10-Q/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q/A

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                          to                         .

Commission file number: 001-14891

FRANKLIN WIRELESS CORP.

(Exact name of Registrant as specified in its charter)

Nevada (State or other jurisdiction of incorporation or organization)	95-3733534  (I.R.S. Employer Identification Number)
9707 Waples Street Suite 150 San Diego, California (Address of principal executive offices)	92121 (Zip code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x    No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).   Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer o Accelerated filer o Non-accelerated filer o Smaller reporting company x Emerging Growth Company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨  No  x

Securities registered pursuant to Section 12(b) of the Act: None

The Registrant has 10,570,203 shares of common stock outstanding as of May 15, 2019.

EXPLANATORY NOTE

This Amendment No. 1 to the Quarterly Report on Form 10-Q is being filed solely to furnish the Interactive Data files as Exhibit 101, in accordance with Rule 405 of Regulation S-T. No other changes have been made to the Form 10-Q, as originally filed on May 15, 2019.

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PART IV

ITEM 6. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

Exhibit No.	Description
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Schema
101.CAL	XBRL Taxonomy Calculation Linkbase
101.DEF	XBRL Taxonomy Definition Linkbase
101.LAB	XBRL Taxonomy Label Linkbase
101.PRE	XBRL Taxonomy Presentation Linkbase

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SIGNATURES

In accordance with Section 13 of 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Franklin Wireless Corp.
	By:	/s/ OC Kim
		OC Kim President (Principal Executive Officer)
	By:	/s/ OC Kim
		OC Kim Acting Chief Financial Officer (Principal Financial Officer)
Dated: May 21, 2019

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Document and Entity Information - shares	9 Months Ended
	Mar. 31, 2019	May 15, 2019
Document And Entity Information
Entity Registrant Name	FRANKLIN WIRELESS CORP
Entity Central Index Key	0000722572
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--06-30
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Ex Transition Period	false
Entity Common Stock, Shares Outstanding		10,570,203
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019

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Consolidated Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Current assets:
Cash and cash equivalents	$ 10,763,321	$ 11,975,944
Accounts receivable	7,939,002	7,907,117
Other receivables, net	27,392	125,144
Inventories, net	771,242	1,615,332
Prepaid expenses and other current assets	24,182	19,034
Prepaid income taxes	3,096	28,240
Advance payments to vendors	54,008	78,696
Total current assets	19,582,243	21,749,507
Property and equipment, net	115,392	124,072
Intangible assets, net	846,838	996,708
Deferred tax assets, non-current	2,039,555	1,853,429
Goodwill	273,285	273,285
Other assets	237,335	139,637
TOTAL ASSETS	23,094,648	25,136,638
Current liabilities:
Accounts payable	6,640,408	7,609,585
Income tax payable	3,750	3,750
Advance payments from customers	71,460	228,593
Accrued liabilities	242,857	259,348
Total current liabilities	6,958,475	8,101,281
Total liabilities	6,958,475	8,101,281
Commitments and contingencies (Notes 7)
Parent Company stockholders' equity:
Preferred stock, par value $0.001 per share, authorized 10,000,000 shares; No preferred stock issued and outstanding as of March 31, 2019 and June 30, 2018	0	0
Common stock, par value $0.001 per share, authorized 50,000,000 shares; 10,570,203 shares issued and outstanding as of March 31, 2019 and June 30, 2018	13,972	13,972
Additional paid-in capital	7,442,272	7,442,272
Retained earnings	13,259,106	13,753,565
Treasury stock, 3,472,286 shares as of March 31, 2019 and June 30, 2018	(4,513,479)	(4,513,479)
Accumulated other comprehensive loss	(589,633)	(581,983)
Total Parent Company stockholders' equity	15,612,238	16,114,347
Non-controlling interests	523,935	921,010
Total Stockholders' Equity	16,136,173	17,035,357
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 23,094,648	$ 25,136,638

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Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2019	Jun. 30, 2018
Statement of Financial Position [Abstract]
Preferred stock par value (in Dollars per share)	$ 0.001	$ 0.001
Preferred stock Authorized	10,000,000	10,000,000
Preferred stock Issued	0	0
Preferred stock Outstanding	0	0
Common stock par value (in Dollars per share)	$ 0.001	$ 0.001
Common stock Authorized	50,000,000	50,000,000
Common stock Issued	10,570,203	10,570,203
Common stock Outstanding	10,570,203	10,570,203
Treasury stock shares	3,472,286	3,472,286

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Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Net sales	$ 8,966,140	$ 6,565,442	$ 31,480,832	$ 22,562,054
Cost of goods sold	7,371,035	5,121,593	26,431,444	18,279,140
Gross profit	1,595,105	1,443,849	5,049,388	4,282,914
Operating expenses:
Selling, general, and administrative	1,268,674	1,124,113	3,849,296	3,202,455
Research and development	714,092	744,794	2,186,755	2,641,526
Total operating expenses	1,982,766	1,868,907	6,036,051	5,843,981
Loss from operations	(387,661)	(425,058)	(986,663)	(1,561,067)
Other income (loss), net:
Interest income	48,921	2,479	82,673	7,513
Income from governmental subsidy	0	55,261	64,824	150,485
Other income (loss), net	2,984	(3,838)	(3,322)	(59,720)
Total other income (loss), net	51,905	53,902	144,175	98,278
Loss before provision for income taxes	(335,756)	(371,156)	(842,488)	(1,462,789)
Income tax benefit	(108,244)	(182,175)	(185,284)	(83,055)
Net loss	(227,512)	(188,981)	(657,204)	(1,379,734)
Non-controlling interests in net loss of subsidiary at 48.2%	0	48,259	55,564	70,710
Non-controlling interests in net loss of subsidiary at 35.8%	69,698	0	107,181	0
Net loss attributable to Parent Company	$ (157,814)	$ (140,722)	$ (494,459)	$ (1,309,024)
Basic loss per share attributable to Parent Company stockholders	$ (0.01)	$ (0.01)	$ (0.05)	$ (0.12)
Diluted loss per share attributable to Parent Company stockholders	$ (0.01)	$ (0.01)	$ (0.05)	$ (0.12)
Weighted average common shares outstanding - basic	10,570,203	10,570,203	10,570,203	10,570,203
Weighted average common shares outstanding - diluted	10,570,203	10,570,203	10,570,203	10,570,203
Comprehensive income
Net loss	$ (227,512)	$ (188,981)	$ (657,204)	$ (1,379,734)
Translation adjustments	(4,351)	(4,567)	(7,650)	73,616
Comprehensive loss	(231,863)	(193,548)	(664,854)	(1,306,118)
Comprehensive loss attributable to non-controlling interest	69,698	48,259	162,745	70,710
Comprehensive loss attributable to controlling interest	$ (162,165)	$ (145,289)	$ (502,109)	$ (1,235,408)

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Consolidated Statements of Stockholders Equity (Unaudited) - USD ($)	Common Stock	Additional Paid-In Capital	Retained Earnings	Treasury Stock	Accumulated Other Comprehensive Loss	Noncontrolling Interest	Total
Beginning balace, shares at Jun. 30, 2017	10,520,203
Beginning balace, value at Jun. 30, 2017	$ 13,922	$ 7,375,322	$ 15,846,022	$ (4,513,479)	$ (613,805)	$ 1,001,128	$ 19,109,110
Net loss attributable to Parent Company			(1,309,024)				(1,309,024)
Foreign exchange translation					73,616		73,616
Comprehensive loss attributable to non-controlling interest						(70,710)	(70,710)
Issuance of stock related to stock options exercised, shares	50,000
Issuance of stock related to stock options exercised, value	$ 50	66,950					67,000
Ending balance, shares at Mar. 31, 2018	10,570,203
Ending balance, value at Mar. 31, 2018	$ 13,972	7,442,272	14,536,998	(4,513,998)	(540,189)	930,418	17,869,992
Beginning balace, shares at Jun. 30, 2018	10,570,203
Beginning balace, value at Jun. 30, 2018	$ 13,972	7,442,272	13,753,565	(4,513,479)	(581,983)	921,010	17,035,357
Net loss attributable to Parent Company			(494,459)				(494,459)
Foreign exchange translation					(7,650)		(7,650)
Comprehensive loss attributable to non-controlling interest						(162,745)	(162,745)
Issuance of stock related to stock options exercised, value
Purchases of shares of a subsidiary						(234,330)	(234,330)
Ending balance, shares at Mar. 31, 2019	10,570,203
Ending balance, value at Mar. 31, 2019	$ 13,972	$ 7,442,272	$ 13,259,106	$ (4,513,479)	$ (589,633)	$ 523,935	$ 16,136,173

