Cover
Cover - shares | 3 Months Ended | |
Sep. 30, 2023 | Nov. 14, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Sep. 30, 2023 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2024 | |
Current Fiscal Year End Date | --06-30 | |
Entity File Number | 001-14891 | |
Entity Registrant Name | FRANKLIN WIRELESS CORP. | |
Entity Central Index Key | 0000722572 | |
Entity Tax Identification Number | 95-3733534 | |
Entity Incorporation, State or Country Code | NV | |
Entity Address, Address Line One | 9707 Waples Street | |
Entity Address, Address Line Two | Suite 150 | |
Entity Address, City or Town | San Diego | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 92121 | |
City Area Code | (858) | |
Local Phone Number | 623-0000 | |
Title of 12(b) Security | Common Stock, par value $.001 per share | |
Trading Symbol | FKWL | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 11,784,280 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2023 | Jun. 30, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 6,844,719 | $ 12,241,286 |
Short-term investments | 26,802,145 | 26,728,313 |
Accounts receivable | 9,921,362 | 8,949,802 |
Other receivables | 20,971 | 14,438 |
Inventories, net | 2,262,358 | 3,741,637 |
Prepaid expenses and other current assets | 58,811 | 36,687 |
Loan to an employee | 92,080 | 91,057 |
Advance payments to vendors | 88,970 | 53,875 |
Total current assets | 46,091,416 | 51,857,095 |
Property and equipment, net | 92,125 | 101,088 |
Intangible assets, net | 1,958,466 | 2,180,884 |
Deferred tax assets, non-current | 2,286,375 | 2,235,515 |
Goodwill | 273,285 | 273,285 |
Right of use assets | 76,730 | 152,665 |
Other assets | 124,152 | 126,546 |
TOTAL ASSETS | 50,902,549 | 56,927,078 |
Current liabilities: | ||
Accounts payable | 7,149,702 | 12,950,497 |
Income tax payable | 6,556 | |
Contract liabilities | 227,454 | 146,488 |
Accrued legal contingency expense | 2,400,000 | 2,400,000 |
Accrued liabilities | 989,697 | 849,605 |
Lease liabilities, current | 79,949 | 159,104 |
Total current liabilities | 10,846,802 | 16,512,250 |
Total liabilities | 10,846,802 | 16,512,250 |
Commitments and contingencies (Note 6) | ||
Parent Company stockholders’ equity | ||
Preferred stock, par value $0.001 per share, authorized 10,000,000 shares; none issued and outstanding as of September 30, and June 30, 2023 | 0 | 0 |
Common stock, par value $0.001 per share, authorized 50,000,000 shares; 11,784,280 shares issued and outstanding as of September 30, and June 30, 2023, respectively | 14,263 | 14,263 |
Additional paid-in capital | 14,489,785 | 14,438,196 |
Retained earnings | 28,843,529 | 29,101,225 |
Treasury stock, 2,549,208 shares as of September 30, and June 30, 2023 | (3,554,893) | (3,554,893) |
Accumulated other comprehensive loss | (1,145,399) | (1,071,930) |
Total Parent Company stockholders’ equity | 38,647,285 | 38,926,861 |
Noncontrolling interests | 1,408,462 | 1,487,967 |
Total stockholders’ equity | 40,055,747 | 40,414,828 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 50,902,549 | $ 56,927,078 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Sep. 30, 2023 | Jun. 30, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares, issued | 11,784,280 | 11,784,280 |
Common stock, shares, outstanding | 11,784,280 | 11,784,280 |
Treasury stock shares | 2,549,208 | 2,549,208 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||
Net sales | $ 9,655,546 | $ 8,108,940 |
Cost of goods sold | 8,142,386 | 6,515,078 |
Gross profit | 1,513,160 | 1,593,862 |
Operating expenses: | ||
Selling, general and administrative | 1,230,722 | 1,239,635 |
Research and development | 866,955 | 970,120 |
Total operating expenses | 2,097,677 | 2,209,755 |
Loss from operations | (584,517) | (615,893) |
Other income (expense), net: | ||
Interest income | 254,015 | 60,062 |
Income from governmental subsidy | 11,100 | 17,147 |
Loss from foreign currency transactions | (198,974) | (948,887) |
Other income (expense), net | 131,115 | (42,382) |
Total other income (expense), net | 197,256 | (914,060) |
Loss before provision for income taxes | (387,261) | (1,529,953) |
Income tax benefits | (50,060) | (103,383) |
Net loss | (337,201) | (1,426,570) |
Less: noncontrolling interests in net loss of subsidiary at 33.7% | (79,505) | (299,579) |
Net loss attributable to Parent Company | (257,696) | (1,126,991) |
Comprehensive loss: | ||
Net loss | (337,201) | (1,426,570) |
Translation adjustments | (73,469) | (314,218) |
Comprehensive loss | (410,670) | (1,740,788) |
Less: comprehensive loss attributable to noncontrolling interest | (79,505) | (299,579) |
Comprehensive loss attributable to controlling interest | $ (331,165) | $ (1,441,209) |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Loss (Unaudited) (Parenthetical) - $ / shares | 3 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Income Statement [Abstract] | ||
Earnings Per Share, Basic | $ (0.02) | $ (0.10) |
Earnings Per Share, Diluted | $ (0.02) | $ (0.10) |
Weighted Average Number of Shares Outstanding, Basic | 11,784,280 | 11,684,280 |
Weighted Average Number of Shares Outstanding, Diluted | 11,784,280 | 11,684,280 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Treasury Stock, Common [Member] | AOCI Attributable to Parent [Member] | Noncontrolling Interest [Member] | Total |
Balance - June 30, 2022 at Jun. 30, 2022 | $ 14,163 | $ 13,593,426 | $ 31,964,246 | $ (3,554,893) | $ (984,152) | $ 1,569,605 | $ 42,602,395 |
Beginning balace, shares at Jun. 30, 2022 | 11,684,280 | ||||||
Net loss attributable to Parent Company | (1,126,991) | (1,126,991) | |||||
Foreign exchange translation | (314,218) | (314,208) | |||||
Comprehensive loss attributable to noncontrolling interest | (299,579) | (299,579) | |||||
Stock based compensation | 180,745 | 180,745 | |||||
Balance – September 30, 2022 (unaudited) at Sep. 30, 2022 | $ 14,163 | 13,774,171 | 30,837,255 | (3,554,893) | (1,298,370) | 1,270,026 | 41,042,352 |
Ending balace, shares at Sep. 30, 2022 | 11,684,280 | ||||||
Balance - June 30, 2022 at Jun. 30, 2023 | $ 14,263 | 14,438,196 | 29,101,225 | (3,554,893) | (1,071,930) | 1,487,967 | 40,414,828 |
Beginning balace, shares at Jun. 30, 2023 | 11,784,280 | ||||||
Net loss attributable to Parent Company | (257,696) | (257,696) | |||||
Foreign exchange translation | (73,469) | (73,469) | |||||
Comprehensive loss attributable to noncontrolling interest | (79,505) | (79,505) | |||||
Stock based compensation | 51,589 | 51,589 | |||||
Balance – September 30, 2022 (unaudited) at Sep. 30, 2023 | $ 14,263 | $ 14,489,785 | $ 28,843,529 | $ (3,554,893) | $ (1,145,399) | $ 1,408,462 | $ 40,055,747 |
Ending balace, shares at Sep. 30, 2023 | 11,784,280 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
CASH FLOW FROM OPERATING ACTIVITIES: | ||
Net loss | $ (337,201) | $ (1,426,570) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation | 11,390 | 15,819 |
Amortization of intangible assets | 244,918 | 179,894 |
Stock based compensation | 51,589 | 180,745 |
Amortization of right of use assets | 75,935 | 72,836 |
Deferred tax benefit | (50,860) | (104,183) |
Change in assets and liabilities: | ||
