What changed in this filing

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Item 9A. Controls and Procedures

2020-09-18 compared with 2012-11-05 · 968 added, 1063 removed, 340 unchanged (86% of the section changed)

CONTROLS AND PROCEDURES

E VALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

The Company’s President

and Acting Chief Financial Officer has concluded, based on an evaluation of the Company’s disclosure controls and procedures

(as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15(d)-15(e)), that such disclosure controls and procedures

were effective as of the end of the period covered by this report.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Our management has

evaluated, under the supervision and with the participation of OC Kim, 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 Acting Chief Financial Officer

has concluded that, as of June 30, 2020, 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.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

have been no significant changes in our internal controls over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f)

under the Exchange Act)or in other factors that materially affected or are reasonably likely to materially affect our internal

controls and procedures over financial reporting during the fiscal year ended June 30, 2012.

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 Exchange

Act or in other factors that materially affected or are reasonably likely to materially affect our internal controls and procedures

over financial reporting during the fourth quarter of the fiscal year ended June 30, 2020.

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL

management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f)

Our management is

responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f)

and 15d-15(f) under the Exchange Act).

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procedures may deteriorate.

evaluate the effectiveness of internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley

Act, management conducted an assessment, including testing, using the criteria in InternalControl—Integrated Framework, issued

To evaluate the effectiveness

of internal controls over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, management conducted

an assessment, using the criteria in Internal Control-Integrated Framework, (specifically the 2013 framework) issued

by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on their assessment, management concluded

that we maintained effective internal control over financial reporting as of June 30, 2012.

annual report does not include an attestation report from our independent registered public accounting firm regarding internal

control over financial reporting.

Management's report was not subject to attestation by our registered public accounting firm pursuant

to Sarbanes-Oxley Rule 404(c).

Based on its assessment, management concluded that

we maintained effective internal control over financial reporting as of June 30, 2020.

This annual report

does not include an attestation report from our independent registered public accounting firm regarding internal control over financial

Management's report was not subject to attestation by our registered public accounting firm pursuant to the rules adopted

under Section 404(c) of the Sarbanes-Oxley Act.

OTHER INFORMATION

On September 9, 2020, we entered into Subscription

Agreements with two accredited investors (the “Investors”), pursuant to which we sold and issued to the Investors

an aggregate of 923,078 shares of Common Stock at a purchase price of $6.50 per share.

The $6,000,007 aggregate purchase price

for these Units was paid in cash to the Company.

DIRECTORS, EXECUTIVE

OFFICERS AND CORPORATE GOVERNANCE

Set forth below are the

names, ages, titles and present and past positions of our directors and executive officers as of June 30, 2012.

President, Acting Chief Financial Officer, Secretary and a Director

Set forth below are

the names, ages, titles and present and past positions of our directors and executive officers as of June 30, 2020.

President, Secretary and a Director

Chairman of the Board and a Director

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Johnathan Chee

Benjamin Chung

Chief Operating Officer

OC Kim has been our

President, Acting Chief Financial Officer, Secretary and a director since September 2003.

OC Kim has been

our President, Secretary and a director since September 2003 and served as our Acting Chief Financial Officer until March 2014

and reassumed the role in April 2018.

Prior to joining Franklin Wireless, Mr.

Kim was the CEO and President of Accetio Inc., a company he founded in April 2001 that developed cell phones and modules for the

telecommunications industry.

In September 2003, Accetio Inc.

Kim was the CEO and President of Accetio Inc., a

company he founded in April 2001 that developed cell phones and modules for the telecommunications industry.

In September 2003,

merged with Franklin Telecommunications Corp.

and was renamed Franklin

Wireless Corp.

and was renamed Franklin Wireless Corp.

Prior to this, Mr.

Kim was the Chief Operating Officer of Axesstel Inc., a pioneering developer of CDMA Wireless

Local Loop Products.

Before joining Axesstel, he was the president of the U.S.

sales office for Kolon Data Communications Co.,

Ltd., one of Korea's most prominent technology conglomerates.

Chief Operating Officer of Axesstel Inc., a pioneering developer of CDMA Wireless Local Loop Products.

Before joining Axesstel,

he was the president of the U.S.

sales office for Kolon Data Communications Co., Ltd., one of Korea's most prominent technology

conglomerates.

While at Kolon Data Communications, Mr.

Kim helped introduce the

first generation of CDMA phones to the Korean market through his work with Qualcomm Personal Electronics (QPE), a joint venture

between Qualcomm Incorporated and Sony Electronics Inc.

Kim helped introduce the first generation of CDMA phones to the Korean market

through his work with Qualcomm Personal Electronics (QPE), a joint venture between Qualcomm Incorporated and Sony Electronics Inc.

Kim began his career at Lucky Goldstar (LG) Electronics.

than 24 years of experience in sales, marketing, and operations management in the telecommunications and information systems industries.

He has more than 29 years of experience in sales, marketing, and operations

management in the telecommunications and information systems industries.

He earned a B.A.

from Sogang University in Korea.

We believe Mr.

qualifications to serve as a director of the Company include his extensive business, operational and management experience in the

wireless industry, including his current position as the Company’s President.

In addition, his knowledge of the Company’s

business, products, strategic relationships and future opportunities is of great value to the Company.

Gary Nelson has been

a director since September 2003.

Kim’s qualifications to serve as a director of the Company include his extensive business, operational and management

experience in the wireless industry, including his current position as the Company’s President.

In addition, his knowledge

of the Company’s business, products, strategic relationships and future opportunities is of great value to the Company.

Nelson has been a director since September 2003.

Nelson was an early investor in Franklin Telecommunications Corp.

in the 1980’s and

served as a director from 2001 up until the company’s merger with Accetio Inc.

in September 2003, at which time the company

was renamed Franklin Wireless Corp.

in the 1980’s and served as a director from 2001 up until the Company’s merger with Accetio Inc.

2003, at which time the Company was renamed Franklin Wireless Corp.

Following the merger, Mr.

Nelson became a director and ultimately Chairman of the Board of

Franklin Wireless Corp.

He is co-founder and current President of Churchill Mortgage Corporation, an income property mortgage banking

firm based in Los Angeles, California, which is a loan correspondent for major life insurance companies and other financial institutions.

The Churchill portfolio consists of approximately $2 billion in loans.

Nelson became a director and

ultimately Chairman of the Board of Franklin Wireless Corp.

He was co-founder and President of Churchill Mortgage

Corporation, an income property mortgage banking firm based in Los Angeles, California, which was a loan correspondent for

major life insurance companies and other financial institutions.

In addition, Mr.

Nelson is the Chief Operating Office of

Churchill Mortgage Capital, which is the loan origination arm of Churchill Mortgage Corporation.

Nelson’s prior experience

includes various marketing positions with Control Data Corporation and design engineering positions with North American Aviation

where he worked on the Apollo Project.

Nelson was the Chief Operating Officer of

Churchill Mortgage Capital, which was the loan origination arm of Churchill Mortgage Corporation.

Nelson’s prior

experience includes various marketing positions with Control Data Corporation and design engineering positions with North

American Aviation where he worked on the Apollo Project.

He holds a B.S.

in Mechanical Engineering from Kansas State University and an

MBA from the University of Southern California.

in Mechanical Engineering from Kansas State

University and an MBA from the University of Southern California.

We believe that Mr.

Nelson’s

qualifications to serve as a director of the Company include his many years of business, operational and management experience

including his current position as President of Churchill Mortgage Corporation.

Nelson’s qualifications to

serve as a director of the Company include his many years of business, operational and management experience including his

previous position as President of Churchill Mortgage Corporation.

In addition, Mr.

Nelson has served as

a director of the Company for nine years, and brings a valuable historical perspective on the development of the Company’s

business and its leadership.

Nelson has served as a director

of the Company for 14 years, and brings a valuable historical perspective on the development of the Company’s business

and its leadership.

Joon Won Jyoung has

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From 1992 to 1996, he served as President of Sneakers Classic Ltd.,

and from 1987 to 1991, he was Chairman of Empire State Bank in New York.

From 1972 to 1982, he was Chairman of Downtown

Mart, a distribution company in New York and Virginia.

and from 1987 to 1991, he was Chairman of Empire State Bank in New York from 1972 to 1982, he was Chairman of Downtown Mart,

a distribution company in New York and Virginia.

He holds a B.S.

in Mathematics from Seoul National University and an M.S.

in Statistics from the University of Connecticut.

in Statistics

from the University of Connecticut.

We believe Mr.

Jyoung’s

qualifications to serve as a director of the Company include his extensive management experience in a diverse range of industries

as well as his broad experience in international business matters.

Jyoung’s background and experience allow

him to provide the Company’s Board of Directors with valuable knowledge and insight.

Jyoung’s qualifications to serve as a director of the Company include

his extensive management experience in a diverse range of industries as well as his broad experience in international business

Johnathan Chee has

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We believe Mr.

qualifications to serve as a director of the Company include his experience as a business attorney that allow him to provide the

Company’s Board of Directors with valuable knowledge of legal matters that may affect the Company.

Benjamin Chung has been

a director since November 2011.

He is a Certified Public Accountant and an experienced finance and accounting executive whose client

base includes several telecommunications companies.

He is currently a Partner in the accounting firm of Simon & Edward, LLP.

Between September 2010 and July 2011 he served as International Controller for American Apparel, Inc., a publicly traded company.

He served as an Audit Senior Manager in the accounting firm of BDO USA, LLP from October 2007 to August 2010 and completed an 18

month international rotation at BDO Daejoo Korea where he was promoted to an Audit Partner.