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Consolidated Statements of Cash Flows (Unaudited) - USD ($)	9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (657,204)	$ (1,379,734)
Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation	72,459	94,084
Amortization of intangible assets	339,708	363,140
Deferred tax asset (benefit)	(186,126)	(82,268)
Increase (decrease) in cash due to change in:
Accounts receivable	(31,885)	4,777,182
Other receivables	97,752	16,159
Inventories	844,090	2,022,713
Prepaid expenses and other current assets	(5,148)	(1,116)
Prepaid income tax	25,144	0
Advance payments to vendors	24,688	(7,219)
Other assets	(97,698)	(8,391)
Accounts payable	(969,177)	(7,719,647)
Advance payments from customers	(157,138)	(51,086)
Accrued liabilities	(16,491)	(27,072)
Net cash used in operating activities	(717,026)	(2,003,255)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of shares of a subsidiary	(234,330)	0
Purchases of property and equipment	(63,779)	(21,798)
Payments for capitalized development costs	(168,910)	(291,386)
Purchases of intangible assets	(20,928)	(38,520)
Net cash used in investing activities	(487,947)	(351,704)
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of stock related to stock options exercised	0	67,000
Net cash provided by financing activities	0	67,000
Effect of foreign currency translation	(7,650)	73,616
Net decrease in cash and cash equivalents	(1,212,623)	(2,214,343)
Cash and cash equivalents, beginning of period	11,975,944	14,285,001
Cash and cash equivalents, end of period	10,763,321	12,070,658
Supplemental disclosure of cash flow information:
Cash received (paid) during the periods for: Interest	82,674	7,513
Cash received (paid) during the periods for: Income taxes	$ (800)	$ (800)

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1. BASIS OF PRESENTATION

9 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION

NOTE 1 – BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Franklin Wireless Corp. (“the Company”) 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, 2018 included in the Company’s Form 10-K filed on September 28, 2018. 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.

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2. BUSINESS OVERVIEW

9 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BUSINESS OVERVIEW

NOTE 2 - BUSINESS OVERVIEW

We are a provider of intelligent wireless solutions including mobile hotspots, routers and modems as well as innovative hardware and software products that support 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. These products are designed to solve wireless connectivity challenges in a variety of vertical markets including video surveillance, digital signage, home security, oil and gas exploration, kiosks, fleet management, smart grid, vehicle diagnostics, telematics and many more.

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 the United States to countries in South America, the Caribbean, Europe, the Middle East and Africa ("EMEA") and Asia.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary with a majority voting interest of 64.2% (35.8% is owned by non-controlling interests) as of March 31, 2019 and 51.8% (48.2% is owned by non-controlling interests) as of June 30, 2018. In the preparation of consolidated financial statements of the Company, intercompany transactions and balances are eliminated and net earnings are reduced by the portion of the net earnings of the subsidiary applicable to non-controlling interests. The increase in the majority voting interest in percentage from 51.8% to 64.2% for the six months ended March 31, 2019 was due to the purchase of an additional 246,663 shares of the subsidiary, at $0.95 per share by the parent company from three shareholders of the subsidiary.

Non-controlling Interest in a Consolidated Subsidiary

As of March 31, 2019, the non-controlling interest was $523,935, which represents a $397,075 decrease from $921,010 as of June 30, 2018. 

The decrease in the non-controlling interest of $397,075 was comprised of two components (1) losses in the subsidiary of $162,745 incurred during the nine month period March 31, 2019 and (2) a reduction in the ownership percentage of the non-controlling interests due to the repurchase by the Company of 246,663 shares of the subsidiary for $234,330 ($0.95 per share) from three non-controlling shareholders. This decreased the non-controlling interests’ ownership percentage from 48.2% to 35.8%.

Segment Reporting

Public companies are required to report financial and descriptive information about their reportable operating segments. We identify our operating segments based on how our chief operating decision maker internally evaluates separate financial information, business activities and management responsibility. We have one reportable segment, consisting of the sale of wireless access products.

We generate revenues from four geographic areas, consisting of the United States and Canada, the Caribbean and South America, EMEA and Asia. The following enterprise-wide disclosure is prepared on a basis consistent with the preparation of the consolidated financial statements. The following table contains certain financial information by geographic area:

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
Net sales:	2019		2018		2019		2018
United States and Canada	$	8,898,775	$	6,414,074	$	31,234,107	$	21,813,370
Caribbean and South America		–		–		–		234,970
Europe, the Middle East and Africa (“EMEA”)		63,347		138,799		224,427		333,021
Asia		4,018		12,569		22,298		180,693
Totals	$	8,966,140	$	6,565,442	$	31,480,832	$	22,562,054

Long-lived assets, net (property and equipment and intangible assets):	March 31, 2019		June 30, 2018
United States	$	927,894	$	1,073,640
Asia		34,336		47,140
Totals	$	962,230	$	1,120,780

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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Fair Value of Financial Instruments

The carrying amounts of financial instruments such as cash equivalents, 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 management believes are readily convertible into cash, such as money market funds and certificates of deposit.

Allowance for Doubtful Accounts

Based upon our review of our collection history as well as the current balances associated with all significant customers and associated invoices, we do not believe an allowance for doubtful accounts was necessary as of March 31, 2019 and June 30, 2018.

Revenue Recognition  

On July 1, 2018, we adopted ASU 2014-09 using the modified retrospective method applied to those contracts that were not completed or substantially complete as of June 30, 2018. Results for the reporting period beginning after June 30, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under Topic 605. We recorded no change in retained earnings as of July 1, 2018 as a result of the cumulative impact of adopting Topic 606.

Contracts with Customers

Revenue for sales of products and services is derived from contracts with customers. The products and services promised in contracts primarily consist of hot spot routers. Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or service. Payment terms are stated in the contract, primarily in the form of a purchase order. Since the customer typically agrees to a stated rate and price in the purchase order that does not vary over the life of the contract, the majority of our contracts do not contain variable consideration. We establish a provision for estimated warranty and returns. Using historical averages, that provision for the nine months ended March 31, 2019 was not material.

Disaggregation of Revenue

In accordance with Topic 606, we disaggregate revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred. We determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606, which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

Contract Balances

We perform our obligations under a contract with a customer by transferring products in exchange for consideration from the customer. We typically invoice our customers as soon as control of an asset is transferred, and a receivable is established. We, however, recognize a contract liability when a customer prepays for goods and/or services, or we have not delivered goods under the contract since we have not yet transferred control of the goods and/or services.

The balances of our receivables are as follows: 

	March 31, 2019		June 30, 2018
Accounts Receivable	$	7,939,002	$	7,907,117

The balance of contract assets was immaterial as we did not have a significant amount of un-invoiced receivables in the periods ended March 31, 2019 and June 30, 2018. 

Our contract liabilities are as follows:

	March 31, 2019		June 30, 2018
Advance payments from customers	$	71,460	$	228,598
Undelivered products		140,000		140,000
Totals	$	211,460	$	368,593

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of measurement in Topic 606. At contract inception, we assess the products and services promised in our contracts with customers. We then identify performance obligations to transfer distinct products or services to the customer. In order to identify performance obligations, we consider all the products or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Our performance obligations are satisfied at a point in time. Revenue from products transferred to customers at a single point in time accounted for 97.4% of net sales for the three months ended March 31, 2019 and 99.3% of net sales for the nine months ended March 31, 2019. Revenue for non-recurring engineering projects is based on the percent complete of a project and accounted for 2.6% of net sales for the three months ended March 31, 2019 and 0.7% of net sales for the nine months ended March 31, 2019. The majority of our revenue recognized at a point in time is for the sale of hot-spot router products. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer at completion of the shipping process.

