The following risk factors do not purport to be a complete explanation of the risks involved in our business.
WE MAY NEED ADDITIONAL FINANCING FOR PRODUCT DEVELOPMENT. Our financial resources are sufficient for our current operational needs; however, the amount of funding required to develop and commercialize our products and technologies is highly uncertain. Adequate funds may not be available when needed or on terms satisfactory to us. Lack of funds may cause us to delay, reduce and/or abandon certain or all aspects of our development and commercialization programs. We may seek additional financing through the issuance of equity or convertible debt securities. In such event, the percentage ownership of our stockholders would be reduced, stockholders may experience additional dilution, and such securities may have rights, preferences, and privileges senior to those of our Common Stock. There can be no assurance that additional financing will be available on terms favorable to us or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to fund our expansion, take advantage of desirable acquisition opportunities, develop, or enhance services or products or respond to competitive pressures. Such inability could have a materially adverse effect on our business, results of operations and financial conditions.
WE MAY INFRINGE THE INTELLECTUAL PROPERTY RIGHTS OF OTHERS. The industry in which we operate has many participants that own, or claim to own, proprietary intellectual property. In the past we have received, and in the future may receive, claims from third parties alleging that we, and possibly our customers, violate their intellectual property rights. Rights to intellectual property can be difficult to verify and litigation may be necessary to establish whether or not we have infringed the intellectual property rights of others. In many cases, these third parties are companies with substantially greater resources than us, and they may be able to, and may choose to, pursue complex litigation to a greater degree than we could. Regardless of whether these infringement claims have merit or not, we may be subject to the following:
| o | We may be liable for potentially substantial damages, liabilities, and litigation costs, including attorneys’ fees; |
| o | We may be prohibited from further use of the intellectual property and may be required to cease selling our products that are subject to the claim; |
| o | We may have to license third-party intellectual property, incurring royalty fees that may or may not be on commercially reasonable terms. In addition, there is no assurance that we will be able to successfully negotiate and obtain such a license from the third party; |
| o | We may have to develop a non-infringing alternative, which could be costly and delay or result in the loss of sales. In addition, there is no assurance that we will be able to develop such a non-infringing alternative; |
| o | The diversion of management’s attention and resources; |
| o | Our relationships with customers may be adversely affected; and |
| o | We may be required to indemnify our customers for certain costs and damages they incur in such a claim. |
In the event of an unfavorable outcome in such a claim and our inability to either obtain a license from the third party or develop a non-infringing alternative, then our business, operating results and financial condition may be materially adversely affected, and we may have to restructure our business.
Absent a specific claim for infringement of intellectual property, from time to time we have and expect to continue to license technology, intellectual property, and software from third parties. There is no assurance that we will be able to maintain our third-party licenses or obtain new licenses when required and this inability could materially adversely affect our business and operating results and the quality and functionality of our products. In addition, there is no assurance that third party licenses we execute will be on commercially reasonable terms.
Under purchase orders and contracts for the sale of our products we may provide indemnification to our customers for potential intellectual property infringement claims for which we may have no corresponding recourse against our third-party licensors. This potential liability, if realized, could materially adversely affect our business, operating results, and financial condition.
WE OPERATE IN AN INTENSIVELY COMPETITIVE MARKET. The wireless broadband data access market is highly competitive, and we may be unable to compete effectively. Many of our competitors or potential competitors have significantly greater financial, technical, and marketing resources than we do. To survive and be competitive, we will need to continuously invest in research and development, sales and marketing, and customer support. Increased competition could result in price reductions, and smaller customer orders. Our failure to compete effectively could seriously impair our business.
WE OPERATE IN THE HIGH-RISK TELECOM SECTOR. We are in a volatile industry. In addition, our revenue model is evolving and relies substantially on the assumption that we will be able to successfully complete the development and sales of our products and services in the marketplace. Our prospects must be considered in the light of the risk, uncertainties, expenses, and difficulties frequently encountered by companies in the early stages of development and marketing of new products. To be successful in the market we must, among other things:
| o | Complete development and introduction of functional and attractive products and services; |
| o | Attract and maintain customer loyalty; |
| o | Establish and increase awareness of our brand and develop customer loyalty; |
| o | Provide desirable products and services to customers at attractive prices; |
| o | Establish and maintain strategic relationships with strategic partners and affiliates; |
| o | Rapidly respond to competitive and technological developments; |
| o | Build operations and customer service infrastructure to support our business; and |
| o | Attract, retain, and motivate qualified personnel. |
We cannot guarantee that we will be able to achieve these goals, and our failure to achieve them could adversely affect our business, results of operations, and financial condition. We expect that revenues and operating results will fluctuate in the future. There is no assurance that any or all our efforts will produce a successful outcome.
