the year ended June 30, 2011 from $6,193,944 for the

corresponding period of 2010.

The increase was primarily due to the consolidation of the FTI expenses (which began in the

second quarter of fiscal 2010), as well as increases in expense related to the amortization of intangible assets, payroll expense

(due to headcount growth), commissions paid to third parties, research and development expense (due to the amount of costs being

capitalized), shipping and handling expense (due to a higher proportion of products supplied by FTI vs.

suppliers who generally pay most or all of the shipping costs) and share-based compensation expense (due to additional options

granted toward the end of fiscal 2010).

OTHER INCOME (LOSS),

NET - Other income (loss), net increased by $2,129,121 to $2,044,097 for the year ended June 30, 2011 from ($85,024) for the

- Operating expenses decreased by $36,638, or 0.5%, to $7,846,946 for the year ended June 30, 2019, from $7,883,584 for the corresponding

period of 2018.

For the year ended June 30, 2019, operating expenses consisted of selling, general, and administrative costs

of $4,891,365 and research and development costs of $2,955,581, respectively.

Selling, general,

and administrative costs increased by $379,797, or 8.4%, to $4,891,365 for the year ended June 30, 2019, from $4,511,568 for the

corresponding period of 2018.

The increase was primarily due to the payment from C-Motech in the amount of $1,873,065, of which

$1,581,457 was recorded as other income.

The portion was recorded as other income represented amounts owed to the Company for certain

marketing funds for products previously purchased by the Company from C-Motech.

The remainder of the increase was primarily due

to the gain on the sale of property and equipment by FTI in the amount of $212,303.

The increase in selling, general, and administrative costs was primarily due to the increase in delivery

charges by $325,303 due to the increased sales.

Research and development costs decreased by $416,435, or 12.3%, to $2,955,581 for

the year ended June 30, 2019, from $3,372,016 for the corresponding period of 2018.

The decrease in research and development costs

was primarily due to the decrease in research and development payroll expense and the related expenses from a cost reduction effort

especially for the early portion of fiscal 2019, as well as increased capitalized product development cost.

OTHER INCOME, NET

- Other income, net decreased by $127,368, or 38.33%, to $204,954 for the year ended June 30, 2019, from $332,322 for the corresponding

period of 2018.

The decrease was primarily due to the decreased product development funding received by FTI from a government entity

as the periods of the associated projects expired, which is partially offset by the increased interest income earned from the newly

opened money market accounts and the certificates of deposit.

LIQUIDITY AND CAPITAL RESOURCES

Our principal liquidity

requirements are for working capital and capital expenditures.

We fund our liquidity requirements with cash on hand and cash flow

from operations.

We continue to invest in product development and have incurred losses, but we believe we will be able

to fund our future cash requirements for operations from our cash available, operating cash flows, bank lines of credit and issuance

of equity securities for the next twelve months.

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

June 30, 2020.

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 June 30, 2020 consisted of cash and cash equivalents as well as short-term investments of $33,543,562.

believe we have sufficient available capital to cover our existing operations and obligations through at least June 30, 2020.

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 used in operating activities for the years ended June 30, 2012 and 2011 was $269,956 and $2,822,939, respectively.

The $269,956 in net cash used in operating activities for the year ended June 30, 2012 was primarily due to the increases in accounts

receivable and inventory of $6,456,811 and $812,241, respectively.

These amounts were partially offset by the increase in accounts

payable of $7, 294,570.

The increase in inventory for the year ended June 30, 2012, was due mainly to products in transit to customers.

The $2,822,939 in net cash

used in operating activities for the year ended June 30, 2011 was primarily due to the increases in accounts receivable and inventory

of $3,797,266 and $737,006 respectively, as well as decreases in accounts payable, income taxes payable, accrued liabilities and

advance payment from customers of $3,636,104, $808,176, $412,750 and $293,493 respectively, which were partially offset by the

favorable effect of net income of $4,545,529 as well as the decrease in advance payments to a vendor of $416,658.

Net cash provided by operating activities for year ended June 30, 2020 and 2019 was $22,004,304 and $775,090, respectively.

The $22,004,304 in

net cash provided by operating activities for the year ended June 30, 2020 was primarily due to the increase in accounts payable

of $36,410,741, caused by a sudden increase in Wi-Fi hotspot production, as well as our operating results (net loss adjusted for

depreciation, amortization and other non-cash charges), which were partially offset by an increase in accounts receivable of $11,855,351

as well as the increase in inventory of $10,730,663.