Accounts receivable | (978,093) | 388,567 |
Inventories | 1,479,279 | (855,392) |
Prepaid expenses and other current assets | (22,124) | 8,707 |
Advance payments to vendors | (35,095) | 28,776 |
Other assets | 2,394 | 9,909 |
Accounts payable | (5,800,795) | 537,395 |
Income tax payable | (6,556) | (4,932) |
Advance payment from customers | 21,434 | 0 |
Unearned revenue from customers | 59,532 | 70,113 |
Lease liabilities | (79,155) | (76,057) |
Accrued liabilities | 140,092 | (37,767) |
Net cash used in operating activities | (5,223,316) | (1,012,140) |
CASH FLOW FROM INVESTING ACTIVITIES: | ||
(Purchases) sales of short-term investments | (73,832) | 1,080,659 |
Purchases of property and equipment | (2,427) | (26,674) |
Payments for capitalized product development costs | (22,500) | (493,250) |
Purchases of intangible assets | 0 | (6,854) |
Net cash (used in) provided by investing activities | (98,759) | 553,881 |
CASH FLOW FROM FINANCING ACTIVITIES: | ||
Loan to an employee | (1,023) | 0 |
Net cash used in financing activities | (1,023) | 0 |
Effect of foreign currency translation | (73,469) | (314,218) |
Net decrease in cash and cash equivalents | (5,396,567) | (772,477) |
Cash and cash equivalents, beginning of year | 12,241,286 | 26,277,418 |
Cash and cash equivalents, end of year | 6,844,719 | 25,504,941 |
Cash paid during the periods for: | ||
Income taxes | $ (45,800) | $ (800) |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiary, Franklin Technology Inc. (“FTI”), with a majority voting interest of 66.3 33.7 As consolidated financial statements are based on the assumption that they represent the financial position and operating results of a single economic entity, the retained earnings or deficit of the subsidiary at the date of acquisition, October 1, 2009, by the parent are excluded from consolidated retained earnings. When a subsidiary is consolidated, the consolidated financial statements include the subsidiary’s revenues, expenses, gains, and losses only from the date the subsidiary is initially consolidated, and the noncontrolling interest is reported in the consolidated statement of financial position within equity, separately from the parent’s equity. There are no shares of the Company held by any subsidiaries as of September 30, 2023, or June 30, 2023. Noncontrolling Interest in a Consolidated Subsidiary As of September 30, 2023, the noncontrolling interest was $ 1,408,462 79,505 1,487,967 79,505 236,217 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. Segment information by geographic areas Three Months Ended September 30, Net sales: 2023 2022 North America $ 9,655,546 $ 8,107,451 Asia – 1,489 Totals $ 9,655,546 $ 8,108,940 Schedule of long lived assets by geographic area Long-lived assets, net (property and equipment and intangible assets): September 30, 2023 June 30, 2023 North America $ 1,860,218 $ 2,083,902 Asia 190,373 198,070 Totals $ 2,050,591 $ 2,281,972 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. Use of 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 On July 1, 2023, we adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held to maturity debt securities. It also applies to Off-Balance Sheet (“OBS”) credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments and leases recognized by a lessor in accordance with Topic 842 on leases. Upon adoption of ASC 326 and based upon our review of our collection history as well as the current balances associated with all significant customers and associated invoices, as of September 30, 2023, we did no Cash Flows Reporting We follow ASC 230, Statements of Cash Flows, for cash flows reporting, which 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 8–RELATED PARTY TRANSACTIONS) Foreign Currency Translations We have a majority-owned subsidiary in a 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 period. 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. Dollars, and therefore, our revenue is not directly subject to foreign currency risk. In accordance with ASC 830, 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 (loss) for the period. Leases In accordance with ASC 842, 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 payments. 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 leases 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 In April 2016, the FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606) (ASU 2016-10), which amends and adds clarity to certain aspects of the guidance set forth in the original revenue standard (ASU 2014-09) related to identifying performance obligations and licensing. In May 2016, the FASB issued Accounting Standards Update No. 2016-11, Revenue Recognition (Topic 605), which amends and rescinds certain revenue recognition guidance previously released within ASU 2014-09. In May 2016 the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers (Topic 606) (ASU 2016-12), which provides narrow scope improvements and practical expedients related to ASU 2014-09. The Company adopted ASU 2014-09 on July 1, 2018 using the modified retrospective method. Contracts with Customers Revenue from sales of products and services is derived from contracts with customers. The products and services promised in contracts primarily consist of hotspot 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 provisions for the quarters ended September 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. 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: Schedule of receivables September 30, 2023 June 30, 2023 Accounts Receivable $ 9,921,362 $ 8,949,802 The balance of contract assets was immaterial as we did not have a significant amount of un-invoiced receivables in the periods ended September 30, 2023, and June 30, 2023. Our contract liabilities are as follows: Schedule of contract liabilities September 30, 2023 June 30, 2023 Undelivered products $ 227,455 $ 146,488 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 primarily satisfied at a point in time. Revenue from products transferred to customers at a single point in time accounted for 99.9 0.1 As of September 30, 2023 and 2022, 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 $ 239,624 166,000 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 is 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 4-INTANGIBLE ASSETS, NET) 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 September 30, 2023, and June 30, 2023, capitalized product development costs in progress were $ 131,588 203,838 22,500 493,250 Research and Development Costs Costs associated with research and development are expensed as incurred. Research and development costs were $ 866,955 970,120 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 consolidated statements of comprehensive income (loss), were $ 51,073 40,553 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, such as certificates of deposit and government bonds, etc. 