What changed in this filing

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Item 9A. Controls and Procedures

2023-09-28 compared with 2022-09-13 · 672 added, 547 removed, 945 unchanged (56% of the section changed)

2 unchanged sentences

Our management has evaluated,

under the supervision and with the participation of OC Kim, our President, and David Brown, our Acting Chief Financial Officer, the effectiveness

under the supervision and with the participation of OC Kim, our President, and Bill Bauer, our 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

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Johnathan Chee

(David) Lee (1)

Chief Operating Officer

Acting Chief Financial Officer

OC Kim has been our President,

Secretary and a director since September 2003.

He also served as our Acting Chief Financial Officer from April 2018 until March 2021.

Acting Chief Financial Officer (Principal Financial Officer)

______________________

(1) On 7/14/2023, the board of directors appointed Mr.

Lee as Senior Vice President of Sales who previously served as Chief Operating

This change did not affect his compensation.

OC Kim has been our

President, CEO and a Director since 2003.

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.

merged with Franklin Telecommunications Corp.

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

company he founded that developed modules for the wireless telecommunication industry.

In 2003, Accetio Inc.

Franklin Telecommunications 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.

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

He was a general manager of Kolon California Corp., one of

Korea's most prominent conglomerates.

While at Kolon Data Communications, in Korea, 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 began his career at Lucky Goldstar (LG) Electronics.

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.

University in Korea.

He has almost 30 years of

experience in sales, marketing, and operations management in the telecommunications and information systems industries.

from Sogang University in Korea.

We believe Mr.

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.

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.

Gary Nelson has been

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several organizations and has managed all aspects of the finance departments along with outside auditors.

One September 30, 2022, he resigned

his position to pursue other opportunities.

Bill Bauer has served as our

Acting Chief Financial Officer since October 2022.

Prior to joining Franklin, he served as in-house legal counsel and senior finance executive

across various industries in California and Texas.

He has over 15 years of experience in Finance and executive management.

Master’s degree in Business Administration from San Diego State University and a Juris Doctorate from California Western School

of Law and is also a member of both the California and Texas State Bars.

CODE OF ETHICS

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During fiscal 2023, the Board

of Directors held five meetings.

Each director attended 100% of the meetings of the Board, except for Joon Won Jyoung, who attended none

of the meetings and resigned his position on the Board on January 26, 2021.

The Board of Directors has an Audit Committee made up of Heidy

Chow (committee chair), Gary Nelson, and Kristina Kim, and a Compensation Committee made up of Gary Nelson (committee chair) and Johnathan

The Board of Directors has no other committees.

of Directors held four meetings.

Each director attended 100% of the meetings of the Board.

The Board of Directors has an Audit Committee

made up of Heidy Chow (committee chair), Gary Nelson, and Kristina Kim, and a Compensation Committee made up of Gary Nelson (committee

chair) and Johnathan Chee, and a Nominating Committee made up of Gary Nelson (committee chair) and Johnathan Chee.

The Board of Directors

has no other committees.

EXECUTIVE COMPENSATION

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

Compensation Table

Summary Compensation Table

Name and Principal Position

1 unchanged sentence

Chief Operating Officer

David Brown (1),

Acting Chief Financial Officer

(1) David Brown resigned his

position on September 30, 2023.

Outstanding Equity Awards at Fiscal Year-End

The following table presents

the outstanding equity awards held by each of the Named Executive Officer as of June 30, 2022.

The only outstanding equity awards

are stock options.

Options to purchase 200,000, 15,000, and 10,000 shares were granted to OC Kim, Yun J.

(David) Lee, and David Brown

during fiscal 2022, respectively.

The options 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.

The following table presents the outstanding equity

awards held by each of the Named Executive Officer as of June 30, 2023.

The only outstanding equity awards are stock options.

to purchase 200,000, 15,000, 10,000 and 15,000 shares were granted to OC Kim, Yun J.

(David) Lee, David Brown, and Bill Bauer during fiscal

2022, respectively.

10,000 shares granted to David Brown have been forfeited and returned to the Company as he resigned his position on

September 30, 2023.

The options 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.

Outstanding Equity Awards at Fiscal Year-End

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33.3% of the shares underlying the option vest on the third anniversary of the date of the grant.

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 had an expiration date of

June 13, 2022.

On June 13, 2022, the option was modified to extend the term to December 31, 2022.

The option vests and is exercisable over three years as follows and has a five-year term:

33.3% of the shares underlying the option vest on the first anniversary of the date of the grant.

33.3% of the shares underlying the option vest on the second anniversary of the date of the grant.

33.3% of the shares underlying the option vest on the third anniversary of the date of the grant.

Director Compensation

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Johnathan Chee

Directors are compensated at a base rate of $15,000 annually for the

year ended June 30, 2022 and prorated based upon board meeting attendance.

Bonuses may be awarded when the business has performed exceptionally

well as determined by the Board of Directors.

Directors are compensated at a base rate of $15,000 and $20,000 annually for the six months ended December 31, 2022 and for the six months ended June 30, 2023, respectively, and prorated based upon board meeting attendance.

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

For the year ended June 30, 2023, there has been no approved bonus for the Directors.

On December 28, 2021, options to purchase 15,000 shares were granted to each of the directors.

The options granted to directors during fiscal 2022 vest over three years and are subject to early termination on the occurrence of certain events related to termination or resignation of the director.

There were no outstanding equity awards held by

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EMPLOYMENT CONTRACTS

On September 21, 2009, we

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

On October 1, 2020, we entered

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

(David) Lee, our Chief Operating Officer.

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.

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.

These agreements were for an initial term of three

years but have now been extended through October 2024.

The Change of Control Agreement

2 unchanged sentences

upon a change of control.

The Board of Directors has

approved extension of the Change of Control Agreements with Mr.

Lee through September 30, 2023.

On November 10, 2022, the

Company and OC Kim, its President, entered into an amendment of the employment letter agreement dated September 7, 2021.

The amendment

provides for a severance payment of $3 million if Mr.

Kim voluntarily terminates his employment by the Company or if he voluntarily terminates

his employment due to a “change in circumstances,” generally defined as a material breach by the Company of its salary and

benefit obligations or a significant reduction in Mr.

Kim’s title or responsibilities.

In the case of a termination of employment

by the Company for cause (generally defined as conviction of a felony, or a misdemeanor where imprisonment is imposed, commission of any

act of theft, fraud, dishonesty, or material falsification of any employment or Company records, or improper disclosure of the Company's

confidential or proprietary information), the Company is to make a severance payment of $1,500,000.

In either case, any unvested options

become immediately vested.

In the amendment, Mr.

also agrees that, for a period of two years after termination, he will not disparage the Company or its officers, solicit any of its employees

to terminate their employment, or disclose any of the Company’s proprietary information.

In addition, the amendment

provides for the payment of an incentive bonus to Mr.

Kim of $125,000 for each calendar quarter during the remaining four-year term of

the employment letter, with the first such bonus due on December 31, 2022.

The Change in Control Agreement

Kim, dated October 1, 2020, has not been terminated and remains in effect at this time.

COMPENSATION DISCUSSION AND ANALYSIS

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We maintain a bonus plan

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.

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

which provides our executive officers 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.

The actual amount of incentive

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

SEVERANCE BENEFITS

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however, we have

entered into Change of Control Agreements with our executive officers, and one other employee that provide them with lump sum

payments in the event of a change in control of the Company.

entered into Change of Control Agreements with OC Kim & David Lee, and a severance agreement with OC Kim that provides him with

a lump sum payment in the event he leaves the Company.

RETIREMENT PLANS –

In January 2022, we implemented the CalSavers retirement program.

