Cover
Cover - USD ($) | 12 Months Ended | ||
Jun. 30, 2023 | Aug. 31, 2023 | Dec. 31, 2022 | |
Cover [Abstract] | |||
Document Type | 10-K | ||
Amendment Flag | false | ||
Document Annual Report | true | ||
Document Transition Report | false | ||
Document Period End Date | Jun. 30, 2023 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2023 | ||
Current Fiscal Year End Date | --06-30 | ||
Entity File Number | 1-16027 | ||
Entity Registrant Name | LANTRONIX, INC. | ||
Entity Central Index Key | 0001114925 | ||
Entity Tax Identification Number | 33-0362767 | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Address, Address Line One | 48 Discovery | ||
Entity Address, Address Line Two | Suite 250 | ||
Entity Address, City or Town | Irvine | ||
Entity Address, State or Province | CA | ||
Entity Address, Postal Zip Code | 92618 | ||
City Area Code | (949) | ||
Local Phone Number | 453-3990 | ||
Title of 12(b) Security | Common Stock, $0.0001 par value | ||
Trading Symbol | LTRX | ||
Security Exchange Name | NASDAQ | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Accelerated Filer | ||
Entity Small Business | true | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 116,199,000 | ||
Entity Common Stock, Shares Outstanding | 36,911,911 | ||
ICFR Auditor Attestation Flag | true | ||
Document financial statement error correction | false | ||
Auditor Name | Baker Tilly US, LLP | ||
Auditor Location | California | ||
Auditor Firm ID | 23 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 13,452 | $ 17,221 |
Accounts receivable, net | 27,682 | 26,262 |
Inventories, net | 49,736 | 37,679 |
Contract manufacturers' receivable | 3,019 | 3,454 |
Prepaid expenses and other current assets | 2,662 | 5,417 |
Total current assets | 96,551 | 90,033 |
Property and equipment, net | 4,629 | 3,652 |
Goodwill | 27,824 | 20,768 |
Purchased intangible assets, net | 10,565 | 14,559 |
Lease right-of-use assets | 11,583 | 8,037 |
Other assets | 472 | 325 |
Total assets | 151,624 | 137,374 |
Current Liabilities: | ||
Accounts payable | 12,401 | 20,644 |
Accrued payroll and related expenses | 2,431 | 4,729 |
Current portion of long-term debt, net | 2,743 | 1,671 |
Other current liabilities | 28,813 | 8,477 |
Total current liabilities | 46,388 | 35,521 |
Long-term debt, net | 16,221 | 14,274 |
Other non-current liabilities | 11,459 | 7,683 |
Total liabilities | 74,068 | 57,478 |
Commitments and contingencies (Note 10) | ||
Stockholders' equity: | ||
Preferred stock, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding | 0 | 0 |
Common stock, $0.0001 par value; 100,000,000 shares authorized; 36,875,586 and 35,129,301 shares issued and outstanding at June 30, 2023 and 2022, respectively | 4 | 4 |
Additional paid-in capital | 295,686 | 289,046 |
Accumulated deficit | (218,505) | (209,525) |
Accumulated other comprehensive income | 371 | 371 |
Total stockholders' equity | 77,556 | 79,896 |
Total liabilities and stockholders' equity | $ 151,624 | $ 137,374 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2023 | Jun. 30, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred Stock par value | $ 0.0001 | $ 0.0001 |
Preferred Stock Authorized | 5,000,000 | 5,000,000 |
Preferred Stock Issued | 0 | 0 |
Preferred Stock Outstanding | 0 | 0 |
Common Stock par value | $ 0.0001 | $ 0.0001 |
Common Stock Authorized | 100,000,000 | 100,000,000 |
Common Stock Issued | 36,875,586 | 35,129,301 |
Common Stock Outstanding | 36,875,586 | 35,129,301 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||
Net revenue | $ 131,189 | $ 129,655 |
Cost of revenue | 74,925 | 74,069 |
Gross profit | 56,264 | 55,586 |
Operating expenses: | ||
Selling, general and administrative | 36,948 | 34,529 |
Research and development | 19,625 | 17,687 |
Restructuring, severance and related charges | 693 | 795 |
Acquisition-related costs | 315 | 889 |
Fair value remeasurement of earnout consideration | (447) | 1,107 |
Amortization of purchased intangible assets | 5,804 | 5,590 |
Total operating expenses | 62,938 | 60,597 |
Loss from operations | (6,674) | (5,011) |
Interest expense, net | (1,485) | (1,472) |
Loss on extinguishment of debt | 0 | (764) |
Other income (expense), net | (73) | 53 |
Loss before income taxes | (8,232) | (7,194) |
Provision (benefit) for income taxes | 748 | (1,832) |
Net loss and comprehensive loss | $ (8,980) | $ (5,362) |
CONSOLIDATED STATEMENTS OF OP_2
CONSOLIDATED STATEMENTS OF OPERATIONS (Parenthetical) - $ / shares shares in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Statement [Abstract] | ||
Earnings Per Share, Basic | $ (0.25) | $ (0.16) |
Earnings Per Share, Diluted | $ (0.25) | $ (0.16) |
Weighted Average Number of Shares Outstanding, Basic | 36,257 | 32,671 |
Weighted Average Number of Shares Outstanding, Diluted | 36,257 | 32,671 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Thousands, $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | AOCI Attributable to Parent [Member] | Total |
Beginning balance, value at Jun. 30, 2021 | $ 3 | $ 249,885 | $ (204,163) | $ 371 | $ 46,096 |
Beginning balance, shares at Jun. 30, 2021 | 29,088 | ||||
Shares issued pursuant to equity offering, net | $ 1 | 32,593 | 32,594 | ||
Shares issued pursuant to equity offering, net, shares | 4,700 | ||||
Shares issued pursuant to stock awards, net | 1,633 | 1,633 | |||
Shares issued pursuant to stock awards, net, shares | 1,341 | ||||
Tax withholding paid on behalf of employees for restricted shares | (1,811) | (1,811) | |||
Fair value of warrants to purchase common stock issued with bank credit facility | 500 | 500 | |||
Share-based compensation | 6,246 | 6,246 | |||
Net loss | (5,362) | (5,362) | |||
Ending balance, value at Jun. 30, 2022 | $ 4 | 289,046 | (209,525) | 371 | 79,896 |
Ending balance, shares at Jun. 30, 2022 | 35,129 | ||||
Shares issued pursuant to stock awards, net | 1,253 | 1,253 | |||
Shares issued pursuant to stock awards, net, shares | 1,746 | ||||
Tax withholding paid on behalf of employees for restricted shares | (821) | (821) | |||
Share-based compensation | 6,208 | 6,208 | |||
Net loss | (8,980) | (8,980) | |||
Ending balance, value at Jun. 30, 2023 | $ 4 | $ 295,686 | $ (218,505) | $ 371 | $ 77,556 |
Ending balance, shares at Jun. 30, 2023 | 36,875 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Operating activities | ||
Net loss | $ (8,980) | $ (5,362) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Share-based compensation | 6,208 | 6,246 |
Amortization of purchased intangible assets | 5,804 | 5,590 |
Depreciation and amortization | 1,735 | 1,028 |
Amortization of manufacturing profit in acquired inventory associated with acquisitions | 225 | 380 |
Loss on disposal of property and equipment | 15 | 4 |
Amortization of deferred debt issuance costs | 104 | 261 |
Fair value remeasurement of earnout consideration | (447) | 1,107 |
Loss on extinguishment of debt | 0 | 764 |
Changes in operating assets and liabilities, net of assets and liabilities acquired: | ||
Accounts receivable | 480 | (7,470) |
Inventories | (8,692) | (15,266) |
Contract manufacturers' receivable | 435 | (1,494) |
Prepaid expenses and other current assets | 3,043 | (2,183) |
Lease right-of-use assets | 2,088 | 1,564 |
Other assets | (18) | (85) |
Accounts payable | (8,575) | 8,782 |
Accrued payroll and related expenses | (2,560) | (222) |
Other liabilities | 9,372 | (3,060) |
Net cash provided by (used in) operating activities | 237 | (9,416) |
Investing activities | ||
Purchases of property and equipment | (2,673) | (2,118) |
Cash payment for acquisitions, net of cash and cash equivalents acquired | (4,650) | (23,629) |
Net cash used in investing activities | (7,323) | (25,747) |
Financing activities | ||
Net proceeds from issuances of common stock | 1,253 | 34,227 |
Tax withholding paid on behalf of employees for restricted shares | (821) | (1,811) |
Earnout consideration paid | 0 | (1,500) |
Net proceeds from issuance of debt | 4,909 | 28,800 |
Payment of borrowings on term loan | (1,994) | (17,062) |
Net proceeds from borrowing on line of credit | 2,000 | 2,500 |
Payment of borrowings on line of credit | (2,000) | (2,500) |
Payment of lease liabilities | (30) | (9) |
Net cash provided by financing activities | 3,317 | 42,645 |
Increase (decrease) in cash and cash equivalents | (3,769) | 7,482 |
Cash and cash equivalents at beginning of year | 17,221 | 9,739 |
Cash and cash equivalents at end of year | 13,452 | 17,221 |
Supplemental disclosure of cash flow information | ||
Interest paid | 1,563 | 1,494 |
Income taxes paid | $ 539 | $ 215 |
Company and Significant Account
Company and Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Company and Significant Accounting Policies | 1. Company and Significant Accounting Policies Company Lantronix, Inc., which we refer to herein as the Company, Lantronix, we, our, or us, is a global Industrial and Enterprise internet of things (“IoT”) provider of solutions that target diversified verticals ranging from Smart Cities, Utilities and Healthcare to Enterprise, Intelligent Transportation, and Industrial Automation. Building on a long history of connectivity and video processing competence, our target applications include Smart Cities infrastructure, Infotainment systems and Video Surveillance all supplemented with a comprehensive Out of Band Management products offering for Cloud and Edge Computing. We were incorporated in California in 1989 and re-incorporated in Delaware in 2000. Basis of Presentation The consolidated financial statements include the accounts of Lantronix and our wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The industry in which we operate is characterized by rapid technological change. As a result, estimates made in preparing the consolidated financial statements include revenue recognition, the allowance for doubtful accounts, business combinations, inventory valuation, goodwill valuation, deferred income tax asset valuation allowances, share-based compensation, restructuring charges and warranty reserves. In the macroeconomic environment affected by COVID-19, our estimates could require increased judgement and carry a higher degree of variability volatility. To the extent there are material differences between our estimates and actual results, future results of operations will be affected. Revenue Recognition Refer to Note 2 Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the amount we expect to collect, which is net of an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Our evaluation of the collectability of customer accounts receivable is based on various factors. In cases where we are aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, we record an allowance against amounts due based on those particular circumstances. For all other customers, we estimate an allowance for doubtful accounts based on various considerations, including the length of time the receivables are past due and our historical bad debt collection experience. We also consider our understanding of current economic and industry conditions that may affect the collectability of customer receivables. Accounts that are deemed uncollectible are written off against the allowance for doubtful accounts. Concentration of Credit Risk Our accounts receivable are primarily derived from revenue earned from customers located throughout North America, Europe and Asia. We perform periodic credit evaluations of our customers’ financial condition and maintain allowances for potential credit losses. Credit losses have historically been within our expectations. We generally do not require collateral or other security from our customers. Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, contract manufacturers’ receivable, accounts payable, and accrued liabilities. The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree to which the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows: Level 1: Level 2: Level 3: The hierarchy noted above requires us to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. Other than earnout consideration liabilities (see Note 3 We believe all of our financial instruments’ recorded values approximate their current fair values because of the nature and short duration of these instruments. Foreign Currency Remeasurement The functional currency for all our foreign subsidiaries is currently the U.S. dollar. Non-monetary and monetary foreign currency assets and liabilities are valued in U.S. dollars at historical and end-of-period exchange rates, respectively. Exchange gains and losses from foreign currency transactions and remeasurements are recognized in the consolidated statements of operations. Translation adjustments for foreign subsidiaries whose functional currencies were previously their respective local currencies are suspended in accumulated other comprehensive income. Accumulated Other Comprehensive Income Accumulated other comprehensive income is composed of accumulated translation adjustments as of June 30, 2023 and 2022. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2023 or 2022. Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments, with original maturities of 90 days or less. Inventories Inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. We provide reserves for excess and obsolete inventories determined primarily based upon estimates of future demand for our products. Shipping and handling costs are classified as a component of cost of revenue in the consolidated statements of operations. Inventory Sale and Purchase Transactions with Contract Manufacturers Under certain circumstances, we sell raw materials to our contract manufacturers and subsequently repurchase finished goods from the contract manufacturers which contain such raw materials. Net sales of raw materials to the contract manufacturers are recorded on the consolidated balance sheets as contract manufacturers’ receivables and are eliminated from net revenue as we intend to repurchase the raw materials from the contract manufacturers in the form of finished goods. We have contractual arrangements with certain of our contract manufacturers that require us to purchase unused inventory that the contract manufacturer has purchased to fulfill our forecasted manufacturing demand. To the extent that inventory on-hand at one or more of these contract manufacturers exceeds our contractually reported forecasts, we record the amount we may be required to purchase as part of other current liabilities and inventories on the consolidated balance sheets. Property and Equipment Property and equipment are carried at cost. Depreciation is provided using the straight-line method over the assets’ estimated useful lives, generally ranging from three to five years. Depreciation and amortization of leasehold improvements are computed using the shorter of the remaining lease term or five years. Major renewals and betterments are capitalized, while replacements, maintenance and repairs, which do not improve or extend the estimated useful lives of the respective assets, are expensed as incurred. Business Combinations We allocate the fair value of the purchase consideration of a business acquisition to the tangible assets, liabilities, and intangible assets acquired, including in-process research and development (“IPR&D”), based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized over the asset’s estimated useful life. Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred. Goodwill Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets acquired. We evaluate goodwill for impairment on an annual basis in our fiscal fourth quarter or more frequently if we believe indicators of impairment exist that would more likely than not reduce the fair value of our single reporting unit below its carrying amount. We begin by assessing qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying value. Based on that qualitative assessment, if we conclude that it is more likely than not that the fair value of our single reporting unit is less than its carrying value, we conduct a quantitative goodwill impairment test, which involves comparing the estimated fair value of our single reporting unit with its carrying value, including goodwill. We estimate the fair value of our single reporting unit using a combination of the income and market approach. If the carrying value of the reporting unit exceeds its estimated fair value, we recognize an impairment loss for the difference. During the fourth quarter of the fiscal year ended June 30, 2023, we performed a qualitative assessment of whether goodwill impairment existed and did not determine that it was more likely than not that the fair value of our single reporting unit was less than its carrying amount. Purchased Intangible Assets Included within "purchased intangible assets, net" at June 30, 2023 are customer lists, developed technology, tradenames, and other intangible assets acquired in connection with various business combinations. Such capitalized costs and intangible assets are being amortized over a period of one to five years. Long-Lived Assets and Intangible Assets We assess the impairment of long-lived assets and intangible assets whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. We estimate the future cash flows, undiscounted and without interest charges, expected to be generated by the assets from its use or eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. Income Taxes Income taxes are computed under the liability method. This method requires the recognition of deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. The impact on deferred taxes of changes in tax rates and laws, if any, are applied to the years during which temporary differences are expected to be settled and are reflected in the consolidated financial statements in the period of enactment. