The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this report. This report contains certain forward-looking statements relating to future events or our future financial performance. These statements are subject to risks and uncertainties which could cause actual results to differ materially from those discussed in this report. You are cautioned not to place undue reliance on this information, which speaks only as of the date of this report. We are not obligated to publicly update this information, whether as a result of new information, future events or otherwise, except to the extent we are required to do so in connection with our obligation to file reports with the SEC. For a discussion of the important risks to our business and future operating performance, see the discussion under the caption "Item 1A. Risk Factors" and under the caption "Factors That May Influence Future Results of Operations" in our Form 10-K for the year ended June 30, 2020, filed on September 17, 2020. In light of these risks, uncertainties and assumptions, the forward-looking events discussed in this report might not occur.





BUSINESS OVERVIEW

We are a leading provider of intelligent wireless solutions including mobile hotspots, routers, trackers, and other devices. Our designs integrate innovative hardware and software enabling machine-to-machine (M2M) applications and the Internet of Things (IoT). Our M2M and IoT solutions include embedded modules, modems and gateways built to deliver reliable always-on connectivity supporting a broad spectrum of applications based on 5G/4G wireless technology.

We have a majority ownership position in Franklin Technology Inc. ("FTI"), a research and development company located in Seoul, South Korea. FTI primarily provides design and development services to us for our wireless products.

Our products are generally marketed and sold directly to wireless operators, and indirectly through strategic partners and distributors. Our global customer base extends primarily from North America to the Caribbean and South America and Asia.

FACTORS THAT MAY INFLUENCE FUTURE RESULTS OF OPERATIONS

We believe that our revenue growth will be influenced largely by (1) the successful maintenance of our existing customers, (2) the rate of increase in demand for wireless data products, (3) customer acceptance of our new products, (4) new customer relationships and contracts, and (5) our ability to meet customers' demands.

We have entered into and expect to continue to enter into new customer relationships and contracts for the supply of our products, and this may require significant demands on our resources, resulting in increased operating, selling, and marketing expenses associated with such new customers.





CRITICAL ACCOUNTING POLICIES

Our discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). The preparation of these financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. Management evaluates these estimates and assumptions on an ongoing basis. Our estimates and assumptions have been prepared on the basis of the most current reasonably available information. The results of these estimates form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates under different assumptions and conditions.

We have several critical accounting policies, which were described in our Annual Report on Form 10-K for the year ended June 30, 2020, that are both important to the portrayal of our financial condition and results of operations and require management's most difficult, subjective and complex judgments. Typically, the circumstances that make these judgments difficult, subjective and complex have to do with making estimates about the effect of matters that are inherently uncertain. There were no material changes to our critical accounting policies during the nine months ended March 31, 2021.







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RESULTS OF OPERATIONS



The following table sets forth, for the three and nine months ended March 31,
2021 and 2020, our statements of comprehensive income including data expressed
as a percentage of sales:





                                          Three Months Ended             Nine Months Ended
                                              March 31,                      March 31,
                                         2021            2020           2021            2020

Net sales                                  100.0%         100.0%          100.0%         100.0%
Cost of goods sold                          82.9%          80.5%           82.4%          79.7%
Gross profit                                17.1%          19.5%           17.6%          20.3%
Operating expenses                           5.3%          11.7%            4.2%          14.2%
Income from operations                      11.8%           7.8%           13.4%           6.1%
Other income (expense), net                  0.4%           0.5%            0.3%           0.5%
Net income before income taxes              12.2%           8.3%           13.7%           6.6%
Income tax provision                         2.7%           1.5%            3.1%           1.1%
Net income                                   9.5%           6.8%           10.6%           5.5%
Less: non-controlling interest in
net income of subsidiary                     0.6%           0.4%            0.4%           0.7%
Net income attributable to Parent
Company stockholders                         8.9%           6.4%           10.2%           4.8%

THREE MONTHS ENDED MARCH 31, 2021 COMPARED TO THREE MONTHS ENDED MARCH 31, 2020

NET SALES - Net sales increased by $28,784,772, or 185.2%, to $44,330,954 for the three months ended March 31, 2021 from $15,546,182 for the corresponding period of 2020. For the three months ended March 31, 2021, net sales by geographic regions, consisting of North America and Asia were $44,054,824 (99.4% of net sales) and $276,130 (0.6% of net sales), respectively. For the three months ended March 31, 2020, net sales by geographic regions, consisting of North America and Asia were $15,444,110 (99.3% of net sales) and $102,072 (0.7% of net sales), respectively.