As of March 31, 2019, 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 expense associated with capitalized product development costs associated with complete technology.

Capitalized Product Development Costs

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) include certifications, licenses, payroll, employee benefits, and other headcount-related expenses associated with product development. We determine that technological feasibility for our products is reached after all high-risk development issues have been resolved. Once the products are available for general release to our customers, we cease capitalizing the product development costs and any additional costs, if any, are expensed. The capitalized product development costs are amortized on a product-by-product basis using the 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 March 31, 2019, and June 30, 2018, capitalized product development costs in progress were $268,910 and $100,000, respectively, and these amounts are included in intangible assets in our consolidated balance sheets. For the three and nine months ended March 31, 2019, we incurred $104,505 and $168,910, respectively, and for the three and nine months ended March 31, 2018, we incurred $66,901 and $291,386, respectively, in capitalized product development costs, and such amounts are primarily comprised of certifications and licenses. All costs incurred before technological feasibility is reached are expensed and included in our consolidated statements of comprehensive income (loss).

Research and Development Costs

Costs associated with research and development are expensed as incurred. Research and development costs were $714,092 and $744,794 for the three months ended March 31, 2019 and 2018, respectively, and $2,186,755 and $2,641,526 for the nine months ended March 31, 2019 and 2018, respectively.

Warranties

We provide a warranty for one year which is covered by our vendors and manufacturers under purchase agreements between the Company and the vendors. As a result, we believe we do not have any net warranty exposure and do not accrue any warranty expenses. Historically, the Company has not experienced any material net warranty expenditures.

Shipping and Handling Costs

Costs associated with product shipping and handling are expensed as incurred.  Shipping and handling costs, which are included in selling, general and administrative expenses on the consolidated statements of comprehensive income (loss), were $262,596 and $177,623 for the three months ended March 31, 2019 and 2018, respectively, and $978,275 and $560,458 for the nine months ended March 31, 2019 and 2018, respectively.

Cash and Cash Equivalents

For purposes of the consolidated statements of cash flow, we consider all highly liquid investments purchased with original maturities of three months or less to be cash equivalents.

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 March 31, 2019, and June 30, 2018, we have recorded an inventory reserve in the amounts of $293,888 and $295,502, respectively, for inventories that we have identified as obsolete or slow-moving.

Property and Equipment

Property and equipment are recorded at cost. Significant additions or improvements extending useful lives of assets are capitalized. Maintenance and repairs are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives as follows:

Machinery	6 years
Office equipment	5 years
Molds	3 years
Vehicles	5 years
Computers and software	5 years
Furniture and fixtures	7 years
Facilities improvements	5 years or life of the lease, whichever is shorter

Goodwill and Intangible Assets

Goodwill and certain intangible assets were recorded in connection with the FTI acquisition in October 2009, and are accounted for in accordance with ASC 805, “Business Combinations.” Goodwill represents the excess of the purchase price over the fair value of the tangible and intangible net assets acquired. Intangible assets are recorded at their fair value at the date of acquisition. Goodwill and other intangible assets are accounted for in accordance with ASC 350, “Goodwill and Other Intangible Assets.” Goodwill and other intangible assets are tested for impairment at least annually and any related impairment losses are recognized in earnings when identified. No impairment was recognized for the periods ended March 31, 2019 and June 30, 2018.

The definite lived intangible assets consisted of the following as of March 31, 2019:

Definite lived intangible assets:	Expected Life	Average Remaining life	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Complete technology	3 years	3.0 years	$	18,397	$	-	$	18,397
Technology in progress	Not Applicable	-		268,910		-		268,910
Software	5 years	1.7 years		323,438		266,868		56,570
Patents	10 years	6.3 years		58,763		8,205		50,558
Certifications & licenses	3 years	0.8 years		3,270,474		2,818,071		452,403
Total as of March 31, 2019			$	3,939,982	$	3,093,144	$	846,838

The definite lived intangible assets consisted of the following as of June 30, 2018:

Definite lived intangible assets:	Expected Life	Average Remaining life		Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Complete technology	3 years		3.0 years	$	18,397	$	–	$	18,397
Technology in progress	Not Applicable		–		100,000		–		100,000
Software	5 years		2.3 years		323,295		238,487		84,808
Patents	10 years		7.0 years		58,391		6,683		51,708
Certifications & licenses	3 years		1.4 years		3,250,061		2,508,266		741,795
Total as of June 30, 2018				$	3,750,144	$	2,753,436	$	996,708

Amortization expense recognized for the three months ended March 31, 2019 and 2018 was $93,777 and $116,788 respectively, and for the nine months ended March 31, 2019 and 2018 was $339,708 and $363,140, respectively.

Long-lived Assets

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 asset; 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 March 31, 2019, we are not aware of any events or changes in circumstances that would indicate that the long-lived assets are impaired.

Stock-based Compensation

The Company’s employee share-based awards result in a cost that is measured at fair value on an award’s grant date, based on the estimated number of awards that are expected to vest. Stock-based compensation is recognized on a straight-line basis over the award’s vesting period. The Company estimates the fair value of stock options using a Black-Scholes option pricing model. Transactions with non-employees in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty's performance is complete or the date on which it is probable that performance will occur. Stock-based compensation costs are reflected in the accompanying consolidated statements of comprehensive income (loss) based upon the underlying recipients' roles within the Company.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Accordingly, deferred tax assets and liabilities are determined based on the difference between the financial statement and income tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets, unless it is more likely than not such assets will be realized. Current income taxes are based on the year’s taxable income for federal and state income tax reporting purposes and the annual change in deferred taxes.

The Company assesses its income tax positions and records tax benefits based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. The Company classifies interest and penalties associated with such uncertain tax positions as a component of income tax expense.

As of March 31, 2019, we have no material unrecognized tax benefits. We recorded an income tax benefit of $108,244 and $185,284 for the three and nine months ended March 31, 2019, respectively, and an increase in deferred tax asset, non-current, of $108,251 and $186,126 for the three and nine months ended March 31, 2019.

The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017. The Act includes a provision to reduce the federal corporate income tax rate to a flat 21% effective for taxable years beginning on or after January 1, 2018. ASC 740 provides that deferred tax assets and liabilities are to be measured at the enacted rate, which is expected to apply when the related temporary differences are to be realized or settled, and the related tax impact is recognized through continuing operations in the period in which tax legislation is enacted. Accordingly, the Company remeasured its deferred tax assets as of December 31, 2017, resulting in an approximate $400,000 decrease, which was included as a component of the income tax provision recognized for the nine months ended March 31, 2018.

Additionally, the Act requires under Internal Revenue Code (“IRC”) Section 965 a deemed repatriation of post-1986 undistributed foreign earnings. Under the provision, U.S. taxpayers are subject to a special tax on previously untaxed foreign income held in the foreign subsidiaries. The Company performed an internal analysis and concluded that its foreign subsidiary has no earning and profits with respect to the IRC Section 954 tax to be recorded in the Company’s consolidated financial statements.

Earnings per Share Attributable to Common Stockholders

Earnings per share is calculated by dividing the net income by the weighted-average number of common shares that were outstanding for the period, without consideration for potential common shares. Diluted earnings per share is calculated by dividing the net income by the sum of the weighted-average number of dilutive potential common shares outstanding for the period determined using the treasury-stock method or the as-converted method. Potentially dilutive shares are comprised of common stock options outstanding under our stock plan.

Concentrations

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 nine months ended March 31, 2019, sales to our two largest customers accounted for 57% and 23% of our consolidated net sales, and 70% and 22% of our accounts receivable balance as of March 31, 2019. In the same period in 2018, sales to our three largest customers accounted for 55%, 19% and 12% of our consolidated net sales, and 58%, 34% and 0% of our accounts receivable balance as of March 31, 2018. No other customers accounted for more than ten percent of total net sales for the nine months ended March 31, 2019 and 2018, and no other customers accounted for more than ten percent of total accounts receivable as of March 31, 2019 and 2018.