CalSavers is California’s new retirement savings program that

will offer millions of workers in California the opportunity to get on track for the future.

The program is a voluntary participation

All employees have the option to participate in this program if they chose to do so.

In January 2022, we implemented the CalSavers retirement program, an automatic enrollment individual retirement account (IRA).

is a voluntary participation program, and all employees have the option to participate in this program if they choose to do so.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL

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

AIGH Investment Partners, L.L.C.

6006 Berkley Avenue, Baltimore, MD21209

All directors and executive officers as a group

Based solely on a Schedule 13G dated February 14, 2022, which indicates that Mr.

Based solely on a Schedule 13G dated December 31, 2022, which indicates that Mr.

Packer may be deemed to beneficially own 874,292 shares.

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and Globis Capital, L.L.C.

Based solely on a Schedule 13G dated February 14, 2022, which indicates

that AIGH Capital Management, L.L.C.

may be deemed to beneficially own 390,000 shares.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR

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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, 2022, and 2021, which was performed by Paris, Kreit, and Chiu CPA LLP (formerly as “Benjamin & Ko”).

services described above were approved in advance by the Board of Directors or the Company's Audit Committee.

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, 2023, and 2022, which

was performed by Kreit, and Chiu CPA LLP (formerly as “Paris, Kreit, and Chiu CPA LLP”).

All of the services described above

were approved in advance by the Board of Directors or the Company's Audit Committee.

EXHIBITS, FINANCIAL STATEMENT SCHEDULES

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Description of Securities (6)

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

Agreement, dated September 7, 2021, between Franklin Wireless Corp.

and OC Kim (4)

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

1 to Employment Agreement, dated November 10, 2022 (8)

Change of Control Agreement, dated October 1, 2020, 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 October 1, 2020, between Franklin Wireless Corp.

and David Lee.

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.

Loan Agreement between Franklin Technology Incorporation and Franklin Wireless Corporation, dated March 31, 2022 (8)

Amendment to Change of Control Agreement between Franklin Wireless Corp.

and OC Kim, dated September 25, 2023

Amendment to Change of Control Agreement between Franklin Wireless Corp.

(“David”) Lee, dated September 25, 2023

Code of Ethics (2)

Consent of Paris, Kreit and Chiu CPA LLP

Consent of Kreit and Chiu CPA LLP

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

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XBRL Presentation Linkbase Document

_________________________

(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.

(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 Report on Form 8-K dated October

(5) Incorporated by reference from Quarterly Report on Form 10-Q for

the quarter ended September 30, 2015, filed on November 16, 2015.

(6) Incorporated by reference from Annual Report on Form 10-K for the

year ended June 30, 2020, filed on September 17, 2020.

(6) Incorporated by reference from Report on Form 10-K/A for the year

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the quarter ended March 31, 2022, filed on May 10, 2022.

(8) Incorporated by reference from Quarterly Report on Form 10-Q for

the quarter ended December 31, 2022, filed on February 14, 2023.

Supplementary Information

FORM 10-K SUMMARY .

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Principal Financial Officer

/s/ David Brown

/s/ Bill Bauer

Acting Chief Financial Officer

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Index to Consolidated Financial Statements

Report of Independent Registered Public Accounting Firms (PCAOB ID 6651 )

Consolidated Balance Sheets as of June 30, 2022, and June 30, 202 1

Report of Independent Registered Public Accounting Firm (PCAOB ID 6651 )

Consolidated Balance Sheets as of June 30, 2023 and 2022

Consolidated Statements of Comprehensive (Loss) Income for the Years ended June 30, 2023 and 2022

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING

To the Shareholders and Board of Directors of Franklin Wireless Corp.

To the Board of Directors and Shareholders of Franklin Wireless Corp.

Opinion on the Consolidated Financial Statements

and Internal Control Over Financial Reporting

We have audited the accompanying consolidated

balance sheet of Franklin Wireless Corp.

balance sheets of Franklin Wireless Corp.

and its subsidiary (the “Company”) as of June 30, 2023, and 2022, and the related

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in the period ended June 30, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of June 30, 2022, based on criteria established

in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements

referred to above present fairly, in all material respects, the financial position of the Company as of June 30, 2022 and 2021, and the

results of its operations and its cash flows for each of the two years in the period ended June 30, 2022 in conformity with accounting

principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects,

effective internal control over financial reporting as of June 30, 2022, based on criteria established in Internal Control – Integrated

Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

present fairly, in all material respects, the financial position of the Company as of June 30, 2023, and 2022 and the results of its operations

and its cash flows for each of the two years in the period ended June 30, 2023, in conformity with accounting principles generally accepted

in the United States of America.

Basis for Opinion

The Company’s management is responsible

for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment

of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal

Control Over Financial Reporting.

Our responsibility is to express an opinion on the entity’s consolidated financial statements

and an opinion on the entity’s internal control over financial reporting 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 U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange

Commission and the PCAOB.

These consolidated financial statements are the

responsibility of the entity’s management.

Our responsibility is to express an opinion on these 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 U.S.

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 PCAOB.

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

statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting

was maintained in all material respects.

Our audits of the consolidated financial statements

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 responds 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 financial statements.

internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing

the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based

on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control

Over Financial Reporting

An entity’s internal control over financial

reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of

financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America.

An entity’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance

of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with

accounting principles generally accepted in the United States of America, and that receipts and expenditures of the entity are being made

only in accordance with authorizations of management and directors of the entity;

and (3) provide reasonable assurance regarding prevention

or timely detection of unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on

the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because

of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matters

Those standards require that we plan and perform the audit 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 our 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 entity’s

internal control over financial reporting.

Accordingly, we express no such opinion.

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.

We believe that our audits provide

a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is

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to the audit committee and that:

(1) relate to accounts or disclosures that is material to the consolidated financial statements and (2)

(1) relate to accounts or disclosures that are material to the consolidated financial statements and

(2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matter does not alter in any

way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter

below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which it relates.

Description of the Matter

As described in Note 2 to the consolidated financial

statements, the Company’s contracts with customers sometimes contain multiple performance obligations, which are accounted for separately

if they are distinct.

In such cases, the transaction price is then allocated to the distinct performance obligations on a relative standalone

selling price basis, and revenue is recognized when control of the distinct performance obligation is transferred.

Auditing the Company’s revenue recognition

was complex, including the identification and determination of distinct performance obligations and the timing of revenue recognition.

For example, there were non-standard terms and conditions that required judgment to determine the distinct performance obligations and

the impact on the timing of revenue recognition.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design,

and tested the operating effectiveness of the Company’s process and controls to identify and determine the distinct performance

obligations and the timing of revenue recognition.

To test the identification and determination of

the distinct performance obligations and the timing of revenue recognition, our audit procedures included, among others, reading the executed

contract or purchase order to understand the contract, identifying the performance obligation(s), determining the distinct performance

obligations, and evaluating the timing of revenue recognition for a sample of individual sales transactions.

We evaluated the accuracy

of the Company’s contract summary documentation, specifically related to the identification and determination of distinct performance

obligations and the timing of revenue recognition.

We further evaluated appropriateness of revenue recognition through year-on-year analytics

and reasonableness assessment of gross margin analysis.

The communication of critical audit matter does not alter in

any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter

below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate .

Description of the Matter

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Where the reasonable estimate of the probable loss is a range, management records as an accrual in its

financial statements the most likely estimate of the loss, or the low end of the range if there is no one best estimate.

Management either

discloses the amount of a possible loss or range of loss in excess of established accruals if estimable, or states that such an estimate

cannot be made.