Net sales in North America increased by $28,610,714, or 185.3%, to 44,054,824 for the three months ended March 31, 2021 from $15,444,110 for the corresponding period of 2020. The increase in net sales in North America resulted primarily from increased demand for wireless connectivity due to people working and attending school remotely. Net sales also increased due to a product and the timing of orders placed by a carrier customer, from which a significant portion of our revenue was derived. (approximately 67% of our consolidated net sales for this period). Net sales in Asia increased by $174,058, or 170.5%, to $276,130 for the three months ended March 31, 2021 from $102,072 for the corresponding period of 2020. The increase in net sales was primarily due to commission revenue generated by FTI, which typically varies from period to period.

GROSS PROFIT - Gross profit increased by $4,531,305, or 149.3%, to $7,566,096 for the three months ended March 31, 2021 from $3,034,791 for the corresponding period of 2020. The gross profit in terms of net sales percentage was 17.1% for the three months ended March 31, 2021 compared to 19.5% for the corresponding period of 2020. The increase in gross profit was primarily due to the change in net sales as described above. The decrease in gross profit and gross profit in terms of net sales percentage was primarily due to competitive selling prices and the increase in production costs.

OPERATING EXPENSES - Operating expenses increased by $513,712, or 28.2%, to $2,336,286 for the three months ended March 31, 2021 from $1,822,574 for the corresponding period of 2020. The increase in operating expenses was primarily due to the increased research and development costs, payroll expense for employees, and compensation costs related to the granted options.

OTHER INCOME (LOSS), NET- Other income (loss), net increased by $78,586, or 97.4%, to $159,265 for the three months ended March 31, 2021 from $80,679 for the corresponding period of 2020. The increase was primarily due to the increased product development funding received by FTI from a government entity and the gain from the favorable changes in foreign currency exchange rates in FTI, which is partially offset by the decreased interest income earned from the money market accounts and certificates of deposit.







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NINE MONTHS ENDED MARCH 31, 2021 COMPARED TO NINE MONTHS ENDED MARCH 31, 2020

NET SALES - Net sales increased by $135,467,670, or 359.5%, to $173,147,982 for the nine months ended March 31, 2021 from $37,680,312 for the corresponding period of 2020. For the nine months ended March 31, 2021, net sales by geographic regions, consisting of North America, the countries in the Caribbean and South America, and Asia, were $172,853,744 (99.8% of net sales), $17,500 (0.0% of net sales), and $276,738 (0.2% of net sales), respectively. For the nine months ended March 31, 2020, net sales by geographic regions, consisting of North America, the countries in the Caribbean and South America, and Asia were $37,342,577 (99.1% of net sales), $0 (0.0% of net sales) and $337,735 (0.0% of net sales), respectively.

Net sales in North America increased by $135,511,167, or 362.9%, to $172,853,744 for the nine months ended March 31, 2021 from $37,342,577 for the corresponding period of 2020. The increase in net sales in North America resulted primarily from increased demand for wireless connectivity due to people working and attending school remotely. Net sales also increased due to a newly launched product and the timing of orders placed by a new carrier customer, from which a significant portion of our revenue was derived. (approximately 61% of our consolidated net sales for this period). Net sales in the Caribbean and South America increased by $17,500, or 100%, to $17,500 for the nine months ended March 31, 2021 from $0 for the corresponding period of 2020. The increase in net sales was primarily due to the general nature of sales in these regions, which often fluctuate significantly from period to period due to timing of orders placed by a relatively small number of customers. Net sales in Asia decreased by $60,997, or 18.1%, to $276,738 for the nine months ended March 31, 2020 from $337,735 for the corresponding period of 2020. The decrease in net sales was primarily due to the discontinued product development service revenue generated by FTI, which typically varies from period to period and was partially offset by a commission revenue.

GROSS PROFIT - Gross profit increased by $22,882,852, or 299.2%, to $30,529,782 for the nine months ended March 31, 2021 from $7,646,930 for the corresponding period of 2020. The gross profit in terms of net sales percentage was 17.6% for the nine months ended March 31, 2021, compared to 20.3% for the corresponding period of 2020. The increase in gross profit was primarily due to increased demand for wireless connectivity due to people working and attending school remotely. Net sales also increased due to the change in net sales as described above. The decrease in gross profit in terms of net sales percentage was primarily due to competitive selling prices and the increase in production costs.

OPERATING EXPENSES - Operating expenses increased by $2,035,881, or 38.0%, to $7,396,895 for the nine months ended March 31, 2021 from $5,361,014 for the corresponding period of 2020. The increase in operating expenses was primarily due to the increased research and development costs, payroll expense for employees, and shipping and handling costs related to the increased volume of product shipments and sales, as well as the increased bad debt expenses and compensation costs related to the granted options.

