| SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES Principles of Consolidation The consolidated financial
statements include the accounts of the Company and its subsidiary with a majority voting interest of 66.3% (33.7% is owned by non-controlling
interests) as of June 30, 2021, and 2020. For the year ended June 30, 2020, the increase in the majority voting interest in percentage
from 64.2% to 66.3% was due to the purchase by the Company of 43,333 shares of the subsidiary for $75,000 ($1.73 per share) from three
non-controlling shareholders. The purchase decreased the non-controlling interests’ ownership percentage from 35.8% to 33.7%.
In the preparation of consolidated financial statements of the Company, intercompany transactions and balances are eliminated and net
earnings are reduced by the portion of the net earnings of the subsidiary applicable to non-controlling interests. As consolidated financial
statements are based on the assumption that they represent the financial position and operating results of a single economic entity, the
retained earnings or deficit of the subsidiary at the date of acquisition, October 1, 2009, by the parent are excluded from consolidated
retained earnings. When a subsidiary is consolidated, the consolidated financial statements include the subsidiary’s revenues, expenses,
gains, and losses only from the date the subsidiary is initially consolidated, and the non-controlling interest is reported in the consolidated
statement of financial position within equity, separately from the parent’s equity. There are no shares of the Company held by any
subsidiaries as of June 30, 2021, or June 30, 2020. Non-controlling Interest in a Consolidated
Subsidiary As of June 30, 2021, the non-controlling
interest was $1,479,162, which represents a $697,147 increase from $782,015 as of June 30, 2020. The increase in the non-controlling
interest of $697,147 was from income in the subsidiary of $2,071,302 incurred for the year ended June 30, 2021. 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. The following enterprise-wide disclosure
is prepared on a basis consistent with the preparation of the consolidated financial statements. The following table contains certain
financial information by geographic area:
Fiscal Year Ended June 30,
Net sales: 2021 2020
North America $ 183,771,146 $ 74,839,778
Caribbean and South America 17,500 –
Asia 326,699 232,520
Totals $ 184,115,345 $ 75,072,298
Long-lived assets, net (property and equipment and intangible assets): June 30, 2021 June 30, 2020
United States $ 1,349,320 $ 1,302,353
Asia 49,040 43,688
Totals $ 1,398,360 $ 1,346,041 Fair Value of Financial Instruments The carrying amounts of financial
instruments such as cash equivalents, short-term investments, accounts receivable, accounts payable and debt approximate the related fair
values due to the short-term maturities of these instruments. We invest our excess cash into financial instruments which are readily convertible
into cash, such as money market funds and certificates of deposit (see Note 3). Estimates The preparation of the consolidated
financial statements in conformity with accounting principles generally accepted in the United States of America requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results
could materially differ from those estimates. Allowance for Doubtful Accounts Based upon our review of our
collection history as well as the current balances associated with all significant customers and associated invoices, we do not believe
an allowance for doubtful accounts was necessary as of June 30, 2021, and June 30, 2020. Revenue Recognition Contracts with Customers Revenue from sales of products
and services is derived from contracts with customers. The products and services covered by contracts primarily consist of hot spot routers.
Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or service.
Payment terms are stated in the contract, primarily in the form of a purchase order. Since the customer typically agrees to a stated rate
and price in the purchase order that does not vary over the life of the contract, the majority of our contracts do not contain variable
consideration. We establish a provision for estimated warranty and returns. Using historical averages, that provision for the year ended
June 30, 2021, was 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. Contract Balances We perform our obligations
under a contract with a customer by transferring products in exchange for consideration from the customer. We typically invoice our customers
as soon as control of an asset is transferred, and a receivable is established. We, however, recognize a contract liability when a customer
prepays for goods and/or services, or we have not delivered goods under the contract since we have not yet transferred control of the
goods and/or services. The balances of our trade
receivables are as follows:
June 30, 2021 June 30, 2020
Accounts Receivable $ 2,542,429 $ 15,973,537 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, 2021, and June 30, 2020. Our contract liabilities are
as follows:
June 30, 2021 June 30, 2020
Undelivered products $ 140,000 $ 140,000 Performance Obligations A performance obligation is
a promise in a contract to transfer a distinct good or service to the customer and is the unit of measurement in Topic 606. At contract
inception, we assess the products and services promised in our contracts with customers. We then identify performance obligations to transfer
distinct products or services to the customer. In order to identify performance obligations, we consider all the products or services
promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices. Our performance obligations
are satisfied at a point in time. Revenue from products transferred to customers at a single point in time accounted for over 99% of net
sales for the year ended June 30, 2021. 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, 2021. Most of our revenue recognized at a point in time is for the
sale of hot-spot router products. Revenue from these contracts is recognized when the customer can direct the use of and obtain substantially
all of the benefits from the product, which generally coincides with title transfer at completion of the shipping process. As of June 30, 2021, our contracts
do not contain any unsatisfied performance obligations, except for undelivered products. Cost of Goods Sold All costs associated with
