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Item 7. Management’s Discussion and Analysis

2025-09-29 compared with 2024-09-30 · 160 added, 209 removed, 147 unchanged (72% of the section changed)

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CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis

of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included

elsewhere in this report.

This report contains certain forward-looking statements relating to future events or our future financial performance.

These statements are subject to risks and uncertainties which could cause actual results to differ materially from those discussed in

You are cautioned not to place undue reliance on this information which speaks only as of the date of this report.

not obligated to publicly update this information, whether as a result of new information, future events or otherwise, except to the extent

we are required to do so in connection with our obligation to file reports with the SEC.

For a discussion of the important risks to our

business and future operating performance, see the discussion under the caption “Item 1A.

Risk Factors” and under the caption

“Factors That May Influence Future Results of Operations” below.

In light of these risks, uncertainties and assumptions, the

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

The following discussion and

analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related

notes included elsewhere in this report.

This report contains certain forward-looking statements relating to future events or our future

financial performance.

These statements are subject to risks and uncertainties which could cause actual results to differ materially from

those discussed in this report.

You are cautioned not to place undue reliance on this information which speaks only as of the date of

We are not obligated to publicly update this information, whether as a result of new information, future events or otherwise,

except to the extent we are required to do so in connection with our obligation to file reports with the SEC.

For a discussion of the

important risks to our business and future operating performance, see the discussion under the caption “Item 1A.

Risk Factors”

and under the caption “Factors That May Influence Future Results of Operations” below.

In light of these risks, uncertainties

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

BUSINESS OVERVIEW

Doing business

as “FranklinAccess”, we are a leading global provider of integrated wireless solutions utilizing the latest 5G (fifth generation)

and 4G LTE (fourth generation long-term evolution) technologies including mobile hotspots, fixed wireless routers, and mobile device management

(MDM) solutions.

We are a leading enabler of the Digital Divide initiative, and our expertise extends to innovation in Internet of Things

(IOT) and machine-to-machine (M2M) applications, driving forward seamless communication and connectivity for both individuals and enterprises.

majority ownership of Franklin Technology Inc.

Doing business as “Franklin

Access”, we are a leading global provider of integrated wireless solutions utilizing the latest 5G (fifth generation) and 4G LTE

(fourth generation long-term evolution) technologies including mobile hotspots, fixed wireless routers, and mobile device management (MDM)

We are a leading enabler of the Digital Divide initiative, and our expertise extends to innovation in Internet of Things (IOT)

and machine-to-machine (M2M) applications, driving forward seamless communication and connectivity for both individuals and enterprises.

We hold a 66.3% ownership

in Franklin Technology Inc.

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

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design and development services for our wireless products.

Our products are generally

marketed and sold directly to wireless operators and indirectly through strategic partners and distributors.

Our primary markets are in

North America and Asia.

FACTORS THAT MAY INFLUENCE FUTURE RESULTS OF OPERATIONS

We hold a 60% ownership interest in Sigbeat Inc., based in San Diego, California

(“Sigbeat”), which will engage in worldwide sales, marketing, customer support and operations for telecommunications modules.

Our products are generally marketed and sold directly to wireless operators and indirectly through strategic partners and distributors.

Our primary markets are in North America and Asia.

FACTORS THAT MAY INFLUENCE FUTURE RESULTS OF

We believe that our revenue

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defect rates experienced by end users of our hardware and software products.

We have entered into and

expect to continue to enter into new customer relationships and contracts for the supply of our products, and this may require significant

demands on our resources, resulting in increased operating, selling, and marketing expenses associated with such new customers.

We continuously evaluate

the performance of our hardware and software products to discover defects that can adversely affect our revenue, income, and the price

of our stock.

We have entered into and expect

to continue to enter into new customer relationships and contracts for the supply of our products, and this may require significant demands

on our resources, resulting in increased operating, selling, and marketing expenses associated with such new customers.

We continuously evaluate the

performance of our hardware and software products to discover defects that can adversely affect our revenue, income, and the price of

If defects occur that customers believe are either severe in nature or excessively frequent in occurrence, customers could

stop buying our products and services and the value of our stock may decrease.