OTHER INCOME (LOSS), NET - Other income (loss), net increased by $341,838, or 165.3%, to $548,600 for the nine months ended March 31, 2021 from $206,762 for the corresponding period of 2020. The increase was primarily due to the gain from the forgiveness of the Payroll Protection Plan loan and increased product development funding received by FTI from a government entity, which was partially offset by the loss from the unfavorable changes in foreign currency exchange rates in FTI and the decreased interest income earned from the money market accounts and certificates of deposit.

LIQUIDITY AND CAPITAL RESOURCES

Our historical operating results, capital resources and financial position, in combination with current projections and estimates, were considered in management's plan and intentions to fund our operations over a reasonable period of time, which we define as the twelve-month period ending from the date of the filing of this Form 10-Q. For purposes of liquidity disclosures, we assess the likelihood that we have sufficient available working capital and other principal sources of liquidity to fund our operating activities and obligations as they become due.

Our principal source of liquidity as of March 31, 2021 consisted of cash and cash equivalents as well as short-term investments of $59,742,180. We believe we have sufficient available capital to cover our existing operations and obligations through at least one year from the date of the filing of this Form 10-Q. Our long-term future cash requirements will depend on numerous factors, including our revenue base, profit margins, product development activities, market acceptance of our products, future expansion plans and ability to control costs. If we are unable to achieve our current business plan or secure additional funding that may be required, we would need to curtail our operations or take other similar actions outside the ordinary course of business in order to continue to operate as a going concern.







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OPERATING ACTIVITIES- Net cash provided in operating activities for the nine months ended March 31, 2021 and 2020 was $20,461,807 and $1,879,536.

The $20,461,807 in net cash provided by operating activities for the nine months ended March 31, 2021 was primarily due to the decrease in inventory and accounts receivable of $10,353,900 and $2,534,938, respectively, as well as our operating results (net income of $18,350,070 adjusted for depreciation, amortization, and other non-cash charges) and the increase in income tax payable of $2,307,543, which were partially offset by the decrease in accounts payable of $14,230,479. The $1,879,536 in net cash provided by operating activities for the nine months ended March 31, 2020 was primarily due to the increase in accounts payable of $5,685,328 and our operating results of $2,902,651 (net income adjusted for depreciation, amortization, and other non-cash charges), which were partially offset by the increase in accounts receivable of $7,098,137.

INVESTING ACTIVITIES- Net cash used in investing activities for the nine months ended March 31, 2021 and 2020 was $605,557 and $705,094, respectively.

The $605,557 in net cash used in investing activities for nine months ended March 31, 2020 was primarily due to the payments for purchase of capitalized product development of $587,246. The $705,094 in net cash used in investing activities for the nine months ended March 31, 2020 was primarily due to the payments for capitalized product development, intangible assets, and property and equipment of $343,360, $151,218, and $157,688, respectively, as well as the payments for purchase of additional shares of the subsidiary of $75,000.

FINANCING ACTIVITIES - Net cash provided by financing activities for the nine months ended March 31, 2021 and 2020 was $6,074,758 and $27,769, respectively.

The $6,074,758 in net cash provided by financing activities for the nine months ended March 31, 2021 was primarily due to the $6,000,008 aggregate purchase price, which was paid to us in cash, by investors for issuance of 923,078 shares of Common Stock and $74,750 received from the exercise of stock options. The $27,769 in net cash provided by financing activities for the nine months ended March 31, 2020 was primarily due to the cash received from the exercise of stock options.

CONTRACTUAL OBLIGATIONS AND OTHER COMMITMENTS





Leases

On September 9, 2015, we signed a lease for new office space consisting of approximately 12,775 square feet, located in San Diego, California, at a monthly rent of $23,115, which commenced on October 28, 2015. In addition to monthly rent, the new lease includes payment for certain common area costs. The term of the lease for the new office space was four years from the lease commencement date and was then extended by an additional fifty months, to December 31, 2023. Our facility is covered by an appropriate level of insurance and we believe it to be suitable for our use and adequate for our present needs. Our Korea-based subsidiary, FTI leases approximately 10,000 square feet of office space, located in Seoul, Korea, at a monthly rent of approximately $8,000 that expires on August 31, 2021. Beginning on June 12, 2015, FTI leased additional office space consisting of approximately 2,682 square feet, also located in Seoul, Korea, at a monthly rent of approximately $2,700 that expires on August 31, 2021. We lease one corporate housing facility primarily for our employees who travel, under a non-cancelable operating lease that expires on September 4, 2021.

Rent expense for the three months ended March 31, 2021 and 2020 was $111,679 and $111,509, respectively. Rent expense for the nine months ended March 31, 2021 and 2020 was $334,932 and $324,198, respectively.

Recently Issued Accounting Pronouncements

Refer to NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES in the Consolidated Financial Statements.

OFF-BALANCE SHEET ARRANGEMENTS





None.





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