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 the control of the Company. We may write down our inventory value for potential obsolescence and excess inventory. As of September 30, 2023, and June 30, 2023, we have recorded inventory reserves in the amount of $ 585,274 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: Schedule of useful lives of property and equipment Machinery 6 Office equipment 5 Molds 3 Vehicles 5 Computers and software 5 Furniture and fixtures 7 Facilities improvements 5 years or life of the lease, whichever is shorter 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. As of September 30, 2023, and June 30, 2023, we were not aware of any events or changes in circumstances that would indicate that the long-lived assets are impaired. Stock-based Compensation Our 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. Compensation costs are recognized over the period that an employee provides service in exchange for the award, i.e., the vesting period. We estimate 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. 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 We use 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. We assess 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, we record 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. We classify interest and penalties associated with such uncertain tax positions as a component of income tax expense. As of September 30, 2023, we have no material unrecognized tax benefits. We recorded income tax benefits of $ 50,060 103,383 50,860 104,183 Earnings (loss) per Share Attributable to Common Stockholders Earnings (loss) per share is calculated by dividing the net income (loss) 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 (loss) 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 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 three months ended September 30, 2023, sales to our two largest customers accounted for 91 98 92 0 For the three months ended September 30, 2023, we purchased the majority of our wireless data products from one manufacturing company located in Asia. If these manufacturing companies were to experience delays, capacity constraints or quality control problems, product shipments to our customers could be delayed, or our customers could consequently elect to cancel the underlying product purchase order, which would negatively impact the Company's revenue. For the three months ended September 30, 2023, we purchased wireless data products from this manufacturer in the amount of $ 6,361,553 99.8 6,917,202 7,067,055 99 7,990,867 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 September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50) |
NOTE 2 - BUSINESS OVERVIEW
NOTE 2 - BUSINESS OVERVIEW | 3 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
NOTE 2 - BUSINESS OVERVIEW | NOTE 2 - BUSINESS OVERVIEW We are a leading provider 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 marketed and sold directly to wireless operators and indirectly through strategic partners and distributors. Our global customer base primarily extends from North America and the Caribbean and South America to Asia. |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Sep. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | NOTE 3 – BASIS OF PRESENTATION The accompanying unaudited consolidated financial statements of Franklin Wireless Corp. have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and are presented in accordance with the requirements of Form 10-Q. In the opinion of management, the financial statements included herein contain all adjustments, including normal recurring adjustments, considered necessary to present fairly the financial position, the results of operations and comprehensive income (loss) and cash flows of the Company for the periods presented. These financial statements and notes hereto should be read in conjunction with the financial statements and notes thereto for the fiscal year ended June 30, 2023 included in our Form 10-K filed on September 28, 2023. The operating results or cash flows for the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year. |
INTANGIBLE ASSETS, NET
INTANGIBLE ASSETS, NET | 3 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS, NET | NOTE 4 – INTANGIBLE ASSETS, NET The definite lived intangible assets consisted of the following as of September 30, 2023: Schedule of definite lived intangible assets Definite lived intangible assets: Expected Life Average Remaining life Gross Intangible Assets Less Accumulated Amortization Net Intangible Assets Complete technology 3 – 18,397 18,397 – Technology in progress Not Applicable – 131,588 – 131,588 Software 5 1.4 423,762 351,063 72,699 Patents 10 6.8 59,975 22,568 37,407 Certifications & licenses 3 1.8 3,853,990 2,137,218 1,716,772 Total as of September 30, 2023 $ 4,487,712 $ 2,529,246 $ 1,958,466 The definite lived intangible assets consisted of the following as of June 30, 2023: Definite lived intangible assets: Expected Life Average Remaining life Gross Intangible Assets Less Accumulated Amortization Net Intangible Assets Complete technology 3 – 18,397 18,397 – Technology in progress Not Applicable – 203,838 – 203,838 Software 5 1.6 423,762 347,228 76,534 Patents 10 7.0 59,975 21,108 38,867 Certifications & licenses 3 2.0 3,759,240 1,897,595 1,861,645 Total as of June 30, 2023 $ 4,465,212 2,284,328 2,180,884 Amortization expense recognized during the three months ended September 30, 2023 and 2022 was $ 244,918 179,894 The amortization expenses of the definite lived intangible assets for the future are as follows: Schedule of future amortization expense FY2024 FY2025 FY2026 FY2027 FY2028 Thereafter Total $ 739,840 $ 752,789 $ 295,501 $ 18,296 $ 12,200 $ 8,252 |
ACCRUED LIABILITIES
ACCRUED LIABILITIES | 3 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
ACCRUED LIABILITIES | NOTE 5 - ACCRUED LIABILITIES Accrued liabilities consisted of the following as of: Schedule of accrued liabilities September 30, 2023 June 30, 2023 Accrued payroll deductions owed to government entities $ 53,500 $ 52,923 Accrued salaries and bonuses 500,000 375,000 Accrued vacation 157,355 141,590 Accrued commission for service providers 31,250 32,500 Accrued commission to a customer 247,592 247,592 Total $ 989,697 $ 849,605 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 6 - COMMITMENTS AND CONTINGENCIES Leases We adopted ASC 842 new lease accounting on July 1, 2019. We had an operating lease principally for both Franklin Wireless Corp. and Franklin Technologies Inc., in accordance with ASC 842. 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 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 payments. 