For the nine months ended March 31, 2019, we purchased the majority of our wireless data products from two manufacturing companies 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 nine months ended March 31, 2019, we purchased wireless data products from these two manufacturers in the amount of $24,768,764, or 98% of total purchases, and had related accounts payable of $6,073,444 as of March 31, 2019. For the nine months ended March 31, 2018, we purchased wireless data products from these manufacturers in the amount of $14,004,980, or 89% of total purchases, and had related accounts payable of $4,133,501 as of March 31, 2018.

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 March 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), which amends existing standards for leases to increase transparency and comparability among organizations by requiring recognition of lease assets and liabilities on the balance sheet and requiring disclosure of key information about such arrangements. ASU 2016-02 will be effective for us beginning in our first quarter of fiscal 2020, and early adoption is permitted. We are currently evaluating the impact of adopting the new standard on our consolidated financial statements and the timing and presentation of our adoption.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) (ASU 2018-02), which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-02 will be effective for us beginning in our first quarter of fiscal 2020, and early adoption is permitted. Management does not expect that the adoption of this update will materially impact the Company’s consolidated financial statements.

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4. PROPERTY AND EQUIPMENT

9 Months Ended

Mar. 31, 2019

Property, Plant and Equipment [Abstract]

PROPERTY AND EQUIPMENT

NOTE 4 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following as of:

	March 31, 2019			June 30, 2018
Machinery and facility	$	362,768		$	306,335
Office equipment		393,259			385,913
Molds		984,720			984,720
		1,740,747			1,676,968
Less accumulated depreciation		(1,625,355	)		(1,552,896	)
Total	$	115,392		$	124,072

Depreciation expense associated with property and equipment was $17,889 and $30,181 for the three months ended March 31, 2019 and 2018, respectively, and $72,459 and $94,084 for the nine months ended March 31, 2019 and 2018, respectively.

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5. ACCRUED LIABILITIES

9 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

ACCRUED LIABILITIES

NOTE 5 – ACCRUED LIABILITIES

Accrued liabilities consisted of the following as of:

	March 31, 2019		June 30, 2018
Accrued salaries and payroll deductions owed to government entities	$	37,717	$	38,855
Accrued vacation		53,776		54,506
Accrued undelivered inventory		140,000		140,000
Other accrued liabilities		11,364		25,987
Total	$	242,857	$	259,348

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6. EARNINGS (LOSS) PER SHARE

9 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

EARNINGS (LOSS) PER SHARE

NOTE 6 – EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share are computed using the weighted average number of shares outstanding during the period. Diluted earnings per share represent basic earnings per share adjusted to include the potentially dilutive effect of outstanding stock options.

For the three and nine months ended March 31, 2019, we were in a net loss position and have excluded 299,000 stock options from the calculation of diluted net loss per shares because these securities are anti-dilutive. The weighted average number of shares outstanding used to compute loss per share is as follows:

	Three Months ended March 31,						Nine Months Ended March 31,
	2019			2018			2019			2018
Net loss attributable to Parent Company	$	(157,814	)	$	(140,722	)	$	(494,459	)	$	(1,309,024	)
Weighted-average shares of common stock outstanding:
Basic shares outstanding		10,570,203			10,570,203			10,570,203			10,570,203
Dilutive effect of common stock equivalents arising from stock options		–			–			–			–
Diluted shares outstanding		10,570,203			10,570,203			10,570,203			10,570,203
Basic loss per share	$	(0.01	)	$	(0.01	)	$	(0.05	)	$	(0.12	)
Diluted loss earnings per share	$	(0.01	)	$	(0.01	)	$	(0.05	)	$	(0.12	)

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7. COMMITMENTS AND CONTINGENCIES

9 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

NOTE 7 - COMMITMENTS AND CONTINGENCIES

Leases

We lease approximately 12,775 square feet of office space in San Diego, California, at a monthly rent of $23,115, pursuant to a lease that expires in October 2019. In addition to monthly rent, the lease includes payment for certain common area costs. 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. Rent expense for this office space was $69,345 for the three months ended March 31, 2019 and 2018, and $208,035 for the nine months ended March 31, 2019 and 2018.

Our Korea-based subsidiary, FTI, leases approximately 10,000 square feet of office space in Seoul, Korea, at a monthly rent of approximately $8,000. The lease expires on September 1, 2019. 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, and the lease expires on September 1, 2019. In addition to monthly rent, the lease provides 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 for the three months ended March 31, 2019 and 2018, and approximately $96,300 for the nine months ended March 31, 2019 and 2018.

We lease one corporate housing facility primarily for our employees who travel, under a non-cancelable operating lease that expires on September 4, 2019. Rent expense related to this lease was approximately $2,535 and $2,664 for the three months ended March 31, 2019 and 2018, and approximately $7,626 and $7,158 for the nine months ended March 31, 2019 and 2018.

Other Contingencies

Due to a cancelled purchase commitment by a significant customer, the Company has received a request for payment from a significant vendor in the amount of $2.9M for components purchased to fulfill that customer’s order. The Company has also requested payment of $2.9M for those components from the above-mentioned customer. We intend to remit payment to the vendor once the amounts are received from the customer. We have received assurances from the customer that we will be paid for this cancelled purchase commitment and we also have in place personal guarantees from the owners/principals of this customer. The vendor may be able to repurpose certain parts purchased into other orders we have placed or will place in the future. The company has made a pre-payment of $100,000 for future orders. The Company has also agreed to a temporary price increase of $1.00 per unit for current products to apply toward future orders. These amounts will be credited back to the Company upon consuming the components. No products have been transferred to us and there have been no revenue generating events relating to this situation. All parties are working towards a resolution as soon as possible, however, at this time material unresolved contingencies remain. Since it is not known at this time the exact amount that ultimately will be collected from the customer to be remitted to the vendor, the Company has not recorded these amounts into either Accounts Payable or Accounts Receivable.

Litigation

We are from time to time involved in certain legal proceedings and claims arising in the ordinary course of business. Management does not believe that the outcome of these matters will have any material adverse effect on the Company.

Change of Control Agreements

On September 21, 2009, 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. 

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. 

The Board of Directors has approved extension of the Change of Control Agreements with Mr. Kim and Mr. Lee through September 30, 2021.

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8. LONG-TERM INCENTIVE PLAN AWARDS

9 Months Ended

Mar. 31, 2019

Share-based Payment Arrangement [Abstract]

LONG-TERM INCENTIVE PLAN AWARDS

NOTE 8 – LONG-TERM INCENTIVE PLAN AWARDS

We adopted the 2009 Stock Incentive Plan (“2009 Plan”) on June 11, 2009, which provided for the grant of incentive stock options and non-qualified stock options to our employees and directors. Options granted under the 2009 Plan generally have a term of ten years and generally vest and become exercisable at the rate of 33% after one year and 33% on the second and third anniversaries of the option grant dates. Historically, some stock option grants have included shorter vesting periods ranging from one to two years.

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 was no compensation expense recorded under this method for the three and nine months ended March 31, 2019 and 2018.

A summary of the status of our stock options is presented below as of March 31, 2019:

					Weighted-
					Average
			Weighted-		Remaining
			Average		Contractual		Aggregate
			Exercise		Life		Intrinsic
Options	Shares		Price		(In Years)		Value
Outstanding as of June 30, 2018		299,000	$	1.04		2.75	$	241,220
Granted		–		–		–		–
Exercised		–		–		–		–
Cancelled		–		–		–		–
Forfeited or Expired		–		–		–		–
Outstanding as of March 31, 2019		299,000	$	1.04		2.00	$	525,270
Exercisable as of March 31, 2019		299,000	$	1.04		2.00	$	525,270

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $2.80 as of March 31, 2019, 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 March 31, 2019, in the amount of 299,000 shares, was $0.92 per share.

As of March 31, 2019, there was no unrecognized compensation cost related to non-vested stock options granted.