Prior to BDO, he was the Director of

Internal Audit for Big 5 Sporting Goods Corporation, a publicly traded company, from January 2006 to October 2007.

in Business Administration from California State Polytechnic University, Pomona.

We believe Mr.

Chung’s

qualifications to serve as a director of the Company include his experience as a certified public accountant and as controller

for public companies, which will allow him to provide the Company’s Board of Directors with valuable knowledge of financial

and accounting matters that may affect the Company.

Chee’s qualifications to serve as a director of the Company

include his experience as a business attorney that allow him to provide the Company’s Board of Directors with valuable knowledge

of legal matters that may affect the Company.

Heidy Chow is a Certified

Public Accountant and an experienced finance and accounting executive whose client base includes several IT companies.

is an Assurance Partner of The Pun Group, LLP and has over fifteen (15) years of combined experience in auditing, consulting and

Chow’s career in public accounting was spent primarily with the National firms of RSM US and Ernst & Young,

and regional firms where she has specialized in corporate accounting and auditing services.

She supervises engagement teams in

areas of designing and planning audits in accordance with the AICPA Generally Accepted Auditing Standards and Public Company Accounting

Oversight Board (PCAOB) standards.

In addition, she often serves as Contract Chief Financial Officer for privately held small and

middle market companies.

She holds a B.S.

in Accounting from California State Polytechnic University, Pomona.

(David) Lee has

been the Chief Operating Officer since September 2008.

Lee has eighteen years of upper level management experience in telecommunications,

been our Chief Operating Officer since September 2008.

Lee has 23 years of upper level management experience in telecommunications,

including experience in the cellular telephone business in the U.S.

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he served as Controller and Director of International Sales for Focus Wireless in Chicago.

We believe Mr.

qualifications to serve as the Chief Operating Officer of the Company include his extensive business, operational, and sales experience

in the wireless industry.

Lee’s background and experience allow him to provide the Company with valuable knowledge and

COMPLIANCE WITH SECTION 16(A) OF EXCHANGE

Section 16(a) of the Securities

Exchange Act of 1934 requires officers and directors, and persons who own more than ten percent of our equity securities, to file

reports of ownership and changes in ownership with the Securities and Exchange Commission (the "Commission").

directors and greater than regulations to furnish us with copies of all forms they file pursuant to Section 16(a).

on our review of the copies of such forms it received and written representations from reporting persons required to file reports

under Section 16(a), to our knowledge all of the Section 16(a) filing requirements applicable to such persons with respect to fiscal

2012 were complied with.

Section 16(a) of the

Securities Exchange Act of 1934 requires officers and directors, and persons who own more than ten percent of our equity securities,

to file reports of ownership and changes in ownership with the Securities and Exchange Commission.

Officers, directors and greater

than regulations to furnish us with copies of all forms they file pursuant to Section 16(a).

Based solely on our review of the

copies of such forms it received and written representations from reporting persons required to file reports under Section 16(a),

to our knowledge all of the Section 16(a) filing requirements applicable to such persons with respect to fiscal 2019 were complied

CODE OF ETHICS

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During fiscal 2020 the

Board of Directors held seven meetings.

Each director attended all of the meetings except for Messrs.

Jyoung and Chung, who each

attended four of the seven meetings.

With respect to Mr.

Chung, one of the meetings took place prior to his appointment to the

Board of Directors.

The Board of Directors has an Audit Committee made up of Messrs.

Chung (committee chair) and Nelson and a Compensation

Committee made up of Messrs.

Board of Directors held six meetings.

Each director attended 100% of the meetings of the Board, except for Joon Won Jyoung, who

attended none of the meetings.

The Board of Directors has an Audit Committee made up of Heidy Chow (committee chair) and Gary Nelson

and a Compensation Committee made up of Messrs.

Nelson (committee chair) and Chee.

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EXECUTIVE COMPENSATION

The following table sets

forth all compensation paid or accrued by us for the years ended June 30, 2012 and 2011 to our President and Acting Chief Financial

Officer and our Chief Operating Officer (The "Named Executive Officers").

The following table

sets forth all compensation paid or accrued by us for the years ended June 30, 2020 and 2019 to our President, Chief Operating

Officer and Chief Financial Officer (The "Named Executive Officers").

Name and Principal Position

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All Other Compensation

OC Kim, President and Acting Chief Financial

(David) Lee, Chief Operating

(1) Represents

the dollar amount recognized for financial statement report purposes with respect to the fiscal year in accordance with ASC 718

“Compensation –

Stock Compensation”.

(2) Represents the dollar amount recognized for an additional

compensation cost for the incremental value of the new options measured as the excess of the fair value over the original options

immediately before its terms are modified.

Please see "NOTE 12.

LONG-TERM INCENTIVE PLAN AWARDS,"

to our financial statements

included in this report for the relevant assumptions used to determine the valuation of our option awards.

OC Kim, President and

Acting Financial Officer

Chief Operating Officer

Outstanding Equity Awards at Fiscal Year-End

The following table presents

the outstanding equity awards held by each of the Named Executive Officers as of June 30, 2012.

The following table

presents the outstanding equity awards held by each of the Named Executive Officers as of June 30, 2020.

The only outstanding

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No options were granted to the Named Executive Officers during the 2020 fiscal year.

Most of options granted to our Named Executive Officers during the 2010 fiscal year vest over a one year period and have ten-year

terms, subject to earlier termination on the occurrence of certain events related to termination of employment.

the full vesting of options is accelerated if there is a change in control of the Company.

previously granted to our Named Executive Officers vest over periods ranging from one to three years and are subject to early termination

on the occurrence of certain events related to termination of employment.

In addition, the full vesting of options is accelerated

if there is a change in control of the Company.

Options Awards

of Shares that

(1) The option vests and is exercisable in full on the first anniversary of the date of the grant and

has a five-year term.

On June 15, 2012, the option previously granted on April 19, 2010 for 200,000 shares with an exercise price

of $2.07 per share was canceled and a new option was granted for 200,000 shares with an exercise price of $1.47 per share.

(2) The option vests and is exercisable in full on the first anniversary of the date of the grant

and has a four-year term.

(3) The option vests and is exercisable in full on the first anniversary of the date of the grant and

has a ten-year term.

On June 15, 2012, the option previously granted on April 19, 2010 for 100,000 shares with an exercise price

of $2.07 per share was canceled and a new option was granted for 100,000 shares with an exercise price of $1.34 per share.

(4) The option vests and is exercisable over two years as follows, and has a five-year term:

The option vests and is exercisable in full on the first anniversary of the date of the grant and has a ten-year term.

The option vests and is exercisable over two years as follows:

50% of the shares underlying the option vest on the first anniversary of the date of the grant.

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25% of the shares underlying the option vest on the second anniversary of the date of the grant.

(5) The options vest and are exercisable in full on the first anniversary of the date of grant and have a five-year term.

The option originally had a five-year term

and an expiration date of June 11, 2014.

On June 10, 2014, the option was modified to extend the term an additional five years

to June 11, 2019.

On June 11, 2019, the option was again modified to extend the term an additional three years to June 15, 2022.

Director Compensation

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for reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors.

There is no established policy

for the payment of fees or other compensation to any of the members of our Board of Directors.

During fiscal 2012, 120,000 shares

of non-qualified stock options were granted to our directors which vest over two years and have five-year terms.

The following

table presents the outstanding equity awards held by each of the named directors as of June 30, 2012.

Options Awards

of Shares that

Employee directors do not receive

any cash compensation for services as directors and have not received any equity compensation designated for such services.

of the Board of Directors who are not employees may receive stock option grants as consideration for their board service from time

to time, although there is no established policy for such stock option grants.

Fiscal 2020 Director

Fee Earned or

Joon Won Jyoung

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Benjamin Chung

(1) The options vest and are exercisable in full on the six month anniversary of the date of the grant

and have a five-year term.

(2) The options vest and are exercisable over two years as follows, and have a five-year term:

50% of the shares underlying the option vest on the one year anniversary of the date

of the grant.

50% of the shares underlying the option vest on the two year anniversary of the date

of the grant.

Heidy Chow (2)

Directors are compensated a base rate of $10,000 annually, which is prorated based upon board meeting attendance.

Bonuses may be awarded when the business has performed exceptionally well as determined by the Board of Directors.

This year the Board of Directors approved bonuses of $2,500 each to Gary Nelson, Jonathan Chee, and Heidy Chow.

On December 30, 2019, the Board of Directors appointed Ms.

Heidy Chow to the Board of Directors to replace Mr.

Benjamin Chung.

Chow was also appointed to the Audit Committee of the Board of Directors

There were no outstanding

equity awards held by any of the non-officer directors as of June 30, 2020.

EMPLOYMENT CONTRACTS

On September 21, 2009 we

entered into Change of Control Agreements with OC Kim, our President and Acting Chief Financial Officer, Yun J.

(David) Lee, our

Chief Operating Officer, and Yong Bae Won, our Vice President, Engineering.

Each Change of Control Agreement provides for a lump

sum payment to the officer in case of a change of control of the Company.

The term includes the acquisition of 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 the Company's outstanding Common Stock, or a liquidation

or dissolution of the Company or sale of substantially all of the Company's assets.

The Change of Control Agreement

Kim is for three years and calls for a payment of $5 million upon a change of control;

the agreement with Mr.

two years and calls for a payment of $2 million upon a change of control;

and the agreement with Mr.

Won is for two years and calls

for a payment of $1 million upon a change of control.

On September 21, 2009,

the Board of Directors approved extending the Change of Control Agreements with OC Kim, our President

and Acting Chief Financial Officer, Yun J.

(David) Lee, our Chief Operating Officer, and Yong Bae Won, our Vice President, Engineering

for an additional three years.