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. Financial statement effects of a tax position are initially recognized when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that meets the more-likely-than-not threshold of being realized upon ultimate settlement with a taxing authority. We recognize potential accrued interest and penalties related to unrecognized tax benefits as income tax expense. Share-Based Compensation We account for share-based compensation by expensing the estimated grant date fair value of our shared-based awards ratably over the requisite service period. We recognize the impact of forfeitures on our share-based compensation expense as such forfeitures occur. Previously recognized expense is reversed for the portion of awards forfeited prior to vesting. Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the fiscal year. Diluted net income (loss) per share is calculated by adjusting the weighted-average number of common shares outstanding, assuming any dilutive effects of outstanding share-based awards using the treasury stock method. Research and Development Costs Costs incurred in the research and development of new products and enhancements to existing products are expensed as incurred. Development costs of computer software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, we believe our current process for developing products is essentially completed concurrently with the establishment of technological feasibility and thus, software development costs have been expensed as incurred. Warranty The standard warranty periods we provide for our products typically range from one to five years. We establish reserves for estimated product warranty costs at the time revenue is recognized based upon our historical warranty experience, and for any known or anticipated product warranty issues. Restructuring Charges We recognize costs and related liabilities for restructuring activities when they are incurred. Our restructuring charges are primarily comprised of employee separation costs, asset impairments and contract exit costs. Employee separation costs include one-time termination benefits that are recognized as a liability at estimated fair value, at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Ongoing termination benefits are recognized as a liability at estimated fair value when the amount of such benefits are probable and reasonably estimable. Contract exit costs include contract termination fees and right-of-use asset impairments recognized on the date that we have vacated the premises or ceased use of the leased facilities. A liability for contract termination fees is recognized in the period in which we terminate the contract. Leases We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement and evaluate whether the lease is an operating lease or a finance lease at the commencement date. We recognize right-of-use (“ROU”) assets and lease liabilities for operating and finance leases with terms greater than 12 months. ROU assets represent our right to use an asset for the lease term, while lease liabilities represent our obligation to make lease payments. To the extent a lease includes a renewal option, we include such options in the calculation of the ROU asset and lease liability if it is reasonably assured that we will exercise the option. Operating and finance lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement date. To determine the present value of lease payments, we use the implicit interest rate, if it is readily determinable or estimable. To the extent that we are unable to utilize an interest rate implicit in the lease, we generally use our collateralized incremental borrowing rate based on the information available at the lease commencement date, including lease term, in determining the present value of lease payments. Operating and finance lease ROU assets are recognized net of any lease prepayments and incentives. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on the effective-interest method over the lease term. For leases that we acquire in acquisition transactions, we generally elect not to recognize assets or liabilities at the acquisition date for leases that, at the acquisition date, have a remaining lease term of 12 months or less. This includes not recognizing an intangible asset if the terms of an operating lease are favorable relative to the market terms or a liability if the terms are unfavorable relative to the market terms. Refer to Note 9 Advertising Expenses Advertising expenses are recorded in the period incurred and totaled $ 262,000 253,000 Segment Information We have one operating and reportable business segment. Recent Accounting Pronouncements Revenue Contracts In October 2021, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity and inconsistency related to (i) recognition of an acquired contract liability and (ii) payment terms and their effect on subsequent revenue recognized by the acquirer. The amendments in this ASU require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with existing revenue recognition guidance under Accounting Standard Codification Topic (“ASC”) 606. At the acquisition date, an acquirer would assess how the acquiree applied ASC 606 to determine what to record for the acquired revenue contracts. Generally, this would result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements. Lantronix adopted this ASU in the first quarter of our fiscal year ended June 30, 2023, and as such, we recorded applicable contract assets and liabilities acquired in the Uplogix acquisition (see Note 3 Current Expected Credit Losses In June 2016, the FASB issued a new ASU requiring financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The ASU eliminates the threshold for initial recognition in current U.S. GAAP and reflects an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. The ASU is effective for Lantronix beginning in the first quarter of fiscal year 2024. The adoption of this guidance is not expected to have a material effect on our consolidated financial statements. |
Revenue
Revenue | 12 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 2. Revenue Revenue is recognized upon the transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We apply the following five-step approach in determining the amount and timing of revenue to be recognized: (i) identifying the contract with a customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations in the contract and (v) recognizing revenue when the performance obligation is satisfied. On occasion we enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of (i) any taxes collected from customers, which are subsequently remitted to governmental authorities and (ii) shipping and handling costs collected from customers. Products Most of our product revenue is recognized as a distinct single performance obligation when products are tendered to a carrier for delivery, which represents the point in time that our customer obtains control of the promised products. A smaller portion of our product revenue is recognized when our customer receives delivery of the promised products. A significant portion of our products are sold to distributors under agreements which contain (i) limited rights to return unsold products and (ii) price adjustment provisions, both of which are accounted for as variable consideration when estimating the amount of revenue to recognize. We base our estimates for returns and price adjustments primarily on historical experience; however, we also consider contractual allowances, approved pricing adjustments and other known or anticipated returns and price adjustments in a given period. Such estimates are generally made at the time of shipment to the customer and updated at the end of each reporting period as additional information becomes available and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Our estimates of accrued variable consideration are included in other current liabilities in the accompanying consolidated balance sheets. Services Revenues from our extended warranty and services are generally recognized ratably over the applicable service period. Revenues from sales of our software-as-a-service (“SaaS”) products are recognized ratably over the applicable service period as well. We prepay sales commissions related to certain of these contracts, which are incremental costs of obtaining the contract. We capitalize these costs and expense them ratably on a straight-line basis over the life of the contract. At June 30, 2023, prepaid sales commissions included in prepaid expenses and other current assets totaled $ 150,000 58,000 Engineering Services We derive a portion of our revenues from engineering and related consulting service contracts with customers. Revenues from professional engineering services are generally recognized as services are performed. These contracts generally include performance obligations in which control is transferred over time because the customer either simultaneously receives and consumes the benefits provided or our performance on the contract creates or enhances an asset that the customer controls. These contracts typically provide services on the following basis: · Time & Materials (“T&M”) – services consist of revenues from software modification, consulting implementation, training and integration services. These services are set forth separately in the contractual arrangements such that the total price of the customer arrangement is expected to vary depending on the actual time and materials incurred based on the customer’s needs. · Fixed Price – arrangements to render specific consulting and software modification services which tend to be more complex. Performance obligations for T&M contracts qualify for the "Right to Invoice" practical expedient within the revenue guidance. Under this practical expedient, we may recognize revenue, over time, in the amount to which we have a right to invoice. In addition, we are not required to estimate variable consideration upon inception of the contract and reassess the estimate each reporting period. We determined that this method best represents the transfer of services as, upon billing, we have a right to consideration from a customer in an amount that directly corresponds with the value to the customer of our performance completed to date. We recognize revenue on fixed price contracts, over time, using an input method based on the proportion of our actual costs incurred (generally labor hours expended) to the total costs expected to complete the contract performance obligation. We determined that this method best represents the transfer of services as the proportion closely depicts the efforts or inputs completed towards the satisfaction of a fixed price contract performance obligation. Multiple Performance Obligations From time to time, we may enter into contracts with customers that include promises to transfer multiple deliverables that may include sales of products, professional engineering services and other product qualification or certification services. Determining whether the deliverables in such arrangements are considered distinct performance obligations that should be accounted for separately versus together often requires judgment. We consider performance obligations to be distinct when the customer can benefit from the promised good or service on its own or by combining it with other resources readily available and when the promised good or service is separately identifiable from other promised goods or services in the contract. In such arrangements, we allocate revenue on a relative standalone selling price basis by maximizing the use of observable inputs to determine the standalone selling price for each performance obligation. Net Revenue by Product Line and Geographic Region We organize our products and solutions into three product lines: Embedded IoT Solutions, IoT System Solutions, and Software & Services. Our Embedded IoT products are normally embedded into new designs. These products include application processing that delivers compute to meet customer needs for data transformation, computer vision, machine learning, augmented / virtual reality, audio / video aggregation and distribution, and custom applications at the edge. Our IoT System products include wired and wireless connections that enhance the value and utility of modern electronic systems and equipment by providing secure network connectivity, power for IoT end devices through Power over Ethernet (PoE), application hosting, protocol conversion, media conversion, secure access for distributed IoT deployments and many other functions. Our Software & Services products can be classified as either (i) our SaaS platform, which enables customers to easily deploy, monitor, manage, and automate across their global deployments, all from a single platform login, virtually connected as though directly on each device, (ii) engineering services, which is a flexible business model that allows customers to select from turnkey product development or team augmentation for accelerating complex areas of product development or (iii) extended warranty, support and maintenance. We conduct our business globally and manage our sales teams by three geographic regions: the Americas; Europe, Middle East, and Africa (“EMEA”); and Asia Pacific Japan (“APJ”). The following tables present our net revenue by product line and by geographic region. Net revenues by geographic region are generally based on the “bill-to” location of our customers: Schedule of net revenue by product lines Years Ended June 30, 2023 2022 (In thousands) Embedded IoT Solutions $ 63,636 $ 61,773 IoT System Solutions 57,496 59,019 Software & Services 10,057 8,863 $ 131,189 $ 129,655 Schedule of net revenue by geographic region Years Ended June 30, 2023 2022 (In thousands) Americas $ 78,557 $ 77,799 EMEA 23,286 22,542 APJ 29,346 29,314 $ 131,189 $ 129,655 The following table presents product revenues and service revenues as a percentage of our total net revenue: Schedule of percentage total net revenues Year Ended June 30, 2022 2021 Product revenues 93 94 Service revenues 7 6 Service revenue is comprised primarily of professional services, software license subscriptions, and extended warranties. Contract Balances In certain instances, the timing of revenue recognition may differ from the timing of invoicing to our customers. We record a contract asset receivable when revenue is recognized prior to invoicing, and a contract or deferred revenue liability when revenue is recognized subsequent to invoicing. With respect to product shipments, we expect to fulfill contract obligations within one year and so we have elected not to separately disclose the amount nor the timing of recognition of these remaining performance obligations. For contract balances related to contracts that include services and multiple performance obligations, refer to the deferred revenue discussion below. Deferred Revenue Deferred revenue is primarily comprised of unearned revenue related to our extended warranty services and certain software services. These services are generally invoiced at the beginning of the contract period and revenue is recognized ratably over the service period. Current and non-current deferred revenue balances represent revenue allocated to the remaining unsatisfied performance obligations at the end of a reporting period and are respectively included in other current liabilities and other non-current liabilities in the accompanying consolidated balance sheets. The following table presents the changes in our deferred revenue balance for the year ended June 30, 2023 (in thousands): Schedule of changes in deferred revenue Balance, July 1, 2022 $ 1,342 New performance obligations 3,183 Performance obligations acquired from acquisitions 4,096 Recognition of revenue as a result of satisfying performance obligations (5,240 ) Balance, June 30, 2023 $ 3,381 Less: non-current portion of deferred revenue (888 ) Current portion, June 30, 2023 $ 2,493 We expect to recognize substantially all of the non-current portion of deferred revenue over the next 2 to 5 years. |
Acquisitions
Acquisitions | 12 Months Ended |