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. On September 9, 2015, we signed a lease for office space consisting of approximately 12,775 square feet, located in San Diego, California, at a monthly rent of $ 23,115 77,263 Our Korea-based subsidiary, FTI, leases approximately 10,000 square feet of office space, at a monthly rent of approximately $8,000, and additional office space consisting of approximately 2,682 square feet at a monthly rent of approximately $2,700, both located in Seoul, Korea. These leases expired on August 31, 2023 and were extended by an additional twelve months to August 31, 2024. In addition to monthly rent, the leases provide for periodic cost of living increases in the base rent and payment for certain common area costs. These facilities are covered by an appropriate level of insurance, and we believe them to be suitable for our use and adequate for our present needs. Rent expense related to these leases was approximately $ 32,100 We lease one corporate housing facility, located in Seoul, Korea, primarily for our employees who travel, under a non-cancelable operating lease that expired on September 4, 2023 and was extended by an additional twelve months to September 4, 2024. Rent expense related to this lease were $ 2,054 1,930 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. We used discount rates of 4.0 2.8 111,417 111,293 Schedule of components of lease expense Three Months Ended September 30, 2023 2022 Operating lease expense $ 77,263 $ 77,263 Short term lease cost 34,154 34,030 Total lease expense $ 111,417 $ 111,293 Remaining lease term-operating leases 0.3 Discount rate-operating lease 4 Schedule of future minimum rental payments for operating leases Operating Leases Fiscal 2024 $ 80,483 Total lease payments 80,483 Less imputed interest (534 ) Total $ 79,949 Litigation We are from time to time involved in certain legal proceedings and claims arising in the ordinary course of business. Verizon Jetpack Recall On April 8, 2021, Verizon issued a press release announcing that it was working with the U.S. Consumer Product Safety Commission (CPSC) to conduct a voluntary recall of certain Verizon Ellipsis Jetpack mobile hotspot devices, indicating that the lithium-ion battery in the devices can overheat, posing a fire and burn hazard. According to the CPSC release, the recall affects approximately 2.5 million devices. We imported the devices and supplied to Verizon. 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. 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. On April 9, 2021 we issued a press release announcing the voluntary recall by Verizon. As of the date of this report, we have been unable to recreate any device failures of the type identified by Verizon. All internal testing conducted to date has confirmed that the Jetpack devices are performing within normal parameters. We are not currently aware of any aspect of the Jetpack design that could cause the devices to fail in the way described in Verizon’s recall notice. Future Impact on Financial Performance 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. Shareholder Litigation Ali A shareholder action, Ali vs. Franklin Wireless Corp. et al. 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 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 Harwood / Martin A legal action was filed in the U.S. 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. v. O.C. 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 in a timely manner. We believe these allegations are not supported by the facts and we will vigorously defend against such claims. A legal action was filed in the U.S. District Court, Southern District of California (San Diego) against Franklin, as a nominal defendant, by Debra Martin, derivatively on behalf of nominal defendant Franklin Wireless Corp. v. O.C. 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 in a timely manner. We believe these allegations are not supported by the facts and we will vigorously defend against such claims. The Harwood and Martin actions 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.: 21cv1837-AJB (MSB). Discovery is ongoing at this time. Pape A legal action was filed in the Second Judicial District Court of Nevada in the County of Washoe against Franklin, as a nominal defendant, Barbara Pape, derivatively on behalf of nominal defendant Franklin Wireless Corp. v. O.C. 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 manner. We believe these allegations are not supported by the facts and we will vigorously defend against such claims. The Company will vigorously defend such shareholder litigation and proceedings. No liability has been recorded for these litigations because the Company believes that any such liability is not probable and reasonably estimable at this time. “Short-Swing” 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-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. On October 19, 2023, the jury) returned a verdict for $2,000,000 in favor of the Company against the Company’s Chief Executive Officer, O.C. Kim. Mr. Kim has filed a notice indicating he intends to appeal the verdict. Loan Agreement with Subsidiary On March 21, 2022, Franklin Wireless Corp. (the “Company”) entered into a Loan Agreement with Franklin Technologies, Inc. a Korean corporation (“FTI”), under which the Company agreed to loan US$ 10,000,000 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. Employment Contracts 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. 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 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. On November 10, 2022, the Company and OC Kim, its President, entered into an amendment of the existing 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. 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. 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 with Mr. Kim, dated October 1, 2020, has not been terminated and remains in effect at this time. International Tariffs We believe that our products are currently exempt from international tariffs upon import from our manufacturers to the United States. If this were to change at any point, a tariff of 10%-25% of the purchase price would be imposed. If such tariffs are imposed, they could have a materially adverse effect on sales and operating results. Customer Indemnification Under purchase orders and contracts for the sale of our products we may provide indemnification to our customers for potential intellectual property infringement claims for which we may have no corresponding recourse against our third-party licensors. This potential liability, if realized, could materially adversely affect our business, operating results and financial condition. |
LONG-TERM INCENTIVE PLAN AWARDS
LONG-TERM INCENTIVE PLAN AWARDS | 3 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