Following this approval, the Change of Control Agreement with Mr.

Kim will expire on September 21,

2015 and the Change of Control Agreements with Messrs.

Lee and Won will expire on September 21, 2014.

we entered into Change of Control Agreements with OC Kim, our President, and Yun J.

(David) Lee, our Chief Operating Officer.

Change of Control Agreement provides for a lump sum payment to the officer in case of a change of control of the Company.

includes the acquisition of 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 the Company's

outstanding Common Stock, or a liquidation or dissolution of the Company or sale of substantially all of 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 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.

Lee through September 30, 2021.

COMPENSATION DISCUSSION AND ANALYSIS

1 unchanged sentence

We compensate our executive officers through a mix of base salary, incentive compensation and stock options.

Our compensation

policies are designed to be competitive with comparable employers and to align management’s incentives with both near term

and long-term interests of our stockholders.

We use informal methods of benchmarking our executive compensation, based on the experience

of our directors or, in some cases, studies of industry standards.

Our compensation is negotiated on a case by case basis, with

attention being given to the amount of compensation necessary to make a competitive offer and the relative compensation among our

executive officers.

Our compensation policies

are designed to be competitive with comparable employers and to align management’s incentives with both near-term and long-term

interests of our stockholders.

We use informal methods of benchmarking our executive compensation, based on the experience of our

directors or, in some cases, studies of industry standards.

Our compensation is negotiated on a case by case basis, with attention

being given to the amount of compensation necessary to make a competitive offer and the relative compensation among our executive

BASE SALARIES

4 unchanged sentences

We maintain a bonus plan

which provides our executive officers and non-executive officers the ability to earn cash bonuses based on the achievement of performance

The performance targets are set annually by the Board of Directors, and bonuses are awarded to executive officers and

non-executive officers on a quarterly basis.

The actual amount of incentive compensation paid to executive officers and non-executive

officers is in the sole discretion of the Board of Directors.

For fiscal 2012, the performance targets were based on achieving

revenue and operating income targets.

which provides our executive officers the ability to earn cash bonuses based on the achievement of performance targets.

The performance

targets are set by the Board of Directors, and our executive officers are eligible to receive bonuses on a quarterly basis.

actual amount of incentive compensation paid to our executive officers is in the sole discretion of the Board of Directors.

SEVERANCE BENEFITS

5 unchanged sentences

- We do not maintain any retirement plans.

DIRECTOR COMPENSATION

- Our Directors are reimbursed for reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors.

During fiscal 2012, 120,000 shares of non-qualified stock options were granted to our directors which vest over two years and have

five-year terms.

There is no established policy for the payment of fees or other compensation to any of the members of our

Board of Directors.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets

forth certain information regarding the beneficial ownership of our Common Stock as of June 30, 2012 by each director and executive

officer of the Company, each person known to us to be the beneficial owner of more than 5% of the outstanding Common Stock, and

all directors and executive officers of the Company as a group.

Except as otherwise indicated below, each person has sole voting

and investment power with respect to the shares owned, subject to applicable community property laws.

SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table

sets forth certain information regarding the beneficial ownership of our Common Stock as of September 17, 2020 by each director

and executive officer of the Company, each person known to us to be the beneficial owner of more than 5% of the outstanding Common

Stock, and all directors and executive officers of the Company as a group.

Except as otherwise indicated below, each person has

sole voting and investment power with respect to the shares owned, subject to applicable community property laws.

Shares Beneficially Owned

Name and Address

6205 Lusk Blvd., San Diego, CA 92121

C-Motech Co.Ltd

1321-1Seocho-Dong, Seocho-Gu, Seoul, Korea

Joon Won Jyoung

6205 Lusk Blvd., San Diego, CA 92121

9707 Waples Street, Suite 150, San Diego, CA 92121

Johnathan Chee

6205 Lusk Blvd., San Diego, CA 92121

Sherman Capital Group LLC

Happy Valley Road, Suite 141-601

Glendale, Arizona 85310

Steven Sherman

Happy Valley Road, Suite 141-601

Glendale, Arizona 85310

212 Vaccaro Drive

Cresskill, New Jersey 07626

Baltimore, Maryland 21202

4550 Gordon Drive

Naples, Florida 34102

9707 Waples Street, Suite 150, San Diego, CA 92121

805 Third Ave., 15 th Floor, New York, NY 10022

Kennedy Capital Management, Inc.

10829 Olive Blvd., St.

Louis, MO 63141

All directors and executive officers as a group

(1) Based solely on a Schedule 13D dated March 2, 2012, which indicates that Mr.

Sherman has sole dispositive

and voting power over the shares of the Company owned by Sherman Capital Group.

(2) Based solely on a Schedule 13D dated March 2, 2012, which indicates that Sherman Capital Group,

Karen Singer, David S.

Oros and Lloyd I.

Miller III are acting as a “group”

for purposes of Rule 13d-5(b)(1) of the

Securities Exchange Act of 1934, as amended, and each may be deemed to beneficially own the shares owned by the others in the group.

Since the four persons in the group own, in aggregate, 1,538,602 shares, or 12.95% of the outstanding shares, they are each included

in this table.

(3) Based solely on a Schedule 13D dated March 2, 2012, which indicates that Mr.

Miller may be deemed

to beneficially own 314,900 shares of which 50,000 shares are owned of record by Trust C and 264,900 shares are owned of record

by Milfam NG.

(4) The shares owned by C-Motech Co.

are the subject of a legal dispute between C-Motech and third

parties relating to the ownership of these shares.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND

DIRECTOR INDEPENDENCE.

purchased wireless data products in the amount of $2,087,467 and $6,985,394 from C-Motech, for

the years ended June 30, 2012 and 2011, and had related accounts payable of $0 as of June 30, 2012 and 2011.

30, 2012, C-Motech owns 1,566,672 shares, or 13.2%, of our Common Stock.

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.

As of June 30, 2012, C-Motech owes us approximately

$84,000, relating to the defense of a patent infringement claim.

PRINCIPAL ACCOUNTING FEES AND SERVICES.

Based solely on a Schedule 13G dated February 14, 2020, which indicates that Mr.

Packer may be deemed to beneficially own 1,189,867 shares.

With respect to these shares, Mr.

Packer has shared voting power and shared dispositive power with Globis Capital Partners, L.P., Globis Capital Advisors, L.L.C., Globis Overseas Fund, Ltd., Globis Capital Management, L.P.

and Globis Capital, L.L.C.

Based solely on a Schedule 13G

dated February 12, 2019, which indicates that Kennedy Capital Management, Inc.

may be deemed to beneficially own 1,050,202 shares.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS,

AND DIRECTOR INDEPENDENCE.

PRINCIPAL ACCOUNTANT FEES AND

The aggregate fees billed

for the two most recently completed fiscal periods for the audit of our annual financial statements and services normally provided

by the independent registered public accounting firm for this fiscal period were as follows:

In the above table, "audit

are fees billed by our external auditor for services provided in auditing our company's annual financial statements

for the subject year.

The fees set forth on the foregoing relate to the audit as of and for the year ended June

30, 2012 and 2011, which were performed by BDO USA, LLP.

for the most recently completed fiscal period for the audit of our annual financial statements and services normally provided by

the independent registered public accounting firm for this fiscal period were as follows:

In the above table,

"audit fees"

are fees billed by our external auditor for services provided in auditing our company's annual financial

statements for the subject year.

The fees set forth on the foregoing table relate to the audit as of and for the years ended June

30, 2020 and 2019, which was performed by Haskell & White LLP.

All of the services described above were approved in advance

by the Board of Directors.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

Index to the financial statements

by the Board of Directors or the Company's Audit Committee.

EXHIBITS, FINANCIAL STATEMENT

Index to financial statements

The following

Exhibits are files as part of, or incorporated by reference into, this Report on Form 10-K:

Articles of Merger and Agreement and Plan of Reorganization, filed

January 2, 2008 with the Nevada Secretary of State (1)

Articles of Incorporation of Franklin Wireless

Amended and Restated Bylaws of Franklin Wireless Corp.(5)

Co-Development, Co-Ownership and Supply Agreement, dated January 5, 2005 between the Company and C-Motech Co., Ltd.

Lease, dated August 12, 2011, between the Company and EJMC, Inc.,

a California corporation.

Employment Agreement, dated September 21, 2009,

between Franklin Wireless Corp.

Articles of Merger and Agreement and Plan of Reorganization, filed January 2, 2008 with the Nevada Secretary of State (1)

Articles of Incorporation of Franklin Wireless Corp.

Amended and Restated Bylaws of Franklin

Wireless Corp.

Description of Securities

Lease, dated August 12, 2011, between the Company and EJMC, Inc., a California corporation (4)

Employment Agreement, dated September 21, 2009, between Franklin Wireless Corp.

and OC Kim (3)

Change of Control Agreement, dated September

21, 2009, between Franklin Wireless Corp.

Change of Control Agreement, dated September 21, 2009, between Franklin Wireless Corp.

and OC Kim (3)

Change of Control Agreement, dated September

21, 2009, between Franklin Wireless Corp.

Change of Control Agreement, dated September 21, 2009, between Franklin Wireless Corp.

and David Lee.

Common Stock Repurchase Agreement between Franklin Wireless Corp.

and C-Motech Co., dated July 27, 2010.

Lease, dated September 9, 2015, between the Company and Hunsaker & Associates San Diego, Inc., a California corporation (5)

Common Stock Purchase Agreement, dated August 18, 2020, between Franklin Wireless Corp.

and Top Intercube Co., Ltd.

Common Stock Purchase Agreement, dated August 18, 2020, between Franklin Wireless Corp.

and Partron Co., Ltd.