A summary of the status of our stock options is presented below as of March 31, 2018:

							Weighted-
							Average
				Weighted-			Remaining
				Average			Contractual		Aggregate
				Exercise			Life		Intrinsic
Options	Shares			Price			(In Years)		Value
Outstanding as of June 30, 2017		399,000		$	1.12			4.05	$	451,820
Granted		–			–			–		–
Exercised		(50,000	)		(1.34	)		4.21		(99,000	)
Cancelled		–			–			–		–
Forfeited or Expired		–			–			–		–
Outstanding as of March 31, 2018		349,000		$	1.09			3.17	$	312,090
Exercisable as of March 31, 2018		349,000		$	1.09			3.17	$	312,090

The aggregate intrinsic value in the preceding table represents the total pretax intrinsic value, based upon the Company’s closing stock price of $1.98 as of March 31, 2018, 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 March 31, 2018, in the amount of 349,000 shares, was $0.98 per share.

As of March 31, 2018, there was no unrecognized compensation cost related to non-vested stock options granted.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Mar. 31, 2019

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Principles of Consolidation

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiary with a majority voting interest of 64.2% (35.8% is owned by non-controlling interests) as of March 31, 2019 and 51.8% (48.2% is owned by non-controlling interests) as of June 30, 2018. In the preparation of consolidated financial statements of the Company, intercompany transactions and balances are eliminated and net earnings are reduced by the portion of the net earnings of the subsidiary applicable to non-controlling interests. The increase in the majority voting interest in percentage from 51.8% to 64.2% for the six months ended March 31, 2019 was due to the purchase of an additional 246,663 shares of the subsidiary, at $0.95 per share by the parent company from three shareholders of the subsidiary.

Non-controlling Interest in a Consolidated Subsidiary

Non-controlling Interest in a Consolidated Subsidiary

As of March 31, 2019, the non-controlling interest was $523,935, which represents a $397,075 decrease from $921,010 as of June 30, 2018. 

The decrease in the non-controlling interest of $397,075 was comprised of two components (1) losses in the subsidiary of $162,745 incurred during the nine month period March 31, 2019 and (2) a reduction in the ownership percentage of the non-controlling interests due to the repurchase by the Company of 246,663 shares of the subsidiary for $234,330 ($0.95 per share) from three non-controlling shareholders. This decreased the non-controlling interests’ ownership percentage from 48.2% to 35.8%.

Segment Reporting

Segment Reporting

Public companies are required to report financial and descriptive information about their reportable operating segments. We identify our operating segments based on how our chief operating decision maker internally evaluates separate financial information, business activities and management responsibility. We have one reportable segment, consisting of the sale of wireless access products.

We generate revenues from four geographic areas, consisting of the United States and Canada, the Caribbean and South America, EMEA and Asia. The following enterprise-wide disclosure is prepared on a basis consistent with the preparation of the consolidated financial statements. The following table contains certain financial information by geographic area:

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
Net sales:	2019		2018		2019		2018
United States and Canada	$	8,898,775	$	6,414,074	$	31,234,107	$	21,813,370
Caribbean and South America		–		–		–		234,970
Europe, the Middle East and Africa (“EMEA”)		63,347		138,799		224,427		333,021
Asia		4,018		12,569		22,298		180,693
Totals	$	8,966,140	$	6,565,442	$	31,480,832	$	22,562,054

Long-lived assets, net (property and equipment and intangible assets):	March 31, 2019		June 30, 2018
United States	$	927,894	$	1,073,640
Asia		34,336		47,140
Totals	$	962,230	$	1,120,780

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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could materially differ from those estimates.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The carrying amounts of financial instruments such as cash equivalents, 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 management believes are readily convertible into cash, such as money market funds and certificates of deposit.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

Based upon our review of our collection history as well as the current balances associated with all significant customers and associated invoices, we do not believe an allowance for doubtful accounts was necessary as of March 31, 2019 and June 30, 2018.

Revenue Recognition

Revenue Recognition  

On July 1, 2018, we adopted ASU 2014-09 using the modified retrospective method applied to those contracts that were not completed or substantially complete as of June 30, 2018. Results for the reporting period beginning after June 30, 2018 are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with our historic accounting under Topic 605. We recorded no change in retained earnings as of July 1, 2018 as a result of the cumulative impact of adopting Topic 606.

Contracts with Customers

Revenue for sales of products and services is derived from contracts with customers. The products and services promised in contracts primarily consist of hot spot routers. Contracts with each customer generally state the terms of the sale, including the description, quantity and price of each product or service. Payment terms are stated in the contract, primarily in the form of a purchase order. Since the customer typically agrees to a stated rate and price in the purchase order that does not vary over the life of the contract, the majority of our contracts do not contain variable consideration. We establish a provision for estimated warranty and returns. Using historical averages, that provision for the nine months ended March 31, 2019 was not material.

Disaggregation of Revenue

In accordance with Topic 606, we disaggregate revenue from contracts with customers into geographical regions and by the timing of when goods and services are transferred. We determined that disaggregating revenue into these categories meets the disclosure objective in Topic 606, which is to depict how the nature, amount, timing and uncertainty of revenue and cash flows are affected by regional economic factors.

Contract Balances

We perform our obligations under a contract with a customer by transferring products in exchange for consideration from the customer. We typically invoice our customers as soon as control of an asset is transferred, and a receivable is established. We, however, recognize a contract liability when a customer prepays for goods and/or services, or we have not delivered goods under the contract since we have not yet transferred control of the goods and/or services.

The balances of our receivables are as follows: 

	March 31, 2019		June 30, 2018
Accounts Receivable	$	7,939,002	$	7,907,117

The balance of contract assets was immaterial as we did not have a significant amount of un-invoiced receivables in the periods ended March 31, 2019 and June 30, 2018. 

Our contract liabilities are as follows:

	March 31, 2019		June 30, 2018
Advance payments from customers	$	71,460	$	228,598
Undelivered products		140,000		140,000
Totals	$	211,460	$	368,593

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of measurement in Topic 606. At contract inception, we assess the products and services promised in our contracts with customers. We then identify performance obligations to transfer distinct products or services to the customer. In order to identify performance obligations, we consider all the products or services promised in the contract regardless of whether they are explicitly stated or are implied by customary business practices.

Our performance obligations are satisfied at a point in time. Revenue from products transferred to customers at a single point in time accounted for 97.4% of net sales for the three months ended March 31, 2019 and 99.3% of net sales for the nine months ended March 31, 2019. Revenue for non-recurring engineering projects is based on the percent complete of a project and accounted for 2.6% of net sales for the three months ended March 31, 2019 and 0.7% of net sales for the nine months ended March 31, 2019. The majority of our revenue recognized at a point in time is for the sale of hot-spot router products. Revenue from these contracts is recognized when the customer is able to direct the use of and obtain substantially all of the benefits from the product which generally coincides with title transfer at completion of the shipping process.

As of March 31, 2019, 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 expense associated with capitalized product development costs associated with complete technology.

Capitalized Product Development Costs

Capitalized Product Development Costs

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) include certifications, licenses, payroll, employee benefits, and other headcount-related expenses associated with product development. We determine that technological feasibility for our products is reached after all high-risk development issues have been resolved. Once the products are available for general release to our customers, we cease capitalizing the product development costs and any additional costs, if any, are expensed. The capitalized product development costs are amortized on a product-by-product basis using the 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 March 31, 2019, and June 30, 2018, capitalized product development costs in progress were $268,910 and $100,000, respectively, and these amounts are included in intangible assets in our consolidated balance sheets. For the three and nine months ended March 31, 2019, we incurred $104,505 and $168,910, respectively, and for the three and nine months ended March 31, 2018, we incurred $66,901 and $291,386, respectively, in capitalized product development costs, and such amounts are primarily comprised of certifications and licenses. All costs incurred before technological feasibility is reached are expensed and included in our consolidated statements of comprehensive income (loss).

Research and Development Costs

Research and Development Costs

Costs associated with research and development are expensed as incurred. Research and development costs were $714,092 and $744,794 for the three months ended March 31, 2019 and 2018, respectively, and $2,186,755 and $2,641,526 for the nine months ended March 31, 2019 and 2018, respectively.

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 $262,596 and $177,623 for the three months ended March 31, 2019 and 2018, respectively, and $978,275 and $560,458 for the nine months ended March 31, 2019 and 2018, respectively.

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.