LONG-TERM INCENTIVE PLAN AWARDS | NOTE 7 - LONG-TERM INCENTIVE PLAN AWARDS We apply the provisions of ASC 718, “Compensation - Stock Compensation,” to all of our stock-based compensation awards and use the Black-Scholes option pricing model to value stock options. The fair value of each share option award on the date of grant was estimated using the Black-Scholes method based on the following weighted average assumptions: The risk-free interest rate is based on the U.S. treasury yield curve in effect at the time of grant for periods corresponding with the expected term of options award; the expected term represents awards granted are expected to be outstanding giving considerations vesting schedules and historical participant exercise behavior; the expected volatility is based upon historical volatility of the dividend yield is based upon the company’s dividend rate at the time fair value is measure and future expectations. Under this application, we record compensation expense for all awards granted. In July of 2020, the Board of Directors adopted the 2020 Franklin Wireless Corp. Stock Option Plan (the “2020 Plan”), which covers 800,000 The estimated forfeiture rate considers historical turnover rates stratified into employee pools in comparison with an overall employee turnover rate, as well as expectations about the future. We periodically revise the estimated forfeiture rate in subsequent periods if actual forfeitures differ from those estimates. There were $ 51,589 180,745 A summary of the status of our stock options is presented below as of September 30, 2023: Schedule of stock option activity Weighted- Average Weighted- Remaining Average Contractual Aggregate Exercise Life Intrinsic Options Shares Price (In Years) Value Outstanding as of June 30, 2023 647,001 $ 4.24 2.88 $ 130,200 Granted – – – – Exercised – – – – Cancelled – – – – Forfeited or expired (16,000 ) 4.77 – – Outstanding as of September 30, 2023 631,001 $ 4.23 2.63 $ – Exercisable as of September 30, 2023 478,642 $ 4.49 2.44 $ – The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $3.20 as of September 30, 2023, 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 September 30, 2023, in the amount of 631,001 3.34 432,617 A summary of the status of our stock options is presented below as of September 30, 2022: Weighted- Average Weighted- Remaining Average Contractual Aggregate Exercise Life Intrinsic Options Shares Price (In Years) Value Outstanding as of June 30, 2022 766,001 $ 3.85 3.37 $ 183,270 Granted – – – – Exercised – – – – Cancelled – – – – Forfeited or expired (10,000 ) 5.40 – – Outstanding as of September 30, 2022 756,001 $ 3.86 3.11 $ 158,000 Exercisable as of September 30, 2022 399,089 $ 3.90 2.36 $ 158,000 The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $2.92 as of September 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 September 30, 2022, in the amount of 756,001 3.17 1,102,036 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Sep. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8 – RELATED PARTY TRANSACTIONS For the three months ended September 30, 2023, and 2022, there have not been any transactions entered into or been a participant in which a related person had or will have a direct or indirect material interest. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Sep. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 9 - 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 September 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 November 14, 2023. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of the Company and its subsidiary, Franklin Technology Inc. (“FTI”), with a majority voting interest of 66.3 33.7 As consolidated financial statements are based on the assumption that they represent the financial position and operating results of a single economic entity, the retained earnings or deficit of the subsidiary at the date of acquisition, October 1, 2009, by the parent are excluded from consolidated retained earnings. When a subsidiary is consolidated, the consolidated financial statements include the subsidiary’s revenues, expenses, gains, and losses only from the date the subsidiary is initially consolidated, and the noncontrolling interest is reported in the consolidated statement of financial position within equity, separately from the parent’s equity. There are no shares of the Company held by any subsidiaries as of September 30, 2023, or June 30, 2023. |
Noncontrolling Interest in a Consolidated Subsidiary | Noncontrolling Interest in a Consolidated Subsidiary As of September 30, 2023, the noncontrolling interest was $ 1,408,462 79,505 1,487,967 79,505 236,217 |
Segment Reporting | 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. Segment information by geographic areas Three Months Ended September 30, Net sales: 2023 2022 North America $ 9,655,546 $ 8,107,451 Asia – 1,489 Totals $ 9,655,546 $ 8,108,940 Schedule of long lived assets by geographic area Long-lived assets, net (property and equipment and intangible assets): September 30, 2023 June 30, 2023 North America $ 1,860,218 $ 2,083,902 Asia 190,373 198,070 Totals $ 2,050,591 $ 2,281,972 |
Fair Value of Financial Instruments | 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. |
Use of Estimates | Use of 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 | Allowance for Doubtful Accounts On July 1, 2023, we adopted ASU 2016-13 Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which replaces the incurred loss methodology with an expected loss methodology that is referred to as the current expected credit loss (“CECL”) methodology. The measurement of expected credit losses under the CECL methodology is applicable to financial assets measured at amortized cost, including loan receivables and held to maturity debt securities. It also applies to Off-Balance Sheet (“OBS”) credit exposures not accounted for as insurance (loan commitments, standby letters of credit, financial guarantees, and other similar instruments) and net investments and leases recognized by a lessor in accordance with Topic 842 on leases. Upon adoption of ASC 326 and based upon our review of our collection history as well as the current balances associated with all significant customers and associated invoices, as of September 30, 2023, we did no |
Cash Flows Reporting | Cash Flows Reporting We follow ASC 230, Statements of Cash Flows, for cash flows reporting, which 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 | 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 8–RELATED PARTY TRANSACTIONS) |
Foreign Currency Translations | Foreign Currency Translations We have a majority-owned subsidiary in a 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 period. 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. Dollars, and therefore, our revenue is not directly subject to foreign currency risk. In accordance with ASC 830, 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 (loss) for the period. |