The $775,090 in net

cash provided by operating activities for the year ended June 30, 2019 was primarily due to the decrease in accounts receivable

of $3,852,985 as well as the decrease in inventory of $304,813, which was partially offset by the decrease in accounts payable

of $1,937,071.

INVESTING ACTIVITIES

Net cash used in investing activities for the year ended June 30, 2012 was $2,284,849, and net cash provided by investing

activities for the year ended June 30, 2011 was $164,879.

The $2,284,849 in net cash used in investing activities for the year

ended June 30, 2012 was primarily due to the capitalization of product development costs and purchases of intangible assets of

$1,412,910 and $719,727, respectively.

We capitalize product development costs because such products are expected to be sold in

future periods and provide economic benefit to the Company.

The $164,879 in net cash provided by investing activities for

the year ended June 30, 2011 was primarily due to proceeds from the sale of property and equipment of $569,328, which was partially

offset by the purchases of intangible assets and property and equipment of $157,446 and $119,699, respectively as well as capitalized

product development of $127,304.

Net cash used in investing activities for the years ended June 30, 2020 and 2019 was $794,969 and $6,250,710, respectively.

The $794,969 in net

cash used in investing activities for the year ended June 30, 2020 was primarily due to the purchases of capitalized product development,

intangible asset, and property and equipment of $343,360, $193,171 and $181,746, respectively, as well as the payments for additional

shares of a subsidiary of $75,000.

The $6,250,710 in

net cash used in investing activities for the year ended June 30, 2019 was primarily due to the payments for purchase of short-term

investments of $5,380,226 and additional shares of the subsidiary of $234,330 as well as the purchases of capitalized product development,

intangible assets, and property and equipment of $465,352, $70,034, and $100,768, respectively.

FINANCING ACTIVITIES

Net cash provided by financing activities for the year ended June 30, 2012 was $578,853, and net cash used in financing

activities for the years ended June 30, 2011 was $2,075,983.

The $578,853 in net cash provided by financing activities for the

year ended June 30, 2012 was primarily due to the proceeds from the issuance of FTI common stock to new investors of $542,603.

The $2,075,983 in net cash used in financing activities for the year ended June 30, 2011 was primarily due to the repurchase of

our Common Stock from C-Motech in the amount of $1,873,065 as well as paying off the short-term and long-term borrowings of $405,272

associated with the building and land sold by FTI, which were partially offset by the proceeds from short-term borrowings of $139,134

and the exercise of employee stock options of $63,220.

Net cash provided by financing activities for the years ended June 30, 2020 and 2019 was $520,428 and $0, respectively.

The $520,418 in net

cash provided by financing activities for the years ended June 30, 2020 was due to the cash received from a loan under the Payroll

Protection Program and the exercise of stock options of $487,300 and $33,128, respectively.

OFF-BALANCE SHEET ARRANGEMENTS

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS

The following table summarizes

our contractual obligations and commitments as of June 30, 2012, and the effect such obligations could have on our liquidity and

cash flow in future periods:

The following table

summarizes our contractual obligations and commitments as of June 30, 2020, and the effect such obligations could have on our liquidity

and cash flow in future periods:

Payments Due by June 30,

Borrowings from banks

On July 27, 2010, we entered

into a Common Stock Repurchase Agreement with C-Motech (the “Agreement”), under which we agreed to repurchase 3,370,356

shares of our Common Stock from C-Motech for $3,500,000.

A total of 1,803,684 shares were repurchased on the date of the Agreement

in exchange for non-cash consideration in the amount of $1,873,065, which represented amounts owed to the Company by C-Motech for

certain marketing funds as well as the settlement of a price dispute for products previously purchased by the Company from C-Motech.

Under the Agreement, the remaining 1,566,672 shares were to be repurchased by us upon payment of the balance, $1,626,935, on or

before December 31, 2010.

On January 28, 2011 (the

“Amendment Date”) the Agreement was amended to reflect (1) a change in the date the 1,566,672 shares are to be repurchased

from C-Motech from December 31, 2010 to March 31, 2011, and (2) a change to the non-cash consideration of $1,873,065.

for the 1,803,684 shares, we were to pay cash to C-Motech (in the same amount) for the shares, by March 31, 2011.

in a separate agreement dated January 28, 2011, C-Motech agreed to pay us $1,873,065, for amounts owed, by March 31, 2011.

purpose of these revisions was to more clearly differentiate each party’s payment obligations to the other with respect to

this transaction.