Code of Ethics (2)

Certificate of Chief Executive Officer Acting

Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

Certificate of Chief Executive Officer and

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

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

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

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

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

XBRL Instance Document

4 unchanged sentences

XBRL Presentation Linkbase Document

* Pursuant to Rule 406T of Regulation S-T, the interactive data

files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11

or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act

of 1934, as amended, and otherwise are not subject to liability under those sections.

(1) Incorporated by reference from Report on Form 10-QSB

for the quarterly period ended March 31, 2008, filed on May 14, 2008

(2) Incorporated by reference from

Annual Report on Form 10-KSB for the year ended June 30, 2005, filed on May 23, 2006

(3) Incorporated by reference from

Annual Report on Form 10-KSB for the year ended June 30, 2008, filed on September 26.

(4) Incorporated by reference from

Annual Report on Form 10-K for the year ended June 30, 2009, filed on October 13, 2009.

(5) Incorporated by reference from

Annual Report on Form 10-K for the year ended June 30, 2011, filed on September 28, 2011

(6) Incorporated by reference from

Quarterly Report on Form 10-Q for the quarter ended December 31, 2010 filed on February 14, 2011

__________________________________

(1) Incorporated by reference from Report on Form 10-QSB for

the quarterly period ended March 31, 2008, filed on May 14, 2008.

(2) Incorporated by reference from Annual Report on Form 10-K

for the year ended June 30, 2008, filed on September 26.

(3) Incorporated by reference from Annual Report on Form 10-K

for the year ended June 30, 2009, filed on October 13, 2009.

(4) Incorporated by reference from Annual Report on Form

10-K for the year ended June 30, 2011, filed on September 28, 2011.

(5) Incorporated by reference from Quarterly Report on Form

10-Q for the quarter ended September 30, 2015, filed on November 16, 2015.

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.

FORM 10-K SUMMARY .

Not applicable.

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.

Franklin Wireless Corp.

OC Kim, President

November 2, 2012

September 17, 2020

Pursuant to the requirements of the Securities

1 unchanged sentence

and on the dates indicated.

(1) Principal Executive, Financial and Accounting Officer

President, Acting Chief Financial Officer and a Director

November 2, 2012

(4) Directors

Principal Executive Officer

President and a Director

September 17, 2020

Principal Financial Officer

Acting Chief Financial Officer

September 17, 2020

/s/ GARY NELSON

Chairman of the Board of Directors

November 2, 2012

September 17, 2020

/s/ JOON WON JYOUNG

November 2, 2012

September 17, 2020

Joon Won Jyoung

/s/ JOHNATHAN CHEE

November 2, 2012

September 17, 2020

Johnathan Chee

/S/ BENJAMIN CHUNG

November 2, 2012

Benjamin Chung

/s/ HEIDY CHOW

September 17, 2020

FRANKLIN WIRELESS CORP.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED JUNE 30, 2012

FOR THE YEARS ENDED JUNE 30, 2020 and

Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of June 30,

2012 and June 30, 2011

Consolidated Statements of Operations for the Years ended June 30, 2012 and 2011

Consolidated Statements of Stockholders' Equity

and Comprehensive Income (Loss) for the Years ended

June 30, 2012 and 2011

Consolidated Balance Sheets as of June 30, 2020 and June 30, 2019

Consolidated Statements of Comprehensive Income for the Years ended June 30, 2020 and 2019

Consolidated Statements of Stockholders' Equity for the Years ended June 30, 2020 and 2019

Consolidated Statements of Cash Flows for the Years ended June 30, 2020 and 2019

Notes to Financial Statements

Notes to Consolidated Financial Statements

REPORT OF INDEPENDENT REGISTERED PUBLIC

2 unchanged sentences

Franklin Wireless Corp.

San Diego, California

Opinion on the Consolidated Financial

We have audited the accompanying consolidated

balance sheets of Franklin Wireless Corp.

and subsidiaries (the “Company”) as of June 30, 2012 and 2011 and the related

statements of operations, stockholders’

equity and comprehensive income (loss), and cash flows for each of the two years

These consolidated financial statements are the responsibility of the Company’s management.

responsibility is to express an opinion on these consolidated financial statements based on our audits.

(the “Company”) as of June 30, 2020 and 2019, and the related consolidated

statements of comprehensive income (loss), stockholders’

equity, and cash flows for each of the two years in the period ended

June 30, 2020, and the related notes (collectively, the “consolidated financial statements”).

In our opinion, the consolidated

financial statements present fairly, in all material respects, the consolidated financial position of the Company as of June 30,

2020 and 2019, and the consolidated results of its operations and its cash flows for each of the two years in the period ended

June 30, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements

are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated

financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with

the standards of the Public Company Accounting Oversight Board (United States).

Those standards require that we plan

and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material

misstatement.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control

over financial reporting.

Our audits included consideration of internal control over financial reporting as a basis

for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the

the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether

the consolidated financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required

to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of audits, we are required

to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the

effectiveness of the Company’s internal control over financial reporting.

Accordingly, we express no such opinion.

audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements,

assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation

of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial

statements referred to above present fairly, in all material respects, the consolidated financial position of Franklin Wireless

at June 30, 2012 and 2011, and the results of its consolidated operations and its cash flows for each of the two years then

ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA, LLP

San Diego, California

October 12, 2012

Our audits included performing procedures

to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing

procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and

disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant

estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

that our audits provide a reasonable basis for our opinion.

/s/ HASKELL & WHITE LLP

We have served as the Company’s auditor

Irvine, California

September 17, 2020

FRANKLIN WIRELESS CORP.

Consolidated Balance Sheets

Fiscal Years Ended June 30,

As of June 30,

Current assets:

Cash and cash equivalents

Certificates of deposit account

Accounts receivable

Loan to an employee

Other receivables, net

Inventories, net

Prepaid expenses and other current assets

Prepaid income taxes

Deferred tax assets, current

Advance payment to vendor

Advance payments to vendors

Total current assets

2 unchanged sentences

Deferred tax assets, non-current

Right of use assets

LIABILITIES AND STOCKHOLDERS' EQUITY

1 unchanged sentence

Accounts payable

Advance payments from customers

Income taxes payable

Income tax payable

Accrued liabilities

Marketing funds payable

Short-term borrowings

Lease liabilities, current

Total current liabilities

Other long-term liabilities

Lease liabilities, non-current

Notes payable, payroll protection plan loan

Total liabilities

Commitments and contingencies (Note 8)

Stockholders’

Parent Company stockholders’

Preferred stock, par value $0.001 per share, authorized 10,000,000 shares;

Preferred stock, par value

$0.001 per share, authorized 10,000,000 shares;

No preferred stock issued and outstanding as of June 30, 2020 and

Common stock, par value $0.001 per share, authorized 50,000,000 shares;

11,882,971 and 11,812,971 shares issued and

outstanding as of June 30, 2012 and 2011, respectively

10,605,912 and 10,570,203 shares issued and outstanding as of June 30, 2020 and 2019, respectively

Additional paid-in capital

Retained earnings

Treasury stock, 1,803,684 shares

Treasury stock, 3,472,286 shares as of June 30, 2020 and 2019

Accumulated other comprehensive loss

3 unchanged sentences

TOTAL LIABILITIES AND STOCKHOLDERS’

See accompanying notes to consolidated financial

See accompanying notes to consolidated financial statements.

FRANKLIN WIRELESS CORP.

Consolidated Statements of Operations

Consolidated Statements of Comprehensive

Income (loss)

Fiscal Years Ended June 30,

1 unchanged sentence

Operating expenses:

Selling, general, and administrative and R&D

Selling, general and administrative

Research and development

Total operating expenses

Income (loss) from operations

Other income (loss), net:

Other income, net:

Interest income

Gain on sale of property and equipment

Loss on disposal of property and equipment

Reimbursement of marketing fund for products previously purchased

Other income (loss), net

Total other income (loss), net

Net income (loss) before provision (benefit) for income taxes

Income from governmental subsidy

Other income, net

Total other income, net

Income (loss) before provision (benefit) for income taxes

Income tax provision (benefit)

Net income (loss)

Non-controlling interests in net income of subsidiary at 49.4%

non-controlling interests in net loss of subsidiary at 48.2%

Non-controlling interests in net loss of subsidiary at 48.2%

non-controlling interests in net income (loss) of subsidiary at 35.8%

Less non-controlling interests in net income of subsidiary at 33.7%

Net income (loss) attributable to Parent Company

$ (1,276,124 )

Basic earnings (loss) per share attributable to Parent Company stockholders

Diluted earnings (loss) per share attributable to Parent Company stockholders

Weighted average common shares outstanding –

Weighted average common shares outstanding - basic

Weighted average common shares outstanding - diluted

Comprehensive income (loss)

Net income (loss)

$ (1,473,758 )

Translation adjustments

Comprehensive income (loss)

Comprehensive loss attributable to non-controlling interest

comprehensive income (loss) attributable to non-controlling interest

Comprehensive income (loss) attributable to controlling interest

$ (1,328,943 )

See accompanying notes to consolidated financial statements.