Leases | Leases In accordance with ASC 842, 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 payments. 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 leases 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 | Revenue Recognition In April 2016, the FASB issued Accounting Standards Update No. 2016-10, Revenue from Contracts with Customers (Topic 606) (ASU 2016-10), which amends and adds clarity to certain aspects of the guidance set forth in the original revenue standard (ASU 2014-09) related to identifying performance obligations and licensing. In May 2016, the FASB issued Accounting Standards Update No. 2016-11, Revenue Recognition (Topic 605), which amends and rescinds certain revenue recognition guidance previously released within ASU 2014-09. In May 2016 the FASB issued Accounting Standards Update No. 2016-12, Revenue from Contracts with Customers (Topic 606) (ASU 2016-12), which provides narrow scope improvements and practical expedients related to ASU 2014-09. The Company adopted ASU 2014-09 on July 1, 2018 using the modified retrospective method. Contracts with Customers Revenue from sales of products and services is derived from contracts with customers. The products and services promised in contracts primarily consist of hotspot 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 provisions for the quarters ended September 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. 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: Schedule of receivables September 30, 2023 June 30, 2023 Accounts Receivable $ 9,921,362 $ 8,949,802 The balance of contract assets was immaterial as we did not have a significant amount of un-invoiced receivables in the periods ended September 30, 2023, and June 30, 2023. Our contract liabilities are as follows: Schedule of contract liabilities September 30, 2023 June 30, 2023 Undelivered products $ 227,455 $ 146,488 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 primarily satisfied at a point in time. Revenue from products transferred to customers at a single point in time accounted for 99.9 0.1 As of September 30, 2023 and 2022, our contracts do not contain any unsatisfied performance obligations, except for undelivered products. |
Cost of Goods Sold | 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 $ 239,624 166,000 |
Capitalized Product Development Costs | 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 is 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 4-INTANGIBLE ASSETS, NET) 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 September 30, 2023, and June 30, 2023, capitalized product development costs in progress were $ 131,588 203,838 22,500 493,250 |
Research and Development Costs | Research and Development Costs Costs associated with research and development are expensed as incurred. Research and development costs were $ 866,955 970,120 |
Warranties | 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 | 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 consolidated statements of comprehensive income (loss), were $ 51,073 40,553 |
Cash and Cash Equivalents | 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 | Short Term Investments We have invested excess funds in short-term liquid assets, such as certificates of deposit and government bonds, etc. |
Inventories | 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 the control of the Company. We may write down our inventory value for potential obsolescence and excess inventory. As of September 30, 2023, and June 30, 2023, we have recorded inventory reserves in the amount of $ 585,274 |
Property and Equipment | 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: Schedule of useful lives of property and equipment Machinery 6 Office equipment 5 Molds 3 Vehicles 5 Computers and software 5 Furniture and fixtures 7 Facilities improvements 5 years or life of the lease, whichever is shorter |
Long-lived Assets | 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. As of September 30, 2023, and June 30, 2023, we were not aware of any events or changes in circumstances that would indicate that the long-lived assets are impaired. |
Stock-based Compensation | Stock-based Compensation Our 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. Compensation costs are recognized over the period that an employee provides service in exchange for the award, i.e., the vesting period. We estimate 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. 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 | Income Taxes We use 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. We assess 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, we record 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. We classify interest and penalties associated with such uncertain tax positions as a component of income tax expense. As of September 30, 2023, we have no material unrecognized tax benefits. We recorded income tax benefits of $ 50,060 103,383 50,860 104,183 |
Earnings (loss) per Share Attributable to Common Stockholders | Earnings (loss) per Share Attributable to Common Stockholders Earnings (loss) per share is calculated by dividing the net income (loss) 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 (loss) 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 | Concentrations 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 three months ended September 30, 2023, sales to our two largest customers accounted for 91 98 92 0 For the three months ended September 30, 2023, we purchased the majority of our wireless data products from one manufacturing company located in Asia. If these manufacturing companies were to experience delays, capacity constraints or quality control problems, product shipments to our customers could be delayed, or our customers could consequently elect to cancel the underlying product purchase order, which would negatively impact the Company's revenue. For the three months ended September 30, 2023, we purchased wireless data products from this manufacturer in the amount of $ 6,361,553 99.8 6,917,202 7,067,055 99 7,990,867 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 | Recently Issued Accounting Pronouncements In September 2022, the FASB issued ASU No. 2022-04, Liabilities—Supplier Finance Programs (Subtopic 405-50) |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Sep. 30, 2023 | |
Accounting Policies [Abstract] | |
Segment information by geographic areas | Segment information by geographic areas Three Months Ended September 30, Net sales: 2023 2022 North America $ 9,655,546 $ 8,107,451 Asia – 1,489 Totals $ 9,655,546 $ 8,108,940 |
Schedule of long lived assets by geographic area | Schedule of long lived assets by geographic area Long-lived assets, net (property and equipment and intangible assets): September 30, 2023 June 30, 2023 North America $ 1,860,218 $ 2,083,902 Asia 190,373 198,070 Totals $ 2,050,591 $ 2,281,972 |
Schedule of receivables | Schedule of receivables September 30, 2023 June 30, 2023 Accounts Receivable $ 9,921,362 $ 8,949,802 |
Schedule of contract liabilities | Schedule of contract liabilities September 30, 2023 June 30, 2023 Undelivered products $ 227,455 $ 146,488 |
Schedule of useful lives of property and equipment | Schedule of useful lives of property and equipment Machinery 6 Office equipment 5 Molds 3 Vehicles 5 Computers and software 5 Furniture and fixtures 7 Facilities improvements 5 years or life of the lease, whichever is shorter |
INTANGIBLE ASSETS, NET (Tables)
INTANGIBLE ASSETS, NET (Tables) | 3 Months Ended |
Sep. 30, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of definite lived intangible assets | Schedule of definite lived intangible assets Definite lived intangible assets: Expected Life Average Remaining life Gross Intangible Assets Less Accumulated Amortization Net Intangible Assets Complete technology 3 – 18,397 18,397 – Technology in progress Not Applicable – 131,588 – 131,588 Software 5 1.4 423,762 351,063 72,699 Patents 10 6.8 59,975 22,568 37,407 Certifications & licenses 3 1.8 3,853,990 2,137,218 1,716,772 Total as of September 30, 2023 $ 4,487,712 $ 2,529,246 $ 1,958,466 The definite lived intangible assets consisted of the following as of June 30, 2023: Definite lived intangible assets: Expected Life Average Remaining life Gross Intangible Assets Less Accumulated Amortization Net Intangible Assets Complete technology 3 – 18,397 18,397 – Technology in progress Not Applicable – 203,838 – 203,838 Software 5 1.6 423,762 347,228 76,534 Patents 10 7.0 59,975 21,108 38,867 Certifications & licenses 3 2.0 3,759,240 1,897,595 1,861,645 Total as of June 30, 2023 $ 4,465,212 2,284,328 2,180,884 |