We are also seeing that

demand from end-users has been shifting in the post-pandemic economy as remote education and work from home trends are declining.

demand for mobile device management (MDM) services has been declining.

We are working to improve and further enhance our software service

offerings to address this change in the market.

We are also seeing that demand

from end-users has been shifting in the post-pandemic economy as remote education and work from home trends are declining.

Current demand

for mobile device management (MDM) services has been declining.

We are working to improve and further enhance our software service offerings

to address this change in the market.

CRITICAL ACCOUNTING POLICIES

Revenue Recognition

The Company accounts for its revenue

We account for our revenue

according to ASC 606, “Revenue from Contracts with Customers”, pursuant to which, revenue is recognized when the control of

the promised goods or services is transferred to the customers, and the performance obligations under the contract have been satisfied,

in an amount that reflects the consideration expected to be entitled to in exchange for those goods or services.

The Company determines revenue

recognition through the following steps:

(1) identify the contract(s) with a customer, (2) identify the performance obligations

in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the

in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

We determine revenue recognition

through the following steps:

(1) identify the contract(s) with a customer, (2) identify the performance obligations in

the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the

contract, and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

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We establish a provision for estimated warranty and returns.

Using historical averages, that provisions for the years ended

Using historical averages, provisions for the years ended

June 30, 2025 and 2024, were not material.

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Contract Balances

We perform our obligations under

a contract with a customer by transferring products in exchange for consideration from the customer.

We perform our obligations

under a contract with a customer by transferring products in exchange for consideration from the customer.

We typically invoice our customers

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the goods and/or services.

The balances of

our trade receivables are as follows:

The balances of our trade

receivables are as follows:

June 30, 2025

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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, 2024, and June 30, 2023.

Our contract liabilities and advance

from customers are as follows:

We did not have any un-invoiced receivables in the periods

ended June 30, 2025 and 2024.

Our contract liabilities are

June 30, 2025

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Undelivered products

Accrued marketing development funds

Performance Obligations

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.

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.

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

Our performance obligations are

satisfied at a point in time.

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

for the year ended June 30, 2024 and 2023.

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 years ended June 30, 2024 and 2023.

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

Our performance obligations

are satisfied at a point in time.

Revenue from products transferred to customers at a single point in time accounted for 99.2% and 98.8%

of net sales for the years ended June 30, 2025 and 2024.

Revenue recognized over a period of time is based on the percent completion of

a project and accounted for under 1.0% and 1.2% of net sales for the years ended June 30, 2025 and 2024, respectively.

The majority of

our revenue recognized at a point in time is for the sale of hotspot router products.

Revenue from these contracts is recognized when

the customer is able to direct the use of and obtain substantially all of the benefits from the product, which generally coincides with

title transfer at completion of the shipping process.

As of June 30, 2025 and 2024,

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in our consolidated statements of comprehensive income (loss).

Deferred income tax assets and

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

Deferred income tax assets

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

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

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$0.5 million, respectively.

Under the Tax Cuts and Jobs Act

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

Under the Tax Cuts and Jobs

Act (the “Act”), which was signed into law on December 22, 2017, the federal net operating loss of approximately $2.7 million,

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

The state net operating loss of approximately $0.7

million will begin to expire through 2043.

million will begin to expire in 2043.

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

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RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Refer to NOTE 2 - SUMMARY OF SIGNIFICANT

ACCOUNTING POLICIES in the Consolidated Financial Statements.

Refer to NOTE 2 - SUMMARY

OF SIGNIFICANT ACCOUNTING POLICIES in the Consolidated Financial Statements.

RESULTS OF OPERATIONS

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NET SALES - Net sales

decreased by $15,151,826, or 33.0%, to $30,796,690 for the year ended June 30, 2024 from $45,948,516 for the corresponding period of 2023.

For the year ended June 30, 2024, net sales by geographic regions, consisting of North America and Asia, were $30,699,727 (99.7% of net

sales) and $96,963 (0.3% of net sales), respectively.