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 March 31, 2019, and June 30, 2018, we have recorded an inventory reserve in the amounts of $293,888 and $295,502, respectively, for inventories that we have identified as obsolete or slow-moving.

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:

Machinery	6 years
Office equipment	5 years
Molds	3 years
Vehicles	5 years
Computers and software	5 years
Furniture and fixtures	7 years
Facilities improvements	5 years or life of the lease, whichever is shorter

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Goodwill and certain intangible assets were recorded in connection with the FTI acquisition in October 2009, and are accounted for in accordance with ASC 805, “Business Combinations.” Goodwill represents the excess of the purchase price over the fair value of the tangible and intangible net assets acquired. Intangible assets are recorded at their fair value at the date of acquisition. Goodwill and other intangible assets are accounted for in accordance with ASC 350, “Goodwill and Other Intangible Assets.” Goodwill and other intangible assets are tested for impairment at least annually and any related impairment losses are recognized in earnings when identified. No impairment was recognized for the periods ended March 31, 2019 and June 30, 2018.

The definite lived intangible assets consisted of the following as of March 31, 2019:

Definite lived intangible assets:	Expected Life	Average Remaining life	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Complete technology	3 years	3.0 years	$	18,397	$	-	$	18,397
Technology in progress	Not Applicable	-		268,910		-		268,910
Software	5 years	1.7 years		323,438		266,868		56,570
Patents	10 years	6.3 years		58,763		8,205		50,558
Certifications & licenses	3 years	0.8 years		3,270,474		2,818,071		452,403
Total as of March 31, 2019			$	3,939,982	$	3,093,144	$	846,838

The definite lived intangible assets consisted of the following as of June 30, 2018:

Definite lived intangible assets:	Expected Life	Average Remaining life		Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Complete technology	3 years		3.0 years	$	18,397	$	–	$	18,397
Technology in progress	Not Applicable		–		100,000		–		100,000
Software	5 years		2.3 years		323,295		238,487		84,808
Patents	10 years		7.0 years		58,391		6,683		51,708
Certifications & licenses	3 years		1.4 years		3,250,061		2,508,266		741,795
Total as of June 30, 2018				$	3,750,144	$	2,753,436	$	996,708

Amortization expense recognized for the three months ended March 31, 2019 and 2018 was $93,777 and $116,788 respectively, and for the nine months ended March 31, 2019 and 2018 was $339,708 and $363,140, respectively.

Long-lived Assets

Long-lived Assets

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 asset; 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 March 31, 2019, we are 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

The Company’s employee share-based awards result in a cost that is measured at fair value on an award’s grant date, based on the estimated number of awards that are expected to vest. Stock-based compensation is recognized on a straight-line basis over the award’s vesting period. The Company estimates the fair value of stock options using a Black-Scholes option pricing model. Transactions with non-employees in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement date of the fair value of the equity instrument issued is the earlier of the date on which the counterparty's performance is complete or the date on which it is probable that performance will occur. Stock-based compensation costs are reflected in the accompanying consolidated statements of comprehensive income (loss) based upon the underlying recipients' roles within the Company.

Income Taxes

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Accordingly, deferred tax assets and liabilities are determined based on the difference between the financial statement and income tax bases of assets and liabilities, using enacted tax rates in effect for the year in which the differences are expected to reverse. A valuation allowance is recorded to reduce the carrying amount of deferred tax assets, unless it is more likely than not such assets will be realized. Current income taxes are based on the year’s taxable income for federal and state income tax reporting purposes and the annual change in deferred taxes.

The Company assesses its income tax positions and records tax benefits based upon management’s evaluation of the facts, circumstances, and information available at the reporting date. For those tax positions where it is more likely than not that a tax benefit will be sustained, the Company records the largest amount of tax benefit with a greater than 50% likelihood of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. For those income tax positions where it is not more likely than not that a tax benefit will be sustained, no tax benefit is recognized in the financial statements. The Company classifies interest and penalties associated with such uncertain tax positions as a component of income tax expense.

As of March 31, 2019, we have no material unrecognized tax benefits. We recorded an income tax benefit of $108,244 and $185,284 for the three and nine months ended March 31, 2019, respectively, and an increase in deferred tax asset, non-current, of $108,251 and $186,126 for the three and nine months ended March 31, 2019.

The Tax Cuts and Jobs Act (the “Act”) was signed into law on December 22, 2017. The Act includes a provision to reduce the federal corporate income tax rate to a flat 21% effective for taxable years beginning on or after January 1, 2018. ASC 740 provides that deferred tax assets and liabilities are to be measured at the enacted rate, which is expected to apply when the related temporary differences are to be realized or settled, and the related tax impact is recognized through continuing operations in the period in which tax legislation is enacted. Accordingly, the Company remeasured its deferred tax assets as of December 31, 2017, resulting in an approximate $400,000 decrease, which was included as a component of the income tax provision recognized for the nine months ended March 31, 2018.

Additionally, the Act requires under Internal Revenue Code (“IRC”) Section 965 a deemed repatriation of post-1986 undistributed foreign earnings. Under the provision, U.S. taxpayers are subject to a special tax on previously untaxed foreign income held in the foreign subsidiaries. The Company performed an internal analysis and concluded that its foreign subsidiary has no earning and profits with respect to the IRC Section 954 tax to be recorded in the Company’s consolidated financial statements.

Earnings per Share Attributable to Common Stockholders

Earnings per Share Attributable to Common Stockholders

Earnings per share is calculated by dividing the net income by the weighted-average number of common shares that were outstanding for the period, without consideration for potential common shares. Diluted earnings per share is calculated by dividing the net income by the sum of the weighted-average number of dilutive potential common shares outstanding for the period determined using the treasury-stock method or the as-converted method. Potentially dilutive shares are comprised of common stock options outstanding under our stock plan.

Concentrations

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 nine months ended March 31, 2019, sales to our two largest customers accounted for 57% and 23% of our consolidated net sales, and 70% and 22% of our accounts receivable balance as of March 31, 2019. In the same period in 2018, sales to our three largest customers accounted for 55%, 19% and 12% of our consolidated net sales, and 58%, 34% and 0% of our accounts receivable balance as of March 31, 2018. No other customers accounted for more than ten percent of total net sales for the nine months ended March 31, 2019 and 2018, and no other customers accounted for more than ten percent of total accounts receivable as of March 31, 2019 and 2018.

For the nine months ended March 31, 2019, we purchased the majority of our wireless data products from two manufacturing companies 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 nine months ended March 31, 2019, we purchased wireless data products from these two manufacturers in the amount of $24,768,764, or 98% of total purchases, and had related accounts payable of $6,073,444 as of March 31, 2019. For the nine months ended March 31, 2018, we purchased wireless data products from these manufacturers in the amount of $14,004,980, or 89% of total purchases, and had related accounts payable of $4,133,501 as of March 31, 2018.

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 March 2016, the FASB issued Accounting Standards Update No. 2016-02, Leases (Topic 842) (ASU 2016-02), which amends existing standards for leases to increase transparency and comparability among organizations by requiring recognition of lease assets and liabilities on the balance sheet and requiring disclosure of key information about such arrangements. ASU 2016-02 will be effective for us beginning in our first quarter of fiscal 2020, and early adoption is permitted. We are currently evaluating the impact of adopting the new standard on our consolidated financial statements and the timing and presentation of our adoption.

In February 2018, the FASB issued Accounting Standards Update No. 2018-02, Income Statement-Reporting Comprehensive Income (Topic 220) (ASU 2018-02), which amends existing standards for income statement-reporting comprehensive income to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from Tax Cuts and Jobs Act and improve the usefulness of information reported to financial statements users. ASU 2018-02 will be effective for us beginning in our first quarter of fiscal 2020, and early adoption is permitted. Management does not expect that the adoption of this update will materially impact the Company’s consolidated financial statements.