Management discloses significant legal proceedings even where liability is not probable or the amount of the liability

is not estimable, or both, if management believes there is at least a reasonable possibility that a loss may be incurred.

consolidated financial statements the most likely estimate of the loss, or the low end of the range if there is no one best estimate.

Management either discloses the amount of a possible loss or range of loss in excess of established accruals if estimable, or states that

such an estimate cannot be made.

Management discloses significant legal proceedings even where liability is not probable or the amount

of the liability is not estimable, or both, if management believes there is at least a reasonable possibility that a loss may be incurred.

How We Addressed the Matter in Our Audit

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disclosures associated with legal proceedings.

Addressing the matter involved performing procedures and evaluating

audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing

the effectiveness of controls relating to management’s evaluation of the liability related to legal proceedings, including controls

over determining the likelihood of a loss and whether the amount of loss can be reasonably estimated, as well as financial statement disclosures.

These procedures also included, among others, obtaining and evaluating the letters of audit inquiry with internal and external legal counsel,

evaluating the reasonableness of management’s assessment regarding whether an unfavourable outcome is reasonably possible or probable

and reasonably estimable, and evaluating the sufficiency of the Company’s disclosures related to legal proceedings

We have served as the Company’s auditor

Kreit, and Chiu CPA LLP , (formerly as “Benjamin & Ko”).

Addressing the matter involved performing procedures

and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures

included determining the likelihood of a loss and whether the amount of loss can be reasonably estimated, as well as evaluating disclosures

citing the compliance with the financial reporting framework.

These procedures also included, among others, obtaining and evaluating the

letters of audit inquiry with internal and external legal counsel, evaluating the reasonableness of management’s assessment regarding

whether an unfavorable outcome is reasonably possible or probable and reasonably estimable, and evaluating the sufficiency of the Company’s

disclosures related to legal proceedings and accounting in the consolidated financial statements.

We have served as the Company’s auditors

/s/ Kreit and Chiu CPA LLP (formerly as “ Paris,

Kreit and Chiu CPA LLP ”).

September 28, 2023

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Cash and cash equivalents

Short-term investments-others

Short-term investments

Accounts receivable, net

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Prepaid expenses and other current assets

Loan to an employee

Advance payments to vendors

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Unearned revenue

Advance payments from customers

Accrued legal contingency expense

Accrued liabilities

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Accumulated other comprehensive loss

( 1,071,930 )

Total Parent Company stockholders’ equity

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Fiscal Years Ended June 30,

$ 184,115,345

Cost of goods sold

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Total operating expenses

(Loss) income from operations

Loss from operations

( 2,349,575 )

( 4,974,892 )

Other income, net:

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Income from governmental subsidy

Gain from the forgiveness of payroll protection plan loan

Gain from the forgiveness of debts

Loss from a legal contingency

( 2,400,000 )

Other income (expense), net

Total other income, net

(Loss) income before (benefit) provision for income taxes

Total other income (expense), net

( 1,481,743 )

Income tax (benefit) provision

Loss before benefit for income taxes

( 3,831,318 )

Net (loss) income

( 4,709,473 )

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

Net (loss) income attributable to Parent Company

Income tax benefit

( 1,037,068 )

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

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

( 2,944,659 )

( 3,672,405 )

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

Net loss attributable to Parent Company

$ ( 2,863,021 )

$ ( 3,762,848 )

Basic loss per share attributable to Parent Company stockholders

Diluted loss per share attributable to Parent Company stockholders

Weighted average common shares outstanding - basic

Weighted average common shares outstanding - diluted

Comprehensive (loss) income

Net (loss) income

Comprehensive loss

$ ( 2,944,659 )

$ ( 3,672,405 )

Translation adjustments

Comprehensive (loss) income

Comprehensive loss

( 3,032,437 )

comprehensive income attributable to non-controlling interest

Comprehensive (loss) income attributable to controlling interest

( 4,184,055 )

comprehensive (loss) income attributable to non-controlling interest

Comprehensive loss attributable to controlling interest

$ ( 2,950,799 )

$ ( 4,274,498 )

See accompanying notes to consolidated financial

7 unchanged sentences

$ ( 472,502 )

Net income attributable to Parent Company

Net loss attributable to Parent Company

( 3,762,848 )

Foreign exchange translation

1 unchanged sentence

Comprehensive income attributable to non-controlling interest

Sales of treasury stock

Stock based compensation

7 unchanged sentences

Issuance of stock related to stock option exercised

Comprehensive income attributable to non-controlling interest

Comprehensive loss attributable to non-controlling interest

Stock based compensation

8 unchanged sentences

CASH FLOW FROM OPERATING ACTIVITIES:

Net (loss) income

$ ( 2,944,659 )

Adjustments to reconcile net income to net cash provided by operating activities:

$ ( 3,672,405 )

Adjustments to reconcile net loss to net cash provided by operating activities:

Amortization of intangible assets

1 unchanged sentence

Bad debt expense

Forgiveness of payroll protection plan loan

Forgiveness of debts

Disposal of intangible assets

Amortization of right of use assets

Deferred tax benefit

Increase (decrease) in cash due to change in:

Increase (decrease) in cash due to change in working capital:

Accounts receivable

( 7,601,489 )

( 3,222,344 )

Prepaid expenses and other current assets

2 unchanged sentences

( 1,537,287 )

( 32,364,266 )

Income tax payable

Lease liabilities

Unearned revenue

Advance payment from customers

Accrued legal contingency expense

Accrued liabilities

Net cash (used in) provided by operating activities

Lease liabilities

Net cash used in operating activities

( 1,882,114 )

( 7,407,355 )

CASH FLOW FROM INVESTING ACTIVITIES:

1 unchanged sentence

( 10,391,654 )

( 10,950,625 )

Purchases of property and equipment

Payments for capitalized product development costs

( 1,631,376 )

Purchases of intangible assets

1 unchanged sentence

( 12,109,183 )

( 11,675,028 )

CASH FLOW FROM FINANCING ACTIVITIES:

Sales of common stock sold from treasury stock

Loan to an employee

Cash received from exercise of stock options

1 unchanged sentence

Effect of foreign currency translation

Net (decrease) increase in cash and cash equivalents

Net decrease in cash and cash equivalents

( 14,036,132 )

( 19,518,588 )

Cash and cash equivalents, beginning of year

3 unchanged sentences

$ ( 200,350 )

$ ( 4,124,485 )

See accompanying notes to consolidated financial

3 unchanged sentences

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.

of integrated wireless solutions utilizing the latest in 5G (fifth generation) and 4G LTE (fourth generation long-term evolution) technologies

including mobile hotspots, routers, fixed wireless routers, and various trackers.

Our integrated software subscription services provide

users remote capabilities including mobile device management (MDM) and software defined wide area networking (SD-WAN).

We have majority ownership

of Franklin Technology Inc.

(FTI), a research and development company based in Seoul, South Korea.

FTI primarily provides design and development

services for our wireless products.

Our products are generally

1 unchanged sentence

Our global customer base

extends primarily from North America, the Caribbean and South America, and Asia.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING

primarily extends from North America to Asia.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

This summary of significant

accounting policies of the Company is presented to assist in understanding the Company’s consolidated financial statements.

consolidated financial statements and notes are representations of the Company’s management, which is responsible for their integrity

and objectivity.

These accounting policies conform to GAAP and have been consistently applied in the preparation of the consolidated financial

Principles of Consolidation

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As of June 30, 2023, the non-controlling

interest was $ 1,569,605 , which represents a $ 90,443 increase from $ 1,479,162 as of June 30, 2021.

The increase in the non-controlling

interest of $ 90,443 was from income in the subsidiary of $268,716 incurred for the year ended June 30, 2022.

interest was $ 1,487,967 ,

which represents a $ 81,638

decrease from $ 1,569,605

as of June 30, 2022.