1 unchanged sentence

Consolidated Statements of Stockholders'

Equity and Comprehensive Income (Loss)

Additional Paid-in

Comprehensive

Other Comprehensive Income

Non-controlling

Stockholders’

Balance –

- June 30, 2018

Foreign exchange translation

Total comprehensive income

Comprehensive loss attributable to non-controlling interest

Purchase of subsidiary stock

Share-based compensation

Repurchase of common stock

Cancelation of stock

Issuance of stock related to

stock options exercised

Balance –

$ (4,513,479 )

attributable to Parent Company

exchange translation

Comprehensive

loss attributable to non-controlling interest

of shares of a subsidiary

- June 30, 2019

$ (4,513,479 )

Net loss attributable to parent company

Foreign exchange translation

Total comprehensive income

Comprehensive loss attributable to non-controlling interest

Proceeds from subsidiary’s sale of stock to non-controlling shareholders

Share-based compensation

Issuance of stock related to

stock options exercised

Balance –

attributable to Parent Company

exchange translation

of stock related to stock option exercised

Comprehensive

income attributable to non-controlling interest

of shares of a subsidiary

- June 30, 2020

4 unchanged sentences

Fiscal Years Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

CASH FLOW FROM OPERATING ACTIVITIES:

Net income (loss)

Adjustments to reconcile net income to net cash from operating activities:

Gain on sales of property and equipment

Loss on disposal of property and equipment

$ (1,473,758 )

Adjustments to reconcile net income (loss) to net cash

provided by operating activities:

Amortization of intangible assets

Write off of uncollectible accounts receivable

Deferred tax assets

Share-based compensation

Disposal of intangible assets

Reserve for obsolete inventory

Deferred tax (benefit)

Amortization of right of use assets

Increase (decrease) in cash due to change in:

Accounts receivable

Loan to employee

(11,855,351 )

(10,730,663 )

Prepaid expenses and other current assets

Prepaid income taxes

Advance payment to vendor

Trade accounts payable

Income taxes payable

Accrued liabilities

Marketing funds payable

Advance payments to vendors

Accounts payable

Income tax payable

Advance payments from customers

Other liabilities

Net cash used in operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

Lease liabilities

Accrued liabilities

Net cash provided by operating activities

CASH FLOW FROM INVESTING ACTIVITIES:

Purchases of short-term investments

Purchases of shares of a subsidiary

Purchases of property and equipment

Payments for capitalized software and development costs

Payments for capitalized development costs

Purchases of intangible assets

Proceeds from sale of property and equipment

Net cash provided by (used in) investing activities

CASH FLOWS FROM FINANCING ACTIVITIES:

Repayment of short-term borrowings

Repayment of long-term borrowings

Proceeds from short-term borrowings

Repurchase of common stock

Proceeds from the exercise of employee stock options

Proceeds from subsidiary’s sale of stock to non-controlling shareholders

Net cash provided by (used in) financing activities

Effect of foreign currency translation on cash

Net cash used in investing activities

CASH FLOW FROM FINANCING ACTIVITIES:

Proceeds of payroll protection plan loan

Cash received from exercise of stock options

Net cash provided by financing activities

Effect of foreign currency translation

Net increase (decrease) in cash and cash equivalents

2 unchanged sentences

Supplemental disclosure of cash flow information:

Cash paid during the years for:

See accompanying notes to consolidated financial

Cash paid during the periods for:

Non-cash investing and financing activities:

Initial adoption of right to use assets

Initial adoption of lease liabilities

See accompanying notes to consolidated financial statements.

FRANKLIN WIRELESS CORP.

NOTES TO CONSOLIDATED FINANCIAL

NOTE 1 –

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.

Our wireless products are

based on Evolution Data Optimized technology ("EV-DO technology") of Code Division Multiple Access ("CDMA"),

High-Speed Packet Access (“HSPA”) technology of Wideband Code Division Multiple Access (“WCDMA”), Worldwide

Interoperability for Microwave Access (“WiMAX”) based on the IEEE 802.16 standard and Long Term Evolution (LTE) which

enable end users to send and receive email with large file attachments, play interactive games, receive, send and download high

resolution pictures, videos and music content .

We market our products

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

Our 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.

NOTE 1 - BUSINESS OVERVIEW

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

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING

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

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.

Non-controlling Interest in a

Consolidated Subsidiary

On January 10, 2011, we purchased

20,000 shares of our Korea-based subsidiary, Franklin Technology Inc.

(“FTI”) common stock for $26,654.

2011 (the “Effective Date”), we entered into a Convertible Bond Purchase Agreement with FTI.

Under this agreement,

we purchased a convertible bond from FTI with an original principal amount of $500,000 that bears interest at a rate of 5% per

annum (with interest payable semi-annually) and matures on July 1, 2016.

Pursuant to the terms of this agreement, upon conversion,

the bond will convert into FTI Common Stock at a price of approximately $0.55 per share .

August 11, 2011, we converted the full amount of the bond of $500,000 into 916,666 shares of FTI Common Stock at a price of approximately

Concurrent with the bond conversion, FTI raised $542,603 by issuing 853,328 shares of its common stock to new investors

at a price of approximately $0.64 per share.

As a result of these transactions, FTI’s total outstanding shares increased

by 1,769,994 shares to 1,988,660 shares.

In addition, we own 1,029,332 shares, or 51.8% of the outstanding capital stock of FTI,

with 48.2% owned by non-controlling interests.

As of June 30, 2012, the non-controlling

interest was $ 652,545 which represents a $248,329 decrease from $900,874 as of June 30, 2011.

The decrease of $248,329 in the non-controlling interest was due to the non-controlling interests in net loss of subsidiary of

$790,932 for the year ended June 30, 2012, which was partially offset by the $542,603 that FTI raised by issuing 853,328 shares

of its common stock to new investors, which took place during the first quarter of our fiscal year 2012.

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 consolidated financial

statements include the accounts of the Company and its subsidiary with a majority voting interest of 66.3% (33.7% is owned by non-controlling

interests) and 64.2% (35.8% is owned by non-controlling interests) as of June 30, 2020 and as of June 30, 2019, respectively.

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.

in the majority voting interest in percentage from 64.2% to 66.3% was due to the purchase by the Company of 43,333 shares of the

subsidiary for $75,000 ($1.73 per share) from three non-controlling shareholders during the year ended June 30, 2020.

decreased the non-controlling interests’

ownership percentage from 35.8% to 33.7%.

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.

are no shares of the Company held by any subsidiaries as of June 30, 2020 or June 30, 2019.

Non-controlling Interest in a Consolidated

As of June 30, 2020,

the non-controlling interest was $782,015, which represents a $292,969 increase from $489,046 as of June 30, 2020.

The increase in the

non-controlling interest of $292,969 was comprised of two components:

(1) an increase of $367,969 from income in the subsidiary

of $1,059,114 incurred for the year ended June 30, 2020 and (2) a reduction in the ownership percentage of the non-controlling

interests due to the repurchase by the Company of 43,333 shares of the subsidiary for $75,000 from three non-controlling shareholders.

This decreased the non-controlling interests’

ownership percentage from 35.8% to 33.7%.

Segment Reporting

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 geographic areas, consisting of the United States, EMEA and Asia.

The following enterprise-wide disclosure is prepared

4 unchanged sentences

United States

Caribbean and South America

Long-lived assets, net:

Europe, the Middle East and Africa ("EMEA")

Long-lived assets, net (property and equipment and intangible assets):

June 30, 2020

2 unchanged sentences

Fair Value of Financial Instruments

The carrying amounts of financial

instruments such as assets, cash equivalents, 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 (See Note 3).

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.

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 (see Note 3).

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.

Allowance for Doubtful Accounts

We do not maintain an allowance for

doubtful accounts.

This is based upon our review of our collection history as well as the current balances associated

with all significant customers and associated invoices.

We did incur a loss of $149,880 during the year ended June 30, 2012 that

resulted from the write-off of uncollectible accounts receivable.

This was a one-time transaction associated with amounts

owed to FTI for research and development services provided to a former customer, which took place prior to our acquisition of FTI

in October, 2009.

FTI filed a lawsuit in order to collect this amount, but the lawsuit was dismissed in December 2011, and

FTI wrote-off this amount as bad debt expense.

Following the acquisition date, FTI no longer provides research and development

services to customers other than Franklin Wireless.

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.

Based upon our review

of our collection history as well as the current balances associated with all significant customers and associated invoices, we

do not believe an allowance for doubtful accounts was necessary as of June 30, 2020 and June 30, 2019.

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.

Accordingly, we recognize

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

with the shipping or delivery terms.

We provide a factory warranty for one year from the shipment date, which is covered by our

vendors pursuant to purchase agreements.

Cost of Goods Sold

All costs associated with our contract

manufacturers, as well as distribution, fulfillment and repair services are included in our cost of goods sold.

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.

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

We provide a warranty for one year from the shipment or delivery date, which is covered by our vendors pursuant to purchase

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

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

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

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.

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 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 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.

Cost of Goods Sold

also includes amortization expense associated with capitalized product development costs associated with complete technology.

Intangible assets, consisting of

goodwill, are accounted for in accordance with ASC Topic 350, Intangibles –

Goodwill and Other (formerly SFAS

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.

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 expense associated with capitalized product development costs associated with complete

Capitalized Product Development Costs

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 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

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

Intangible Assets table) 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 its 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 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 are included

in intangible assets in our consolidated balance sheets.

During the year ended June 30, 2012, we incurred $1,412,910 in capitalized

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

All expenses incurred before technological feasibility is reached are expensed and included in our consolidated statements

of operations.

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 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 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.

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 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, 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).

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.

Advertising and Promotion Costs

Costs associated with advertising

and promotions are expensed as incurred.

Advertising and promotion costs were $72,798 and $94,879 for the years ended

June 30, 2012 and 2011, respectively.

We provide a factory warranty for

one year which is covered by our vendors and manufacturers under purchase agreements between the Company and the vendors.

these products are shipped directly from our vendors to our customers.

As a result, we do not have warranty exposure and do not

accrue any warranty expenses.

Costs associated with

research and development are expensed as incurred.