Schedule of future amortization expense | Schedule of future amortization expense FY2024 FY2025 FY2026 FY2027 FY2028 Thereafter Total $ 739,840 $ 752,789 $ 295,501 $ 18,296 $ 12,200 $ 8,252 |
ACCRUED LIABILITIES (Tables)
ACCRUED LIABILITIES (Tables) | 3 Months Ended |
Sep. 30, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of accrued liabilities | Schedule of accrued liabilities September 30, 2023 June 30, 2023 Accrued payroll deductions owed to government entities $ 53,500 $ 52,923 Accrued salaries and bonuses 500,000 375,000 Accrued vacation 157,355 141,590 Accrued commission for service providers 31,250 32,500 Accrued commission to a customer 247,592 247,592 Total $ 989,697 $ 849,605 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Sep. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of components of lease expense | Schedule of components of lease expense Three Months Ended September 30, 2023 2022 Operating lease expense $ 77,263 $ 77,263 Short term lease cost 34,154 34,030 Total lease expense $ 111,417 $ 111,293 Remaining lease term-operating leases 0.3 Discount rate-operating lease 4 |
Schedule of future minimum rental payments for operating leases | Schedule of future minimum rental payments for operating leases Operating Leases Fiscal 2024 $ 80,483 Total lease payments 80,483 Less imputed interest (534 ) Total $ 79,949 |
LONG-TERM INCENTIVE PLAN AWAR_2
LONG-TERM INCENTIVE PLAN AWARDS (Tables) | 3 Months Ended |
Sep. 30, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of stock option activity | Schedule of stock option activity Weighted- Average Weighted- Remaining Average Contractual Aggregate Exercise Life Intrinsic Options Shares Price (In Years) Value Outstanding as of June 30, 2023 647,001 $ 4.24 2.88 $ 130,200 Granted – – – – Exercised – – – – Cancelled – – – – Forfeited or expired (16,000 ) 4.77 – – Outstanding as of September 30, 2023 631,001 $ 4.23 2.63 $ – Exercisable as of September 30, 2023 478,642 $ 4.49 2.44 $ – The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $3.20 as of September 30, 2023, 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 September 30, 2023, in the amount of 631,001 3.34 432,617 A summary of the status of our stock options is presented below as of September 30, 2022: Weighted- Average Weighted- Remaining Average Contractual Aggregate Exercise Life Intrinsic Options Shares Price (In Years) Value Outstanding as of June 30, 2022 766,001 $ 3.85 3.37 $ 183,270 Granted – – – – Exercised – – – – Cancelled – – – – Forfeited or expired (10,000 ) 5.40 – – Outstanding as of September 30, 2022 756,001 $ 3.86 3.11 $ 158,000 Exercisable as of September 30, 2022 399,089 $ 3.90 2.36 $ 158,000 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Segments) - USD ($) | 3 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Net sales | $ 9,655,546 | $ 8,108,940 |
North America [Member] | ||
Net sales | 9,655,546 | 8,107,451 |
Asia [Member] | ||
Net sales | $ 0 | $ 1,489 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Segments Long-Lived Assets) - USD ($) | Sep. 30, 2023 | Jun. 30, 2022 |
Long-lived assets, net (property and equipment and intangible assets) | $ 2,050,591 | $ 2,281,972 |
North America [Member] | ||
Long-lived assets, net (property and equipment and intangible assets) | 1,860,218 | 2,083,902 |
Asia [Member] | ||
Long-lived assets, net (property and equipment and intangible assets) | $ 190,373 | $ 198,070 |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Receivables) - USD ($) | Sep. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 |
Accounting Policies [Abstract] | |||
Accounts Receivable | $ 9,921,362 | $ 8,949,802 | $ 8,949,802 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Contract liabilities) - USD ($) | Sep. 30, 2023 | Jun. 30, 2022 |
Accounting Policies [Abstract] | ||
Undelivered products | $ 227,455 | $ 146,488 |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details - Useful lives) | 3 Months Ended |
Sep. 30, 2023 | |
Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 6 |
Office Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 |
Tools, Dies and Molds [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 |
Vehicles [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 |
Computer Equipment [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 |
Furniture and Fixtures [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 7 |
Facility Closing [Member] | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years or life of the lease, whichever is shorter |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | |||
Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Product Information [Line Items] | ||||
Noncontrolling interest | $ 1,408,462 | $ 1,487,967 | ||
Increase (decrease) in noncontrolling interest | 79,505 | |||
Gain (Loss) on disposition of stock in subsidiary | 236,217 | |||
Accounts Receivable, Allowance for Credit Loss | 0 | |||
Product development costs | 239,624 | $ 166,000 | ||
Capitalized product development costs | 131,588 | $ 203,838 | ||
Product development costs incurred | 22,500 | 493,250 | ||
Research and development expense | 866,955 | 970,120 | ||
Shipping and handling expense | 1,230,722 | 1,239,635 | ||
Inventory reserve | 585,274 | |||
Income tax benefits | 50,060 | 103,383 | ||
Increase (decrease) in deferred tax asset | 50,860 | 104,183 | ||
Cost of revenue | 8,142,386 | 6,515,078 | ||
Accounts payable, current | 7,149,702 | $ 12,950,497 | ||
Wireless Data Products [Member] | ||||
Product Information [Line Items] | ||||
Cost of revenue | 6,361,553 | 7,067,055 | ||
Accounts payable, current | 6,917,202 | 7,990,867 | ||
Shipping and Handling [Member] | ||||
Product Information [Line Items] | ||||
Shipping and handling expense | $ 51,073 | $ 40,553 | ||
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Customer 1 [Member] | ||||
Product Information [Line Items] | ||||
Concentration of credit risk | 91% | 92% | ||
Accounts Receivable [Member] | Customer Concentration Risk [Member] | Customer 1 [Member] | ||||
Product Information [Line Items] | ||||
Concentration of credit risk | 98% | 0% | ||
Cost of Goods and Service, Product and Service Benchmark [Member] | Supplier Concentration Risk [Member] | Wireless Data Products [Member] | ||||
Product Information [Line Items] | ||||
Concentration of credit risk | 99.80% | 99% | ||
Transferred at Point in Time [Member] | Revenue Benchmark [Member] | Product Concentration Risk [Member] | ||||
Product Information [Line Items] | ||||
Concentration of credit risk | 99.90% | 99.90% | ||
Transferred at Point in Time [Member] | Revenue Benchmark [Member] | Engineering Projects [Member] | ||||