The decrease in the non-controlling interest of $81,638

was from loss in the subsidiary of $ 242,554

incurred for the year ended June 30, 2023.

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 North America, the Caribbean and South America, and Asia.

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 shall generate revenues

from three geographic areas, consisting of North America, the Caribbean and South America, and Asia.

The following enterprise-wide disclosure

5 unchanged sentences

North America

$ 183,771,146

Caribbean and South America

$ 184,115,345

Long lived assets by geographic area

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into cash, such as money market funds and certificates of deposit (see Note 3).

Use of Estimates

The preparation of the consolidated

8 unchanged sentences

an allowance for doubtful accounts was necessary as of June 30, 2023, and 2022.

Cash Flows Reporting

We follow ASC 230, Statements

of Cash Flows, for cash flows reporting, classifies cash receipts and payments according to whether they stem from operating, investing,

or financing activities and provides definitions of each category.

We use the indirect or reconciliation method (“Indirect method”)

as defined by ASC 230, Statement of Cash Flows, to report net cash flow from operating activities by adjusting net income to reconcile

it to net cash flow from operating activities by removing the effects of all deferrals of past operating cash receipts and payments and

all accruals of expected future operating cash receipts and payments and all items that are included in net (loss) income that do not

affect operating cash receipts and payments.

Related Parties

We follow ASC 850, “Related

Party Disclosures,” for the identification of related parties and disclosure of related party transactions.

Related parties are

any entities or individuals that, through employment, ownership or other means, possess the ability to direct or cause the direction of

our management and policies of the Company.

(Refer to NOTE 11–RELATED PARTY TRANSACTIONS)

Foreign Currency Translations

We have a majority-owned subsidiary

in foreign country, South Korea.

Fluctuations in foreign currency impact the amount of total assets, liabilities, earnings and cash flows

that we report for our foreign subsidiary upon the translation of these amounts into U.S.

Dollars for, and as of the end of, each reporting

In particular, the strengthening of the U.S.

Dollar generally will reduce the reported amount of our foreign-denominated cash,

cash equivalents, total revenues and total expense that we translate into U.S.

Dollars and report in our consolidated financial statements

for, and as of the end of, each reporting period.

However, a majority of our consolidated revenue is denominated in U.S.

therefore, our revenue is not directly subject to foreign currency risk.

accordance with FASB ASC 830, "Foreign Currency Matters" , when an operation has

transactions denominated in a currency other than its functional currency, they are measured in the functional currency.

Changes in the

expected functional currency cash flows caused by changes in exchange rates are included in net income for the period.

In accordance with ASC 842,

“Leases”, we determine whether an arrangement contains a lease at inception.

A lease is a contract that provides the right

to control an identified asset for a period of time in exchange for consideration.

For identified leases, we determine whether it should

be classified as an operating or finance lease.

Operating leases are recorded in the balance sheet as right-of-use asset (“ROU asset”)

and operating lease obligation.

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease

liabilities represent our obligation to make lease payment arising from the lease ROU assets and operating lease liabilities are recognized

at the commencement date of the lease and measure based on the present value of lease payment over the lease term.

The ROU asset also

includes deferred rent liabilities.

Our lease arrangement generally does not provide an implicit interest rate.

As a result, in such situations,

we use its incremental borrowing rate based on the information available at commencement date in determining the present value of lease

We include options to extend or terminate the lease when it is reasonably certain that it will exercise that option in the measurement

of its ROU assts and liabilities.

Lease expense for operating

lease is recognized on a straight-line basis over the lease term.

We are also electing not to apply the recognition requirements to short-term

leases of twelve months or less and instead will recognize lease payments as expense on a straight-line basis over the lease term.

Revenue Recognition

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We establish a provision for estimated warranty and returns.

Using historical averages, that provision for the year ended

June 30, 2022, was not material.

Using historical averages, that provisions for the years ended

June 30, 2023, and 2022, were not material.

Disaggregation of Revenue

In accordance with Topic 606,

we disaggregate revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred.

We determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606, which is to depict how the

nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

“Revenue from Contracts with Customers”, we disaggregate revenue from contracts with customers into geographical regions and

by the timing of when goods and services are transferred.

We determined that disaggregating revenue into these categories meets the disclosure

objective in Topic 606, which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional

economic factors.

Contract Balances

3 unchanged sentences

as soon as control of an asset is transferred, and a receivable is established.

We, however, recognize a contract liability when a customer

We, however, recognize 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

5 unchanged sentences

June 30, 2022

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, 2022 and June 30,

An amount of $837,000 is

included in the Accounts Receivable balance as of June 30, 2022, which is the direct result of an agreement between our vendor and our

customer where we acted as facilitator.

There is a corresponding balance of $837,000 in our Accounts Payable balance as of June 30, 2022.

We expect to settle our liability with the vendor once the amount is received from the customer.

Accounts Receivable, net

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, 2023, and June 30, 2022.

in the Accounts Receivable balance as of June 30, 2022, is a passthrough amount of $837,000.

These transactions were a direct result of

an agreement between our vendor and our customer.

There is a corresponding balance of $837,000 in our Accounts Payable account as of June

30, 2022, to offset.

These balances are removed as of June 30, 2023, since these pass-through charges are unlikely to ever be collected

due to the customer's refusal to pay.

There were no such balances as of June 30, 2023.

Our contract liabilities,

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

Schedule of contract liabilities

3 unchanged sentences

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.

inception, we assess the products and services promised in our contracts with customers.

We then identify performance obligations to transfer

distinct products or services to the customer.

To identify performance obligations, we consider all the products or services promised

in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

A performance obligation is

a promise in a contract to transfer a distinct good and/or service to the customer and is the unit of measurement in Topic 606.

inception, we assess the products and/or services promised in our contracts with customers.

We then identify performance obligations to

transfer distinct products and/or services to the customer.

To identify performance obligations, we consider all the products or services

promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Our performance obligations

1 unchanged sentence

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

sales for the year ended June 30, 2022.

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

and accounted for under 1% of net sales for the year ended June 30, 2022.

Most of our revenue that is recognized at a point in time is

for the sale of hot-spot router products.

Revenue from these contracts is recognized when the customer can direct the use of and obtain

substantially all of the benefits from the product, which generally coincides with title transfer at completion of the shipping process.

As of June 30, 2022, our contracts

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

sales for the year ended June 30, 2023, and 2022.

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

of a project and accounted for under 1% of net sales for the year ended June 30, 2023, and 2022.

Most of our revenue that is recognized

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

Revenue from these contracts is recognized when the customer can direct

the use of and obtain substantially all of the benefits from the product, which generally coincides with title transfer at completion

of the shipping process.

As of June 30, 2023, and 2022,

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

Cost of Goods Sold

11 unchanged sentences

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.

The capitalized product development costs are

amortized on a product-by-product basis using the greater of straight-line amortization or the ratio of the current gross revenues to

the current and anticipated future gross revenues.

The amortization begins when the products are available for general release to our

that are capitalized once technological feasibility is determined (noted as Technology in progress in the Intangible Assets table, in

Note 2 to Notes to Consolidated Financial Statements) include certifications, licenses, payroll, employee benefits, and other headcount-related

expenses associated with product development.

We determine that technological feasibility for our products is reached after all high-risk

development issues have been resolved.

Once the products are available for general release to our customers, we cease capitalizing the

product development costs and any additional costs, if any, are expensed.

The capitalized product development costs are amortized on a

product-by-product basis using the straight-line amortization.

The amortization begins when the products are available for general release

to our customers.