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3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Segment information by geographic areas

	Three Months Ended				Nine Months Ended
	March 31,				March 31,
Net sales:	2019		2018		2019		2018
United States and Canada	$	8,898,775	$	6,414,074	$	31,234,107	$	21,813,370
Caribbean and South America		–		–		–		234,970
Europe, the Middle East and Africa (“EMEA”)		63,347		138,799		224,427		333,021
Asia		4,018		12,569		22,298		180,693
Totals	$	8,966,140	$	6,565,442	$	31,480,832	$	22,562,054

Long lived assets by geographic area

Long-lived assets, net (property and equipment and intangible assets):	March 31, 2019		June 30, 2018
United States	$	927,894	$	1,073,640
Asia		34,336		47,140
Totals	$	962,230	$	1,120,780

Schedule of receivables

	March 31, 2019		June 30, 2018
Accounts Receivable	$	7,939,002	$	7,907,117

Schedule of contract liabilities

	March 31, 2019		June 30, 2018
Advance payments from customers	$	71,460	$	228,598
Undelivered products		140,000		140,000
Totals	$	211,460	$	368,593

Schedule of useful lives of property and equipment

Machinery	6 years
Office equipment	5 years
Molds	3 years
Vehicles	5 years
Computers and software	5 years
Furniture and fixtures	7 years
Facilities improvements	5 years or life of the lease, whichever is shorter

Schedule of Intangible Assets

Definite lived intangible assets:	Expected Life	Average Remaining life	Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Complete technology	3 years	3.0 years	$	18,397	$	-	$	18,397
Technology in progress	Not Applicable	-		268,910		-		268,910
Software	5 years	1.7 years		323,438		266,868		56,570
Patents	10 years	6.3 years		58,763		8,205		50,558
Certifications & licenses	3 years	0.8 years		3,270,474		2,818,071		452,403
Total as of March 31, 2019			$	3,939,982	$	3,093,144	$	846,838

The definite lived intangible assets consisted of the following as of June 30, 2018:

Definite lived intangible assets:	Expected Life	Average Remaining life		Gross Intangible Assets		Accumulated Amortization		Net Intangible Assets
Complete technology	3 years		3.0 years	$	18,397	$	–	$	18,397
Technology in progress	Not Applicable		–		100,000		–		100,000
Software	5 years		2.3 years		323,295		238,487		84,808
Patents	10 years		7.0 years		58,391		6,683		51,708
Certifications & licenses	3 years		1.4 years		3,250,061		2,508,266		741,795
Total as of June 30, 2018				$	3,750,144	$	2,753,436	$	996,708

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4. PROPERTY AND EQUIPMENT (Tables)

9 Months Ended

Mar. 31, 2019

Property, Plant and Equipment [Abstract]

Schedule of property and equipment

	March 31, 2019			June 30, 2018
Machinery and facility	$	362,768		$	306,335
Office equipment		393,259			385,913
Molds		984,720			984,720
		1,740,747			1,676,968
Less accumulated depreciation		(1,625,355	)		(1,552,896	)
Total	$	115,392		$	124,072

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5. ACCRUED LIABILITIES (Tables)

9 Months Ended

Mar. 31, 2019

Payables and Accruals [Abstract]

Schedule of accrued liabilities

	March 31, 2019		June 30, 2018
Accrued salaries and payroll deductions owed to government entities	$	37,717	$	38,855
Accrued vacation		53,776		54,506
Accrued undelivered inventory		140,000		140,000
Other accrued liabilities		11,364		25,987
Total	$	242,857	$	259,348

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6. EARNINGS (LOSS) PER SHARE (Tables)

9 Months Ended

Mar. 31, 2019

Earnings Per Share [Abstract]

Schedule of earnings (loss) per share

	Three Months ended March 31,						Nine Months Ended March 31,
	2019			2018			2019			2018
Net loss attributable to Parent Company	$	(157,814	)	$	(140,722	)	$	(494,459	)	$	(1,309,024	)
Weighted-average shares of common stock outstanding:
Basic shares outstanding		10,570,203			10,570,203			10,570,203			10,570,203
Dilutive effect of common stock equivalents arising from stock options		–			–			–			–
Diluted shares outstanding		10,570,203			10,570,203			10,570,203			10,570,203
Basic loss per share	$	(0.01	)	$	(0.01	)	$	(0.05	)	$	(0.12	)
Diluted loss earnings per share	$	(0.01	)	$	(0.01	)	$	(0.05	)	$	(0.12	)

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8. LONG-TERM INCENTIVE PLAN AWARDS (Tables)

9 Months Ended

Mar. 31, 2019

Share-based Payment Arrangement [Abstract]

Schedule of Stock Option Activity

A summary of the status of our stock options is presented below as of March 31, 2019:

					Weighted-
					Average
			Weighted-		Remaining
			Average		Contractual		Aggregate
			Exercise		Life		Intrinsic
Options	Shares		Price		(In Years)		Value
Outstanding as of June 30, 2018		299,000	$	1.04		2.75	$	241,220
Granted		–		–		–		–
Exercised		–		–		–		–
Cancelled		–		–		–		–
Forfeited or Expired		–		–		–		–
Outstanding as of March 31, 2019		299,000	$	1.04		2.00	$	525,270
Exercisable as of March 31, 2019		299,000	$	1.04		2.00	$	525,270

A summary of the status of our stock options is presented below as of March 31, 2018:

							Weighted-
							Average
				Weighted-			Remaining
				Average			Contractual		Aggregate
				Exercise			Life		Intrinsic
Options	Shares			Price			(In Years)		Value
Outstanding as of June 30, 2017		399,000		$	1.12			4.05	$	451,820
Granted		–			–			–		–
Exercised		(50,000	)		(1.34	)		4.21		(99,000	)
Cancelled		–			–			–		–
Forfeited or Expired		–			–			–		–
Outstanding as of March 31, 2018		349,000		$	1.09			3.17	$	312,090
Exercisable as of March 31, 2018		349,000		$	1.09			3.17	$	312,090

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3. Summary of Significant Accounting Policies (Details - Segments) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Net sales	$ 8,966,140	$ 6,565,442	$ 31,480,832	$ 22,562,054
United States [Member]
Net sales	8,898,775	6,414,074	31,234,107	21,813,370
Caribbean and South America [Member]
Net sales	0	0	0	234,970
EMEA [Member]
Net sales	63,347	138,799	224,427	333,021
Asia [Member]
Net sales	$ 4,018	$ 12,569	$ 22,298	$ 180,693

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3. Summary of Significant Accounting Policies (Details - Segments Long-Lived Assets) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Long-lived assets, net (property and equipment and intangible assets)	$ 962,230	$ 1,120,780
United States [Member]
Long-lived assets, net (property and equipment and intangible assets)	927,894	1,073,640
Asia [Member]
Long-lived assets, net (property and equipment and intangible assets)	$ 34,336	$ 47,140

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3. Summary of Significant Accounting Policies (Details - Receivables) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Accounting Policies [Abstract]
Accounts Receivable	$ 7,939,002	$ 7,907,117

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3. Summary of Significant Accounting Policies (Details - Contract liabilities) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Accounting Policies [Abstract]
Advance payments from customers	$ 71,460	$ 228,593
Undelivered products	140,000	140,000
Contract liabilities	$ 211,460	$ 368,593

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3. Summary of Significant Accounting Policies (Details - Useful lives)	9 Months Ended
	Mar. 31, 2019
Machinery [Member]
Estimated useful lives	6 years
Office Equipment [Member]
Estimated useful lives	5 years
Molds [Member]
Estimated useful lives	3 years
Vehicles[Member]
Estimated useful lives	5 years
Computers and software [Member]
Estimated useful lives	5 years
Furniture and fixtures [Member]
Estimated useful lives	7 years
Facilities Improvements [Member]
Estimated useful lives	5 years or life of the lease, whichever is shorter

