Lantronix Inc. Files 10-Q for Period Ending December 31, 2023

TL;DR

<b>Lantronix Inc. filed its quarterly 10-Q report for the period ending December 31, 2023, detailing financial performance and key balance sheet items.</b>

AI Summary

LANTRONIX INC (LTRX) filed a Quarterly Report (10-Q) with the SEC on February 8, 2024. Lantronix Inc. reported financial results for the period ending December 31, 2023. The filing is a Form 10-Q, indicating a quarterly report. The company's fiscal year ends on June 30. Key financial statement data points such as common stock, additional paid-in capital, retained earnings, and accumulated other comprehensive income are detailed for various periods. Specific segments like Embedded IoT Solutions are mentioned in relation to quarterly and year-to-date performance.

Why It Matters

For investors and stakeholders tracking LANTRONIX INC, this filing contains several important signals. This 10-Q filing provides investors with an updated view of Lantronix's financial health and operational performance for the most recent quarter. Understanding the details within this report is crucial for assessing the company's financial position, profitability trends, and potential future performance.

Risk Assessment

Risk Level: medium — LANTRONIX INC shows moderate risk based on this filing. The filing is a standard quarterly report (10-Q), which typically contains detailed financial information but does not usually include significant new strategic announcements or material events that would drastically alter risk perception without further context.

Analyst Insight

Review the detailed financial statements and segment performance within the 10-Q to identify any significant trends or deviations from previous periods.

Revenue Breakdown

Key Numbers

• 2023-12-31 — Period End Date (Conformed period of report)
• 2024-02-08 — Filing Date (Filed as of date)
• Q2 — Quarter (Indicates the second quarter of the fiscal year)
• 06-30 — Fiscal Year End (Company's fiscal year end date)

Key Players & Entities

• LANTRONIX INC (company) — Filer name
• LTRX (company) — Ticker symbol
• 2023-12-31 (date) — Conformed period of report
• 2024-02-08 (date) — Filed as of date
• 0001683168-24-000785 (filing) — Accession number
• 3576 (industry) — Standard Industrial Classification
• DE (state) — State of incorporation
• 0630 (date) — Fiscal year end

FAQ

Key Dates

• 2024-02-08: Filing Date — Submission of the 10-Q report for the period ending 2023-12-31.
• 2023-12-31: Period End Date — The end date for the financial reporting period covered by the 10-Q.
• 2023-06-30: Fiscal Year End — Indicates the company's annual fiscal closing date.

Key Financial Figures

• $0.0001 — nge on which registered Common Stock, $0.0001 par value LTRX The Nasdaq Stock Marke

Filing Documents

• lantronix_i10q-123123.htm (10-Q) — 928KB
• lantronix_ex3101.htm (EX-31.1) — 11KB
• lantronix_ex3102.htm (EX-31.2) — 11KB
• lantronix_ex3201.htm (EX-32.1) — 7KB
• lantronixlogo.jpg (GRAPHIC) — 4KB
• 0001683168-24-000785.txt (&nbsp;) — 4247KB
• ltrx-20231231.xsd (EX-101.SCH) — 31KB
• ltrx-20231231_cal.xml (EX-101.CAL) — 60KB
• ltrx-20231231_def.xml (EX-101.DEF) — 93KB
• ltrx-20231231_lab.xml (EX-101.LAB) — 243KB
• ltrx-20231231_pre.xml (EX-101.PRE) — 212KB
• lantronix_i10q-123123_htm.xml (XML) — 595KB

Financial Statements

Financial Statements 4 Unaudited Condensed Consolidated Balance Sheets at December 31, 2023 and June 30, 2023 4 Unaudited Condensed Consolidated Statements of Operations for the Three and Six Months Ended December 31, 2023 and 2022 5 Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three and Six Months Ended December 31, 2023 and 2022 6 Unaudited Condensed Consolidated Statements of Cash Flows for the Six Months Ended December 31, 2023 and 2022 7 Notes to Unaudited Condensed Consolidated Financial Statements 8 Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 21 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 31 Item 4.

Controls and Procedures

Controls and Procedures 31 PART II. OTHER INFORMATION 32 Item 1.