WE OPERATE IN THE HIGH-RISK HARDWARE DESIGN INDUSTRY. We are in a volatile industry. In this industry it should be expected that:
| o | Latent design flaws can be discovered, even after a device has been certified; |
| o | Latent component defects can be discovered in critical systems, including batteries, LCDs, chargers, and other system; |
| o | Manufacturing defects and flaws may occur during device production. |
SOME OF OUR PRODUCTS INCLUDE BATTERIES. The following are common dangers of lithium batteries.
| o | Thermal Runaway: An uncontrollable chemical reaction that causes the cells to heat up rapidly, leading to intense fires, potential explosions, and the ejection of cells. |
| o | Fires and Explosions: The batteries contain volatile electrolytes that, when exposed to damage or high temperatures, can ignite, causing fires that reach extreme temperatures. |
| o | Toxic and Flammable Gases: When a battery malfunctions, it can release flammable and toxic gases, which can ignite and create a fire. |
| o | Hydrofluoric Acid Exposure: During combustion, fluorine can separate from lithium salts, forming hydrofluoric acid when mixed with water vapor, posing a severe health risk. |
| o | Burns: The extreme temperatures of lithium battery fires, reaching up to 1000°F or more, can cause severe third-degree burns. |
| o | Chemical Exposure: The chemicals inside the batteries, including toxic and flammable electrolytes, pose chemical hazards if released. |
| o | Choking Hazard: Small lithium-ion button batteries can cause severe chemical burns to the esophagus if ingeste. |
WE OPERATE IN THE HIGH-RISK SOFTWARE INDUSTRY. This industry has numerous and significantly known risks. In this industry it should be expected that:
| o | Latent design flaws, coding errors, vulnerabilities and security defects may be discovered, including after software or a device has been tested, approved, or commercially deployed; |
| o | Code within a program may fail to operate as intended as a result of updates, modifications or changes to other software, hardware, networks, or systems; |
| o | Software may contain security vulnerabilities arising from coding errors, design flaws, third-party or open-source components, development tools or other dependencies, and such vulnerabilities may not be identified or remediated before they are exploited; and |
| o | Hacking, malware, unauthorized access and other malicious actions by third parties may exploit software vulnerabilities or otherwise compromise, damage or alter software, data, or system integrity. Product security vulnerabilities, system security risks, data breaches, cyber-attacks, improper use of AI tools, and other threats and risks, could disrupt or otherwise compromise our products, services, internal operations or information technology systems, or those of third parties with whom we work. Actual or perceived non-compliance with our privacy and security obligations could lead to regulatory investigations or actions, litigation, fines and penalties, business operation disruption, reputational harm, loss of revenue or profits, loss of customers or sales, and other adverse business consequences. |
POTENTIAL DESIGN AND MANUFACTURING DEFECTS COULD OCCUR. Our product and service offerings may have quality issues from time to time, due to defects in software design, hardware design or component manufacturing. As a result, our products and services may not perform as anticipated and may not meet customer expectations. Component defects could make our products unsafe and create a risk of environmental or property damage and personal injury. There can be no assurance we will be able to detect and address all issues and defects in the hardware, software, and services we offer. Failure to do so could result in widespread technical and performance issues affecting our products and services. In addition, we may be exposed to product liability claims, recalls, product replacements or modifications, write-offs of inventory, property, plant and equipment, and/or intangible assets, and significant warranty and other expenses, including litigation costs and regulatory fines.
WE OPERATE IN A FIELD WITH RAPIDLY CHANGING TECHNOLOGY. We cannot be certain that our products and services will function as anticipated or be desirable to our intended markets. Our current or future products and services may fail to function properly, and if our products and services do not achieve and sustain market acceptance, our business, results of operations and profitability may suffer. If we are unable to predict and comply with evolving wireless standards, our ability to introduce and sell new products will be adversely affected. If we fail to develop and introduce products on time, we may lose customers and potential product orders.