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3. Summary of Significant Accounting Policies (Details - Intangibles) - USD ($)	9 Months Ended	12 Months Ended
	Mar. 31, 2019	Jun. 30, 2018
Intangible Assets, Gross	$ 3,939,982	$ 3,750,144
Accumulated Amortization	3,093,144	2,753,436
Intangible Assets, Net	846,838	996,708
Technology In Progress [Member]
Intangible Assets, Gross	268,910	100,000
Accumulated Amortization	0	0
Intangible Assets, Net	$ 268,910	$ 100,000
Complete Technology [Member]
Expected Life	3 years	3 years
Average Remaining Life	3 years	3 years
Intangible Assets, Gross	$ 18,397	$ 18,397
Accumulated Amortization	0	0
Intangible Assets, Net	$ 18,397	$ 18,397
Software [Member]
Expected Life	5 years	5 years
Average Remaining Life	1 year 8 months 12 days	2 years 3 months 18 days
Intangible Assets, Gross	$ 323,438	$ 323,295
Accumulated Amortization	266,868	238,487
Intangible Assets, Net	$ 56,570	$ 84,808
Patents [Member]
Expected Life	10 years	10 years
Average Remaining Life	6 years 3 months 18 days	7 years
Intangible Assets, Gross	$ 58,763	$ 58,391
Accumulated Amortization	8,205	6,683
Intangible Assets, Net	$ 50,558	$ 51,708
Certifications And Licenses [Member]
Expected Life	3 years	3 years
Average Remaining Life	9 months 18 days	1 year 4 months 24 days
Intangible Assets, Gross	$ 3,270,474	$ 3,250,061
Accumulated Amortization	2,818,071	2,508,266
Intangible Assets, Net	$ 452,403	$ 741,795

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3. Summary of Significant Accounting Policies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018	Jun. 30, 2018
Noncontrolling interest percentage	35.80%		35.80%		48.20%
Noncontrolling interest	$ 523,935		$ 523,935		$ 921,010
Increase (decrease) in noncontrolling interest			(397,075)
Net income (loss) of subsidiary			(162,745)
Allowance for doubtful accounts	0		0		0
Capitalized product development costs	268,910		268,910		100,000
Product development costs incurred during period	104,505	$ 66,901	168,910	$ 291,386
Research and development costs	714,092	744,794	2,186,755	2,641,526
Selling, general and administrative expenses	1,268,674	1,124,113	3,849,296	3,202,455
Inventory reserve	293,888		293,888		295,502
Impairment expense	0	0	0	0
Amortization expense	93,777	116,788	339,708	363,140
Unrecognized tax benefits	0		0
Income tax provision (benefit)	(108,244)	(182,175)	(185,284)	(83,055)
Increase (decrease) in tax deferred asset	108,251		186,126	82,268
Products purchased, cost of goods sold			8,850,932	4,542,021
Accounts payable	6,640,408		6,640,408		$ 7,609,585
Shipping and Handling [Member]
Selling, general and administrative expenses	$ 262,596	$ 177,623	$ 978,275	$ 560,458
Sales [Member] | Transferred At Point In Time [Member]
Concentration percentage	97.40%	99.30%
Sales [Member] | Transferred Over Time [Member]
Concentration percentage	2.60%	0.70%
Sales [Member] | Customer 1 [Member]
Concentration percentage			57.00%	55.00%
Sales [Member] | Customer 2 [Member]
Concentration percentage			23.00%	19.00%
Sales [Member] | Customer 3 [Member]
Concentration percentage				12.00%
Accounts Receivable [Member] | Customer 1 [Member]
Concentration percentage			70.00%	58.00%
Accounts Receivable [Member] | Customer 2 [Member]
Concentration percentage			22.00%	34.00%
Accounts Receivable [Member] | Customer 3 [Member]
Concentration percentage				0.00%
Purchases [Member] | Supplier Concentration Risk [Member]
Concentration percentage			98.00%	89.00%
Products purchased, cost of goods sold			$ 24,768,794	$ 14,004,980
Accounts payable	$ 6,073,444	$ 4,133,501	$ 6,073,444	$ 4,133,501

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4. Property and Equipment (Details) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Property and equipment, gross	$ 1,740,747	$ 1,676,968
Less accumulated depreciation	(1,625,355)	(1,552,896)
Total	115,392	124,072
Machinery and Facility [Member]
Property and equipment, gross	362,768	306,335
Office Equipment [Member]
Property and equipment, gross	393,259	385,913
Molds [Member]
Property and equipment, gross	$ 984,720	$ 984,720

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4. Property and Equipment (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Property, Plant and Equipment [Abstract]
Depreciation	$ 17,889	$ 30,181	$ 72,459	$ 94,084

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5. Accrued Liabilities (Details) - USD ($)	Mar. 31, 2019	Jun. 30, 2018
Payables and Accruals [Abstract]
Accrued salaries and payroll deductions owed to government entities	$ 37,717	$ 38,855
Accrued vacation	53,776	54,506
Accrued undelivered inventory	140,000	140,000
Other accrued liabilities	11,364	25,987
Total	$ 242,857	$ 259,348

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6. Earnings (Loss) Per Share (Details) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share [Abstract]
Net loss attributable to parent company	$ (157,814)	$ (140,722)	$ (494,459)	$ (1,309,024)
Weighted-average shares of common stock outstanding:
Basic shares outstanding	10,570,203	10,570,203	10,570,203	10,570,203
Dilutive effect of common stock equivalents arising from stock options	0	0	0	0
Diluted shares outstanding	10,570,203	10,570,203	10,570,203	10,570,203
Basic loss per share	$ (0.01)	$ (0.01)	$ (0.05)	$ (0.12)
Diluted loss per share	$ (0.01)	$ (0.01)	$ (0.05)	$ (0.12)

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7. Commitments and Contingencies (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Mar. 31, 2019	Mar. 31, 2018
Administrative office, San Diego, CA [Member]
Rent Expense	$ 39,345	$ 39,345	$ 208,035	$ 208,035
Administrative office, Korea [Member]
Rent Expense	32,100	32,100	96,300	96,300
Corporate housing facility [Member]
Rent Expense	$ 2,535	$ 2,664	$ 7,626	$ 7,158

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8. Long-Term Incentive Plan Awards (Details - Option Activity) - USD ($)	9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Shares
Number of Options Outstanding, Ending	299,000	399,000
Weighted-Average Exercise Price
Weighted Average Exercise Price Granted	$ 0.98	$ 1.03
Options [Member]
Shares
Number of Options Outstanding, Beginning	299,000	399,000
Number of Options Granted	0	0
Number of Options Exercised	0	(50,000)
Number of Options Cancelled	0	0
Number of Options Forfeited or Expired	0	0
Number of Options Outstanding, Ending	299,000	349,000
Number of Options Exercisable	299,000	349,000
Weighted-Average Exercise Price
Weighted Average Exercise Price Outstanding, Beginning	$ 1.04	$ 1.12
Weighted Average Exercise Price Granted
Weighted Average Exercise Price Exercised		(1.34)
Weighted Average Exercise Price Canceled
Weighted Average Exercise Price Forfeited or Expired
Weighted Average Exercise Price Outstanding, Ending	1.04	1.09
Weighted Average Exercise Price Exercisable	$ 1.04	$ 1.09
Weighted-Average Remaining Contractual Life (In Years)
Weighted Average Remaining Contractual Life (in years) Outstanding	2 years 9 months	4 years 18 days
Weighted Average Remaining Contractual Life (in years) Exercised		4 years 2 months 16 days
Weighted Average Exercise Price Outstanding, Ending	2 years	3 years 2 months 1 day
Weighted Average Remaining Contractual Life (in years) Exercisable	2 years	3 years 2 months 1 day
Aggregate Intrinsic Value
Aggregate Intrinsic Value Outstanding, Beginning	$ 241,220	$ 451,820
Aggregate Intrinsic Value Granted	$ 0
Aggregate Intrinsic Value Exercised	$ 0	(99,000)
Aggregate Intrinsic Value Cancelled	$ 0
Aggregate Intrinsic Value Forfeited or Expired	$ 0
Aggregate Intrinsic Value Outstanding, Ending	$ 525,270	312,090
Aggregate Intrinsic Value Exercisable	$ 525,270	$ 312,090

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8. Long-Term Incentive Plan Awards (Details Narrative) - USD ($)	9 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Share-based Payment Arrangement [Abstract]
Share based compensation expense	$ 0
Weighted average grant-date fair value of stock options	299,000	399,000
Weighted average grant-date fair value of stock options, per share price	$ 0.98	$ 1.03
Unrecognized compensation cost related to non-vested options	$ 0	$ 0