Jun. 30, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | 3. Acquisitions Acquisition of Uplogix On September 12, 2022 (the “Closing Date”), we entered into a Merger Agreement with Uplogix, Inc. (“Uplogix”) pursuant to which Uplogix became a wholly-owned subsidiary of Lantronix. Pursuant to the Merger Agreement, all of the issued and outstanding shares of Uplogix were cancelled and converted into the right to receive an applicable portion of the Consideration Pool Amount (as defined in the Merger Agreement). In addition, the holders of promissory notes issued by Uplogix entered into note termination agreements with Uplogix, which provided, among other things, that the issued and outstanding promissory notes were cancelled and terminated upon the closing of the Merger. Holders of Company Junior-Only Notes (as defined in the Merger Agreement) received, in connection with their cancellation and termination of such notes, the full payment of principal and interest. Holders of Company Senior Notes (as defined in the Merger Agreement), including those holders of Company Senior Notes and Company Junior Notes (as defined in the Merger Agreement) (the “Company Senior Noteholders”), received the applicable portions of the Estimated Merger Consideration (as defined in the Merger Agreement). The aggregate consideration payable by Lantronix under the Merger Agreement was equal to $8,000,000 (inclusive of payments to satisfy the Company Junior-Only Notes), subject to certain adjustments, including, without limitation, for cash, debt, transaction expenses (including the Bonus Amount (as defined below)) and net working capital. Prior to the Closing Date, Uplogix entered into an amended and restated bonus plan, which provided that certain of its employees would be entitled to receive, in the aggregate, 15% of the consideration otherwise payable to the holders of Company Senior Notes (the “Bonus Amount”) under the Merger Agreement, with the terms of such bonus payments (including the amounts per employee and the timing of such payments) as specified in such bonus plan. In addition, the Company Senior Noteholders and former Uplogix employees have the right to receive up to an additional $4,000,000 in the aggregate (the “Earnout Amount”), payable after the closing of the Merger based on revenue targets for the business of Uplogix as specified in the Merger Agreement. The Earnout Amount will be based on Uplogix achieving revenue (subject to certain adjustments as specified in the Merger Agreement) of $7,000,000 to $14,000,000 for the period beginning at the Closing Date and ending on September 30, 2023. The Company Senior Noteholders are entitled to an advance of the Earnout Amount if the revenue of the Uplogix business for the period beginning at the closing of the Merger and ending on March 31, 2023 is between $7,000,000 to $14,000,000, but in no event will the Earnout Amount, together with any such advance of the Earnout Amount, exceed $4,000,000. The acquisition of Uplogix brings immediate scale to our out-of-band remote management solutions, adding a complementary high-end product offering that includes high-margin maintenance and licensing revenues. A summary of the purchase consideration for the Uplogix acquisition is as follows (in thousands): Schedule of purchase consideration Cash paid, including initial working capital adjustments $ 8,754 Preliminary estimated fair value of earnout consideration 1,718 Total purchase consideration $ 10,472 We recorded Uplogix’s tangible and intangible assets and liabilities based on their estimated fair values as of the Closing Date and allocated the remaining purchase consideration to goodwill. Our valuation assumptions of acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets. Updates to the valuation of certain assets acquired and liabilities assumed may result in changes to the recorded amounts of assets and liabilities, with corresponding adjustments to goodwill in subsequent periods. As of June 30, 2023, the measurement period is complete. During the fiscal year ended June 30, 2023, based on additional analysis and refinements to our estimates, we adjusted the preliminary purchase price allocation as of the Closing Date to (i) decrease the estimated fair value of intangible assets acquired by $ 660,000 12,000 672,000 The final purchase price allocation is as follows (in thousands): Schedule of purchase price allocation Cash and cash equivalents $ 4,104 Accounts receivable, net 1,900 Inventories, net 3,590 Prepaid expense and other current assets 288 Lease right-of-use asset 778 Other non-current assets 129 Amortizable intangible assets 1,810 Goodwill 7,056 Accounts payable (278 ) Accrued payroll (262 ) Deferred revenue (4,096 ) Other current liabilities (3,067 ) Notes payable (900 ) Other noncurrent liabilities (580 ) Total consideration $ 10,472 As discussed above, the purchase consideration and resulting purchase price allocation for this acquisition included various adjustments for transaction expenses, the Bonus Amount, payment of Company Junior-Only Notes and certain other accrued expenses paid shortly after the Closing Date. Pursuant to the Merger Agreement, substantially all of the $ 4,104,000 The factors that contributed to a purchase price resulting in the recognition of goodwill include our belief that this acquisition will create a more diverse IoT company with respect to product offerings and our belief that we are committed to improving cost structures in accordance with our operational and restructuring plans which should result in a realization of cost savings and an improvement of overall efficiencies. Depending on the structure of a particular acquisition, goodwill and identifiable intangible assets may not be deductible for tax purposes. We have determined that goodwill and identifiable intangible assets related to this acquisition are deductible. Acquisition-related costs were expensed in the periods in which the costs were incurred. The valuation of identifiable intangible assets and their estimated useful lives are as follows: Schedule of intangible assets of useful lives Asset Fair Value Weighted Average Useful Life (In thousands) (In years) Customer relationships $ 1,030 5.0 Developed technology 600 5.0 Trademarks and trade names 180 1.0 The intangible assets are amortized on a straight-line basis over the estimated weighted-average useful lives. Valuation Methodology The customer relationships were valued using the multi-period excess earnings method, which estimates revenues and cash flows derived from this asset and also considers portions of the cash flows that can be attributed to the use of other supporting assets. The useful lives of customer relationships are estimated based primarily upon customer turnover data. Order backlog was estimated to be substantially fulfilled within a year of the Closing Date. Developed technology and trades names were valued using the relief-from-royalty method. This method is an income approach that estimates the portion of a company’s earnings attributable to an asset based on the royalty rate the company would have paid for the use of the asset if it did not own it. Royalty payments are estimated by applying a royalty rate to the prospective revenue attributable to the intangible asset. The resulting annual royalty payments are tax-affected and then discounted to present value. Assumptions used in forecasting cash flows for each of the identified intangible assets included consideration of the following: · Historical performance including sales and profitability · Business prospects and industry expectations · Estimated economic life of the asset · Development of new technologies · Acquisition of new customers · Attrition of existing customers · Obsolescence of technology over time The fair value of earnout consideration was estimated based on applying a Monte Carlo simulation method to forecast achievement of the revenue targets. This method involves many possible value outcomes which are evaluated to establish an estimated value. Key inputs in the valuation include forecasted revenue, revenue volatility and discount rate. Remeasurement of Earnout Consideration During the year ended June 30, 2023, we remeasured the estimated fair value of the earnout consideration based on our updated expectations of achieving the revenue targets for the business of Uplogix. The following table presents the change in the earnout consideration liability (in thousands): Schedule of change in the earnout consideration liability Preliminary estimated fair value of earnout consideration $ 1,718 Remeasurement estimates (447 ) Payments – Balance at June 30, 2023 $ 1,271 The remeasurement of the earnout consideration liability was recorded within our operating expenses in the accompanying consolidated statement of operations for the fiscal year ended June 30, 2023. The balance of this liability is recorded in other current liabilities on the accompanying consolidated balance sheet at June 30, 2023. Supplemental Pro Forma Information (Unaudited) The following supplemental pro forma data summarizes our results of operations for the periods presented, as if we completed the acquisition of Uplogix as of the first day of our fiscal year ended June 30, 2022. The supplemental pro forma data reports actual operating results adjusted to include the pro forma effect and timing of the impact of amortization expense of identified intangible assets, restructuring costs, the purchase accounting effect on inventories acquired, and transaction costs. In accordance with the pro forma acquisition date, we recorded in the year ended June 30, 2022 supplemental pro forma data (i) cost of goods sold from manufacturing profit in acquired inventory of $ 225,000 315,000 315,000 506,000 79,000 Net revenue related to products and services from the acquisition of Uplogix contributed just under 4% of our total net revenue for the year ended June 30, 2023. As of the Closing Date, we began to immediately integrate the acquisition into existing operations, engineering groups, sales distribution networks and management structure, making it generally impracticable to determine the post-acquisition earnings on a standalone basis. Supplemental pro forma data is as follows: Schedule of supplemental pro forma data Years ended June 30, 2023 2022 (In thousands, except per share amounts) Pro forma net revenue $ 133,224 $ 138,835 Pro forma net loss $ (7,545 ) $ (5,813 ) Pro forma net loss per share: Basic and Diluted $ (0.21 ) $ (0.18 ) Acquisition of Transition Networks On April 28, 2021, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with Communications Systems, Inc., a Minnesota corporation (“CSI”), pursuant to which we agreed to purchase from CSI the Transition Networks (“TNI”) and Net2Edge businesses of CSI (the “Transaction”). The Transaction closed on August 2, 2021 (the “Closing Date”), with Lantronix acquiring all outstanding shares of the common stock of TNI and all of the outstanding ordinary shares of Transition Networks Europe Limited (such entity, together with TNI, the “TN Companies”) for an aggregate purchase price of up to approximately $ 32,028 25,028,000 7,000,000 The acquisition of the TN Companies provided Lantronix with complementary IoT connectivity products and capabilities, including switching, power over ethernet and media conversion and adapter products. A summary of the purchase consideration for the TN Companies is as follows (in thousands): Schedule of purchase consideration Cash consideration paid to CSI $ 23,651 Estimated fair value of earnout consideration 393 Total purchase consideration $ 24,044 We recorded the TN Companies’ tangible and intangible assets and liabilities based on their estimated fair values as of the Closing Date and allocated the remaining purchase consideration to goodwill. Our valuation assumptions of acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets. The final purchase price allocation is as follows (in thousands): Schedule of purchase price allocation Cash and cash equivalents $ 22 Accounts receivable, net 5,277 Inventories, net 7,734 Prepaid expense and other current assets 355 Property and equipment, net 121 Goodwill 4,958 Amortizable intangible assets 10,794 Accounts payable (1,872 ) Accrued payroll (9 ) Deferred tax liability (2,036 ) Other current liabilities (1,300 ) Total consideration $ 24,044 The factors that contributed to a purchase price resulting in the recognition of goodwill include our belief that the Transaction will create a more diverse IoT company with respect to product offerings and our belief that we are committed to improving cost structures in accordance with our operational and restructuring plans which should result in a realization of cost savings and an improvement of overall efficiencies. Depending on the structure of a particular acquisition, goodwill and identifiable intangible assets may not be deductible for tax purposes. We determined that goodwill and identifiable intangible assets related to the Transaction are not deductible. Acquisition-related costs were expensed in the periods in which the costs were incurred. The valuation of identifiable intangible assets and their estimated useful lives are as follows: Schedule of intangible assets of useful lives Asset Fair Value Weighted Average Useful Life (In thousands) (In years) Customer relationships $ 7,467 3.5 Developed technology 1,890 3.5 Order backlog 567 1.0 Trademarks and trade names 870 2.0 The intangible assets are amortized on a straight-line basis over the estimated weighted-average useful lives. |
Supplemental Financial Informat
Supplemental Financial Information | 12 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Supplemental Financial Information | 4. Supplemental Financial Information Accounts Receivable The following table presents details of our accounts receivable: Schedule of accounts receivable June 30, 2023 2022 (In thousands) Accounts receivable $ 28,204 $ 26,602 Allowance for doubtful accounts (522 ) (340 ) Accounts receivable, net $ 27,682 $ 26,262 Inventories The following table presents details of our inventories: Schedule of Inventory June 30, 2023 2022 (In thousands) Finished goods $ 25,670 $ 16,094 Raw materials 24,066 21,585 Inventories, net $ 49,736 $ 37,679 Property and Equipment The following table presents details of property and equipment: Schedule of property and equipment June 30, 2023 2022 (In thousands) Computer, software and office equipment $ 7,167 $ 5,370 Furniture and fixtures 3,119 760 Production, development and warehouse equipment 5,443 5,147 Construction-in-progress 52 1,612 Property and equipment, gross 15,781 12,889 Less accumulated depreciation (11,152 ) (9,237 ) Property and equipment, net $ 4,629 $ 3,652 Purchased Intangible Assets The following table presents details of purchased intangible assets: Schedule of purchased intangible assets June 30, 2023 June 30, 2022 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value (In thousands) Developed technology $ 6,331 $ (3,881 ) $ 2,450 $ 5,731 $ (2,493 ) $ 3,238 Customer relationships 17,528 (9,487 ) 8,041 16,498 (5,700 ) 10,798 Order backlog 1,406 (1,406 ) – 1,406 (1,356 ) 50 Non-compete agreements 400 (400 ) – 400 (400 ) – Trademark and trade name 1,425 (1,351 ) 74 1,245 (772 ) 473 $ 27,090 $ (16,525 ) $ 10,565 $ 25,280 $ (10,721 ) $ 14,559 We do not currently have any purchased intangible assets with indefinite useful lives. As of June 30, 2023, future estimated amortization expense is as follows: Schedule of future estimated amortization expense Years Ending June 30, (In thousands) 2024 $ 5,314 2025 3,684 2026 1,177 2027 326 2028 64 Total amortization expense $ 10,565 Goodwill The following table presents details of our goodwill balance: Schedule of goodwill Year Ended June 30, 2023 (In thousands) Balance at June 30, 2022 $ 20,768 Acquisition of Uplogix 7,056 Balance at June 30, 2023 $ 27,824 Warranty Reserve The following table presents details of our warranty reserve: Schedule of Warranty Reserve Years Ended June 30, 2023 2022 (In thousands) Beginning balance $ 594 $ 197 Warranty reserve assumed from acquisition of the TN Companies – 483 Charged to cost of revenues 352 202 Usage (158 ) (288 ) Ending balance $ 788 $ 594 Other Liabilities The following table presents details of our other liabilities: Schedule of Other Liabilities June 30, 2023 2022 (In thousands) Current Accrued variable consideration $ 2,167 $ 1,905 Customer deposits and refunds 16,344 922 Accrued raw materials purchases 267 132 Deferred revenue 2,493 969 Lease liability 1,859 978 Taxes payable 647 371 Warranty reserve 788 594 Accrued operating expenses 4,248 2,606 Total other current liabilities $ 28,813 $ 8,477 Non-current Lease liability $ 10,425 $ 7,310 Deferred tax liability 146 – Deferred revenue 888 373 Total other non-current liabilities $ 11,459 $ 7,683 Computation of Net Loss per Share The following table presents the computation of net loss per share: Schedule of computation of net loss per Share Years Ended June 30, 2023 2022 (In thousands, except per share data) Numerator: Net loss $ (8,980 ) $ (5,362 ) Denominator: Weighted-average shares outstanding - basic and diluted 36,257 32,671 Net loss per share - basic and diluted $ (0.25 ) $ (0.16 ) The following table presents the common stock equivalents excluded from the diluted net loss per share calculation because they were anti-dilutive for the periods presented. These excluded common stock equivalents could be dilutive in the future. Schedule of antidilutive securities Years Ended June 30, 2023 2022 (In thousands) Common stock equivalents 637 1,069 Severance and Related Charges The following table presents details of the liability we recorded related to restructuring, severance and related activities during the current fiscal year: Schedule of severance and related charges Year Ended June 30, 2023 (In thousands) Beginning balance $ 34 Charges 693 Payments (630 ) Ending balance $ 97 The ending balance is recorded in accrued payroll and related expenses on the accompanying consolidated balance sheet at June 30, 2023. Supplemental Cash Flow Information The following table presents non-cash investing and financing transactions excluded from the consolidated statements of cash flows: Schedule of non-cash transactions Years Ended June 30, 2023 2022 (In thousands) Acquisition of property through operating leases $ 4,320 $ 7,170 Acquisition of property through financing leases $ 536 $ – Accrued property and equipment paid for in the subsequent period $ 54 $ 868 Warrants to purchase common stock issued with bank credit facility $ – $ 500 Fair value adjustment of earnout consideration for TN companies at acquisition date $ – $ 393 |