For the year ended June 30, 2023, net sales by geographic regions, consisting of

North America and Asia, were $45,782,084 (99.6% of net sales) and $166,432 (0.4% of net sales), respectively.

Net sales in North America decreased

by $15,082,357, or 32.9%, to $30,699,727 for the year ended June 30, 2024, from $45,782,084 for the corresponding period of 2023.

decrease in net sales in North America was primarily due to the reduced demand from two major carriers by approximately 50% and 26%, compared

to the corresponding period of 2023.

Net sales in Asia decreased by $69,469, or 41.7%, to $96,963 for the year ended June 30, 2024, from

$166,432 for the corresponding period of 2023.

The decrease in net sales was primarily due to the reduced demand (approximately 61%) for

a newly launched wireless product from a customer of FTI.

GROSS PROFIT - Gross profit

decreased by $3,512,392, or 50.0%, to $3,508,350 for the year ended June 30, 2024, from $7,020,742 for the corresponding period of 2023.

The gross profit in terms of net sales percentage was 11.4% for the year ended June 30, 2024, compared to 15.3% for the corresponding

period of 2023.

The decrease in gross profit was primarily due to the change in net sales as described above.

The decrease in gross profit

in terms of net sales was the mixed results of competitive selling prices and the increase in production costs as well as the increased

amortization expenses associated with the completed capitalized product development costs that are included in the cost of goods sold

compared to the corresponding period of 2023.

OPERATING EXPENSES - Operating

expenses increased by $77,788, or 0.8%, to $9,448,105 for the year ended June 30, 2024, from $9,370,317 for the corresponding period of

Selling, general, and administrative

expenses increased by $589,702 to $6,041,355 for the year ended June 30, 2024, from $5,451,653 for the corresponding period of 2023.

increase in selling, general, and administrative expenses was primarily due to the increased legal expenses of approximately $540,000.

Research and development expenses decreased by $511,914 to $3,406,750 for the year ended June 30, 2024, from $3,918,664 for the corresponding

period of 2023.

The decrease in research and development expense was primarily due to the decreased research and development costs and

the related payroll expense of approximately $250,000 and $260,000, respectively, which is the mixed result of the timing of research

and development activities and the number of active projects and typically vary from period to period.

OTHER INCOME (EXPENSE), NET

- Other income (expense), net increased by $2,305,527, or 155.6%, to $823,784 for the year ended June 30, 2024, from ($1,481,743) for

the corresponding period of 2023.

The increase was primarily due to the decreased loss from the agreement in principle to settle a legal

action of $2,400,000, the increased loss from unfavorable changes in foreign currency exchange rates in FTI of approximately $360,000,

which were offset by the increased interest income earned from the money market accounts and certificates of deposit of approximately

YEAR ENDED JUNE 30, 2023, COMPARED TO YEAR ENDED JUNE 30, 2022

NET SALES - Net sales

increased by $15,290,211, or 49.6%, to $46,086,901 for the year ended June 30, 2025 from $30,796,690 for the corresponding period of 2024.

For the year ended June 30, 2023, net sales by geographic regions, consisting of North America, the Caribbean and South America, and Asia

were $45,782,084 (99.6% of net sales), $0 (0.0% of net sales), and $166,432 (0.4% of net sales), respectively.

For the year ended June

30, 2022, net sales by geographic regions, consisting of North America, the Caribbean and South America, and Asia were $23,305,366 (97.1%

of net sales), $2,375 (0.0% of net sales), and $690,021 (2.9% of net sales), respectively.

Net sales in North America increased

by $22,476,718, or 96.4%, to $45,782,084 for the year ended June 30, 2023, from $23,305,366 for the corresponding period of 2022.

increase in net sales in North America was primarily due to the new demand for two newly launched wireless products from a major carrier

customer (approximately $14M newly generated revenue) which did not purchase our products during the fiscal year 2022, and the increased

demand by approximately $11M, or 66%, for our wireless products from the existing major carrier customer compared to the fiscal year 2022,

which were offset by the decreased demands from other customers.