Following the Amendment Date, we paid C-Motech $1,873,065 in exchange for the 1,803,684 shares previously transferred

to us by C-Motech, and C-Motech paid us $1,873,065 for amounts owed, of which $1,581,457 was booked to other income and $291,608

was booked to cost of goods sold.

The repurchase of the remaining 1,566,672 shares has not been completed.

We have provided formal

notification to C-Motech that it is in breach of its obligations and we have also provided a demand to sell the shares back to

We have attempted to tender payment for the shares without results, and we are unable to determine whether or not this repurchase

will take place.

We leased approximately

6,070 square feet of office space in San Diego, California, at a monthly rent of $8,975, and the lease expired on August 31, 2011.

On September 1, 2011, we moved into new office space, consisting of approximately 11,318 square feet located in San Diego, California,

at a monthly rent of $16,576, and the lease expires on August 31, 2015.

In addition to monthly rent, the new lease provides for

periodic cost of living increases in the base rent.

Rent expense related to the operating leases was $186,530 and $107,704 for

the years ended June 30, 2012 and 2011, respectively.

Our facility is covered by an appropriate level of insurance and we believe

it to be suitable for our use and adequate for our present needs.

Our subsidiary, FTI, leases

approximately 10,000 square feet of office space in Seoul, Korea, at a monthly rent of approximately $7,840, and the lease expires

on September 1, 2013.

In addition to monthly rent, the lease provides for periodic cost of living increases in the base rent and

payment of common area costs.

The facility is covered by an appropriate level of insurance and we believe it to be suitable for

our use and adequate for our present needs.

Rent expense related to the operating lease was approximately $94,000 and $77,500 for

the years ended June 30, 2012 and 2011, respectively.

We lease two corporate

housing facilities for our vendors and employees who travel, under non-cancelable operating leases that expire on September 30,

2012 and July 31, 2013.

Rent expense related to the operating leases was $19,408 and $25,422 for the years ended June 30, 2012

and 2011, respectively.

OFF-BALANCE SHEET ARRANGEMENTS

Refer to ITEM 2.

FUTURE LIQUIDITY AND CAPITAL REQUIREMENTS

the next twelve months, we may incur in excess of $5.0 million for capital expenditures, software licenses and for testing and

certifying new products.

On September 27, 2012, we completed the repurchase of 1,538,602 shares of our Common Stock from

the members of the Sherman Group for a purchase price of $2,831,028, or $1.84 per share.

For the next twelve

months, we may require in excess of $5 million for capital expenditures, software licenses and for testing and certifying new products.

We believe we will be

1 unchanged sentence

issuance of equity securities.

We believe these sources of funds will be sufficient to continue our operations and planned

capital expenditures.

However, we will be required to refinance or restructure our indebtedness or raise additional

debt or equity capital if we are unable to generate sufficient cash flow from operations to fund the continued expansion of our

sales and to satisfy the related working capital requirements for the next twelve months.

Our ability to satisfy such

obligations also depends upon our future performance, which in turn is subject to general economic conditions and regional risks,

and to financial, business and other factors affecting our operations, including factors beyond our control.

“Risk Factors”

We believe these sources of funds will be sufficient to continue our operations and planned capital

expenditures.

However, we will be required to raise additional debt or equity capital if we are unable to generate sufficient cash

flow from operations to fund the expansion of our sales and to satisfy the related working capital requirements for the next twelve

Our ability to satisfy such obligations also depends upon our future performance, which in turn is subject to general economic

conditions and regional risks, and to financial, business and other factors affecting our operations, including factors beyond

See Item 1A, “Risk Factors”

included in this report.

If we are unable to generate

sufficient cash flow from operations to meet our obligations and commitments, we will be required to refinance or restructure our

indebtedness or raise additional debt or equity capital.

Additionally, we may be required to sell material assets or operations

or delay or forego expansion opportunities.

We might not be able to effect these alternative strategies on satisfactory terms,

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK.

If we are unable to

generate sufficient cash flow from operations to meet our obligations and commitments, we will be required to raise additional

debt or equity capital.

Additionally, we may be required to sell material assets or operations or delay or forego expansion opportunities.

We might not be able to effect these alternative strategies to raise funds including credit lines and loans, on satisfactory terms,

QUANTITATIVE AND

QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

7 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K/A

Item 7. Management’s Discussion and Analysis