Bank Loan Agreements
Bank Loan Agreements | 12 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Bank Loan Agreements | 5. Bank Loan Agreements On September 7, 2022 we entered into a Third Amendment to the Third Amended and Restated Loan and Security Agreement (the “Amendment”) with Silicon Valley Bank (“SVB”), pertaining to our existing term loan and revolving credit facility (together, the “Senior Credit Facilities”), which amends that certain Third Amended and Restated Loan and Security Agreement, dated as of August 2, 2021, as amended by the First Amendment to Third Amended and Restated Loan and Security Agreement, dated as of October 21, 2021, as amended by the Second Amendment to Third Amended and Restated Loan and Security Agreement, dated as of February 15, 2022 by and among Lantronix and SVB (collectively with the Amendment, the “Loan Agreement”). The Amendment, among other things, provided for an additional term loan in the original principal amount of $ 5,000,000 August 2, 2025 Term Secured Overnight Financing Rate (“ 5,000,000 4,000,000 25,000 August 2, 2025 On September 7, 2022, we borrowed $ 2,000,000 On April 3, 2023, we entered into a Letter Agreement (the “Letter Agreement”) with SVB, which, among other matters, amended the Loan Agreement to reduce the former requirement to hold 85% of our company-wide cash balances at SVB to 50%, and provided a waiver of any event of default under the Loan Agreement for any failure to comply with this covenant prior to the date of the Letter Agreement. The following table summarizes our outstanding debt: Schedule of outstanding debt June 30, 2023 2022 (In thousands) Outstanding borrowings on Senior Credit Facilities $ 19,194 $ 16,188 Less: Unamortized debt issuance costs (230 ) (243 ) Net Carrying amount of debt 18,964 15,945 Less: Current portion (2,743 ) (1,671 ) Non-current portion $ 16,221 $ 14,274 During the year ended June 30, 2023, we recognized $ 1,610,000 On March 10, 2023, SVB was closed by the California Department of Financial Protection and Innovation, which appointed the Federal Deposit Insurance Corporation (“FDIC”) as receiver. On March 13, 2023, the FDIC announced that it had transferred all insured and uninsured deposits and substantially all assets of SVB to a newly created, full-service FDIC-operated “bridge bank” called Silicon Valley Bridge Bank, N.A., where depositors would have full access to their money immediately. On March 27, 2023, First Citizens Bank announced that it entered into an agreement with the FDIC to purchase all of the assets and liabilities of Silicon Valley Bridge Bank. We currently have full control of our cash and cash equivalents balance at SVB and our other banking institutions. We frequently monitor the third-party depository institutions that hold our cash and cash equivalents. Our emphasis is primarily on safety of principal and secondarily on maximizing yield on those funds. Financial Covenants The Senior Credit Facilities require Lantronix to comply with a minimum liquidity test, a maximum leverage ratio and a minimum fixed charge coverage ratio. We were in compliance with all financial covenants as of June 30, 2023. Liquidity The Senior Credit Facilities require that we maintain a minimum liquidity of $4,000,000 at SVB, as measured at the end of each month. Maximum leverage ratio The Senior Credit Facilities require that we maintain a maximum leverage ratio, calculated as the ratio of funded debt to the consolidated trailing 12 month earnings before interest, taxes, depreciation and amortization, and certain other allowable exclusions of (i) 2.50 to 1.00 for each calendar quarter ending June 30, 2021 through and including September 30, 2022, (ii) 2.25 to 1.00 for each calendar quarter ending December 31, 2022 through and including September 30, 2023, and (iii) 2.00 to 1.00 for the calendar quarter December 31, 2023 and each calendar quarter thereafter. Minimum fixed charge coverage ratio The Senior Credit Facilities require that we maintain a minimum fixed charge coverage ratio, calculated as the ratio of consolidated trailing 12 month earnings before interest, taxes, depreciation and amortization, and certain other allowable exclusions, less capital expenditures and taxes paid, to the trailing twelve month principal and interest payments on all funded debt of 1.25 to 1.00 as measured at the end of each calendar quarter. In addition, the Senior Credit Facilities contain customary representations and warranties, affirmative and negative covenants, including covenants that limit or restrict Lantronix and its subsidiaries’ ability to incur liens, incur indebtedness, dispose of assets, make investments, make certain restricted payments, merge or consolidate and enter into certain speculative hedging arrangements. The Senior Credit Facilities include a number of events of default, including, among other things, non-payment defaults, covenant defaults, cross-defaults to other materials indebtedness, bankruptcy and insolvency defaults and material judgment defaults. If any event of default occurs (subject, in certain instances, to specified grace periods), the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the Senior Credit Facilities may become due and payable immediately. |
Stockholders_ Equity
Stockholders’ Equity | 12 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
Stockholders’ Equity | 6. Stockholders’ Equity Stock Incentive Plans We have stock incentive plans in effect under which non-qualified and incentive stock options to purchase shares of Lantronix common stock (“stock options”) have been granted to employees, non-employees and board members. In addition, we have previously granted restricted common stock awards (“non-vested shares”) to employees and board members under these plans. In November 2020, our stockholders voted to approve the 2020 Performance Incentive Plan (the “2020 Plan”), replacing our Amended and Restated 2010 Stock Incentive Plan (the “2010 Plan”), which expired in September 2020. At the 2010 Plan’s expiration date, approximately 1,097,000 2,500,000 2,465,000 The Compensation Committee of our board of directors determines eligibility, vesting schedules and exercise prices for stock options and shares granted under the plans. Stock options are generally granted with an exercise price equal to the market price of our common stock on the grant date. Stock options generally have a contractual term of seven to ten years. Share-based awards generally vest and become exercisable over a one to four-year service period. As of June 30, 2023, no stock appreciation rights or non-vested stock was outstanding. No income tax benefit was realized from activity in the share-based plans during the fiscal years ended June 30, 2023 and 2022. Stock Option Awards The fair value of each stock option grant is estimated on the grant date using the Black-Scholes-Merton option-pricing formula. The expected term of stock options granted is based on our recent historical exercise data. Expected volatilities are based on the historical volatility of our stock price. The risk-free interest rate assumption is based on the U.S. Treasury interest rates appropriate for the expected term of our stock options. The following weighted-average assumptions were used to estimate the fair value of all of our stock option grants: Schedule of Valuation Assumptions Years Ended June 30, 2023 2022 Expected term (in years) 3.9 4.7 Expected volatility 62% 63% Risk-free interest rate 3.79% 0.82% Dividend yield 0.00% 0.00% The following table presents a summary of activity for all of our stock options: Schedule of option activity Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Shares Per Share Term Value (In thousands) (In years) (In thousands) Balance of options outstanding at June 30, 2022 1,383 $ 3.40 Granted 115 4.96 Expired (9 ) 2.04 Exercised (164 ) 2.55 Balance of options outstanding at June 30, 2023 1,325 $ 3.65 2.1 $ 987 Options exercisable at June 30, 2023 1,147 $ 3.45 1.5 $ 979 The following table presents a summary of grant date fair value and intrinsic value information for all of our stock options: Summary of option grant-date fair value and intrinsic value information Years Ended June 30, 2023 2022 (In thousands, except per share data) Weighted-average grant date fair value per share $ 2.44 $ 2.94 Intrinsic value of options exercised $ 454 $ 1,506 Restricted Stock Units The fair value of our RSUs is based on the closing market price of our common stock on the grant date. The following table presents a summary of activity with respect to our RSUs: Summary of other than option activity Number of Shares Weighted-Average Grant Date Fair Value per Share (In thousands) Balance of RSUs outstanding at June 30, 2022 1,115 $ 5.50 Granted 763 5.59 Forfeited (96 ) 5.51 Vested (593 ) 5.22 Balance of RSUs outstanding at June 30, 2023 1,189 $ 5.70 Performance Shares The following table presents a summary of activity with respect to our PSUs: Summary of other than option activity Number of Shares (In thousands) Balance of PSUs outstanding at June 30, 2022 1,030 Granted 1,147 Forfeited (299 ) Vested (947 ) Balance of PSUs outstanding at June 30, 2023 931 Employee Stock Purchase Plan Our 2013 Employee Stock Purchase Plan (“ESPP”) is intended to provide employees with an opportunity to purchase our common stock through accumulated payroll deductions at the end of a specified purchase period. Each of our employees (including officers) is eligible to participate in our ESPP, subject to certain limitations as set forth in our ESPP. The ESPP currently operates with six month offering periods commencing on the first trading day on or after May 16 and November 16 of each year (an “Offering Period”). Common stock may be purchased under the ESPP at the end of each six-month Offering Period unless the participant withdraws or terminates employment earlier. Shares of the Company’s common stock may be purchased under the ESPP at a price not less than 85% of the lesser of the fair market value of our common stock on the first or last trading day of each Offering Period. The per share fair value of stock purchase rights granted under the ESPP was estimated using the following weighted-average assumptions: Schedule of Valuation Assumptions Years Ended June 30, 2023 2022 Expected term (in years) 0.5 0.5 Expected volatility 66 59 Risk-free interest rate 4.88 0.92 Dividend yield 0.00 0.00 The following table presents a summary of activity under our ESPP: Summary of other than option activity Year Ended (In thousands, except per share data) Shares available for issuance at June 30, 2022 85 Shares reserved for issuance 500 Shares issued (204 ) Shares available for issuance at June 30, 2023 381 Weighted-average purchase price per share $ 4.26 Intrinsic value of ESPP shares on purchase date $ 153 Share-Based Compensation Expense The following table presents a summary of share-based compensation expense included in each applicable functional line item on our consolidated statements of operations: Schedule of share-based compensation expense by functional line item Years Ended June 30, 2023 2022 (In thousands) Cost of revenues $ 158 $ 369 Selling, general and administrative 4,546 4,862 Research and development 1,504 1,015 Total share-based compensation expense $ 6,208 $ 6,246 The following table presents a summary of the remaining unrecognized share-based compensation expense related to our outstanding share-based awards as of June 30, 2023: Schedule of unrecognized share-based compensation expense Remaining Unrecognized Compensation Expense Remaining Weighted-Average Years to Recognize (In thousands) Stock options $ 402 2.6 RSUs 5,666 2.2 PSUs 1,650 1.9 Common stock purchase rights under ESPP 128 0.4 $ 7,846 If there are any modifications or cancellations of the underlying unvested share-based awards, we may be required to accelerate, increase or cancel remaining unearned share-based compensation expense. Future share-based compensation expense and unearned share-based compensation expense will increase to the extent that we grant additional share-based awards. |
Retirement Plan
Retirement Plan | 12 Months Ended |
Jun. 30, 2023 | |
Retirement Benefits [Abstract] | |
Retirement Plan | 7. Retirement Plan We have a retirement savings plan (the “Plan”) to which eligible employees may elect to make contributions through salary deferrals up to 100% of their base pay, subject to limitations. We made approximately $ 411,000 373,000 In addition, we may make discretionary profit-sharing contributions, subject to limitations. During the fiscal years ended June 30, 2023 and 2022, we made no such contributions to the Plan. |
Income Taxes
Income Taxes | 12 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. Income Taxes The provision (benefit) for income taxes consists of the following components: Schedule of Components of Income Tax Expense Years Ended June 30, 2023 2022 (In thousands) Current: Federal $ – $ – State 294 11 Foreign 308 254 Total Current taxes $ 602 $ 265 Deferred: Federal 146 (1,805 ) State – (292 ) Foreign – – Provision (benefit) for income taxes $ 748 $ (1,832 ) The following table presents U.S. and foreign income (loss) before income taxes: Schedule of Income before Income Tax, Domestic and Foreign Years Ended June 30, 2023 2022 (In thousands) United States $ (9,168 ) $ (7,829 ) Foreign 936 635 Loss before income taxes $ (8,232 ) $ (7,194 ) The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows: Schedule of Deferred Tax Assets and Liabilities Years Ended June 30, 2023 2022 (In thousands) Deferred tax assets: Tax losses and credits $ 9,882 $ 15,310 Reserves not currently deductible 2,054 1,881 Capitalized research and development expenses* 6,975 – Deferred compensation 1,301 1,858 Inventory capitalization 2,390 1,508 Lease liabilities 2,848 2,260 Depreciation and amortization – 130 Identified intangibles 446 – Other 263 333 Gross deferred tax assets 26,159 23,280 Valuation allowance (22,532 ) (20,173 ) Deferred tax assets, net 3,627 3,107 Deferred tax liabilities: State taxes (518 ) (404 ) Right-of-use assets (2,676 ) (2,240 ) Identified intangibles – (463 ) Depreciation and amortization (579 ) – Deferred tax liabilities (3,773 ) (3,107 ) Net deferred tax assets (liabilities) $ (146 ) $ – * As required by the 2017 Tax Cuts and Jobs Act (the “2017 Act”), research and experimental (“R&E”) expenses under Internal Revenue Code Section 174 are required to be capitalized beginning in our fiscal year ended June 30, 2023. R&E expenses are required to be amortized over five years for domestic expenses and 15 years for foreign expenses. Our net deferred tax liability of $ 146,000 As a result of the acquisition of the TN Companies during the fiscal year ended June 30, 2022, we recorded U.S. deferred tax liabilities in the purchase accounting related to non-tax-deductible intangible assets recognized in our consolidated financial statements. The acquired deferred tax liabilities are a source of income to support recognition of our existing deferred tax assets. Pursuant to ASC 805, the impact on our existing deferred tax assets and liabilities caused by an acquisition should be recorded in the consolidated financial statements outside of acquisition accounting. Accordingly, we recorded an income tax benefit during the fiscal year ended June 30, 2022 of $ 2,036,000 The following table presents a reconciliation of the provision (benefit) for income taxes to taxes computed at the U.S. federal statutory rate: Schedule of Effective Income Tax