Research and development costs were $3,746,502 and $2,955,581 for the years

ended June 30, 2020 and 2019, 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.

a result, we believe we do not have any net warranty exposure and do not accrue any warranty expenses.

Historically, the Company

has not experienced any material net warranty expenditures.

Shipping and Handling Costs

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 statement of operations, were $226,758 and $232,880 for the years ended June 30, 2012 and 2011, respectively.

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 statements of comprehensive income, were $642,930 and $1,140,229 for the years ended June 30,

2020 and 2019, respectively.

Cash and Cash Equivalents

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.

Our inventories

consist of finished goods and are stated at the lower of cost or market, cost being determined on a first-in, first-out basis.

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 and have a $1.00 net asset value.

Short Term Investments

We have invested excess

funds in short term liquid assets of 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,

1 unchanged sentence

Our customer demand

is highly unpredictable, and can fluctuate significantly caused by factors beyond the control of the Company.

down our inventory value for potential obsolescence and excess inventory.

However, as of June 30, 2012, we believe our inventory

needs no such reserves and have recorded no inventory reserves.

is highly unpredictable and can fluctuate significantly caused by factors beyond our control.

We may write down our inventory value

for potential obsolescence and excess inventory.

As of June 30, 2020, and 2019, we have recorded inventory reserves in the

amount of $399,437 and $553,281, respectively, for inventories that we have identified as obsolete or slow-moving.

Property and Equipment

Property and equipment are recorded

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:

Maintenance and repairs

are charged to expense as incurred.

Depreciation is computed using the straight-line method over the estimated useful lives as

Office equipment

1 unchanged sentence

Furniture and fixtures

Facilities improvements

5 years or life of the lease, whichever is shorter

Goodwill and Intangible Assets

Goodwill and certain intangible assets

are recorded in connection with the FTI acquisition and are accounted for in accordance with ASC 805, “Business Combinations.”

represents the excess of the purchase price over the fair value of the tangible and intangible net assets acquired.

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 is tested for impairment at least annually

and any related impairment losses are recognized in earnings when identified.

No impairment was noted as of June 30, 2012 and 2011.

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.

No impairment was recognized during the years ended June 30,

2020 and 2019.

Intangible Assets

The definite lived intangible

assets consisted of the following as of June 30, 2012:

The definite lived

intangible assets consisted of the following as of June 30, 2020:

Definite lived intangible assets:

Expected Life

Complete technology

Less Accumulated

Net Intangible

Complete technology

Supply and development agreement

Technology in progress

Not Applicable

1 unchanged sentence

Total as of June 30, 2020

The definite lived intangible

assets consisted of the following as of June 30, 2011:

The definite lived

intangible assets consisted of the following as of June 30, 2019:

Definite lived intangible assets:

Expected Life

Complete technology

Less Accumulated

Net Intangible

Complete technology

Supply and development agreement

Technology in progress

Not Applicable

Certifications & licenses

Total as of June 30, 2019

Amortization expense recognized during the years ended

June 30, 2012 and 2011 was $892,482 and $868,295, respectively.

The amortization expenses of the definite lived intangible assets

for the next five years and thereafter is as follows:

Amortization expense

recognized during the years ended June 30, 2020 and 2019 was $482,792 and $422,183, respectively.

The amortization expenses of

the definite lived intangible assets for the next five years and thereafter are as follows:

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:

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

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 this date, no impairment existed.

We are not aware of any events or changes in circumstances following this date that

would indicate that the long-lived assets are impaired.

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 are not aware of

any events or changes in circumstances during the year ended June 30, 2020 that would indicate that the long-lived assets are impaired.

Stock-based Compensation

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 recognized on a straight-line basis over the award’s

vesting period.

The Company estimates the fair value of stock options using a Black-Scholes option pricing model.

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.

The measurement date of the fair value of the equity instrument issued is the earlier of the date on which

the counterparty’s performance is complete or the date on which it is probable that performance will occur.

Stock-based compensation

costs are reflected in the accompanying consolidated statements of comprehensive income based upon the underlying recipients' roles

within the Company.

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.

The Company assesses

its income tax positions and 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,

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.

The Company classifies

interest and penalties associated with such uncertain tax positions as a component of income tax expense.

Earnings per Share Attributable to Common

Basic 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

Concentrations of Credit Risk

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 year ended June 30, 2012, net sales to our two largest customers accounted

for 39% and 19% of our consolidated net sales and 47% and 35% of our accounts receivable balance as of June 30, 2012.

period in 2011, net sales to our two largest customers accounted for 59% and 12% of net sales and 80% and 0% of our accounts receivable

balance as of June 30, 2011.

No other customers accounted for more than ten percent of total net sales for the years ended June

30, 2012 and 2011.

For the year ended June 30, 2012,

we purchased the majority of our wireless data products from two manufacturing companies located in Asia.

If any of these manufacturing

companies were to experience delays, capacity constraints or quality control problems, product shipments to our customers could

be delayed, or our customers could consequently elect to cancel the underlying product purchase order, which would negatively impact

the Company's revenue.

For the year ended June 30, 2012, we purchased wireless data products from these suppliers in

the amount of $13,765,478, or 63.2%% of total purchases, and had related accounts payable of $7,576,976 as of June 30, 2012.

the year ended June 30, 2011, we purchased wireless data products from these suppliers in the amount of $31,157,229, or 98.6% of

total purchases, and had related accounts payable of $2,176,785 as of June 30, 2011.

We maintain our cash accounts with

established commercial banks.

Such cash deposits may exceed the Federal Deposit Insurance Corporation insured limit of $250,000

for each account.

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 year ended June 30, 2020, net sales to our two largest customers

represented 46% and 36% of our consolidated net sales, respectively, and 21% and 72% of our accounts receivable balance as of June

For the year ended June 30, 2019, net sales to our two largest customers represented 57% and 24% of our consolidated

net sales, respectively, and 56% and 26% of our accounts receivable balance as of June 30, 2019, no other customer accounted for

more than ten percent of total net sales.

For the year ended

June 30, 2020, we purchased the majority of our wireless data products from two manufacturing companies located in Asia.

were to experience delays, capacity constraints or quality control problems, product shipments to our customers could be delayed,

or our customers could consequently elect to cancel the underlying product purchase order, which would negatively impact our revenue.

For the year ended June 30, 2020, we purchased wireless data products from these suppliers in the amount of $67,179,379, or 94%

of total purchases, and had related accounts payable of $41,181,840, as of June 30, 2020.

For the year ended June 30, 2019, we

purchased wireless data products from two suppliers in the amount of $28,858,171, or 97% of total purchases, and had related accounts

payable of $4,401,501, as of June 30, 2019.

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.

Recently Adopted Accounting Pronouncements

2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update No.

2016-02, Leases (ASC

Topic 842) (ASU 2016-02), which amends existing standards for leases to increase transparency and comparability among organizations

by requiring recognition of lease assets and liabilities on the balance sheet and requiring disclosure of key information about

such arrangements.

We adopted the standard as of July 1, 2019 using the modified retrospective approach.

The adoption of the new

standard resulted in the recording of operating lease right-of-use (“ROU”) assets and operating lease liabilities of

$1,501,203 as of July 1, 2019.

As of the adoption date, we have no finance leases.

As permitted under ASC 842, we elected several

practical expedients that permit us to not reassess (1) whether existing contracts are or contain a lease, (2) the classification

of existing leases, and (3) whether previously capitalized costs continue to qualify as initial indirect costs.

The application

of the practical expedients did not have a significant impact on the measurement of the operating lease liability.

did not affect our consolidated net income or cash flows.

See “Note 8”

for further details.

Recently Issued Accounting Pronouncements

In June 2011, the Financial Accounting

Standards Board (FASB) issued Accounting Standards Update (ASU) 2011-05, Presentation of Comprehensive Income, which 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.

NOTE 3 –

FAIR VALUE OF FINANCIAL INSTRUMENTS

We are required to disclose

the estimated fair value of certain assets and liabilities in accordance with Accounting Standards Codification (“ASC”)

Topic 825, “Financial Instruments.”

As of June 30, 2012 and 2011, management believes that the carrying value of assets,

cash and cash equivalents approximate fair value, due to the short maturity of our Level 1 financial instruments.

amounts and estimated fair value of our financial instruments consisted of cash and cash equivalents of $9,419,441 and $11,537,878

as of June 30, 2012 and 2011, respectively.

Based on borrowing rates currently available to us for loans with similar terms, the

carrying value of short-term borrowing of $139,134 as of June 30, 2012 and 2011 approximates fair value and represents a level

NOTE 4 –

PROPERTY AND EQUIPMENT

February 2018, the FASB issued Accounting Standards Update (ASU) 2018-02, Income Statement—Reporting Comprehensive Income

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 of 2017 on items within accumulated

other comprehensive income to retained earnings.

We do not expect that the adoption of this update will impact the Company’s

consolidated financial statements.

NOTE 3 - FAIR VALUE MEASUREMENTS

Fair value accounting

is applied for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at

fair value in the consolidated financial statements on a recurring basis (at least annually).

Assets and liabilities recorded at

fair value in the financial statements are categorized based upon the level of judgment associated with the inputs used to measure

their fair value.

Hierarchical levels, which are directly related to the amount of subjectivity, associated with the inputs to

the valuation of these assets or liabilities are as follows:

Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities

that the Company can access at the measurement date.

Level 2 inputs are observable inputs other than quoted prices in active markets for identical assets

and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable

or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 inputs are unobservable inputs for the asset or liability.

The carrying values

of the Company’s financial instruments, including cash and cash equivalents, short-term investments, accounts receivable,

and accounts payable and debt, are calculated based on their approximate their fair values due to the short period of time to maturity

or repayment.