As of June 30, 2023, and June

3 unchanged sentences

development costs, and all costs incurred before technological feasibility is reached are expensed and included in our consolidated statements

of comprehensive income.

of comprehensive income (loss).

Research and Development Costs

6 unchanged sentences

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

Historically, the Company has no t experienced

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 statements of comprehensive income, were $ 246,290 and $ 723,617 for the years ended June 30, 2022, and 2021, 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 $ 234,681 and $ 246,290 for the years ended June 30, 2023, and 2022, respectively.

Cash and Cash Equivalents

For purposes of the consolidated

For the 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

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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:

Significant additions or improvements extending the useful lives of assets are capitalized.

Maintenance and repairs

of revenue nature are charged to expense as incurred.

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

lives as follows:

Useful lives of property and equipment

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assets consisted of the following as of June 30, 2023:

Intangible Assets

Schedule of definite lived intangible assets

Definite lived intangible assets:

Expected Life

Less Accumulated

Net Intangible

8 unchanged sentences

Expected Life

Less Accumulated

Net Intangible

5 unchanged sentences

Amortization expense recognized

during the years ended June 30, 2022, and 2021 was $ 579,012

and $ 435,571 , respectively.

ended June 30, 2021, we disposed the fully amortized intangible assets in the amount of $ 3,228,261

and a technology in progress in the amount of $ 140,192

as we identified it has the great unlikelihood of economic success based on its performance test results.

The amortization expenses

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

Schedule of Expected Amortization Expense

Long-lived Assets

during the years ended June 30, 2023, and 2022 was $ 839,595 and $ 579,012 , respectively.

The amortization expenses of the definite lived

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

Schedule of future amortization expense

Impairment of Long-lived Assets

In accordance with ASC 360,

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Stock-based compensation costs are reflected in the accompanying consolidated

statements of comprehensive income based upon the underlying recipients' roles within the Company.

statements of comprehensive (loss) income based upon the underlying recipients' roles within the Company.

The Company uses the asset

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(Loss) Earnings per Share Attributable to Common

Basic (loss) earnings per

share is calculated by dividing the net (loss) income by the weighted-average number of common shares that were outstanding for the period,

without consideration for potential common shares.

Diluted (loss) earnings per share is calculated by dividing the net (loss) income by

the sum of the weighted-average number of dilutive potential common shares outstanding for the period determined using the treasury-stock

method or the as-converted method.

Potentially dilutive shares are comprised of common stock options outstanding under our stock plan.

In accordance with ASC 260,

“Earnings per share”, basic (loss) earnings per share are calculated by dividing the net (loss) income by the weighted-average

number of common shares that were outstanding for the period, without consideration for potential common shares.

Diluted (loss) earnings

per share is calculated by dividing the net (loss) income by the sum of the weighted-average number of dilutive potential common shares

outstanding for the period determined using the treasury-stock method or the as-converted method.

Potentially dilutive shares are comprised

of common stock options outstanding under our stock plan.

Diluted EPS excludes all dilutive potential

common shares if their effect is anti-dilutive.

Concentrations of Credit Risk

2 unchanged sentences

We evaluate our accounts receivable on a regular basis for collectability and

provide for an allowance for potential credit losses as deemed necessary.

provide an allowance for potential credit losses as deemed necessary.

No reserve was required or recorded for any of the periods presented.

6 unchanged sentences

For the year ended June 30, 2023, net sales to our two largest customers represented

70 % and 13 % of our consolidated net sales, respectively, and 0 % of our accounts receivable balance as of June 30, 2022.

For the year ended

June 30, 2021, net sales to our two largest customers represented 63 % and 30 % of our consolidated net sales, respectively, and 0 % and

84 % of our accounts receivable balance as of June 30, 2021.

No other customer accounted for more than ten percent of total net sales.

approximately 61 % and 31 % of our consolidated net sales, respectively, and 27 % and 69 % of our accounts receivable balance as of June 30,

For the year ended June 30, 2022, net sales to our two largest customers represented 70 % and 13 % of our consolidated net sales,

respectively, and 0 % of our accounts receivable balance as of June 30, 2022.

No other customer accounted for more than ten percent of

total net sales.

For the year ended June 30,

2022, we purchased the majority of our wireless data products from two manufacturing companies located in Asia.

2023, we purchased the majority of our wireless data products from three manufacturing companies located in Asia.

If they were to experience

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For the year ended June 30, 2022, we purchased wireless data products from

these suppliers in the amount of $ 138,516,044 , or 99 % of total purchases, and had related accounts payable of $ 9,096,451 as of June 30,

our two suppliers in the amount of $ 22,319,313 , or 98.3 % of total purchases, and had related accounts payable of $ 7,409,273 as of June

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.

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 Issued Accounting Pronouncements

In June 2016, the FASB

issued Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses, which changes the methodology to be

used to measure credit losses for certain financial instruments and financial assets, including trade receivables.

methodology requires the recognition of an allowance that reflects the current estimate of credit losses expected to be incurred

over the life of the financial asset.

The Company adopted the standard on July 1, 2020.

The new standard did not have a material

impact on its consolidated financial statements.

In February 2018, the FASB

issued Accounting Standards Update (ASU) 2018-02, Income Statement—Reporting Comprehensive Income (Topic 220):

Reclassification

of Certain Tax Effects from Accumulated Other Comprehensive Income.

Under the amendments in ASU 2018-02, an entity may elect to reclassify

the income tax effects of the Tax Cuts and Jobs Act of 2017 on items within accumulated other comprehensive income to retained earnings.

The adoption of this update does not have a material impact the Company’s consolidated financial statements.

In December 2019, the

FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes, which among other things, eliminates

certain exceptions in the current rules regarding the approach for intraperiod tax allocations and the methodology for calculating

income taxes in an interim period, and clarifies the accounting for transactions that result in a step-up in the tax basis of

The Company adopted the standard on July 1, 2021.

The new standard did not have a material impact on its consolidated

financial statements.

In September 2022,

the FASB issued ASU No.

2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50) .

The ASU requires disclosure of

the key terms of outstanding supplier finance programs and a rollforward of the related obligations.

The ASU does not affect the recognition,

measurement or financial statement presentation of supplier finance program obligations.

The ASU is effective for annual and interim periods

beginning after December 15, 2022, except for the rollforward requirement, which is effective for annual periods beginning after December

There was no impact to the consolidated financial statements.

NOTE 3 - FAIR VALUE MEASUREMENTS

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Less accumulated depreciation

Depreciation expense associated

with property and equipment was $ 87,743 and $ 90,322 for the fiscal years ended June 30, 2022, and 2021, respectively, and is included

in selling, general, and administrative expenses on the consolidated statements of comprehensive (loss) income.

For the years ended June

30, 2022 and 2021, we disposed of fully depreciated property and equipment in the amounts of $ 4,175 and $ 812,416 , respectively.

Depreciation expense

associated with property and equipment was $ 51,970

and $ 87,743 for the

years ended June 30, 2023, and 2022, respectively, and is included in selling, general, and administrative expenses on the

consolidated statements of comprehensive (loss) income.

For the years ended June 30, 2023, and 2022, we have written off

fully depreciated property and equipment in the amounts of $ 265,071

and $ 4,175 ,

respectively.