Reconciliation Years Ended June 30, 2023 2022 (In thousands) Statutory federal provision (benefit) for income taxes $ (1,729 ) $ (1,510 ) Increase (decrease) resulting from: Stock options (283 ) (588 ) Other permanent differences 30 (54 ) Change in valuation allowance 2,222 (1,829 ) Global intangible low-tax income inclusion 2 4 Foreign tax rate variances 112 120 Acquisition costs – 395 Other 394 1,630 Provision (benefit) for income taxes $ 748 $ (1,832 ) Due to the “change of ownership” provision of the Tax Reform Act of 1986, utilization of our net operating loss (“NOL”) carryforwards and tax credit carryforwards may be subject to an annual limitation against taxable income in future periods. Due to the annual limitation, a portion of these carryforwards may expire before ultimately becoming available to reduce future income tax liabilities. The following table presents our NOL carryforwards: Summary of Operating Income (Loss) Carryforwards June 30, 2023 (In thousands) Federal $ 43,320 State $ 22,589 Our federal NOL carryforwards generated for tax years beginning before July 1, 2018 began to expire in the fiscal year ended June 30, 2021. Pursuant to the 2017 Act, we also have federal NOL carryforwards of $ 6,788,000 80 We continue to assert that our foreign earnings are indefinitely reinvested in our overseas operations and as such, deferred income taxes were not provided on undistributed earnings of certain foreign subsidiaries. The 2017 Act created a requirement that certain income earned by foreign subsidiaries, known as global intangible low-tax income (“GILTI”), must be included in the gross income of their U.S. shareholder. The FASB allows an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such taxes as a current-period expense when incurred. During the fiscal years ended June 30, 2023 and 2022, we elected to treat the tax effect of GILTI as a current-period expense when incurred. Unrecognized Tax Benefits The following table summarizes our liability for uncertain tax positions for the fiscal year ended June 30, 2023: Summary of uncertain tax position Year Ended June 30, 2023 (In thousands) Balance as of June 30, 2022 $ 5,652 Change in balances related to uncertain tax positions (839 ) Balance as of June 30, 2023 $ 4,813 At June 30, 2023, we had $ 4,813,000 4,813,000 303,000 At June 30, 2023, our fiscal years ended June 30, 2020 through 2023 remain open to examination by the federal taxing jurisdiction and our fiscal years ended June 30, 2019 through 2023 remain open to examination by the state taxing jurisdictions. However, we have NOLs beginning in the fiscal year ended June 30, 2001 which would cause the statute of limitations to remain open for the year in which the NOL was incurred. Our fiscal years ended June 30, 2015 through 2023 remain open to examination by foreign taxing authorities. We currently do not anticipate that the amount of unrecognized tax benefits as of June 30, 2023 will significantly increase or decrease within the next 12 months. |
Leases
Leases | 12 Months Ended |
Jun. 30, 2023 | |
Leases | |
Leases | 9. Leases In general, our leases include office buildings for various facilities worldwide which are all classified as operating leases. We also have financing leases related to some office equipment in the United States. Components of lease expense and supplemental cash flow information: Components of lease expense June 30, (In thousands) Components of lease expense Operating lease cost $ 2,583 Financing lease cost 30 Financing lease interest expense 10 Supplemental cash flow information Cash paid for amounts included in the measurement of operating lease liabilities $ 1,701 Cash paid for amounts included in the measurement of financing lease liabilities $ 30 Right-of-use assets obtained in exchange for lease obligation $ 4,856 The weighted-average remaining lease term is 3.76 4.6 Maturities of lease liabilities as of June 30, 2023 were as follows: Maturities of lease liabilities Years ending June 30, Operating Financing (In thousands) 2024 $ 2,272 $ 222 2025 2,059 213 2026 1,695 117 2027 1,648 22 2028 1,698 19 Thereafter 4,479 – Total remaining lease payments 13,851 593 less: imputed interest (2,076 ) (84 ) Lease liability $ 11,775 $ 509 Reported as: Current liabilities $ 1,677 $ 182 Non-current liabilities $ 10,098 $ 327 California Corporate Headquarters Lease In July 2022, we commenced the lease of approximately 14,000 square feet of office space for our corporate headquarters in Irvine, California. The term of the lease is 84 months from the commencement date, with an option to extend the lease for one 60-month extension period at a basic rent to be agreed upon by the parties or determined pursuant to the lease. The initial basic rent payable is $28,900 per month and is subject to customary annual rent increases. The aggregate basic rent payable under the lease during the 84-month term is approximately $2,700,000. We are also obligated to pay as additional rent our proportionate share of operating expenses, including property taxes. Additionally, the lease required us to deliver to the landlord an irrevocable stand-by letter of credit in the amount of $50,000 as security in the case of default. We accounted for this lease as an operating lease in accordance with ASC 842. Upon commencement of the lease, we recorded a right-of-use asset of $2,852,000 and lease liability of $2,852,000 at the inception of the lease based upon a discount rate of 4.6% over a term of 7 years. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 10. Commitments and Contingencies From time to time, we are subject to legal proceedings and claims in the ordinary course of business. We are currently not aware of any such legal proceedings or claims that we believe will have, individually or in the aggregate, a material adverse effect on our business, prospects, financial position, operating results or cash flows. |
Significant Geographic, Custome
Significant Geographic, Customer and Supplier Information | 12 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Significant Geographic, Customer and Supplier Information | 11. Significant Geographic, Customer and Supplier Information The following table presents our sales within geographic regions as a percentage of net revenue, which is generally based on the “bill-to” location of our customers: Schedule of revenue by geographic area Years Ended June 30, 2023 2022 Americas 60 60 Europe, Middle East, and Africa 18 17 Asia Pacific Japan 22 23 Total 100 100 Long-lived assets, which consists of property and equipment, net, lease right-of-use assets, purchased intangible assets, net, and goodwill by geographic area are as follows: Long-lived Assets by Geographic Areas June 30, 2023 2022 (In thousands) U.S. $ 44,757 $ 36,037 Canada 9,169 10,158 Rest of world 675 821 $ 54,601 $ 47,016 Customers The following table presents sales to our significant customers as a percentage of net revenue: Schedule of Revenue by Major Customers Years Ended June 30, 2023 2022 Top five customers (1) 35 44 Ingram Micro 10 14 Amtran * 10 (1) Includes Ingram Micro and Amtran in the fiscal years ended June 30, 2023 and 2022. * Less than 10% No other customer represented more than 10% of our annual net revenue during these fiscal years. Related Party Transactions We had no Suppliers We do not own or operate a manufacturing facility. All of our products are manufactured by third-party contract manufacturers and foundries primarily located in Thailand, Taiwan and China. We have several single-sourced supplier relationships, either because alternative sources are not available or because the relationship is advantageous to us. If these suppliers are unable to provide a timely and reliable supply of components, we could experience manufacturing delays that could adversely affect our consolidated results of operations. |
Company and Significant Accou_2
Company and Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Company | Company Lantronix, Inc., which we refer to herein as the Company, Lantronix, we, our, or us, is a global Industrial and Enterprise internet of things (“IoT”) provider of solutions that target diversified verticals ranging from Smart Cities, Utilities and Healthcare to Enterprise, Intelligent Transportation, and Industrial Automation. Building on a long history of connectivity and video processing competence, our target applications include Smart Cities infrastructure, Infotainment systems and Video Surveillance all supplemented with a comprehensive Out of Band Management products offering for Cloud and Edge Computing. We were incorporated in California in 1989 and re-incorporated in Delaware in 2000. |
Basis of Presentation | Basis of Presentation The consolidated financial statements include the accounts of Lantronix and our wholly-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The industry in which we operate is characterized by rapid technological change. As a result, estimates made in preparing the consolidated financial statements include revenue recognition, the allowance for doubtful accounts, business combinations, inventory valuation, goodwill valuation, deferred income tax asset valuation allowances, share-based compensation, restructuring charges and warranty reserves. In the macroeconomic environment affected by COVID-19, our estimates could require increased judgement and carry a higher degree of variability volatility. To the extent there are material differences between our estimates and actual results, future results of operations will be affected. |
Revenue Recognition | Revenue Recognition Refer to Note 2 |
Accounts Receivable and Allowance for Doubtful Accounts | Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the amount we expect to collect, which is net of an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. Our evaluation of the collectability of customer accounts receivable is based on various factors. In cases where we are aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, we record an allowance against amounts due based on those particular circumstances. For all other customers, we estimate an allowance for doubtful accounts based on various considerations, including the length of time the receivables are past due and our historical bad debt collection experience. We also consider our understanding of current economic and industry conditions that may affect the collectability of customer receivables. Accounts that are deemed uncollectible are written off against the allowance for doubtful accounts. |
Concentration of Credit Risk | Concentration of Credit Risk Our accounts receivable are primarily derived from revenue earned from customers located throughout North America, Europe and Asia. We perform periodic credit evaluations of our customers’ financial condition and maintain allowances for potential credit losses. Credit losses have historically been within our expectations. We generally do not require collateral or other security from our customers. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, contract manufacturers’ receivable, accounts payable, and accrued liabilities. The fair value of a financial instrument is the amount that would be received in an asset sale or paid to transfer a liability in an orderly transaction between unaffiliated market participants. Assets and liabilities measured at fair value are categorized based on whether or not the inputs are observable in the market and the degree to which the inputs are observable. The categorization of financial instruments within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The hierarchy is prioritized into three levels (with Level 3 being the lowest) defined as follows: Level 1: Level 2: Level 3: The hierarchy noted above requires us to minimize the use of unobservable inputs and to use observable market data, if available, when determining fair value. Other than earnout consideration liabilities (see Note 3 We believe all of our financial instruments’ recorded values approximate their current fair values because of the nature and short duration of these instruments. |
Foreign Currency Remeasurement | Foreign Currency Remeasurement The functional currency for all our foreign subsidiaries is currently the U.S. dollar. Non-monetary and monetary foreign currency assets and liabilities are valued in U.S. dollars at historical and end-of-period exchange rates, respectively. Exchange gains and losses from foreign currency transactions and remeasurements are recognized in the consolidated statements of operations. Translation adjustments for foreign subsidiaries whose functional currencies were previously their respective local currencies are suspended in accumulated other comprehensive income. |
Accumulated Other Comprehensive Income | Accumulated Other Comprehensive Income Accumulated other comprehensive income is composed of accumulated translation adjustments as of June 30, 2023 and 2022. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2023 or 2022. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments, with original maturities of 90 days or less. |
Inventories | Inventories Inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. We provide reserves for excess and obsolete inventories determined primarily based upon estimates of future demand for our products. Shipping and handling costs are classified as a component of cost of revenue in the consolidated statements of operations. |
Inventory Sale and Purchase Transactions with Contract Manufacturers | Inventory Sale and Purchase Transactions with Contract Manufacturers Under certain circumstances, we sell raw materials to our contract manufacturers and subsequently repurchase finished goods from the contract manufacturers which contain such raw materials. Net sales of raw materials to the contract manufacturers are recorded on the consolidated balance sheets as contract manufacturers’ receivables and are eliminated from net revenue as we intend to repurchase the raw materials from the contract manufacturers in the form of finished goods. We have contractual arrangements with certain of our contract manufacturers that require us to purchase unused inventory that the contract manufacturer has purchased to fulfill our forecasted manufacturing demand. To the extent that inventory on-hand at one or more of these contract manufacturers exceeds our contractually reported forecasts, we record the amount we may be required to purchase as part of other current liabilities and inventories on the consolidated balance sheets. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost. Depreciation is provided using the straight-line method over the assets’ estimated useful lives, generally ranging from three to five years. Depreciation and amortization of leasehold improvements are computed using the shorter of the remaining lease term or five years. Major renewals and betterments are capitalized, while replacements, maintenance and repairs, which do not improve or extend the estimated useful lives of the respective assets, are expensed as incurred. |
Business Combinations | Business Combinations We allocate the fair value of the purchase consideration of a business acquisition to the tangible assets, liabilities, and intangible assets acquired, including in-process research and development (“IPR&D”), based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized over the asset’s estimated useful life. Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred. |
Goodwill | Goodwill Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the acquired net tangible and intangible assets acquired. We evaluate goodwill for impairment on an annual basis in our fiscal fourth quarter or more frequently if we believe indicators of impairment exist that would more likely than not reduce the fair value of our single reporting unit below its carrying amount. We begin by assessing qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying value. Based on that qualitative assessment, if we conclude that it is more likely than not that the fair value of our single reporting unit is less than its carrying value, we conduct a quantitative goodwill impairment test, which involves comparing the estimated fair value of our single reporting unit with its carrying value, including goodwill. We estimate the fair value of our single reporting unit using a combination of the income and market approach. If the carrying value of the reporting unit exceeds its estimated fair value, we recognize an impairment loss for the difference. During the fourth quarter of the fiscal year ended June 30, 2023, we performed a qualitative assessment of whether goodwill impairment existed and did not determine that it was more likely than not that the fair value of our single reporting unit was less than its carrying amount. |
Purchased Intangible Assets | Purchased Intangible Assets Included within "purchased intangible assets, net" at June 30, 2023 are customer lists, developed technology, tradenames, and other intangible assets acquired in connection with various business combinations. Such capitalized costs and intangible assets are being amortized over a period of one to five years. |