WE DEPEND ON THE DEMAND FOR WIRELESS NETWORK CAPACITY. The demand for our products is completely dependent on the demand for broadband wireless access to networks. If wireless operators do not deliver acceptable wireless service, our product sales may dramatically decline. Thus, if wireless operators experience financial or network difficulties, it will likely reduce demand for our products. These are beyond our ability to control and can either increase or decrease demand for our products.
PANDEMIC OUTBREAKS CAN CAUSE VOLATILE CHANGES IN THE MARKET. Demand for wireless access can rise and fall greatly during times of pandemic outbreaks, such as COVID-19, as more people may be required to work remotely, and schools may be required to operate remote classrooms. When an outbreak ends, or becomes more controlled, demand for wireless devices could decline rapidly, decreasing demand for our products. Pandemic outbreaks can also disrupt supply chains, manufacturing operations, and shipping. These disruptions can make product fulfilment difficult, delayed, or impossible. All these changes are beyond our ability to control and can cause revenue and income to change dramatically.
WE DEPEND ON COLLABORATIVE ARRANGEMENTS. The development and commercialization of our products and services depend in large part upon our ability to selectively enter and maintain collaborative arrangements with developers, distributors, service providers, network systems providers, core wireless communications technology providers and manufacturers, among others.
THE LOSS OF ANY OF OUR MATERIAL CUSTOMERS, OR A REDUCTION IN THEIR PURCHASES OF OUR PRODUCTS, COULD ADVERSELY AFFECT OUR REVENUES AND PROFITABILITY, AND THEREFORE SHAREHOLDER VALUE. We depend on a small number of customers for a significant portion of our revenues. For the year ended June 30, 2026, net revenues from our two largest customers represented 60.9% and 27.5% of our consolidated net sales, respectively. We have a written agreement with each of these customers that governs the sale of products to them, but the agreements do not obligate them to purchase any quantity of products from us.
During fiscal 2026, one of our major customers discontinued a hotspot product that we expected to generate significant revenues for us, resulting in a significant reduction in revenues from that customer. We do not expect material future sales of that product to this customer. Although we continue to maintain a relationship with this customer, there can be no assurance that it will purchase other products from us in quantities sufficient to replace the revenues associated with the discontinued product.
Our customers may discontinue products, reduce or delay purchases, transition to competing products, or otherwise reduce their business with us at any time. Because of our customer concentration, the loss of a material customer or a significant reduction in purchases of one or more of our products by a material customer could materially adversely affect our revenues, profitability and financial condition.
OUR PRODUCT DELIVERIES ARE SUBJECT TO LONG LEAD TIMES. We often experience long-lead times to ship products, often more than 160 days. This could cause us to lose customers, who may be able to secure faster delivery times from our competitors and require us to maintain higher levels of working capital.
OUR PRODUCT-TO-MARKET CHALLENGE IS CRITICAL. Our success depends on our ability to quickly enter the market and establish an early mover advantage. We must implement an aggressive sales and marketing campaign to solicit customers and strategic partners. Any delay could seriously affect our ability to establish and exploit effectively an early-to-market strategy.
AS OUR BUSINESS EXPANDS INTERNATIONALLY, WE WILL BE EXPOSED TO ADDITIONAL RISKS RELATING TO INTERNATIONAL OPERATIONS. Our expansion into international operations exposes us to additional risks unique to such international markets, including the following:
| o | Increased credit management risks and greater difficulties in collecting accounts receivable; |
| o | Unexpected changes in regulatory requirements, wireless communications standards, exchange rates, trading policies, tariffs, and other barriers; |
| o | Uncertainties of laws and enforcement relating to the protection of intellectual property; |
| o | Language barriers; and |
| o | Potential adverse tax consequences. |
Furthermore, if we are unable to further develop distribution channels in countries in North America, the Caribbean and South America, EMEA (Europe, the Middle East and Africa), and Asia, we may not be able to grow our international operations, and our ability to increase our revenue will be negatively impacted.
We believe that our products are currently exempt from international tariffs. If this were to change at any point, a tariff of 10%-80% of the purchase price could be imposed. If such tariffs are imposed, they could have a materially adverse effect on sales and operating results. The financial impact of this could make our business unprofitable.