Net sales in the Caribbean and

South America decreased by $2,375, or 100%, to $0 for the year ended June 30, 2023, from $2,375 for the corresponding period of 2022.

Net sales in Asia decreased by $523,589, or 75.9%, to $166,432 for the year ended June 30, 2023, from $690,021 for the corresponding period

The decrease in net sales was primarily due to the one-time revenue generated from the material sales by FTI for the fiscal year

2022, which was partially offset by the revenue generated from the demand for one newly launched wireless product by FTI (approximately

$160,000) for the year ended June 30, 2023.

GROSS PROFIT - Gross profit

The increase in net sales was primarily due to increased demand from our major carrier customers.

For the year ended June 30, 2025, net

sales by geographic regions, consisting of North America and Asia, were $46,081,244 (100.0% of net sales) and $5,657 (0.0% of net sales),

respectively.

For the year ended June 30, 2024, net sales by geographic regions, consisting of North America and Asia, were $30,699,727

(99.7% of net sales) and $96,963 (0.3% of net sales), respectively.

Net sales in North America

increased by $15,381,517, or 50.1%, to $46,081,244 for the year ended June 30, 2025, from $30,699,727 for the corresponding period of

The increase in net sales in North America was primarily due to increased demand from our major carrier customers.

Asia decreased by $91,306, or 94.2%, to $5,657 for the year ended June 30, 2025, from $96,963 for the corresponding period of 2024.

decrease in net sales was primarily due to the absence of revenue generated by FTI, which typically varies from period to period.

GROSS PROFIT - Gross

profit increased by $4,406,719, or 125.6%, to $7,915,069 for the year ended June 30, 2025, from $3,508,350 for the corresponding period

The gross profit in terms of net sales percentage was 17.2% for the year ended June 30, 2025, compared to 11.4% for the corresponding

period of 2024.

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

The decrease in gross profit

in terms of net sales percentage was the mixed results of competitive selling prices and the increase in production costs of the launched

OPERATING EXPENSES - Operating

expenses increased by $578,842, or 6.6%, to $9,370,317 for the year ended June 30, 2023, from $8,791,475 for the corresponding period

The increase in gross profit and gross profit in terms of net sales percentage for the year ended June 30, 2025, was primarily

due to the increase in net sales, a greater proportion of higher margin products sold, and lower per-unit costs.

OPERATING EXPENSES

- Operating expenses increased by $1,330,633, or 14.1%, to $10,778,738 for the year ended June 30, 2025, from $9,448,105 for the corresponding

period of 2024.

Selling, general, and administrative

expenses increased by $634,723 to $6,676,078 for the year ended June 30, 2025, from $6,041,355 for the corresponding period of 2024.

increase in selling, general, and administrative expenses was primarily due to the increased payroll expenses (excluding payroll expense

for employees involved in research and development) and compensation expenses related to stock options granted for employees of approximately

$230,000 and $165,000, respectively, and the increased legal expenses of $195,000.

Research and development expenses

decreased by $363,467 to $3,918,664 for the year ended June 30, 2023, from $4,282,131 for the corresponding period of 2022.

in research and development expense was primarily due to the mix of the timing of research and development activities and the number of

active projects, which typically vary from period to period.

For the year ended June 30, 2023, the research and development expenses decreased

by approximately $450,000, which is partially offset by the increased payroll expenses for employees involved in research and development

of approximately $89,000.

OTHER INCOME, NET - Other

income, net decreased by $1,747,162, or 658.3%, to $1,481,743 for the year ended June 30, 2023, from $265,419 for the corresponding period

The decrease was primarily due to the loss from the agreement in principle to settle a legal action of $2,400,000 and the increased

loss from unfavorable changes in foreign currency exchange rates in FTI of approximately $184,000, which were offset by the increased

interest income earned from the money market accounts and certificates of deposit of approximately $388,000, the increased unrealized

gain from an investment account of approximately $340,000, and the increased gain from forgiven liabilities of approximately $199,000.

increase in selling, general, and administrative expenses was primarily due to the increased payroll and related expense of approximately

$1.1 million, which was offset by the decreased legal expense of approximately $500,000.