NOTE 5 - ACCRUED LIABILITIES

Accrued liabilities consisted

Accrued liabilities consist

of the following as of:

3 unchanged sentences

Accrued payroll deductions owed to government entities

Accrued salaries and bonuses

Accrued vacation

4 unchanged sentences

NOTE 6 - INCOME TAXES

Income tax (benefit) provision

for the years ended June 30, 2022, and 2021 consists of the following:

Schedule of Income tax provision from continuing operations

Income tax benefit for the

years ended June 30, 2023, and 2022 consists of the following:

Schedule of income tax benefit

Year Ended June 30,

2 unchanged sentences

Total Current income tax expense (benefit)

Deferred income tax (benefit) expense:

Deferred income tax benefit:

Total deferred income tax expense (benefit)

(Benefit) provision for income taxes

Benefit for income taxes

$ ( 886,659 )

The (benefit) provision 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:

$ ( 1,037,068 )

The benefit 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:

Schedule of effective income tax rate

2 unchanged sentences

$ ( 810,281 )

$ ( 982,130 )

State tax, net of federal tax benefit

2 unchanged sentences

Foreign rate difference

Forgiveness of payroll protection plan loan

Change in valuation allowance

(Benefit) provision for income taxes

Benefit for income taxes

$ ( 886,659 )

$ ( 1,037,068 )

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.

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:

5 unchanged sentences

Lease accounting, net

Legal contingency expense reserve

Inventory reserve

3 unchanged sentences

Property and equipment, net

Unrealized gain (loss)

Total deferred tax liabilities

12 unchanged sentences

As of June 30, 2023, we have

federal and state net operating loss carryforwards of approximately $ 3.3 million and $ 40,000 , respectively.

Under the Tax Cuts and Jobs

Act, which was signed into law on December 22, 2017, the federal net operating loss of approximately $ 2.5 million, which was recognized

federal and state net operating loss carryforwards of approximately $ 2.5 million and $ 0.5 million , respectively.

Under the Tax Cuts and

Jobs Act, which was signed into law on December 22, 2017, the federal net operating loss of approximately $ 2.5 million , which was recognized

on or after January 1, 2018, will carry forward indefinitely.

The federal net operating loss of approximately $ 0.8 million, which was

recognized on or before December 31, 2017, will expire through 2035 .

The state net operating loss of approximately $ 40,000 will begin

to expire through 2042.

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.

There is $ 0 federal net operating loss, which was recognized on or before

December 31, 2017.

The state net operating loss of approximately $ 0.5 million will begin to expire through 2043.

The utilization of net

operating loss carryforwards may be subject to limitations under provisions of the Internal Revenue Code Section 382 and similar state

We apply the provisions of

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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:

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

Schedule of unrecognized tax benefits

4 unchanged sentences

Balance as of June 30, 2023

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 paid.

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

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 paid.

Our policy is to

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

We have not recorded any interest

9 unchanged sentences

from an in-the-money option exercise are used towards repurchasing common shares in the market.

For the year ended June 30, 2022, we were

in a net loss position and have excluded 766,001 stock options from the calculation of diluted net loss per share because these securities

are anti-dilutive.

For the year ended June 30, 2021, we have calculated the diluted effect of common stocks arising from 484,000 stock

For the years ended June 30,

2023, and 2022, we were in a net loss position and have excluded 647,001 and 766,001 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) earnings per share is as follows:

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

Schedule of earnings per share

Year Ended June 30,

Net (loss) income attributable to Parent Company

Net loss attributable to Parent Company

$ ( 2,863,021 )

$ ( 3,762,848 )

Weighted-average shares of common stock outstanding:

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Diluted Outstanding shares

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

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

Basic loss per share attributable to Parent Company stockholders

Diluted loss per share attributable to Parent Company stockholders

NOTE 8 - COMMITMENTS AND CONTINGENCIES

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in the period of adoption.

The Company, effective July

1, 2019 has adopted the provisions of the new standard.

The Company decided to use the practical expedients available upon adoption of

Topic 842 to aid the transition from current accounting to provisions of Topic 842.

The package of expedients will effectively allow the

Company to run off existing leases, as initially classified as operating and classify new leases after implementation under the new standard

as the business evolves.

The Company has an operating

lease principally for both Franklin Wireless Corp.

and Franklin Technologies Inc.

Management evaluates each lease independently to determine

the purpose, necessity to its future operations in addition to other appropriate facts and circumstances.

The Company adopted Topic 842 using a modified retrospective approach

for its existing lease at July 1, 2019.

The adoption of Topic 842 impacted the Company’s balance sheet by the recognition of the

operating lease right-of-use assets and the liability for operating leases.

The lease liability is based on the present value of the remaining

lease payments, discounted using a market based incremental borrowing rate as the effective date of July 1, 2019 using current estimates

as to lease term including estimated renewals for each operating lease.

We adopted ASC 842 as of July

We had an operating lease principally for both Franklin Wireless Corp.

and Franklin Technologies Inc., in accordance with

Adoption of the standard resulted in the initial recognition of operating lease right-of-use (“ROU”) assets and operating

lease liabilities of $ 1,501,203 and $ 1,507,367 , respectively, as of July 1, 2019, with the difference due to the existing lease liabilities

We determine whether an arrangement

contains a lease at inception.

A lease is a contract that provides the right to control an identified asset for a period of time in exchange

for consideration.

Operating leases are recorded in the balance sheet as right-of-use asset (“ROU asset”) and operating lease

ROU assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent

our obligation to make lease payment arising from the lease ROU assets and operating lease liabilities are recognized at the commencement

date of the lease and measure based on the present value of lease payment over the lease term.

The ROU asset also includes deferred rent

Our lease arrangement generally does not provide an implicit interest rate.

As a result, in such situations, we use its incremental

borrowing rate based on the information available at commencement date in determining the present value of lease payments.

options to extend or terminate the lease when it is reasonably certain that it will exercise that option in the measurement of its ROU

assets and liabilities.

Lease expense for operating lease is recognized on a straight-line basis over the lease term.

We are also electing

not to apply the recognition requirements to short-term leases of twelve months or less and instead will recognize lease payments as expense

on a straight-line basis over the lease term .

On September 9, 2015, we signed

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These leases expired on August

31, 2022 but extended by an additional twelve months to August 31, 2023.

31, 2023, and were extended by an additional twelve months to August 31, 2024.

In addition to monthly rent, the leases provide for periodic

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located in Seoul, Korea, primarily for our employees who travel, under a non-cancelable operating lease that expired on September 4, 2023,

and extended by an additional twelve months to September 4, 2023.

Rent expense for the years

ended June 30, 2022, and 2021 was $ 446,057 and $ 446,614 ,

respectively.

Future minimum payments under operating leases are as follows:

and were extended by an additional twelve months to September 4, 2024.

Short-term leases with initial terms of twelve months or less are

not capitalized, and our leases of the South Korean offices and corporate housing facility have been considered as short-term lease.

The components of lease expense

and supplemental cash flow information related to leases for the years ended June 30, 2023, and 2022 are as follows:

As of June 30, 2023, we used

discount rates of 4.0 % in determining

our operating lease liabilities for the office spaces in San Diego, California.

This rate represented our incremental borrowing rates

at that time.

Short-term leases with initial terms of twelve months or less are not capitalized, and our lease of the South Korean offices

has been considered as short-term lease.

Our San Diego office lease was extension of previous lease and did not contain any further extension

Rent expenses for the years ended June 30, 2023, and 2022 were $ 445,548

and $ 446,057 , respectively.

In accordance with ASC 842, the components of the lease expense were as follows:

Schedule of components of lease expense

Years ended June 30,

Operating lease expense

Short term lease cost

Total lease expense

Remaining lease term-operating leases

Discount rate-operating lease

In accordance with ASC 842,

maturity of operating lease liabilities as of June 30, 2023, was as follows:

Schedule of future minimum rental payments for operating leases

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Total Obligations

As of June 30, 2022, we used

discount rates of 4.0 % in determining our operating lease liabilities for the office spaces in San Diego, California.

This rate represented

our incremental borrowing rates at that time.