Product Information [Line Items] | ||||
Concentration of credit risk | 0.10% | 0.10% | ||
Franklin Technology [Member] | ||||
Product Information [Line Items] | ||||
Noncontrolling interest percentage | 66.30% | |||
Noncontrolling Interests [Member] | ||||
Product Information [Line Items] | ||||
Noncontrolling interest percentage | 33.70% |
DEFINITE LIVED INTANGIBLE ASSET
DEFINITE LIVED INTANGIBLE ASSETS (Details - Intangible assets activity) - USD ($) | Sep. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 |
Indefinite-Lived Intangible Assets [Line Items] | |||
Gross Intangible Assets | $ 4,487,712 | $ 4,465,212 | |
Less Accumulated Amortization | 2,529,246 | 2,284,328 | |
Net Intangible Assets | $ 1,958,466 | $ 2,180,884 | $ 2,180,884 |
Complete Technology [Member] | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Expected Life | 3 years | 3 years | |
Gross Intangible Assets | $ 18,397 | $ 18,397 | |
Less Accumulated Amortization | 18,397 | 18,397 | |
Net Intangible Assets | 0 | 0 | |
Technology In Progess [Member] | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Gross Intangible Assets | 131,588 | 203,838 | |
Less Accumulated Amortization | 0 | 0 | |
Net Intangible Assets | $ 131,588 | $ 203,838 | |
Computer Software, Intangible Asset [Member] | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Expected Life | 5 years | 5 years | |
Gross Intangible Assets | $ 423,762 | $ 423,762 | |
Less Accumulated Amortization | 351,063 | 347,228 | |
Net Intangible Assets | $ 72,699 | $ 76,534 | |
Average Remaining Life | 1 year 4 months 24 days | 1 year 7 months 6 days | |
Patent [Member] | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Expected Life | 10 years | 10 years | |
Gross Intangible Assets | $ 59,975 | $ 59,975 | |
Less Accumulated Amortization | 22,568 | 21,108 | |
Net Intangible Assets | $ 37,407 | $ 38,867 | |
Average Remaining Life | 6 years 9 months 18 days | 7 years | |
Certification And Licenses [Member] | |||
Indefinite-Lived Intangible Assets [Line Items] | |||
Expected Life | 3 years | 3 years | |
Gross Intangible Assets | $ 3,853,990 | $ 3,759,240 | |
Less Accumulated Amortization | 2,137,218 | 1,897,595 | |
Net Intangible Assets | $ 1,716,772 | $ 1,861,645 | |
Average Remaining Life | 1 year 9 months 18 days | 2 years |
DEFINITE LIVED INTANGIBLE ASS_2
DEFINITE LIVED INTANGIBLE ASSETS (Details - Amortization Expenses) | Sep. 30, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
FYE 2024 | $ 739,840 |
FYE 2025 | 752,789 |
FYE 2026 | 295,501 |
FYE 2027 | 18,296 |
FYE 2028 | 12,200 |
Thereafter | $ 8,252 |
INTANGIBLE ASSETS, NET (Details
INTANGIBLE ASSETS, NET (Details Narrative) - USD ($) | 3 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Amortization of Intangible Assets | $ 244,918 | $ 179,894 |
ACCRUED LIABILITIES (Details)
ACCRUED LIABILITIES (Details) - USD ($) | Sep. 30, 2023 | Jun. 30, 2023 | Jun. 30, 2022 |
Payables and Accruals [Abstract] | |||
Accrued payroll deductions owed to government entities | $ 53,500 | $ 52,923 | |
Accrued salaries and bonuses | 500,000 | 375,000 | |
Accrued vacation | 157,355 | 141,590 | |
Accrued commission for service providers | 31,250 | 32,500 | |
Accrued commission to a customer | 247,592 | 247,592 | |
Total | $ 989,697 | $ 849,605 | $ 849,605 |
COMMITMENTS AND CONTINGENCIES_2
COMMITMENTS AND CONTINGENCIES (Details - Lease expenses) - USD ($) | 3 Months Ended | |
Sep. 30, 2023 | Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease expense | $ 77,263 | $ 77,263 |
Short term lease cost | 34,154 | 34,030 |
Total lease expense | $ 111,417 | $ 111,293 |
Remaining lease term-operating leases | 3 months 18 days | |
Discount rate-operating lease | 4% |
COMMITMENTS AND CONTINGENCIES_3
COMMITMENTS AND CONTINGENCIES (Details - Maturities of lease liabilities) | Sep. 30, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Fiscal 2024 | $ 80,483 |
Total lease payments | 80,483 |
Less imputed interest | (534) |
Total | $ 79,949 |
COMMITMENTS AND CONTINGENCIES_4
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | |||
Sep. 09, 2015 | Sep. 30, 2023 | Sep. 30, 2022 | Mar. 21, 2022 | |
Loss Contingencies [Line Items] | ||||
Monthly rent | $ 23,115 | |||
Rent expense | $ 111,417 | $ 111,293 | ||
Loan | $ 10,000,000 | |||
Ali [Member] | ||||
Loss Contingencies [Line Items] | ||||
Settlement amount | $ 2,400,000 | |||
California [Member] | ||||
Loss Contingencies [Line Items] | ||||
Lessee, Operating Lease, Discount Rate | 4% | |||
South Korea [Member] | ||||
Loss Contingencies [Line Items] | ||||
Lessee, Operating Lease, Discount Rate | 2.80% | |||
Administrative Office San Diego C A [Member] | ||||
Loss Contingencies [Line Items] | ||||
Rent expense | $ 77,263 | 77,263 | ||
Administrative Office Korea [Member] | ||||
Loss Contingencies [Line Items] | ||||
Rent expense | 32,100 | 32,100 | ||
Seoul Korea [Member] | ||||
Loss Contingencies [Line Items] | ||||
Rent expense | $ 2,054 | $ 1,930 |
LONG-TERM INCENTIVE PLAN AWAR_3
LONG-TERM INCENTIVE PLAN AWARDS (Details - Option Activity) - Equity Option [Member] - USD ($) | 3 Months Ended | 12 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Jun. 30, 2022 | Jun. 30, 2021 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||
Number of Options Outstanding, Beginning | 647,001 | 766,001 | ||
Weighted Average Exercise Price Outstanding, Beginning | $ 4.24 | $ 3.85 | ||
Weighted Average Remaining Contractual Life (in years) Exercisable | 2 years 7 months 17 days | 3 years 1 month 9 days | 2 years 10 months 17 days | 3 years 4 months 13 days |
Aggregate Intrinsic Value Outstanding, Beginning | $ 130,200 | $ 183,270 | ||
Number of Options Granted | 0 | 0 | ||
Weighted Average Exercise Price Granted | $ 0 | $ 0 | ||
Number of Options Exercised | 0 | 0 | ||
Weighted Average Exercise Price Exercised | $ 0 | $ 0 | ||
Number of Options Cancelled | 0 | 0 | ||
Weighted Average Exercise Price Canceled | $ 0 | $ 0 | ||
Number of Options Forfeited or expired | (16,000) | (10,000) | ||
Weighted Average Exercise Price Forfeited or expired | $ 4.77 | $ 5.40 | ||
Number of Options Outstanding, Ending | 631,001 | 756,001 | 766,001 | |
Weighted Average Exercise Price Outstanding, Ending | $ 4.23 | $ 3.86 | $ 3.85 | |
Aggregate Intrinsic Value Outstanding, Ending | $ 0 | $ 158,000 | $ 183,270 | |
Number of Options Exercisable | 478,642 | 399,089 | ||
Weighted Average Exercise Price Exercisable | $ 4.49 | $ 3.90 | ||
Weighted Average Remaining Contractual Life (in years) Exercisable | 2 years 5 months 8 days | 2 years 4 months 9 days | ||
Aggregate Intrinsic Value Exercisable | $ 0 | $ 158,000 |
LONG-TERM INCENTIVE PLAN AWAR_4
LONG-TERM INCENTIVE PLAN AWARDS (Details Narrative) - USD ($) | 3 Months Ended | ||
Sep. 30, 2023 | Sep. 30, 2022 | Jul. 31, 2020 | |
Share-Based Payment Arrangement [Abstract] | |||
Common stock shares | 800,000 | ||
Share based compensation expense | $ 51,589 | $ 180,745 | |
Weighted average grant-date fair value of stock options | 631,001 | 756,001 | |
Weighted average grant-date fair value of stock options, per share price | $ 3.34 | $ 3.17 | |
Unrecognized compensation cost related to non-vested options | $ 432,617 | $ 1,102,036 |