Research and development expenses increased by

$695,910 to $4,102,660 for the year ended June 30, 2025, from $3,406,750 for the corresponding period of 2024.

The increase in research

and development expense was primarily driven by two factors:

an approximate $370,000 increase in direct R&D costs (such as for materials

and third-party services) and a $320,000 increase in related payroll expense.

This fluctuation is a natural result of the varying timing

and number of active R&D projects from one period to the next.

OTHER INCOME (EXPENSE),

NET - Other income (expense), net increased by $1,854,289, or 225.1%, to $2,678,073 for the year ended June 30, 2025, from $823,784

for the corresponding period of 2024.

The increase was primarily due to the gain from the legal settlement owed by OC Kim, the President,

the forgiven accrued marketing development fund liability, and favorable foreign currency exchange rate changes in FTI of $1,000,000,

$247,592, and $683,132, respectively.

LIQUIDITY AND CAPITAL RESOURCES

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sources of liquidity to fund our operating activities and obligations as they become due.

Our principal source of

liquidity as of June 30, 2024, consisted of cash and cash equivalents as well as short-term investments of $37,457,827.

we have sufficient available capital to cover our existing operations and obligations through at least June 30, 2025.

Our long-term

future cash requirements will depend on numerous factors, including our revenue base, profit margins, product development activities,

market acceptance of our products, future expansion plans and ability to control costs.

If we are unable to achieve our current

business plan or secure additional funding that may be required, we would need to curtail our operations or take other similar actions

outside the ordinary course of business.

Our principal source of liquidity

as of June 30, 2025, consisted of cash and cash equivalents as well as short-term investments of $40,628,201.

We believe we have

sufficient available capital to cover our existing operations and obligations through at least June 30, 2026.

Our long-term future

cash requirements will depend on numerous factors, including our revenue base, profit margins, product development activities, market

acceptance of our products, future expansion plans and ability to control costs.

If we are unable to achieve our current business

plan or secure additional funding that may be required, we would need to curtail our operations or take other similar actions outside

the ordinary course of business.

OPERATING ACTIVITIES

Net cash used in operating activities for the years ended June 30, 2024 and 2023 were $773,360 and $1,882,114, respectively.

The $773,360 in net cash used

in operating activities for the year ended June 30, 2024 was primarily due to the decrease in accounts payable and accrued legal contingency

expense of $5,685,087 and $2,400,000, respectively, as well as our operating results (net loss adjusted for depreciation, amortization,

and other non-cash charges), which was offset by the decrease of accounts receivable and inventories of $7,722,229 and $2,290,211, respectively.

The $1,882,114 in net cash used in operating activities for the year ended June 30, 2023 was primarily due to the increase in accounts

receivable of $7,627,183 as well as our operating results (net loss adjusted for depreciation, amortization, and other non-cash charges),

which was offset by the increase of accounts payable and accrued legal contingency expense of $4,905,499 and $2,400,000, respectively.

– Net cash provided by (used in) operating activities for the years ended June 30, 2025 and 2024 were $1,844,360 and ($773,360),

respectively.

The $1,844,360 in net cash

provided by operating activities for the year ended June 30, 2025 was primarily due to the increase in accrued liabilities and accounts

payable of $2,615,116 and $855,382, respectively, which was offset by our operating results (net loss adjusted for depreciation, amortization,

and other non-cash charges) and the increase in inventories and accounts receivable of $993,069 and $311,767.

The ($773,360) in net cash

used in operating activities for the year ended June 30, 2024 was primarily due to the decrease in accounts payable and accrued legal

contingency expense of $5,685,087 and $2,400,000, respectively, as well as our operating results (net loss adjusted for depreciation,

amortization, and other non-cash charges), which was offset by the decrease of accounts receivable and inventories of $7,722,229 and $2,290,211,

respectively.

INVESTING ACTIVITIES

Net cash provided by investing activities for the year ended June 30, 2024 was $723,858, and net cash used in investing activities for

the year ended June 30, 2023 was $12,109,183.