Long-Lived Assets and Intangible Assets | Long-Lived Assets and Intangible Assets We assess the impairment of long-lived assets and intangible assets whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. We estimate the future cash flows, undiscounted and without interest charges, expected to be generated by the assets from its use or eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. |
Income Taxes | Income Taxes Income taxes are computed under the liability method. This method requires the recognition of deferred tax assets and liabilities for temporary differences between the financial reporting basis and the tax basis of our assets and liabilities. The impact on deferred taxes of changes in tax rates and laws, if any, are applied to the years during which temporary differences are expected to be settled and are reflected in the consolidated financial statements in the period of enactment. A valuation allowance is recorded when it is more likely than not that some of the deferred tax assets will not be realized. Financial statement effects of a tax position are initially recognized when it is more likely than not, based on the technical merits, that the position will be sustained upon examination by a taxing authority. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that meets the more-likely-than-not threshold of being realized upon ultimate settlement with a taxing authority. We recognize potential accrued interest and penalties related to unrecognized tax benefits as income tax expense. |
Share-Based Compensation | Share-Based Compensation We account for share-based compensation by expensing the estimated grant date fair value of our shared-based awards ratably over the requisite service period. We recognize the impact of forfeitures on our share-based compensation expense as such forfeitures occur. Previously recognized expense is reversed for the portion of awards forfeited prior to vesting. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the fiscal year. Diluted net income (loss) per share is calculated by adjusting the weighted-average number of common shares outstanding, assuming any dilutive effects of outstanding share-based awards using the treasury stock method. |
Research and Development Costs | Research and Development Costs Costs incurred in the research and development of new products and enhancements to existing products are expensed as incurred. Development costs of computer software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, we believe our current process for developing products is essentially completed concurrently with the establishment of technological feasibility and thus, software development costs have been expensed as incurred. |
Warranty | Warranty The standard warranty periods we provide for our products typically range from one to five years. We establish reserves for estimated product warranty costs at the time revenue is recognized based upon our historical warranty experience, and for any known or anticipated product warranty issues. |
Restructuring Charges | Restructuring Charges We recognize costs and related liabilities for restructuring activities when they are incurred. Our restructuring charges are primarily comprised of employee separation costs, asset impairments and contract exit costs. Employee separation costs include one-time termination benefits that are recognized as a liability at estimated fair value, at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Ongoing termination benefits are recognized as a liability at estimated fair value when the amount of such benefits are probable and reasonably estimable. Contract exit costs include contract termination fees and right-of-use asset impairments recognized on the date that we have vacated the premises or ceased use of the leased facilities. A liability for contract termination fees is recognized in the period in which we terminate the contract. |
Leases | Leases We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement and evaluate whether the lease is an operating lease or a finance lease at the commencement date. We recognize right-of-use (“ROU”) assets and lease liabilities for operating and finance leases with terms greater than 12 months. ROU assets represent our right to use an asset for the lease term, while lease liabilities represent our obligation to make lease payments. To the extent a lease includes a renewal option, we include such options in the calculation of the ROU asset and lease liability if it is reasonably assured that we will exercise the option. Operating and finance lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement date. To determine the present value of lease payments, we use the implicit interest rate, if it is readily determinable or estimable. To the extent that we are unable to utilize an interest rate implicit in the lease, we generally use our collateralized incremental borrowing rate based on the information available at the lease commencement date, including lease term, in determining the present value of lease payments. Operating and finance lease ROU assets are recognized net of any lease prepayments and incentives. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on the effective-interest method over the lease term. For leases that we acquire in acquisition transactions, we generally elect not to recognize assets or liabilities at the acquisition date for leases that, at the acquisition date, have a remaining lease term of 12 months or less. This includes not recognizing an intangible asset if the terms of an operating lease are favorable relative to the market terms or a liability if the terms are unfavorable relative to the market terms. Refer to Note 9 |
Advertising Expenses | Advertising Expenses Advertising expenses are recorded in the period incurred and totaled $ 262,000 253,000 |
Segment Information | Segment Information We have one operating and reportable business segment. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Revenue Contracts In October 2021, the Financial Accounting Standards Board (“FASB”) issued an Accounting Standards Update (“ASU”) to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity and inconsistency related to (i) recognition of an acquired contract liability and (ii) payment terms and their effect on subsequent revenue recognized by the acquirer. The amendments in this ASU require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with existing revenue recognition guidance under Accounting Standard Codification Topic (“ASC”) 606. At the acquisition date, an acquirer would assess how the acquiree applied ASC 606 to determine what to record for the acquired revenue contracts. Generally, this would result in an acquirer recognizing and measuring the acquired contract assets and contract liabilities consistent with how they were recognized and measured in the acquiree’s financial statements. Lantronix adopted this ASU in the first quarter of our fiscal year ended June 30, 2023, and as such, we recorded applicable contract assets and liabilities acquired in the Uplogix acquisition (see Note 3 Current Expected Credit Losses In June 2016, the FASB issued a new ASU requiring financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The ASU eliminates the threshold for initial recognition in current U.S. GAAP and reflects an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. The ASU is effective for Lantronix beginning in the first quarter of fiscal year 2024. The adoption of this guidance is not expected to have a material effect on our consolidated financial statements. |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of net revenue by product lines | Schedule of net revenue by product lines Years Ended June 30, 2023 2022 (In thousands) Embedded IoT Solutions $ 63,636 $ 61,773 IoT System Solutions 57,496 59,019 Software & Services 10,057 8,863 $ 131,189 $ 129,655 |
Schedule of net revenue by geographic region | Schedule of net revenue by geographic region Years Ended June 30, 2023 2022 (In thousands) Americas $ 78,557 $ 77,799 EMEA 23,286 22,542 APJ 29,346 29,314 $ 131,189 $ 129,655 |
Schedule of percentage total net revenues | Schedule of percentage total net revenues Year Ended June 30, 2022 2021 Product revenues 93 94 Service revenues 7 6 |
Schedule of changes in deferred revenue | Schedule of changes in deferred revenue Balance, July 1, 2022 $ 1,342 New performance obligations 3,183 Performance obligations acquired from acquisitions 4,096 Recognition of revenue as a result of satisfying performance obligations (5,240 ) Balance, June 30, 2023 $ 3,381 Less: non-current portion of deferred revenue (888 ) Current portion, June 30, 2023 $ 2,493 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Business Acquisition [Line Items] | |
Schedule of purchase consideration | Schedule of purchase consideration Cash paid, including initial working capital adjustments $ 8,754 Preliminary estimated fair value of earnout consideration 1,718 Total purchase consideration $ 10,472 |
Schedule of intangible assets of useful lives | Schedule of intangible assets of useful lives Asset Fair Value Weighted Average Useful Life (In thousands) (In years) Customer relationships $ 1,030 5.0 Developed technology 600 5.0 Trademarks and trade names 180 1.0 |
Schedule of change in the earnout consideration liability | Schedule of change in the earnout consideration liability Preliminary estimated fair value of earnout consideration $ 1,718 Remeasurement estimates (447 ) Payments – Balance at June 30, 2023 $ 1,271 |
Schedule of supplemental pro forma data | Schedule of supplemental pro forma data Years ended June 30, 2023 2022 (In thousands, except per share amounts) Pro forma net revenue $ 133,224 $ 138,835 Pro forma net loss $ (7,545 ) $ (5,813 ) Pro forma net loss per share: Basic and Diluted $ (0.21 ) $ (0.18 ) |
Uplogix [Member] | |
Business Acquisition [Line Items] | |
Schedule of purchase price allocation | Schedule of purchase price allocation Cash and cash equivalents $ 4,104 Accounts receivable, net 1,900 Inventories, net 3,590 Prepaid expense and other current assets 288 Lease right-of-use asset 778 Other non-current assets 129 Amortizable intangible assets 1,810 Goodwill 7,056 Accounts payable (278 ) Accrued payroll (262 ) Deferred revenue (4,096 ) Other current liabilities (3,067 ) Notes payable (900 ) Other noncurrent liabilities (580 ) Total consideration $ 10,472 |
Acquisition Of Transition Networks [Member] | |
Business Acquisition [Line Items] | |
Schedule of purchase consideration | Schedule of purchase consideration Cash consideration paid to CSI $ 23,651 Estimated fair value of earnout consideration 393 Total purchase consideration $ 24,044 |
Schedule of intangible assets of useful lives | Schedule of intangible assets of useful lives Asset Fair Value Weighted Average Useful Life (In thousands) (In years) Customer relationships $ 7,467 3.5 Developed technology 1,890 3.5 Order backlog 567 1.0 Trademarks and trade names 870 2.0 |
TN Companies [Member] | |
Business Acquisition [Line Items] | |
Schedule of purchase price allocation | Schedule of purchase price allocation Cash and cash equivalents $ 22 Accounts receivable, net 5,277 Inventories, net 7,734 Prepaid expense and other current assets 355 Property and equipment, net 121 Goodwill 4,958 Amortizable intangible assets 10,794 Accounts payable (1,872 ) Accrued payroll (9 ) Deferred tax liability (2,036 ) Other current liabilities (1,300 ) Total consideration $ 24,044 |
Supplemental Financial Inform_2
Supplemental Financial Information (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of accounts receivable | Schedule of accounts receivable June 30, 2023 2022 (In thousands) Accounts receivable $ 28,204 $ 26,602 Allowance for doubtful accounts (522 ) (340 ) Accounts receivable, net $ 27,682 $ 26,262 |
Schedule of Inventory | Schedule of Inventory June 30, 2023 2022 (In thousands) Finished goods $ 25,670 $ 16,094 Raw materials 24,066 21,585 Inventories, net $ 49,736 $ 37,679 |
Schedule of property and equipment | Schedule of property and equipment June 30, 2023 2022 (In thousands) Computer, software and office equipment $ 7,167 $ 5,370 Furniture and fixtures 3,119 760 Production, development and warehouse equipment 5,443 5,147 Construction-in-progress 52 1,612 Property and equipment, gross 15,781 12,889 Less accumulated depreciation (11,152 ) (9,237 ) Property and equipment, net $ 4,629 $ 3,652 |
Schedule of purchased intangible assets | Schedule of purchased intangible assets June 30, 2023 June 30, 2022 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value (In thousands) Developed technology $ 6,331 $ (3,881 ) $ 2,450 $ 5,731 $ (2,493 ) $ 3,238 Customer relationships 17,528 (9,487 ) 8,041 16,498 (5,700 ) 10,798 Order backlog 1,406 (1,406 ) – 1,406 (1,356 ) 50 Non-compete agreements 400 (400 ) – 400 (400 ) – Trademark and trade name 1,425 (1,351 ) 74 1,245 (772 ) 473 $ 27,090 $ (16,525 ) $ 10,565 $ 25,280 $ (10,721 ) $ 14,559 |
Schedule of future estimated amortization expense | Schedule of future estimated amortization expense Years Ending June 30, (In thousands) 2024 $ 5,314 2025 3,684 2026 1,177 2027 326 2028 64 Total amortization expense $ 10,565 |
Schedule of goodwill | Schedule of goodwill Year Ended June 30, 2023 (In thousands) Balance at June 30, 2022 $ 20,768 Acquisition of Uplogix 7,056 Balance at June 30, 2023 $ 27,824 |
Schedule of Warranty Reserve | Schedule of Warranty Reserve Years Ended June 30, 2023 2022 (In thousands) Beginning balance $ 594 $ 197 Warranty reserve assumed from acquisition of the TN Companies – 483 Charged to cost of revenues 352 202 Usage (158 ) (288 ) Ending balance $ 788 $ 594 |
Schedule of Other Liabilities | Schedule of Other Liabilities June 30, 2023 2022 (In thousands) Current Accrued variable consideration $ 2,167 $ 1,905 Customer deposits and refunds 16,344 922 Accrued raw materials purchases 267 132 Deferred revenue 2,493 969 Lease liability 1,859 978 Taxes payable 647 371 Warranty reserve 788 594 Accrued operating expenses 4,248 2,606 Total other current liabilities $ 28,813 $ 8,477 Non-current Lease liability $ 10,425 $ 7,310 Deferred tax liability 146 – Deferred revenue 888 373 Total other non-current liabilities $ 11,459 $ 7,683 |
Schedule of computation of net loss per Share | Schedule of computation of net loss per Share Years Ended June 30, 2023 2022 (In thousands, except per share data) Numerator: Net loss $ (8,980 ) $ (5,362 ) Denominator: Weighted-average shares outstanding - basic and diluted 36,257 32,671 Net loss per share - basic and diluted $ (0.25 ) $ (0.16 ) |
Schedule of antidilutive securities | Schedule of antidilutive securities Years Ended June 30, 2023 2022 (In thousands) Common stock equivalents 637 1,069 |
Schedule of severance and related charges | Schedule of severance and related charges Year Ended June 30, 2023 (In thousands) Beginning balance $ 34 Charges 693 Payments (630 ) Ending balance $ 97 |
Schedule of non-cash transactions | Schedule of non-cash transactions Years Ended June 30, 2023 2022 (In thousands) Acquisition of property through operating leases $ 4,320 $ 7,170 Acquisition of property through financing leases $ 536 $ – Accrued property and equipment paid for in the subsequent period $ 54 $ 868 Warrants to purchase common stock issued with bank credit facility $ – $ 500 Fair value adjustment of earnout consideration for TN companies at acquisition date $ – $ 393 |
Bank Loan Agreements (Tables)
Bank Loan Agreements (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of outstanding debt | Schedule of outstanding debt June 30, 2023 2022 (In thousands) Outstanding borrowings on Senior Credit Facilities $ 19,194 $ 16,188 Less: Unamortized debt issuance costs (230 ) (243 ) Net Carrying amount of debt 18,964 15,945 Less: Current portion (2,743 ) (1,671 ) Non-current portion $ 16,221 $ 14,274 |
Stockholders_ Equity (Tables)
Stockholders’ Equity (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Schedule of option activity | Schedule of option activity Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Shares Per Share Term Value (In thousands) (In years) (In thousands) Balance of options outstanding at June 30, 2022 1,383 $ 3.40 Granted 115 4.96 Expired (9 ) 2.04 Exercised (164 ) 2.55 Balance of options outstanding at June 30, 2023 1,325 $ 3.65 2.1 $ 987 Options exercisable at June 30, 2023 1,147 $ 3.45 1.5 $ 979 |
Summary of option grant-date fair value and intrinsic value information | Summary of option grant-date fair value and intrinsic value information Years Ended June 30, 2023 2022 (In thousands, except per share data) Weighted-average grant date fair value per share $ 2.44 $ 2.94 Intrinsic value of options exercised $ 454 $ 1,506 |
Summary of other than option activity | Summary of other than option activity Number of Shares Weighted-Average Grant Date Fair Value per Share (In thousands) Balance of RSUs outstanding at June 30, 2022 1,115 $ 5.50 Granted 763 5.59 Forfeited (96 ) 5.51 Vested (593 ) 5.22 Balance of RSUs outstanding at June 30, 2023 1,189 $ 5.70 |