GOVERNMENT REGULATION COULD RESULT IN INCREASED COSTS AND INABILITY TO SELL OUR PRODUCTS. Our products are subject to certain mandatory regulatory approvals in the United States and other regions in which we operate. In the United States, the Federal Communications Commission regulates many aspects of communications devices. Although we have obtained all the necessary Federal Communications Commission and other required approvals for the products we currently sell, we may not obtain approvals for future products on a timely basis, or at all. In addition, regulatory requirements may change, or we may not be able to obtain regulatory approvals from countries other than the United States in which we may desire to sell products in the future.
EVENTS THAT COULD REDUCE OR IMPAIR OUR ABILITY TO GENERATE REVENUES.
| o | The marketability of our products may suffer if wireless telecommunications operators do not deliver acceptable wireless services. |
| o | If customers do not adopt our software, we may not be able to monetize these software assets and realize a key part of our growth and profitability strategy. |
| o | The market for the products and services that we offer is rapidly evolving and highly competitive. We may be unable to compete effectively. |
| o | If we fail to develop and maintain strategic relationships, we may not be able to penetrate new markets. |
| o | If we fail to develop and timely introduce new products and services or enter new markets for our products and services successfully, we may not achieve our revenue targets, or we may lose key customers or sales, and our business could be harmed. |
EVENTS THAT COULD IMPAIR OUR ABILITY TO DEVELOP, MANUFACTURE AND DELIVER OUR SOLUTIONS.
| o | We rely on third parties to manufacture and warehouse many of our products, which exposes us to a number of risks and uncertainties outside our control. |
| o | We depend on sole source suppliers for some components used in our products. The availability and sale of those services would be harmed if any of these suppliers is not able to meet our demand and alternative suitable products are not available on acceptable terms, or at all. |
| o | Natural disasters, public health crises, political crises and other catastrophic events or other events outside of our control could damage our facilities or the facilities of third parties on which we depend, and could impact consumer spending. |
| o | Disruptions in global transportation networks, including those resulting from geopolitical conflicts, could increase our shipping costs, delay deliveries and adversely affect demand for our products. Our business depends on international transportation and logistics networks to transport components and finished products. Geopolitical conflicts, including the ongoing conflict involving Iran and related instability in the Middle East, may disrupt shipping routes, increase freight, fuel, insurance and other transportation costs, or cause delays in the movement of goods. To the extent we are unable to absorb these increased costs, we may seek to pass some or all of them on to our customers through higher prices, which could reduce demand for our products or adversely affect our competitive position. Geopolitical conflicts may also have broader macroeconomic effects, including increased energy, transportation and other consumer costs, inflationary pressures and reduced consumer spending. These effects could reduce demand for wireless products and services generally and, consequently, reduce demand for our products. |
| o | We may be unable to adequately control the costs or maintain adequate supply of components and raw materials associated with our operations. We have experienced increases in the costs of certain components used in our products, and such increases may continue. Component costs and availability may be affected by a variety of factors outside our control, including inflation, shortages of raw materials, changes in supplier pricing, and changes in global demand and manufacturing capacity. In particular, increased demand for components used in artificial intelligence and data center applications has caused certain component manufacturers to allocate production capacity toward higher-margin products, which may reduce the availability or increase the cost of components used in our products. We have also experienced increased costs for certain chipsets and constraints in the availability of raw materials used in printed circuit boards. If component costs continue to increase, we may be unable to fully offset those increases through reductions in other costs or increases in the prices charged to our customers. Any resulting reduction in our gross margins could adversely affect our results of operations. In addition, increases in the prices of our products could reduce customer or end-user demand, result in lower order volumes, or adversely affect our competitive position. |
| o | Product liability, product replacement or recall costs could adversely affect our business and financial performance. |
| o | We rely on third-party software and other intellectual property to develop and provide our solutions and significant increases in licensing costs or defects in third-party software could harm our business. |
| o | Our solutions integrate with third-party technologies and if our solutions become incompatible with these technologies, our solutions would lose functionality, and our customer acquisition and retention could be adversely affected. |
LEGAL AND REGULATORY CHANGES THAT COULD REDUCE OR IMPAIR OUR ABILITY TO OPERATE.