We invest our excess cash into financial instruments which management believes are readily convertible into cash,

such as money market funds and certificates of deposit.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment

consisted of the following as of:

Machinery and facility

June 30, 2020

June 30, 2019

Machinery and Commercial Equipment

Office equipment

Less accumulated depreciation

Depreciation expense associated with property

and equipment was $164,054 and $151,916 for the fiscal years ended June 30, 2012 and 2011, respectively.

Depreciation expense

associated with property and equipment was $92,736 and $92,961 for the fiscal years ended June 30, 2020 and 2019, respectively,

and is included in selling, general, and administrative expenses on the consolidated statements of comprehensive income.

NOTE 5 - ACCRUED LIABILITIES

Accrued liabilities consisted

of the following as of:

Accrued liabilities

consisted of the following as of:

June 30, 2020

June 30, 2019

Accrued salaries, incentives

Accrued salaries, severance

Accrued payroll deductions owed to government entities

Accrued salaries and bonuses

Accrued vacation

Payroll taxes

Accrued undelivered inventory

Accrued commission for service providers

Other accrued liabilities

NOTE 6 –

SHORT-TERM BORROWINGS FROM

Short-term borrowings from

banks consisted of the following as of:

June 30, 2012

June 30, 2011

Loan dated June 2011, due to a financial institution, with

principal and monthly interest payments (interest rate of 8.90% per annum), and the original remaining balance due September

2011, which was extended to September 2012 (interest rate of 5.74% per annum as extended)

The short-term borrowings

from banks of $139,134 as of June 30, 2012 and 2011 result from the consolidation of FTI’s debt.

NOTE 6 - INCOME TAXES

tax provision (benefit) from continuing operations for the years ended June 30, 2012 and 2011 consists of the following:

Income tax provision

for the years ended June 30, 2020 and 2019 consists of the following:

Year Ended June 30,

Current income tax expense (benefit):

Current income tax expense::

Deferred income tax expense (benefit):

Provision for income taxes

$ (1,213,791 )

Provision (benefit) for income taxes

The provision (benefit)

for income taxes reconciles to the amount computed by applying effective federal statutory income tax rate to income (loss) before

for income taxes reconciles to the amount computed by applying the effective federal statutory income tax rate to the income before

provision for income taxes as follows:

Year Ended June 30,

Federal tax provision (benefit), at statutory rate of 34%, earnings (loss) before income taxes and extraordinary items

Federal income tax (benefit), at statutory rate of 21% applied to earnings before income taxes and extraordinary items

State tax, net of federal tax benefit

Nondeductible expenses

Uncertain tax position

Global intangible low-taxed income

Foreign rate difference

Rate reduction

Change in valuation allowance

Provision (benefit) for income taxes

$ (1,213,791 )

Deferred income taxes reflect

the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes

and the amounts used for income tax purposes.

Deferred income taxes

reflect the net effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting

purposes and the amounts used for income tax purposes.

Significant components of our deferred tax assets are as follows:

3 unchanged sentences

Net operating losses

Lease accounting

Inventory reserve

Total deferred tax assets

Deferred tax liabilities:

Deferred state taxes

Total deferred tax liabilities

Less valuation allowance

Net deferred tax asset

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 provision of the Internal Revenue Code

Section 382 and similar state provisions.

We adopted the provision

of ASC 740 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.

Under 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.

A reconciliation of the

beginning and ending balance of unrecognized tax benefits, which are included in accrued liabilities on the balance sheet, is as

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 forecasted future taxable income.

Management determined it is more likely

than not that the federal deferred tax assets will be fully realized, and no valuation allowance is necessary as of June 30, 2020.

As of June 30, 2020,

we have federal net operating loss carryforwards of approximately $1.2 million and no state net operating loss carryforwards.

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 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, is 0.

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.

We apply the provisions

of ASC 740 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.

Under 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.

A reconciliation of

the beginning and ending balance of unrecognized tax benefits, which have been considered in the Company's computation of its deferred

tax assets, is as follows:

Balance as of June 30, 2018

Gross increase or (decrease)

Gross increase

Balance as of June 30, 2019

Gross increase or (decrease)

Reversal of reserve on unrecognized tax benefits

Gross increase

Balance as of June 30, 2020

We do not anticipate any

material change in the total amount of unrecognized tax benefits to occur within the next twelve months.

ASC 740 requires us to

accrue interest and penalties where there is an underpayment of taxes based on our best estimate of the amount ultimately to be

We do not anticipate

any material change in the total amount of unrecognized tax benefits to occur within the next twelve months.

ASC 740 requires us

to accrue interest and penalties where there is an underpayment of taxes based on our best estimate of the amount ultimately to

Our policy is to recognize interest accrued related to unrecognized tax benefits and penalties as income tax expense.

have not recorded any interest or penalties as the liability associated with the unrecognized tax benefits is immaterial.

subject to taxation in the U.S., various state and foreign jurisdictions.

We are no longer subject to U.S.

examination for years

before 2009 by the federal taxing authority, and years before 2005 by state taxing authorities.

NOTE 8 –

EARNINGS PER SHARE

We report earnings per

share in accordance with ASC 260, “Earnings Per Share.”

Basic earnings (loss) 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.

For the year ended June 30, 2012, we are in a

net loss position and has excluded 1,328,170 stock options from the calculation of diluted net loss per share because these securities

are anti-dilutive.

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

We have not recorded any interest or penalties as the liability associated with the unrecognized tax benefits is immaterial.

are subject to taxation in the U.S., and various state and foreign jurisdictions.

The Tax Cuts and Jobs

Act (the “Act”) was signed into law on December 22, 2017.

The Act includes a provision to reduce federal corporate

income tax rate to a flat 21% effective for a taxable year beginning on or after January 1, 2018.

ASC 740 provides that deferred

tax assets and liabilities be measured at the enacted tax rate expected to apply when the related temporary differences are to

be realized or settled, and the related tax impact is recognized through continuing operation in the period in which tax legislation

Accordingly, the Company remeasures its deferred tax assets and liabilities as of June 30, 2018 and provides income

tax provision of $661,629 through continuing operation section of the income statement.

NOTE 7 - EARNINGS PER SHARE

We report earnings

per share in accordance with ASC 260, “Earnings Per Share.”

Basic earnings (loss) per share are computed using the

weighted average number of shares outstanding during the period.

Diluted earnings (loss) per share represent basic earnings (loss)

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.

year ended June 30, 2020, we have calculated the diluted effect of common stock arising from 251,291 stock options.

ended June 30, 2019, we were in a net loss position and have excluded 299,000 stock options from the calculation of diluted net

loss per share because these securities are anti-dilutive.

The weighted average

number of shares outstanding used to compute loss per share is as follows:

Year Ended June 30,

Net income (loss) attributable to Parent Company

$ (1,276,124 )

Weighted-average shares of common stock outstanding:

1 unchanged sentence

Diluted Outstanding shares

Basic earnings (loss) per share

Diluted earnings (loss) per share

Basic earnings (loss) per share attributable to Parent Company stockholders

Diluted earnings (loss) per share attributable to Parent Company stockholders

NOTE 8 - COMMITMENTS AND CONTINGENCIES

an agreement to lease office space expiring 2016.

Rent expense for the year ended June 30, 2012 and 2011 was $299,938 and

$210,626, respectively.

Future minimum rental payments under the operating leases are as follows:

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

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 covered by an appropriate level of insurance and we believe

it 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.

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.

We lease one corporate housing facility primarily for

our employees who travel, under a non-cancelable operating lease that expires on September 4, 2020.

Rent expense for

the years ended June 30, 2020 and 2019 was $435,283 and $415,443, respectively.

Future minimum

payments under operating leases are as follows:

Payments Due by June 30,

1 unchanged sentence

Administrative office, Korea

Corporate housing facility

Total Obligations

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.

In exchange 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 addition, in a separate agreement

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

The purpose of these revisions

was to more clearly differentiate each party’s payment obligations to the other with respect to this transaction.

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 us.

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 are from time to time involved

in certain legal proceedings and claims arising in the ordinary course of business.

On August 16, 2011, Brandywine Communications

Technologies, LLC filed a complaint in the United States District Court for the Middle District of Florida, Orlando Division against

one of our customers as one of several defendants.

The complaint alleges that certain wireless devices, including one device provided

by the Company, infringe on U.S.

The Company provided device was purchased by the Company from one of our

The supplier has been notified of the complaint and is evaluating this matter.

As of June 30, 2012, this legal proceeding

is pending, but we do not believe this action will have a material effect on the Company.

On December 10, 2010, Novatel

Wireless, Inc.

filed a complaint in the United States District Court for the Southern District of California, against us and one

other defendant.

The complaint alleges that certain products, including, but not limited to, mobile data hot spots and data modems,

infringe on U.S.

7,574,737 and 7,319,715.

On April 13, 2012, the plaintiff filed a Second Amended

Complaint which amended certain claims and added U.S.

7,944,901 to the original complaint.

On April 27, 2012, we filed

a Motion to Dismiss the Second Amended Complaint as to certain of the claims.

On July 6, 2012, the Court held oral argument on

the Motion to Dismiss and on July 19, 2012, the Court issued an order granting in part and denying in part the Motion to Dismiss.

On August 2, 2012, we answered the complaint and an Early Neutral Evaluation Conference has been scheduled for October 31, 2012.

Due to the preliminary nature of these proceedings, we do not believe an amount of loss, if any, can be reasonably estimated for

We intend to vigorously defend ourselves against these allegations.