Short-term leases with initial terms of twelve months or less are not capitalized, and our

lease of the South Korean offices has been considered as short-term lease.

Our San Diego office lease was extension of previous lease

and did not contain any further extension provisions.

Future minimum payments under

operating leases are as follows:

Maturities of lease liabilities

Schedule of future minimum rental payments for operating leases

Operating Leases

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On April 8, 2021, Verizon

issued a press release announcing that it is working with the U.S.

issued a press release announcing that it was working with the U.S.

Consumer Product Safety Commission (CPSC) to conduct a voluntary recall

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supply them to Verizon.

first advised us of one alleged Jetpack device failure at the end of February 2021.

We immediately began meeting with Verizon and requested

access to the device.

Verizon first advised us of

one alleged Jetpack device failure at the end of February 2021.

We immediately began meeting with Verizon and requested access to the

We also began internal testing to evaluate device performance.

We did not receive any further incident information

until the last week of March 2021.

On April 1, 2021 we issued a press release announcing that we had received reports from Verizon about

potential issues with the batteries in the devices.

We did not receive any further incident information until the last

week of March 2021.

On April 1, 2021 we issued a press release announcing that we had received reports from Verizon about potential issues

with the batteries in the devices.

On April 9, 2021 we issued a press release announcing the voluntary recall by Verizon.

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Future Impact on Financial

We are striving to avoid any litigation arising from the recall and

have not been served with any legal action relating to the products covered by the recall.

We are not currently able to estimate the financial

impact of the recall on our future operations.

At this time, we do not have information that identifies the cause of the alleged incidents.

We also do not have any specific legal claims or theories of causation for device failure incidents that would help us estimate the cost

of potential future litigation.

No liability has been recorded for this litigation because the Company believes that any such liability

is not probable and reasonably estimable at this time.

We are striving to avoid any

litigation with Verizon arising from the recall and have not been served with any legal action by Verizon relating to the products covered

by the recall.

We are not currently able to estimate the financial impact of the recall on our future operations.

At this time, we do

not have information that identifies the cause of the alleged incidents.

We also do not have any specific legal claims or theories of

causation for device failure incidents that would help us estimate the cost of potential future litigation.

No liability has been recorded

for this litigation because the Company believes that any such liability is not probable and reasonably estimable at this time.

Anydata, Inc .

We entered into a Professional

Services Agreement with Anydata Corp.

(“Anydata”) for the product ACT233F Smart Link OBD device on May 5, 2017, for a minimum

purchase commitment of 250,000 units.

We delivered approximately 25,000 units and 7,000 units during our second and fourth quarters of

fiscal 2018, respectively, and an additional 18,000 units during our first quarter of fiscal 2019.

Sales to Anydata were approximately

$1.8 million for the year ended June 30, 2019.

We received information that Anydata may not be able to fulfill the entire purchase commitment

for which parts have already been ordered with our main vendor, Quanta.

We believe that the Company will be able to supply some of the

products to another customer and we received personal guarantees from the ownership group of Anydata.

As of June 30, 2019, the remaining

unfulfilled purchase commitment was approximately $3.1 million.

The total product purchase commitment with Quanta was approximately $2.9

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, and for the quarter ended December 31, 2020, the prepaid expense of $ 149,580

has been recorded as a cost of goods sold.

As of June 30, 2023, there is a reasonable possibility we may incur a loss;

however, the amount

is not estimable at this time.

On January 25, 2021, we commenced legal action against Anydata and its principal officers in San Diego

Superior Court, case number 37-2021-00003468-CU-BC-CTL.

Subsequent to June 30, 2023, a confidential settlement has been reached

between the parties for an immaterial amount and as of the date of this report, the action is expected to be dismissed within the next

Shareholder Litigation

A shareholder action, Ali

A shareholder action,

Franklin Wireless Corp.

Case #3:21-cv-00687-AJB-MSB, was filed in the U.S.

District Court, Southern District of California

(San Diego) on April 16, 2021, alleging, among other things, that we had prior knowledge that the recall was likely and that we did not

disclose that information to investors in a timely manner.

We believe these allegations are not supported by the facts and we will vigorously

defend against such claims.

Discovery is ongoing at this time.

District Court, Southern District of

California (San Diego) on April 16, 2021, alleging, among other things, that we had prior knowledge that the Verizon recall was

likely and that we did not disclose that information to investors in a timely manner.

The Class and Defendants have executed a

Stipulation and Agreement of Settlement under which the Class releases all claims against Defendants in exchange for a payment by

Defendants of $ 2.4

million (the “Settlement Amount”), which is reflected in liabilities under “accrued legal contingency

expense” with a corresponding charge to “loss from a legal contingency”.

The Class has submitted a motion for

preliminary approval of the settlement, which the Court has not yet ruled on.

If and when the Court grants preliminary approval of

the Settlement, Defendants will be required to deposit the Settlement Amount into an escrow account established to administer the

Harwood / Martin

A legal action was filed in

District Court, Southern District of California (San Diego) against Franklin, as a nominal defendant, Stephen Norwood Derivatively

District Court, Southern District of California (San Diego) against Franklin, as a nominal defendant, by Stephen Harwood, derivatively

on behalf of nominal defendant Franklin Wireless Corp.

OC Kim, Et al., Case #21cv01837-JAH-DEB, on or about October 29, 2021, claiming

Kim, et al., Case #21cv01837-AJB-MSB, on or about October 29, 2021, claiming

among other things, that we had prior knowledge that the recall was likely and that we did not disclose that information to investors

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on behalf of nominal defendant Franklin Wireless Corp.

OC Kim, Et al., Case #21cv2091-CAB-KSC, on or about December 15, 2021, claiming

Kim, et al., Case #21cv2091-AJB-MSB, on or about December 15, 2021, claiming

among other things, that we had prior knowledge that the recall was likely and that we did not disclose that information to investors

2 unchanged sentences

The Harwood and Martin actions

have recently been consolidated into a single action in the U.S.

District Court, Southern District of California (San Diego) titled “In

re Franklin Wireless Corp.

have been consolidated into a single action in the U.S.

District Court, Southern District of California (San Diego) titled “In re

Franklin Wireless Corp.

Derivative Litigation”, Case No.:

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on behalf of nominal defendant Franklin Wireless Corp.

OC Kim, Et al., Case # CV22-00471, on or about March 21, 2022, claiming among

Kim, et al., Case # CV22-00471, on or about March 21, 2022, claiming among

other things, that we had prior knowledge that the recall was likely and that we did not disclose that information to investors in a timely

6 unchanged sentences

Profits Litigation

A legal action was filed in the U.S.

District Court, Southern District

of California (San Diego) against Franklin, as a nominal defendant, Nosirrah Management LLC v.

Franklin Wireless et al.

Case # 3:21-cv-01316-CAB-JLB,

on or about July 22, 2021, claiming that our Chief Executive Officer, OC Kim, violated Section 16(b) of the Securities Exchange Act of

1934 for receiving “short-swing” profits from a sale and purchase of Franklin shares, in violation of that Act.

the allegations are not supported by the facts and we intend to vigorously defend against these claims.

No liability has been recorded

for this litigation because the Company believes that any such liability is not probable and reasonably estimable at this time.

We entered into a Professional

Services Agreement with Anydata Corp.

(“Anydata”) for the product ACT233F Smart Link OBD device on May 5, 2017, for a minimum

purchase commitment of 250,000 units.

We have delivered approximately 25,000 units and 7,000 units during our second and fourth quarters

of fiscal 2018, respectively, and an additional 18,000 units during our first quarter of fiscal 2019.

Sales to Anydata were approximately

$1.8 million for the year ended June 30, 2019.