our contract manufacturers, as well as distribution, fulfillment and repair services, are included in our cost of goods sold. Cost of
goods sold also includes amortization expenses of approximately $360,000 and $405,000 associated with capitalized product development
costs associated with complete technology for the years ended June 30, 2021, and 2020, respectively. Capitalized Product Development Costs Accounting Standards Codification
(“ASC”) Topic 350, “Intangibles - Goodwill and Other” includes software that is part of a product or process to
be sold to a customer and shall be accounted for under Subtopic 985-20. Our products contain embedded software internally developed by
FTI, which is an integral part of these products because it allows the various components of the products to communicate with each other
and the products are clearly unable to function without this coding. The costs of product development
that are capitalized once technological feasibility is determined (noted as technology in progress in the Intangible Assets table in Note
2 to Notes to Consolidated Financial Statements) include related licenses, certification costs, payroll, employee benefits, and other
headcount-related expenses associated with product development. We determine that technological feasibility for our products is reached
after all high-risk development issues have been resolved. Once the products are available for general release to our customers, we cease
capitalizing the product development costs and any additional costs, if any, are expensed. The capitalized product development costs are
amortized on a product-by-product basis using the greater of straight-line amortization or the ratio of the current gross revenues to
the current and anticipated future gross revenues. The amortization begins when the products are available for general release to our
customers. As
of June 30, 2021, and June 30, 2020, capitalized product development costs in progress were $602,388 and $140,192, respectively, and
these amounts are included in intangible assets in our consolidated balance sheets. During the year ended June 30, 2021, we incurred
$694,909 in capitalized product development costs and disposed 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, and such amounts are primarily comprised of certifications
and licenses. All costs incurred before technological feasibility is reached are expensed and included in our consolidated statements
of comprehensive income. Research and Development Costs Costs associated with research
and development are expensed as incurred. Research and development costs were $4,567,863 and $3,746,502 for the years ended June 30, 2021,
and 2020, respectively. Warranties We provide a warranty for
one year which is covered by our vendors and manufacturers under purchase agreements between the Company and the vendors. As a result,
we believe we do not have any net warranty exposure and do not accrue any warranty expenses. Historically, the Company has not 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 $723,617 and $642,930 for the years ended June 30, 2021, and 2020, respectively. Cash and Cash Equivalents For purposes of the consolidated
statements of cash flow, we consider all highly liquid investments purchased with original maturities of three months or less to be cash
equivalents. We invest our excess cash into financial instruments which management believes are readily convertible into cash, such as
money market funds that are readily convertible to cash and have a $1.00 net asset value. Short Term Investments We have invested excess funds
in short term liquid assets of certificates of deposit. Inventories Our inventories consist of
finished goods and are stated at the lower of cost or net realizable value, cost being determined on a first-in, first-out basis. We assess
the inventory carrying value and reduce it, if necessary, to its net realizable value based on customer orders on hand, and internal demand
forecasts using management’s best estimates given information currently available. Our customer demand is highly unpredictable and
can fluctuate significantly caused by factors beyond our control. We may write down our inventory value for potential obsolescence and
excess inventory. As of June 30, 2021, and 2020, we have recorded inventory reserves in the amount of $0 and $399,437, respectively,
for inventories that we have identified as obsolete or slow-moving. Property and Equipment Property and equipment are
recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are
charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:
Machinery 6 years
Office equipment 5 years
Molds 3 years
Vehicles 5 years
Computers and software 5 years
Furniture and fixtures 7 years
Facilities improvements 5 years or life of the lease, whichever is shorter Goodwill and Intangible Assets Goodwill and certain intangible
assets were recorded in connection with the FTI acquisition in October 2009, and were accounted for in accordance with ASC 805, “Business
Combinations.” Goodwill represents the excess of the purchase price over the fair value of the tangible and intangible net assets
acquired. Intangible assets are recorded at their fair value at the date of acquisition. Goodwill and other intangible assets are accounted
for in accordance with ASC 350, “Goodwill and Other Intangible Assets.” Goodwill and other intangible assets are tested for
impairment at least annually and any related impairment losses are recognized in earnings when identified. No impairment was recognized
during the years ended June 30, 2021, and 2020. Intangible Assets The definite lived intangible
assets consisted of the following as of June 30, 2021:
Definite lived intangible assets: Expected Life Average Remaining life Gross Intangible Assets Less Accumulated Amortization Net Intangible Assets
Complete technology 3 years 0.5 years 18,397 15,331 3,066
Technology in progress Not Applicable – 602,388 – 602,388
Software 5 years 3.0 years 399,811 268,495 131,316
Patents 10 years 3.9 years 21,105 12,951 8,154
Certifications & licenses 3 years 1.6 years 1,070,770 568,944 501,826
Total as of June 30, 2021 $ 2,112,471 $ 865,721 $ 1,246,750 The definite lived intangible
assets consisted of the following as of June 30, 2020:
Definite lived intangible assets: Expected Life Average Remaining life Gross Intangible Assets Less Accumulated Amortization Net Intangible Assets
Complete technology 3 years 1.8 years 18,397 7,666 10,731