On December 14, 2011 our officers

and directors were named as defendants in an action filed by Sherman Capital Group LLC, Singer Children's Management Trust, David

Oros, Milfam NG LLC and Lloyd I.

Miller-Trust C (the “Sherman Group”) in the Superior Court of the State of California

for the County of San Diego.

The complaint seeks damages and declaratory relief for alleged breaches of fiduciary duty by

our officers and directors in the management of the Company.

The complaint does not specify an amount of damages.

and directors are entitled to indemnity from the Company under the Company’s bylaws.

On January 20, 2012 we filed a Notice

of Removal from the Superior Court of the State of California for the County of San Diego to the United States District Court for

the Southern District of California.

Following several motions and filings submitted to the Court by both parties, we answered

the complaint in the United States District Court on April 10, 2012 and an Early Neutral Evaluation Conference took place on June

On October 3, 2012, the U.S.

Court for the Southern District of California issued an Order approving the voluntary dismissal, with prejudice, of the action

filed by the Sherman Group.

As of June 30, 2020,

we used discount rates of 4.0% and 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.

Future minimum payments under operating leases are as follows:

Operating Leases

Total lease payments

Less imputed interest

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.

We entered into a Professional

Services Agreement with Anydata Corp.

(“Anydata”) for the productACT233F 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.

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.

believes 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

The total product purchase commitment with Quanta was approximately $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 for the right to call on

inventory and recorded an additional $49,580 as a prepaid expense related to pricing adjustments, which has been agreed with Quanta

for other products to ensure demand is met.

As of June 30, 2020, there is a reasonable possibility we may incur a loss, however,

the amount is not estimable at this time.

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, Franklin Wireless is deemed to be an essential business.

Nonetheless, out of concern for our workers and pursuant to the government order, Franklin Wireless reduced the scope of its 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 the Company expects this situation may increase demand for its products, the related impact cannot

be reasonably estimated at this time.

Change of Control Agreements

On September 21, 2009 we entered

into Change of Control Agreements with OC Kim, our President and Acting Chief Financial Officer, Yun J.

(David) Lee, our Chief

Operating Officer, and Yong Bae Won, our Vice President, Engineering.

Each Change of Control Agreement provides for a lump sum

payment to the officer in case of a change of control of the Company.

The term includes the acquisition of 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 the Company's outstanding Common Stock, or a liquidation

or dissolution of the Company or sale of substantially all of the Company's assets.

The Change of Control Agreement with

Kim is for three years and calls for a payment of $5 million upon a change of control;

the agreement with Mr.

Lee is for two

years and calls for a payment of $2 million upon a change of control;

and the agreement with Mr.

Won is for two years and calls

for a payment of $1 million upon a change of control.

On September 16, 2011, the Board

of Directors approved extending the Change of Control Agreements with OC Kim, our President and Acting

Chief Financial Officer, Yun J.

(David) Lee, our Chief Operating Officer, and Yong Bae Won, our Vice President, Engineering for

an additional three years.

Following this approval, the Change of Control Agreement with Mr.

Kim will expire on September 21, 2015

and the Change of Control Agreements with Messrs.

Lee and Won will expire on September 21, 2014.

NOTE 10 –

LONG-TERM INCENTIVE PLAN

On September 21, 2009,

we entered into Change of Control Agreements with OC Kim, our President, and Yun J.

(David) Lee, our Chief Operating Officer.

Change of Control Agreement provides for a lump sum payment to the officer in case of a change of control of the Company.

includes the acquisition of 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 the Company's

outstanding Common Stock, or a liquidation or dissolution of the Company or sale of substantially all of 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 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.

Lee, through September 30, 2021.

International Tariffs

We believe that our

products are currently exempt from international tariffs upon import from our manufacturers to the United States.

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

Customer Indemnification

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.

NOTE 9 - LONG-TERM INCENTIVE PLAN AWARDS

We apply the provisions

of ASC 718, “Compensation –

Stock Compensation,”

using a modified prospective application, and the Black-Scholes

Under this application, we are required to record compensation expense for all awards granted after the date of adoption

and for the unvested portion of previously granted awards that remain outstanding at the date of adoption.

of ASC 718, “Compensation - Stock Compensation,”

using a modified prospective application, and the Black-Scholes 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.

We adopted the 2009 Stock

Incentive Plan (“2009 Plan”) on June 11, 2009, which provided for the grant of incentive stock options and non-qualified

be recognized over the period that an employee provides service in exchange for the award, i.e.

the vesting period.

We adopted the 2009

Stock Incentive Plan (“2009 Plan”) on June 11, 2009, which provided for the grant of incentive stock options and non-qualified

stock options to our employees and directors.

7 unchanged sentences

differ from those estimates.

Compensation expense recorded under this method for the year ended June 30, 2012 was $224,526 and

reduced operating income and income before income taxes by the same amount by increasing compensation expense recognized in selling

and administrative expense.

The recognized tax benefit related to the compensation expense for the year ended June 30, 2012 was

The risk-free interest

rate is based on the U.S.

Treasury yield curve in effect at the time of grant for periods corresponding with the expected

term of the option;

the expected term represents the weighted-average period of time that options granted are expected to be outstanding

giving consideration to vesting schedules and using the simplified method;

the expected volatility is based upon historical volatilities

of the Company’s common stock;

and the expected dividend yield is based upon the Company’s current dividend rate and

future expectations.

The fair value of each stock option is estimated

using a Black-Scholes option valuation model, consistent with the provisions of ASC Topic 718, based on the following assumptions:

Year ended June 30 ,

Weighted average estimated per share fair value of grant

Risk-free interest rate

Expected life

2.75-6.50 years

Expected volatility

Dividend yield

The volatility assumption is based on historical volatility

of the Company for the period equal to the expected life of the option

The expected life assumption is

based upon the Company’s consideration of the historical life of options, the vesting period of the option granted, and

the contractual period of the option granted.

The historical life of the Company’s options is 10 years, the vesting period

of options granted is generally 3 years and the contractual period of options granted is 10 years .

stock option grants have included shorter vesting periods ranging from one to two years.

The dividend yield assumption is based

on the Company’s history of not paying, nor intending to pay, dividends.

The risk free interest rate assumption is based on the

Treasury yield with terms equivalent to the expected life of the option in effect at the time of the grant.

There was no compensation expense recorded under this method for the year ended June 30, 2030.

A summary of the status

3 unchanged sentences

Outstanding as of June 30, 2019

Forfeited or Expired

Outstanding as of June 30, 2020

Exercisable as of June 30, 2020

5 unchanged sentences

shares was $0.93 per share.

As of June 30, 2012, there

was $729,807 of total unrecognized compensation cost related to non-vested stock options granted.

That cost is expected to be recognized

over a weighted-average period of 2.6 years.

NOTE 11 –

RELATED PARTY TRANSACTIONS

purchased wireless data products in the amount of $2,087,467 and $6,985,394 from C-Motech, for

the years ended June 30, 2012 and 2011, and had related accounts payable of $0 as of June 30, 2012 and 2011.

30, 2012, C-Motech owns 1,566,672 shares, or 13.2%, of our Common Stock.

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 as of the date of this filing, we are unable to determine

whether or not this repurchase will take place.

As of June 30, 2012, C-Motech owes us approximately

$84,000, relating to the defense of a patent infringement claim.

As of June 30, 2020,

there was no unrecognized compensation cost related to non-vested stock options granted.

NOTE 10 - SUBSEQUENT EVENTS

ASC 855, “Subsequent

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, October 12, 2012.

During these periods, we did not have

any material recognizable subsequent events required to be disclosed other than those disclosed in this note to the financial statements

as of June 30, 2012 and for the year ended June 30, 2012.

On September 19, 2012,

we entered into a Stock Repurchase Agreement and a Standstill Agreement, each with Sherman Capital Group, LLC;

Karen Singer, Trustee

Of Singer Children’s Management Trust;

Milfam NG LLC;

and PNC Trust Company of Delaware, Trustee of Lloyd

Miller –

Under the terms of the Stock Repurchase Agreement, we agreed to repurchase 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.

Under the terms of the Standstill

Agreement, the members of the Sherman Group agreed that they will not (i) acquire any Common Stock or other securities of the Company,

(ii) make any tender offer with respect to securities of the Company, (iii) participate in any solicitation of proxies with respect

to the Company, (iv) form, join or in any way participate in a “group”

(within the meaning of Section 13(d)(3) of the

Exchange Act and Rule 13d-5(b) thereunder) with respect to the securities of the Company, or (v) act, alone or in concert with

others, to seek to control or influence the management, Board of Directors or policies of the Company.

On September 27, 2012, we

completed the repurchase of the shares of our Common Stock from the Sherman Group.

As of June 30, 2012, we recorded an expense

of $440,000 relating to the premium paid on the stock repurchase 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 Stock Repurchase Agreement.

Separate from the Stock Repurchase Agreement

and Standstill Agreement, our officers and directors entered into a Settlement Agreement and Release with the Sherman Group dated

September 19, 2012.

Under the terms of this Agreement, the parties agreed to file a request with the Court to dismiss this action,

which took place on October 2, 2012.

On October 3, 2012, the U.S.

District Court for the Southern District of California issued

an Order approving the voluntary dismissal, with prejudice, of the action filed by the Sherman Group.

considered subsequent events in the preparation of the Company's financial statements through the date this Form 10-K was filed.

On September 9, 2020, we entered into Subscription Agreements with two accredited investors (the “Investors”), pursuant

to which we sold and issued to the Investors an aggregate of 923,078 shares of Common Stock at a purchase price of $6.50 per share.

The $6,000,007 aggregate purchase price for these Units was paid in cash to the Company.

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 9A. Controls and Procedures