The $723,858 in net cash provided

by investing activities for the year ended June 30, 2024 was primarily due to the proceeds of short-term investments of $910,034, which

was offset by the purchases of capitalized product development of $123,359.

The $12,109,183 in net cash used in investing activities

for the year ended June 30, 2023 was primarily due to the purchases of short-term investments of $10,391,654 and capitalized product

development of $1,631,376.

– Net cash provided by investing activities for the years ended June 30, 2025 and 2024 were $1,006,398 and $723,858, respectively.

The $1,006,398 in net cash

provided by investing activities for the year ended June 30, 2025 was primarily due to the contribution in noncontrolling interest by

a partner of $2,000,000, which was offset by the payments for the purchase of capitalized product development and intangible assets of

$533,563 and the purchase of short-term investments of $437,774.

The $723,858 in net cash provided by investing activities for the year

ended June 30, 2024 was primarily due to the proceeds from the sale of short-term investments of $910,034, which was offset by purchases

related to capitalized product development costs of $123,359.

FINANCING ACTIVITIES

Net cash provided by financing activities for the years ended June 30, 2024 and 2023 was $91,057 and $42,943, respectively.

– Net cash (used in) provided by financing activities for the years ended June 30, 2025 and 2024 was ($408,663) and $91,057, respectively.

The ($408,663) in net cash

provided by financing activities for the year ended June 30, 2024 was repayment received from the loan to an employee of $91,057.

$42,943 in net cash provided by financing activities for the year ended June 30, 2023 was from the exercise of stock options of $45,000,

which was offset by loan to an employee of $2,057.

used in financing activities for the year ended June 30, 2025 was the repurchase of 200,000 vested stock options from OC Kim, our President,

which had been previously granted under the 2020 employee stock option plan.

The $91,057 in net cash provided by financing activities

for the year ended June 30, 2024 was a repayment received for a loan made to an employee of $91,057.

OFF-BALANCE SHEET ARRANGEMENTS

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Less imputed interest

Remaining lease term-operating leases

Discount rate-operating lease

Remaining lease term-operating lease in San Diego, California

Discount rate-operating lease in San Diego, California

Remaining lease term-operating lease in South Korea

Discount rate-operating lease in South Korea

Remaining lease term-vehicle lease in San Diego, California

Discount rate-vehicle lease in San Diego, California

Refer to ITEM 2.

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The following table sets forth the percentages

of return rates and warranty repairs for all products currently marketed, in the aggregate from the date each product was introduced through

June 30, 2024.

of return rates and warranty repairs for all products currently marketed, in the aggregate, from the date each product was introduced

through June 30, 2025.

Current Devices

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FUTURE LIQUIDITY AND CAPITAL REQUIREMENTS

For the next twelve months, we

may require in excess of $2 million for capital expenditures, software licenses and for testing and certifying new products.

We believe we will be able

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

of equity securities.

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

expenditures.

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

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

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

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

beyond our control.

See Item 1A, “ Risk Factors ” included in this report.

If we are unable to generate sufficient

cash flow from operations to meet our obligations and commitments, we will be required to raise additional debt or equity capital.

Additionally,

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

We might not be able to effect these

alternative strategies to raise funds including credit lines and loans, on satisfactory terms, if at all.

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK.

For the next twelve months,

we may require in excess of $2 million for capital expenditures, software licenses and for testing and certifying new products.

believes its balances of cash, cash equivalents, and short-term investments, which totaled $40.6 million as of June 30, 2025, along with

cash generated by ongoing operations will be sufficient to satisfy its cash requirements over the next 12 months.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.

FINANCIAL STATEMENTS AND SUPPLEMENTARY

The financial statements and the

supplementary financial information required by this Item and included in this report are listed in the Index to Financial Statements

FINANCIAL STATEMENTS AND

SUPPLEMENTARY DATA

The financial statements and

the supplementary financial information required by this Item and included in this report are listed in the Index to Financial Statements

beginning on page F-1.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON

ACCOUNTING AND FINANCIAL DISCLOSURE.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

ON ACCOUNTING AND FINANCIAL DISCLOSURE

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 7. Management’s Discussion and Analysis