| o | Evolving regulations and changes in applicable laws relating to data privacy may increase our expenditures related to compliance efforts or otherwise limit the solutions we can offer, which may harm our business and adversely affect our financial condition. |
| o | Enhanced United States fiscal, tax and trade restrictions and executive and legislative actions could adversely affect our business, financial condition, and results of operations. |
| o | An assertion by a third party that we are infringing its intellectual property could subject us to costly and time-consuming litigation or expensive licenses and our business could be harmed. |
| o | If we are unable to protect our intellectual property and proprietary rights, our competitive position and our business could be harmed. |
| o | Restrictions on foreign-manufactured telecommunications and networking equipment could adversely affect our ability to develop, manufacture or commercialize certain future products. Recent regulatory developments in the United States have imposed or contemplated additional restrictions on certain foreign-manufactured telecommunications and networking equipment and on the entities involved in the manufacture of such equipment. These restrictions, and any future expansion or interpretation of them, could affect the manufacturers, suppliers or other parties that we are permitted to use in connection with certain products and could affect our ability to obtain required regulatory approvals for, import or commercialize such products. Compliance with these requirements may require us to use alternative manufacturers or suppliers, modify our supply chain or product designs, or incur additional manufacturing, development, certification or compliance costs. Such changes could increase our costs, delay the introduction of new products or, in certain circumstances, prevent us from commercializing a product as planned. These risks are particularly relevant to certain consumer and enterprise networking products included in our future product roadmap. Based on currently available information, we believe our currently approved mobile hotspot products are not materially affected by these developments. |
POTENTIAL NEGATIVE IMPACTS RELATED TO INTERNATIONAL OPERATIONS.
| o | Due to the global nature of our operations, we are subject to political and economic risks of doing business internationally. |
| o | Weakness or deterioration in global economic conditions or jurisdictions where we have significant foreign operations could have a material adverse effect on our results of operations and financial condition. |
| o | Weakness or deterioration in global political conditions where we have significant business interests could have a material adverse effect on our business, results of operations and financial condition. |
| o | Fluctuations in foreign currency exchange rates could adversely affect our results of operations. |
| o | Unionization efforts in certain countries in which we operate could materially increase our costs or limit our flexibility. |
| o | Our international operations may increase our exposure to potential liability under anti-corruption, trade protection, tax and other laws and regulations. |
| o | A governmental challenge to our transfer pricing policies or practices could impose significant costs on us. |
EVENTS THAT COULD HARM BUSINESS DEVELOPMENT ACTIVITIES AND IMPAIR OR REDUCE REVENUE.
| o | We may acquire companies and businesses, and/or divest assets or businesses. The completion of acquisition or divestiture transactions could have an adverse effect on our financial condition. |
| o | If our goodwill and acquired intangible assets become impaired, we may be required to record a significant charge to earnings. |
POTENTIAL EVENTS THAT COULD NEGATIVELY IMPACT THE VALUE OF OUR SECURITIES.
| o | Our share price has been highly volatile in the past and could be highly volatile in the future. |
| o | The price of our stock may be vulnerable to manipulation, including through short sales. |
| o | Ownership of our common stock is concentrated, and as a result, certain stockholders may exercise significant influence over our decisions. |
| o | We do not currently pay recurring dividends on our common stock, and, consequently, your ability to achieve a return on your investment will depend on appreciation, if any, in the price of our common stock. |
| o | If financial or industry analysts do not publish research or reports about our business, or if they issue negative or misleading evaluations of our stock, our stock price and trading volume could decline. |
| o | If we fail to maintain an effective system of internal controls over financial reporting, we may not be able to report our financial results timely and accurately, which could adversely affect investor confidence in us, and in turn, our results of operations and our stock price. |
| o | If the accounting estimates we make, and the assumptions on which we rely, in preparing our financial statements prove inaccurate, our actual results may be adversely affected. |
| o | Changes to the accounting systems or new accounting system implementations may be ineffective or cause delays in our ability to record transactions and/or provide timely financial results. |
| o | Any changes to existing accounting pronouncements or taxation rules or practices may cause adverse fluctuations in our reported results of operations or affect how we conduct our business. |
| o | Our quarterly operating results have fluctuated in the past and may fluctuate in the future, which could cause declines or volatility in the price of our common stock. |