Schedule of share-based compensation expense by functional line item | Schedule of share-based compensation expense by functional line item Years Ended June 30, 2023 2022 (In thousands) Cost of revenues $ 158 $ 369 Selling, general and administrative 4,546 4,862 Research and development 1,504 1,015 Total share-based compensation expense $ 6,208 $ 6,246 |
Schedule of unrecognized share-based compensation expense | Schedule of unrecognized share-based compensation expense Remaining Unrecognized Compensation Expense Remaining Weighted-Average Years to Recognize (In thousands) Stock options $ 402 2.6 RSUs 5,666 2.2 PSUs 1,650 1.9 Common stock purchase rights under ESPP 128 0.4 $ 7,846 |
Equity Option [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Schedule of Valuation Assumptions | Schedule of Valuation Assumptions Years Ended June 30, 2023 2022 Expected term (in years) 3.9 4.7 Expected volatility 62% 63% Risk-free interest rate 3.79% 0.82% Dividend yield 0.00% 0.00% |
Performance Shares [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Summary of other than option activity | Summary of other than option activity Number of Shares (In thousands) Balance of PSUs outstanding at June 30, 2022 1,030 Granted 1,147 Forfeited (299 ) Vested (947 ) Balance of PSUs outstanding at June 30, 2023 931 |
Employee Stock [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Schedule of Valuation Assumptions | Schedule of Valuation Assumptions Years Ended June 30, 2023 2022 Expected term (in years) 0.5 0.5 Expected volatility 66 59 Risk-free interest rate 4.88 0.92 Dividend yield 0.00 0.00 |
Summary of other than option activity | Summary of other than option activity Year Ended (In thousands, except per share data) Shares available for issuance at June 30, 2022 85 Shares reserved for issuance 500 Shares issued (204 ) Shares available for issuance at June 30, 2023 381 Weighted-average purchase price per share $ 4.26 Intrinsic value of ESPP shares on purchase date $ 153 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | Schedule of Components of Income Tax Expense Years Ended June 30, 2023 2022 (In thousands) Current: Federal $ – $ – State 294 11 Foreign 308 254 Total Current taxes $ 602 $ 265 Deferred: Federal 146 (1,805 ) State – (292 ) Foreign – – Provision (benefit) for income taxes $ 748 $ (1,832 ) |
Schedule of Income before Income Tax, Domestic and Foreign | Schedule of Income before Income Tax, Domestic and Foreign Years Ended June 30, 2023 2022 (In thousands) United States $ (9,168 ) $ (7,829 ) Foreign 936 635 Loss before income taxes $ (8,232 ) $ (7,194 ) |
Schedule of Deferred Tax Assets and Liabilities | Schedule of Deferred Tax Assets and Liabilities Years Ended June 30, 2023 2022 (In thousands) Deferred tax assets: Tax losses and credits $ 9,882 $ 15,310 Reserves not currently deductible 2,054 1,881 Capitalized research and development expenses* 6,975 – Deferred compensation 1,301 1,858 Inventory capitalization 2,390 1,508 Lease liabilities 2,848 2,260 Depreciation and amortization – 130 Identified intangibles 446 – Other 263 333 Gross deferred tax assets 26,159 23,280 Valuation allowance (22,532 ) (20,173 ) Deferred tax assets, net 3,627 3,107 Deferred tax liabilities: State taxes (518 ) (404 ) Right-of-use assets (2,676 ) (2,240 ) Identified intangibles – (463 ) Depreciation and amortization (579 ) – Deferred tax liabilities (3,773 ) (3,107 ) Net deferred tax assets (liabilities) $ (146 ) $ – * As required by the 2017 Tax Cuts and Jobs Act (the “2017 Act”), research and experimental (“R&E”) expenses under Internal Revenue Code Section 174 are required to be capitalized beginning in our fiscal year ended June 30, 2023. R&E expenses are required to be amortized over five years for domestic expenses and 15 years for foreign expenses. |
Schedule of Effective Income Tax Reconciliation | Schedule of Effective Income Tax Reconciliation Years Ended June 30, 2023 2022 (In thousands) Statutory federal provision (benefit) for income taxes $ (1,729 ) $ (1,510 ) Increase (decrease) resulting from: Stock options (283 ) (588 ) Other permanent differences 30 (54 ) Change in valuation allowance 2,222 (1,829 ) Global intangible low-tax income inclusion 2 4 Foreign tax rate variances 112 120 Acquisition costs – 395 Other 394 1,630 Provision (benefit) for income taxes $ 748 $ (1,832 ) |
Summary of Operating Income (Loss) Carryforwards | Summary of Operating Income (Loss) Carryforwards June 30, 2023 (In thousands) Federal $ 43,320 State $ 22,589 |
Summary of uncertain tax position | Summary of uncertain tax position Year Ended June 30, 2023 (In thousands) Balance as of June 30, 2022 $ 5,652 Change in balances related to uncertain tax positions (839 ) Balance as of June 30, 2023 $ 4,813 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Leases | |
Components of lease expense | Components of lease expense June 30, (In thousands) Components of lease expense Operating lease cost $ 2,583 Financing lease cost 30 Financing lease interest expense 10 Supplemental cash flow information Cash paid for amounts included in the measurement of operating lease liabilities $ 1,701 Cash paid for amounts included in the measurement of financing lease liabilities $ 30 Right-of-use assets obtained in exchange for lease obligation $ 4,856 |
Maturities of lease liabilities | Maturities of lease liabilities Years ending June 30, Operating Financing (In thousands) 2024 $ 2,272 $ 222 2025 2,059 213 2026 1,695 117 2027 1,648 22 2028 1,698 19 Thereafter 4,479 – Total remaining lease payments 13,851 593 less: imputed interest (2,076 ) (84 ) Lease liability $ 11,775 $ 509 Reported as: Current liabilities $ 1,677 $ 182 Non-current liabilities $ 10,098 $ 327 |
Significant Geographic, Custo_2
Significant Geographic, Customer and Supplier Information (Tables) | 12 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
Schedule of revenue by geographic area | Schedule of revenue by geographic area Years Ended June 30, 2023 2022 Americas 60 60 Europe, Middle East, and Africa 18 17 Asia Pacific Japan 22 23 Total 100 100 |
Long-lived Assets by Geographic Areas | Long-lived Assets by Geographic Areas June 30, 2023 2022 (In thousands) U.S. $ 44,757 $ 36,037 Canada 9,169 10,158 Rest of world 675 821 $ 54,601 $ 47,016 |
Schedule of Revenue by Major Customers | Schedule of Revenue by Major Customers Years Ended June 30, 2023 2022 Top five customers (1) 35 44 Ingram Micro 10 14 Amtran * 10 (1) Includes Ingram Micro and Amtran in the fiscal years ended June 30, 2023 and 2022. * Less than 10% |
Company and Significant Accou_3
Company and Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Accounting Policies [Abstract] | ||
Advertising Expense | $ 262,000 | $ 253,000 |
Revenue (Details - Revenues by
Revenue (Details - Revenues by product line) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 131,189 | $ 129,655 |
Embedded IoT Solutions [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 63,636 | 61,773 |
IoT System Solutions [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | 57,496 | 59,019 |
Software And Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenues | $ 10,057 | $ 8,863 |
Revenue (Details - Revenue by G
Revenue (Details - Revenue by Geography) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Revenues | $ 131,189 | $ 129,655 |
Americas [Member] | ||
Revenues | 78,557 | 77,799 |
EMEA [Member] | ||
Revenues | 23,286 | 22,542 |
APJ [Member] | ||
Revenues | $ 29,346 | $ 29,314 |
Revenue (Details - Percentage o
Revenue (Details - Percentage of total net revenue) - Revenue Benchmark [Member] - Customer Concentration Risk [Member] | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Product [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk percentage | 93% | 94% |
Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Concentration risk percentage | 7% | 6% |
Revenue (Details - Changes in D
Revenue (Details - Changes in Deferred Revenue) $ in Thousands | 12 Months Ended |
Jun. 30, 2023 USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Deferred revenue beginning balance | $ 1,342 |
New performance obligations | 3,183 |
Performance obligations acquired from acquisitions | 4,096 |
Recognition of revenue as a result of satisfying performance obligations | (5,240) |
Deferred revenue ending balance | 3,381 |
Less: non-current portion of deferred revenue | (888) |
Current portion ending balance | $ 2,493 |
Revenue (Details Narrative)
Revenue (Details Narrative) | Jun. 30, 2023 USD ($) |
Revenue from Contract with Customer [Abstract] | |
Prepaid expenses and other current assets | $ 150,000 |
Other assets | $ 58,000 |
Acquisitions (Details-Purchase
Acquisitions (Details-Purchase Consideration) - USD ($) | Aug. 28, 2022 | Aug. 02, 2021 | Sep. 12, 2022 |
Uplogix [Member] | |||
Business Acquisition [Line Items] | |||
Cash paid, including initial working capital adjustments | $ 8,754,000 | ||
Preliminary estimated fair value of earnout consideration | 1,718,000 | ||
Total purchase consideration | $ 10,472,000 | ||
TN Companies [Member] | |||
Business Acquisition [Line Items] | |||
Total purchase consideration | $ 24,044,000 | ||
Cash consideration paid to CSI | 23,651,000 | $ 25,028,000 | |
Estimated fair value of earnout consideration | 393,000 | ||
Total purchase consideration | $ 24,044,000 |
Acquisitions (Details-Purchas_2
Acquisitions (Details-Purchase Price Allocation) - USD ($) $ in Thousands | Jun. 30, 2023 | Sep. 12, 2022 | Aug. 28, 2022 | Jun. 30, 2022 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 27,824 | $ 20,768 | ||
Uplogix [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 4,104 | |||
Accounts receivable, net | 1,900 | |||
Inventories, net | 3,590 | |||
Prepaid expense and other current assets | 288 | |||
Lease right-of-use asset | 778 | |||
Other non-current assets | 129 | |||
Amortizable intangible assets | 1,810 | |||
Goodwill | 7,056 | |||
Accounts payable | (278) | |||
Accrued payroll | (262) | |||
Total consideration | 10,472 | |||
Deferred revenue | (4,096) | |||
Other current liabilities | (3,067) | |||
Notes payable | (900) | |||
Other noncurrent liabilities | (580) | |||
Total consideration | $ 10,472 | |||
TN Companies [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 22 | |||
Accounts receivable, net | 5,277 | |||
Inventories, net | 7,734 | |||
Prepaid expense and other current assets | 355 | |||
Amortizable intangible assets | 10,794 | |||
Property and equipment, net | 121 | |||
Goodwill | 4,958 | |||
Accounts payable | (1,872) | |||
Accrued payroll | (9) | |||
Deferred tax liability | (2,036) | |||
Total consideration | 24,044 | |||
Other current liabilities | (1,300) | |||
Total consideration | $ 24,044 |
Acquisitions (Details-Estimated
Acquisitions (Details-Estimated Useful Lives) $ in Thousands | 12 Months Ended |
Jun. 30, 2023 USD ($) | |
Uplogix [Member] | Customer Relationships [Member] | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | $ 1,030 |
Weighted average useful life | 5 years |
Uplogix [Member] | Developed Technology Rights [Member] | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | $ 600 |
Weighted average useful life | 5 years |
Uplogix [Member] | Trademarks and Trade Names [Member] | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | $ 180 |
Weighted average useful life | 1 year |
TN Companies [Member] | Customer Relationships [Member] | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | $ 7,467 |
Weighted average useful life | 3 years 6 months |
TN Companies [Member] | Developed Technology Rights [Member] | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | $ 1,890 |
Weighted average useful life | 3 years 6 months |
TN Companies [Member] | Trademarks and Trade Names [Member] | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | $ 870 |
Weighted average useful life | 2 years |
TN Companies [Member] | Order or Production Backlog [Member] | |
Business Acquisition [Line Items] | |
Identifiable intangible assets | $ 567 |
Weighted average useful life | 1 year |
Acquisitions (Details-considera
Acquisitions (Details-consideration liability) $ in Thousands | 12 Months Ended |
Jun. 30, 2023 USD ($) | |
Business Combination and Asset Acquisition [Abstract] | |
Preliminary estimated fair value of earnout consideration at beginning balance | $ 1,718 |
Remeasurement estimates | (447) |
Payments | 0 |
Preliminary estimated fair value of earnout consideration at ending balance | $ 1,271 |
Acquisitions (Details-supplemen
Acquisitions (Details-supplemental Pro Forma Data) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Business Combination and Asset Acquisition [Abstract] | ||
Pro forma net revenue | $ 133,224 | $ 138,835 |
Pro forma net loss | $ (7,545) | $ (5,813) |
Pro forma net loss per share: | ||
Business Acquisition, Pro Forma Earnings Per Share, Basic | $ (0.21) | $ (0.18) |
Business Acquisition, Pro Forma Earnings Per Share, Diluted | $ (0.21) | $ (0.18) |
Acquisitions (Details Narrative
Acquisitions (Details Narrative) - USD ($) | 12 Months Ended | |||
Aug. 28, 2022 | Aug. 02, 2021 | Jun. 30, 2023 | Jun. 30, 2022 | |
Business Acquisition [Line Items] | ||||
Amortizable intangible assets | $ 660,000 | |||
Other current liabilities | 12,000 | |||
Goodwill | 672,000 | |||
Cash | 4,104,000 | |||
Uplogix [Member] | ||||
Business Acquisition [Line Items] | ||||
Acquired inventory | $ 225,000 | |||
Restructuring costs | 315,000 | |||
Acquisition related costs | 315,000 | |||
Amortization expense | $ 79,000 | $ 506,000 | ||
TN Companies [Member] | ||||
Business Acquisition [Line Items] | ||||
Total purchase price | $ 24,044,000 | |||
Payments to Acquire Businesses, Gross | $ 23,651,000 | $ 25,028,000 | ||
Earnout payments | 7,000,000 | |||
TN Companies [Member] | Purchase Agreement [Member] | ||||
Business Acquisition [Line Items] | ||||
Total purchase price | $ 32,028,000 |
Supplemental Financial Inform_3
Supplemental Financial Information (Details - Accounts receivable) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Accounts receivable | $ 28,204 | $ 26,602 |
Allowance for doubtful accounts | (522) | (340) |
Accounts receivable, net | $ 27,682 | $ 26,262 |
Supplemental Financial Inform_4
Supplemental Financial Information (Details - Inventories) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Finished goods | $ 25,670 | $ 16,094 |
Raw materials | 24,066 | 21,585 |
Inventories, net | $ 49,736 | $ 37,679 |
Supplemental Financial Inform_5
Supplemental Financial Information (Details - Property and Equipment) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 15,781 | $ 12,889 |
Less accumulated depreciation | (11,152) | (9,237) |
Property and equipment, net | 4,629 | 3,652 |
Computer Equipment [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 7,167 | 5,370 |
Furniture and Fixtures [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 3,119 | 760 |
Support Equipment and Facilities [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,443 | 5,147 |
Construction in Progress [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 52 | $ 1,612 |
Supplemental Financial Inform_6
Supplemental Financial Information (Details - Purchased intangible assets) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 27,090 | $ 25,280 |
Accumulated Amortization | (16,525) | (10,721) |
Net Book Value | 10,565 | 14,559 |
Developed Technology Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 6,331 | 5,731 |
Accumulated Amortization | (3,881) | (2,493) |
Net Book Value | 2,450 | 3,238 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 17,528 | 16,498 |
Accumulated Amortization | (9,487) | (5,700) |
Net Book Value | 8,041 | 10,798 |
Order or Production Backlog [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,406 | 1,406 |
Accumulated Amortization | (1,406) | (1,356) |
Net Book Value | 0 | 50 |
Noncompete Agreements [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 400 | 400 |
Accumulated Amortization | (400) | (400) |
Net Book Value | 0 | 0 |
Trademarks and Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 1,425 | 1,245 |
Accumulated Amortization | (1,351) | (772) |
Net Book Value | $ 74 | $ 473 |
Supplemental Financial Inform_7
Supplemental Financial Information (Details - Amortization expense) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
2024 | $ 5,314 | |
2025 | 3,684 | |
2026 | 1,177 | |
2027 | 326 | |
2028 | 64 | |
Total amortization expense | $ 10,565 | $ 14,559 |
Supplemental Financial Inform_8
Supplemental Financial Information (Details - Goodwill) $ in Thousands | 12 Months Ended |
Jun. 30, 2023 USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Goodwill, Beginning balance | $ 20,768 |
Acquisition of Uplogix | 7,056 |
Goodwill, Ending balance | $ 27,824 |
Supplemental Financial Inform_9
Supplemental Financial Information (Details - Warranty Reserve) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Beginning balance | $ 594 | $ 197 |
Warranty reserve assumed from acquisition of Intrinsyc | 0 | 483 |
Charged to cost of revenues | 352 | 202 |