Technology in progress Not Applicable - 140,192 – 140,192
Software 5 years 2.9 years 525,930 338,593 187,337
Patents 10 years 7.0 years 20,734 10,821 9,913
Certifications & licenses 3 years 1.9 years 4,078,310 3,301,331 776,979
Total as of June 30, 2020 $ 4,783,563 $ 3,658,411 $ 1,125,152 Amortization expense recognized
during the years ended June 30, 2021, and 2020 was $435,571 and $482,792, respectively. For the year ended June 30, 2021,
FY2022 FY2023 FY2024 FY2025 FY2026 Thereafter
Total $ 528,655 $ 341,133 $ 198,944 $ 98,521 $ 25,442 $ 54,055 Long-lived Assets In accordance with ASC 360,
“Property, Plant, and Equipment,” we review for impairment of long-lived assets and certain identifiable intangibles whenever
events or circumstances indicate that the carrying amount of assets may not be recoverable. We consider the carrying value of assets may
not be recoverable based upon our review of the following events or changes in circumstances: the asset’s ability to continue to
generate income from operations and positive cash flow in future periods; loss of legal ownership or title to the assets; significant
changes in our strategic business objectives and utilization of the asset; or significant negative industry or economic trends. An impairment
loss would be recognized when estimated future cash flows expected to result from the use of the asset are less than its carrying amount. We are not aware of any events
or changes in circumstances during the year ended June 31, 2021, that would indicate that the long-lived assets are impaired. Stock-based Compensation The Company’s employee
share-based awards result in a cost that is measured at fair value on an award’s grant date, based on the estimated number of awards
that are expected to vest. Stock-based compensation is recognized on a straight-line basis over the award’s vesting period. The
Company estimates the fair value of stock options using a Black-Scholes option pricing model. Transactions with non-employees in which
goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date
of the fair value of the equity instrument issued is the earlier of the date on which the counterparty’s performance is complete
or the date on which it is probable that performance will occur. Stock-based compensation costs are reflected in the accompanying consolidated
statements of comprehensive income based upon the underlying recipients' roles within the Company. Income Taxes The Company uses the asset
and liability method of accounting for income taxes. Accordingly, deferred tax assets and liabilities are determined based on the difference
between the financial statement and income tax bases of assets and liabilities, using enacted tax rates in effect for the year in which
the differences are expected to reverse. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets, unless
it is more likely than not such assets will be realized. Current income taxes are based on the year’s taxable income for federal
and state income tax reporting purposes and the annual change in deferred taxes. The Company assesses its income
tax positions and records tax benefits based upon management’s evaluation of the facts, circumstances, and information available
at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records
the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority
having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit
will be sustained, no tax benefit is recognized in the financial statements. The Company classifies interest and penalties associated
with such uncertain tax positions as a component of income tax expense. Earnings per Share Attributable to Common Stockholders Basic earnings per share is
calculated by dividing the net income by the weighted-average number of common shares that were outstanding for the period, without consideration
for potential common shares. Diluted earnings per share is calculated by dividing the net income by the sum of the weighted-average number
of dilutive potential common shares outstanding for the period determined using the treasury-stock method or the as-converted method.
Potentially dilutive shares are comprised of common stock options outstanding under our stock plan. Concentrations of Credit Risk We extend credit to our customers
and perform ongoing credit evaluations of such customers. We evaluate our accounts receivable on a regular basis for collectability and
provide for an allowance for potential credit losses as deemed necessary. No reserve was required or recorded for any of the periods presented. Substantially all of our revenues
are derived from sales of wireless data products. Any significant decline in market acceptance of our products or in the financial condition
of our existing customers could impair our ability to operate effectively. A significant portion of our
revenue is derived from a small number of customers. For the year ended June 30, 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. For the
year ended June 30, 2020, net sales to our two largest customers represented 46% and 36% of our consolidated net sales, respectively,
and 21% and 72% of our accounts receivable balance as of June 30, 2020. No other customer accounted for more than ten percent of total
net sales. For the year ended June 30,
2021, we purchased the majority of our wireless data products from two manufacturing companies located in Asia. If they were to experience
delays, capacity constraints or quality control problems, product shipments to our customers could be delayed, or our customers could
consequently elect to cancel the underlying product purchase order, which would negatively impact our revenue. For the year ended June
30, 2021, 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, 2021. For the year ended June 30, 2020, we purchased wireless data products from these suppliers
in the amount of $67,179,379, or 94% of total purchases, and had related accounts payable of $41,181,840, as of June 30, 2020. We maintain our cash accounts
with established commercial banks. Such cash deposits exceed the Federal Deposit Insurance Corporation insured limit of $250,000
for each financial institution. However, we do not anticipate any losses on excess deposits. Recently Issued Accounting Pronouncements 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.
We do not expect that the adoption of this update will impact the Company’s consolidated financial statements. |