Legal Proceedings

Legal Proceedings 32 Item 1A

Risk Factors

Risk Factors 32 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 47 Item 3. Defaults Upon Senior Securities 47 Item 4. Mine Safety Disclosures 47 Item 5. Other Information 48 Item 6. Exhibits 48 2 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q for the three months ended December 31, 2023 (the "Report") contains forward-looking statements within the meaning of the federal securities laws, which statements are subject to substantial risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Report, or incorporated by reference into this Report, are forward-looking statements. Throughout this Report, we have attempted to identify forward-looking statements by using words such as "may," "believe," "will," "could," "project," "anticipate," "expect," "estimate," "should," "continue," "potential," "plan," "forecasts," "goal," "seek," "intend," other forms of these words or similar words or expressions or the negative thereof. Additionally, statements concerning future matters such as our expected earnings, revenues, expenses and financial condition, our expectations with respect to the development of new products, expectations regarding the impact of the COVID-19 pandemic or similar outbreaks and other statements regarding matters that are not historical are forward-looking statements. We have based our forward-looking statements on management's current expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements LANTRONIX, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) December 31, June 30, 2023 2023 Assets Current assets: Cash and cash equivalents $ 22,146 $ 13,452 Accounts receivable, net 30,381 27,682 Inventories, net 42,774 49,736 Contract manufacturers' receivables 1,767 3,019 Prepaid expenses and other current assets 2,839 2,662 Total current assets 99,907 96,551 Property and equipment, net 4,815 4,629 Goodwill 27,824 27,824 Intangible assets, net 7,871 10,565 Lease right-of-use assets 10,617 11,583 Other assets 589 472 Total assets $ 151,623 $ 151,624 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 9,595 $ 12,401 Accrued payroll and related expenses 3,303 2,431 Current portion of long-term debt, net 3,002 2,743 Other current liabilities 32,089 28,813 Total current liabilities 47,989 46,388 Long-term debt, net 14,720 16,221 Other non-current liabilities 12,138 11,459 Total liabilities 74,847 74,068 Commitments and contingencies (Note 9) – – Stockholders' equity: Common stock 4 4 Additional paid-in capital 299,385 295,686 Accumulated deficit ( 222,984 ) ( 218,505 ) Accumulated other comprehensive income 371 371 Total stockholders' equity 76,776 77,556 Total liabilities and stockholders' equity $ 151,623 $ 151,624 See accompanying notes to unaudited condensed consolidated

financial statements

financial statements. 4 LANTRONIX, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) Three Months Ended December 31, Six Months Ended December 31, 2023 2022 2023 2022 Net revenue $ 37,038 $ 31,506 $ 70,069 $ 63,301 Cost of revenue 22,007 17,712 40,941 35,471 Gross profit 15,031 13,794 29,128 27,830 Operating expenses: Selling, general and administrative 10,224 9,813 19,394 18,970 Research and development 4,725 5,084 9,831 9,610 Restructuring, severance and related charges 530 82 550 174 Acquisition-related costs – 102 – 315 Fair value remeasurement of earnout consideration – ( 673 ) ( 9 ) ( 673 ) Amortization of intangible assets 1,310 1,497 2,694 2,916 Total operating expenses 16,789 15,905 32,460 31,312 Loss from operations ( 1,758 ) ( 2,111 ) ( 3,332 ) ( 3,482 ) Interest expense, net ( 232 ) ( 354 ) ( 570 ) ( 616 ) Other income (expense), net ( 23 ) ( 26 ) ( 4 ) 8 Loss before income taxes ( 2,013 ) ( 2,491 ) ( 3,906 ) ( 4,090 ) Provision for income taxes 580 118 573 172 Net loss $ ( 2,593 ) $ ( 2,609 ) $ ( 4,479 ) $ ( 4,262 ) Net loss per share - basic and diluted $ ( 0.07 ) $ ( 0.07 ) $ ( 0.12 ) $ ( 0.12 ) Weighted-average common shares - basic and diluted 37,354 36,352 37,170 35,883 See accompanying notes to unaudited condensed consolidated