Usage | (158) | (288) |
Ending balance | $ 788 | $ 594 |
Supplemental Financial Infor_10
Supplemental Financial Information (Details - Other Liabilities) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Current | ||
Accrued variable consideration | $ 2,167 | $ 1,905 |
Customer deposits and refunds | 16,344 | 922 |
Accrued raw materials purchases | 267 | 132 |
Deferred revenue | 2,493 | 969 |
Lease liability | 1,859 | 978 |
Taxes payable | 647 | 371 |
Warranty reserve | 788 | 594 |
Accrued operating expenses | 4,248 | 2,606 |
Total other current liabilities | 28,813 | 8,477 |
Non-current | ||
Lease liability | 10,425 | 7,310 |
Deferred tax liability | 146 | 0 |
Deferred revenue | 888 | 373 |
Total other non-current liabilities | $ 11,459 | $ 7,683 |
Supplemental Financial Infor_11
Supplemental Financial Information (Details - Net Loss per Share) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Numerator: | ||
Net loss | $ (8,980) | $ (5,362) |
Denominator: | ||
Weighted Average Number of Shares Outstanding, Diluted | 36,257 | 32,671 |
Weighted Average Number of Shares Outstanding, Basic | 36,257 | 32,671 |
Earnings Per Share, Basic | $ (0.25) | $ (0.16) |
Earnings Per Share, Diluted | $ (0.25) | $ (0.16) |
Supplemental Financial Infor_12
Supplemental Financial Information (Details - Equivalents) - shares shares in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Common stock equivalents | 637 | 1,069 |
Supplemental Financial Infor_13
Supplemental Financial Information (Details - Severance of Related Charges) $ in Thousands | 12 Months Ended |
Jun. 30, 2023 USD ($) | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Beginning balance | $ 34 |
Charges | 693 |
Payments | (630) |
Ending balance | $ 97 |
Supplemental Financial Infor_14
Supplemental Financial Information (Details - non-cash transactions) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Acquisition of property through operating leases | $ 4,320 | $ 7,170 |
Acquisition of property through financing leases | 536 | 0 |
Accrued property and equipment paid for in the subsequent period | 54 | 868 |
Warrants to purchase common stock issued with bank credit facility | 0 | 500 |
Fair value adjustment of earnout consideration for TN companies at acquisition date | $ 0 | $ 393 |
Bank Loan Agreements (Details -
Bank Loan Agreements (Details - Summarizes our outstanding debt) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Debt Disclosure [Abstract] | ||
Outstanding borrowings on Senior Credit Facilities | $ 19,194 | $ 16,188 |
Less: Unamortized debt issuance costs | (230) | (243) |
Net Carrying amount of debt | 18,964 | 15,945 |
Less: Current portion | (2,743) | (1,671) |
Non-current portion | $ 16,221 | $ 14,274 |
Bank Loan Agreements (Details N
Bank Loan Agreements (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Sep. 07, 2022 | |
Debt Instrument [Line Items] | ||
Principal amount | $ 5,000,000 | |
Maturity date | Aug. 02, 2025 | |
Revolving Credit Facility [Member] | ||
Debt Instrument [Line Items] | ||
Payments of Financing Costs | $ 25,000 | |
Revolving credit facility | $ 2,000,000 | |
Credit Facilities [Member] | ||
Debt Instrument [Line Items] | ||
Interest expense | 1,610,000 | |
Maximum [Member] | ||
Debt Instrument [Line Items] | ||
Reduction in liquidity | 5,000,000 | |
Minimum [Member] | ||
Debt Instrument [Line Items] | ||
Reduction in liquidity | $ 4,000,000 |
Stockholders' Equity (Details -
Stockholders' Equity (Details - Option assumptions) - Options Held [Member] | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected term (in years) | 3 years 10 months 24 days | 4 years 8 months 12 days |
Expected volatility | 62% | 63% |
Risk-free interest rate | 3.79% | 0.82% |
Dividend yield | 0% | 0% |
Stockholders' Equity (Details_2
Stockholders' Equity (Details - Stock Option) - Options Held [Member] $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Shares Options Outstanding, Beginning | shares | 1,383 |
Exercise Price Outstanding, Beginning | $ / shares | $ 3.40 |
Number of Shares Options Granted | shares | 115 |
Exercise Price Granted | $ / shares | $ 4.96 |
Number of Shares Options Expired | shares | (9) |
Exercise Price Expired | $ / shares | $ 2.04 |
Number of Shares Options Exercised | shares | (164) |
Exercise Price Exercised | $ / shares | $ 2.55 |
Number of Shares Options Outstanding, Ending | shares | 1,325 |
Exercise Price Outstanding, Ending | $ / shares | $ 3.65 |
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending | 2 years 1 month 6 days |
Aggregate Intrinsic Value Outstanding | $ | $ 987 |
Number of Shares Options Options exercisable at end of period | shares | 1,147 |
Exercise Price Options exercisable at end of period | $ / shares | $ 3.45 |
Weighted Average Remaining Contractual Life (in years) Exercisable | 1 year 6 months |
Aggregate Intrinsic Value Exercisable | $ | $ 979 |
Stockholders' Equity (Details_3
Stockholders' Equity (Details - Other option information) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Equity [Abstract] | ||
Weighted-average grant date fair value per share | $ 2.44 | $ 2.94 |
Intrinsic value of options exercised | $ 454 | $ 1,506 |
Stockholders' Equity (Details_4
Stockholders' Equity (Details - RSU activity) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 12 Months Ended |
Jun. 30, 2023 $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Shares, Balance at beginning | shares | 1,115 |
RSU Shares Weighted-Average Grant-Date Fair Value per Share, beginning | $ / shares | $ 5.50 |
Number of Shares, Granted | shares | 763 |
RSU Shares Granted, Weighted-Average Grant-Date Fair Value per Share | $ / shares | $ 5.59 |
Number of Shares, Forfeited | shares | (96) |
RSU Shares Forfeited, Weighed-Average Grant Date Fair Value per Share | $ / shares | $ 5.51 |
Number of Shares, Vested | shares | (593) |
RSU Shares Vested, Weighted-Average Grant-Date Fair Value per Share | $ / shares | $ 5.22 |
Number of Shares, Balance at ending | shares | 1,189 |
RSU Shares Weighted-Average Grant-Date Fair Value per Share, ending | $ / shares | $ 5.70 |
Stockholders' Equity (Details_5
Stockholders' Equity (Details - RSU activity) (Restricted Stock Units) - Performance Stock Units P S U [Member] shares in Thousands | 12 Months Ended |
Jun. 30, 2023 shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Number of Shares, Balance at beginning | 1,030 |
Number of Shares, Granted | 1,147 |
Number of Shares, Forfeited | (299) |
Number of Shares, Vested | (947) |
Number of Shares, Balance at ending | 931 |
Stockholders' Equity (Details_6
Stockholders' Equity (Details - ESPP Assumptions) - Employee Stock [Member] | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Expected term (in years) | 6 months | 6 months |
Expected volatility | 66% | 59% |
Risk-free interest rate | 4.88% | 0.92% |
Dividend yield | 0% | 0% |
Stockholders' Equity (Details_7
Stockholders' Equity (Details - ESPP activity) - Employee Stock [Member] $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Jun. 30, 2023 USD ($) $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Shares available for issuance, beginning balance | 85 |
Shares reserved for issuance | 500 |
Shares issued | (204) |
Shares available for future issuance, ending balance | 381 |
Weighted average purchase price per share | $ / shares | $ 4.26 |
Intrinsic value of ESPP shares on purchase date | $ | $ 153 |
Stockholders' Equity (Details_8
Stockholders' Equity (Details - Share based compensation) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Total share-based compensation | $ 6,208 | $ 6,246 |
Cost of Sales [Member] | ||
Total share-based compensation | 158 | 369 |
Selling, General and Administrative Expenses [Member] | ||
Total share-based compensation | 4,546 | 4,862 |
Research and Development Expense [Member] | ||
Total share-based compensation | $ 1,504 | $ 1,015 |
Stockholders' Equity (Details_9
Stockholders' Equity (Details - Unrecognized expense) $ in Thousands | 12 Months Ended |
Jun. 30, 2023 USD ($) | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unrecognized share-based compensation expense | $ 7,846 |
Options Held [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unrecognized share-based compensation expense | $ 402 |
Weighted average years to recognize | 2 years 7 months 6 days |
Restricted Stock Units (RSUs) [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unrecognized share-based compensation expense | $ 5,666 |
Weighted average years to recognize | 2 years 2 months 12 days |
Performance Stock Units P S U [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unrecognized share-based compensation expense | $ 1,650 |
Weighted average years to recognize | 1 year 10 months 24 days |
Employee Stock [Member] | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |
Unrecognized share-based compensation expense | $ 128 |
Weighted average years to recognize | 4 months 24 days |
Stockholders_ Equity (Details N
Stockholders’ Equity (Details Narrative) - shares | Jun. 30, 2023 | Sep. 30, 2020 |
2010 Plan [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares available for grant | 1,097,000 | |
2020 Plan [Member] | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Shares available for grant | 2,465,000 | 2,500,000 |
Retirement Plan (Details Narrat
Retirement Plan (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Retirement Benefits [Abstract] | ||
Contributions to participants | $ 411,000 | $ 373,000 |
Income Taxes (Details - Income
Income Taxes (Details - Income tax provision) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Current: | ||
Federal | $ 0 | $ 0 |
State | 294 | 11 |
Foreign | 308 | 254 |
Total Current taxes | 602 | 265 |
Deferred: | ||
Federal | 146 | (1,805) |
State | 0 | (292) |
Foreign | 0 | 0 |
Provision (benefit) for income taxes | $ 748 | $ (1,832) |
Income Taxes (Details - US and
Income Taxes (Details - US and foreign income) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ (8,232) | $ (7,194) |
UNITED STATES | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | (9,168) | (7,829) |
Non-US [Member] | ||
Net Income (Loss), Including Portion Attributable to Noncontrolling Interest | $ 936 | $ 635 |
Income Taxes (Details - Deferre
Income Taxes (Details - Deferred tax assets) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 | |
Deferred tax assets: | |||
Tax losses and credits | $ 9,882 | $ 15,310 | |
Reserves not currently deductible | 2,054 | 1,881 | |
Capitalized research and development expenses | [1] | 6,975 | 0 |
Deferred compensation | 1,301 | 1,858 | |
Inventory capitalization | 2,390 | 1,508 | |
Lease liabilities | 2,848 | 2,260 | |
Depreciation and amortization | 0 | 130 | |
Identified intangibles | 446 | 0 | |
Other | 263 | 333 | |
Gross deferred tax assets | 26,159 | 23,280 | |
Valuation allowance | (22,532) | (20,173) | |
Deferred tax assets, net | 3,627 | 3,107 | |
Deferred tax liabilities: | |||
State taxes | (518) | (404) | |
Right-of-use assets | (2,676) | (2,240) | |
Identified intangibles | 0 | (463) | |
Depreciation and amortization | (579) | 0 | |
Deferred tax liabilities | (3,773) | (3,107) | |
Net deferred tax assets (liabilities) | $ (146) | $ 0 | |
[1]As required by the 2017 Tax Cuts and Jobs Act (the “2017 Act”), research and experimental (“R&E”) expenses under Internal Revenue Code Section 174 are required to be capitalized beginning in our fiscal year ended June 30, 2023. R&E expenses are required to be amortized over five years for domestic expenses and 15 years for foreign expenses. |
Income Taxes (Details - Reconci
Income Taxes (Details - Reconciliation) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal provision (benefit) for income taxes | $ (1,729) | $ (1,510) |
Increase (decrease) resulting from: | ||
Stock options | (283) | (588) |
Other permanent differences | 30 | (54) |
Change in valuation allowance | 2,222 | (1,829) |
Global intangible low-tax income inclusion | 2 | 4 |
Foreign tax rate variances | 112 | 120 |
Acquisition costs | 0 | 395 |
Other | 394 | 1,630 |
Provision (benefit) for income taxes | $ 748 | $ (1,832) |
Income Taxes (Details - NOL car
Income Taxes (Details - NOL carryforwards) $ in Thousands | Jun. 30, 2023 USD ($) |
Income Tax Disclosure [Abstract] | |
Federal | $ 43,320 |
State | $ 22,589 |
Income Taxes (Details - Unrecog
Income Taxes (Details - Unrecognized tax positions) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | $ 4,813 | $ 5,652 |
Change in balances related to uncertain tax positions | $ (839) |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Income Tax Disclosure [Abstract] | ||
Net deferred tax liability | $ 146,000 | |
Income tax benefit | $ 2,036,000 | |
Net operating loss carryover | $ 6,788,000 | |
future taxable income percentage | 80% | |
[custom:UnrecognizedTaxBenefit-0] | $ 4,813,000 | |
Increase (Decrease) in Deferred Income Taxes | 4,813,000 | |
Liability for Uncertainty in Income Taxes, Current | $ 303,000 |
Leases (Details - Components of
Leases (Details - Components of lease expense) $ in Thousands | 12 Months Ended |
Jun. 30, 2023 USD ($) | |
Components of lease expense | |
Operating lease cost | $ 2,583 |
Financing lease cost | 30 |
Financing lease interest expense | 10 |
Supplemental cash flow information | |
Cash paid for amounts included in the measurement of operating lease liabilities | 1,701 |
Cash paid for amounts included in the measurement of financing lease liabilities | 30 |
Right-of-use assets obtained in exchange for lease obligation | $ 4,856 |
Leases (Details - Maturities of
Leases (Details - Maturities of lease liabilities) $ in Thousands | Jun. 30, 2023 USD ($) |
Operating Lease [Member] | |
Operating lease liability to be paid, year one | $ 2,272 |
Operating lease liability to be paid, year two | 2,059 |
Operating lease liability to be paid, year three | 1,695 |
Operating lease liability to be paid, year four | 1,648 |
Operating lease liability to be paid, year five | 1,698 |
Operating lease liability to be paid, after year five | 4,479 |
Operating lease liability, to be paid | 13,851 |
less: imputed interest | (2,076) |
Operating lease, liability | 11,775 |
Operating lease liability, current | 1,677 |
Operating lease liability, noncurrent | 10,098 |
Finance Lease [Member] | |
Finance lease liability to be paid, year one | 222 |
Finance lease liability to be paid, year two | 213 |
Finance lease liability to be paid, year three | 117 |
Finance lease liability to be paid, year four | 22 |
Finance lease liability to be paid, year five | 19 |
Finance lease liability to be paid, after year five | 0 |
Finance lease liability, to be paid | 593 |
less: imputed interest | (84) |
Finance lease, liability | 509 |
Finance lease liability, current | 182 |
Finance lease liability, noncurrent | $ 327 |
Leases (Details Narrative)
Leases (Details Narrative) | Jun. 30, 2023 |
Leases | |
Weighted-average remaining lease term | 3 years 9 months 3 days |
Weighted-average discount rate | 4.60% |
Significant Geographic, Custo_3
Significant Geographic, Customer and Supplier Information (Details - Geographic) - Revenue Benchmark [Member] - Customer Concentration Risk [Member] | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Americas [Member] | ||
Revenue, Major Customer [Line Items] | ||
Significant countries, net revenue percentage | 60% | 60% |
EMEA [Member] | ||
Revenue, Major Customer [Line Items] | ||
Significant countries, net revenue percentage | 18% | 17% |
Asia Pacific [Member] | ||
Revenue, Major Customer [Line Items] | ||
Significant countries, net revenue percentage | 22% | 23% |
All Geographic Regions [Member] | ||
Revenue, Major Customer [Line Items] | ||
Significant countries, net revenue percentage | 100% | 100% |
Significant Geographic, Custo_4
Significant Geographic, Customer and Supplier Information (Details - Long lived assets) - USD ($) $ in Thousands | Jun. 30, 2023 | Jun. 30, 2022 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 54,601 | $ 47,016 |
UNITED STATES | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 44,757 | 36,037 |
CANADA | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 9,169 | 10,158 |
Rest Of World [Member] | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 675 | $ 821 |
Significant Geographic, Custo_5
Significant Geographic, Customer and Supplier Information (Details - Significant customers) - Revenue Benchmark [Member] - Customer Concentration Risk [Member] | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | ||
Top Five Customers [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk, Percentage | [1] | 35% | 44% |
Ingram Micro [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk, Percentage | 10% | 14% | |
Amtran [Member] | |||
Revenue, Major Customer [Line Items] | |||
Concentration Risk, Percentage | 10% | ||
[1]Includes Ingram Micro and Amtran in the fiscal years ended June 30, 2023 and 2022. |
Significant Geographic, Custo_6
Significant Geographic, Customer and Supplier Information (Details Narrative) - USD ($) | 12 Months Ended | |
Jun. 30, 2023 | Jun. 30, 2022 | |
Segment Reporting [Abstract] | ||
Revenue from related parties | $ 0 | $ 0 |