We have received information that Anydata may not be able to fulfill the entire purchase

commitment for which parts have already been ordered with our main vendor, Quanta.

We believe that the Company will be able to supply

some of the products to another customer and has received personal guarantees from the ownership group of Anydata.

As of June 30, 2019,

the remaining unfulfilled purchase commitment was approximately $ 3.1 million.

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, and for the quarter ended December 31, 2020, the prepaid

expense of $ 149,580 has been recorded as a cost of goods sold.

As of March 31, 2022, there is a reasonable possibility we may incur a

however, the amount is not estimable at this time.

On January 25 th , 2021, we commenced legal action against Anydata and

its principal officers in San Diego Superior Court, case number 37-2021-00003468-CU-BC-CTL.

As of the date of this report, litigation

is continuing, and the action is not yet resolved.

In March 2020, the World Health

Organization declared the outbreak of a novel coronavirus (COVID-19) as a pandemic which continues to spread throughout the United States.

On March 19, 2020, the Governor of California declared a health emergency and issued an order to close all nonessential businesses until

further notice.

As a maker of wireless connectivity devices, we are deemed to be an essential business.

Nonetheless, out of concern for

our workers and pursuant to the government order, we reduced the scope of our operations and, where possible, certain workers began telecommuting

from their homes.

The continued spread of COVID-19 may result in a period of business disruption, including delays or disruptions in our

supply chain.

The spread of COVID-19, or another infectious disease, could also negatively affect the operations at our third-party manufacturers,

which could result in delays or disruptions in the supply of our products.

While we expect this situation may increase demand for its

products, the related impact cannot be reasonably estimated at this time.

A legal action was filed in

District Court, Southern District of California (San Diego) against Franklin, as a nominal defendant, Nosirrah Management LLC

Franklin Wireless et al., Case # 3:21-cv-01316-RSH-JLB, on or about July 22, 2021, claiming that our Chief Executive Officer, O.C.

Kim, violated Section 16(b) of the Securities Exchange Act of 1934 for receiving “short-swing” profits from a sale and purchase

of Franklin shares, in violation of that Act.

We believe the allegations are not supported by the facts and we intend to vigorously defend

against these claims.

No liability has been recorded for this litigation because the Company believes that any such liability is not probable

and reasonably estimable at this time.

Change of Control Agreements

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all of our assets.

The Change of Control Agreement

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.

Lee calls for a

payment of $2 million upon a change of control.

The Change in Control Agreements, dated October 1, 2020, have been extended through

September 30, 2024.

Severance Agreement

November 10, 2022 the Company and OC Kim, its President, entered into an amendment of the employment letter agreement dated September

The amendment provides for a severance payment of $3 million if Mr.

Kim voluntarily terminates his employment by the Company

or if he voluntarily terminates his employment due to a “change in circumstances,” generally defined as a material breach

by the Company of its salary and benefit obligations or a significant reduction in Mr.

Kim’s title or responsibilities.

of a termination of employment by the Company for cause (generally defined as conviction of a felony, or a misdemeanor where imprisonment

is imposed, commission of any act of theft, fraud, dishonesty, or material falsification of any employment or Company records, or improper

disclosure of the Company's confidential or proprietary information), the Company is to make a severance payment of $1,500,000.

case, any unvested options become immediately vested.

the amendment, Mr.

Kim also agrees that, for a period of two years after termination, he will not disparage the Company or its officers,

solicit any of its employees to terminate their employment, or disclose any of the Company’s proprietary information.

addition, the amendment provides for the payment of an incentive bonus to Mr.

Kim of $125,000 for each calendar quarter during the remaining

four year term of the employment letter, with the first such bonus due on December 31, 2022.

Loan Agreement with Subsidiary

On March 21, 2022, Franklin Wireless Corp.

“Company”) entered into a Loan Agreement with Franklin Technology Incorporation, a Republic of Korea corporation (“FTI”),

under which the Company agreed to loan US$ 10,000,000 to FTI.

The Company owns a majority of the outstanding equity of FTI.

primary business is providing design and development services to the Company for our wireless products.

As part of the loan transaction,

FTI delivered a $10 million Promissory Note to the Company (the “Note”).

The purpose of the loan is to allow FTI to purchase

a facility in South Korea to house its operations, and to provide it with additional working capital.

The purchase of such a facility

with the loan proceeds is subject to the Company’s reasonable approval.

Upon acquisition of the facility, FTI is required to grant

the Company a mortgage on it to secure payment of the Note.

The Note is for a term of five years, provides

for annual payments of interest at 2% per annum, and is due and payable upon maturity.

The Note and Loan Agreement include customary provisions

for default and acceleration upon default, and a default interest rate of 7% per annum.

International Tariffs

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of Directors adopted the 2020 Franklin Wireless Corp.

Stock Option Plan, which covers 800,000 shares of Common Stock.

The Plan provide

for the grant of incentive stock options, non-qualified stock options and restricted stock to our employees, directors, and independent

These options will have such vesting or other provisions as may be established by the Board of Directors at the time of each

Stock Option Plan, which covers 800,000

shares of Common Stock.

The Plan provide for the grant of incentive stock options, non-qualified stock options and restricted

stock to our employees, directors, and independent contractors.

These options will have such vesting or other provisions as may be established

by the Board of Directors at the time of each grant.

The estimated forfeiture rate

12 unchanged sentences

Exercisable as of June 30, 2023

The aggregate

intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price

of $3.1727 as of June 30, 2022, which would have been received by the option holders had all option holders exercised their options as

of that date.

The weighted-average grant-date fair value of stock options outstanding as of June 30, 2022, in the amount of 766,001 shares

was $ 3.17 per share.

The aggregate intrinsic value

in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $3.73 as of

June 30, 2023, which would have been received by the option holders had all option holders exercised their options as of that date.

weighted-average grant-date fair value of stock options outstanding as of June 30, 2023, in the amount of 647,001 shares was $ 3.34 per

As of June 30, 2023, there

was unrecognized compensation cost of $ 542,807 related to non-vested stock options granted.

10 – STOCKHOLDERS’ EQUITY

have been authorized to issue 50,000,000 shares of common stock, $ 0.001 par value.

Each share of issued and outstanding common stock shall

entitle the holder thereof to fully participate in all shareholder meetings, to cast one vote on each matter with respect to which shareholders

have the right to vote, and to share ratably in all dividends and other distributions declared and paid with respect to common stock,

as well as in the net assets of the corporation upon liquidation or dissolution.

December 22, 2022, we issued 100,000 common shares in conjunction with stock-based compensation awards.

There were 11,784,280

and 11,684,280 shares issued and outstanding as of June 30, 2023, and 2022, respectively.

have been authorized to issue 10,000,000 shares

of preferred stock.

$0.001 0.001 par

value, but no preferred

stock is issued and outstanding as of June 30, 2023 and 2022.

had 2,549,208 shares of treasury stock, valued at $ 3,554,893 (based on the costs that we agreed to repurchase) as of June 30, 2023 and

NOTE 11 – RELATED PARTY TRANSACTIONS

For the years ended June

30, 2023, and 2022, there have not been any transactions, except as disclosed in Note 8, entered into or been a participant in which a

related person had or will have a direct or indirect material interest.

NOTE 12 - SUBSEQUENT EVENTS

The FASB issued ASC 855,

“Subsequent Events.” ASC 855 establishes general standards of accounting for and disclosure of events that occur after the

balance sheet date but before financial statements are issued or are available to be issued.

The Company has evaluated all events or transactions

that occurred after June 30, 2023, up through the date the financial statements were available to be issued.

During these periods,

the Company did not have any material recognizable subsequent events required to be disclosed to the financial statements as of September

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

Item 9A. Controls and Procedures