financial statements

financial statements. 5 LANTRONIX, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (In thousands) Three Months Ended December 31, 2023 Accumulated Additional Other Total Common Stock Paid-In Accumulated Comprehensive Stockholders' Shares Amount Capital Deficit Income Equity Balance at September 30, 2023 37,260 $ 4 $ 297,007 $ ( 220,391 ) $ 371 $ 76,991 Shares issued pursuant to stock awards, net 216 – 406 – – 406 Tax withholding paid on behalf of employees for restricted shares – – ( 204 ) – – ( 204 ) Share-based compensation – – 2,176 – – 2,176 Net loss – – – ( 2,593 ) – ( 2,593 ) Balance at December 31, 2023 37,476 $ 4 $ 299,385 $ ( 222,984 ) $ 371 $ 76,776 Three Months Ended December 31, 2022 Accumulated Additional Other Total Common Stock Paid-In Accumulated Comprehensive Stockholders' Shares Amount Capital Deficit Income Equity Balance at September 30, 2022 36,239 $ 4 $ 290,541 $ ( 211,178 ) $ 371 $ 79,738 Shares issued pursuant to stock awards, net 278 – 708 – – 708 Tax withholding paid on behalf of employees for restricted shares – – ( 184 ) – – ( 184 ) Share-based compensation – – 1,865 – – 1,865 Net loss – – – ( 2,609 ) – ( 2,609 ) Balance at December 31, 2022 36,517 $ 4 $ 292,930 $ ( 213,787 ) $ 371 $ 79,518 Six Months Ended December 31, 2023 Accumulated Additional Other Total Common Stock Paid-In Accumulated Comprehensive Stockholders' Shares Amount Capital Deficit Income Equity Balance at June 30, 2023 36,875 $ 4 $ 295,686 $ ( 218,505 ) $ 371 $ 77,556 Shares issued pursuant to stock awards, net 601 – 500 – – 500 Tax withholding paid on behalf of employees for restricted shares – – ( 719 ) – – ( 719 ) Share-based compensation – – 3,918 – – 3,918 Net loss – – – ( 4,479 ) – ( 4,479 ) Balance at December 31, 2023 37,476 $ 4

financial statements

financial statements. 6 LANTRONIX, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Six Months Ended December 31, 2023 2022 Operating activities Net loss $ ( 4,479 ) $ ( 4,262 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Share-based compensation 3,918 3,653 Depreciation and amortization 1,027 791 Amortization of intangible assets 2,694 2,916 Amortization of manufacturing profit in acquired inventory associated with acquisitions 506 104 Loss on disposal of property and equipment – ( 10 ) Amortization of deferred debt issuance costs 55 50 Fair value remeasurement of earnout consideration ( 9 ) ( 673 ) Changes in operating assets and liabilities, net of assets and liabilities acquired: Accounts receivable ( 2,699 ) 487 Inventories 6,456 ( 7,991 ) Contract manufacturers' receivable 1,252 670 Prepaid expenses and other current assets ( 177 ) 2,080 Lease right-of-use assets 966 831 Other assets ( 117 ) ( 105 ) Accounts payable ( 2,830 ) ( 4,421 ) Accrued payroll and related expenses 872 ( 1,782 ) Other liabilities 4,055 ( 2,289 ) Net cash provided by (used in) operating activities 11,490 ( 9,951 ) Investing activities Purchases of property and equipment ( 1,189 ) ( 1,994 ) Cash payment for acquisitions, net of cash and cash equivalents acquired – ( 4,650 ) Net cash used in investing activities ( 1,189 ) ( 6,644 ) Financing activities Net proceeds from issuances of common stock 500 729 Tax withholding paid on behalf of employees for restricted shares ( 719 ) ( 498 ) Net proceeds from issuance of debt – 4,909 Payment of borrowings on term loan ( 1,297 ) ( 957 ) Net proceeds from borrowing on line of credit – 2,000 Payment of lease liabilities ( 91 ) ( 4 ) Net cash provided by (used in) financing activities ( 1,607 ) 6,179 Increase (decrease) in cash and cash equival

financial statements

financial statements. 7 LANTRONIX, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL December 31, 2023 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, target applications include video surveillance, traffic management, infotainment systems, robotics, edge computing and remote environment management. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Lantronix have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP") for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Securities and Exchange Commission ("SEC") Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended June 30, 2023, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2023, which was filed with the SEC on September 12, 2023. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the consolidated financial position of Lantronix at December 31, 2023, the consolidated results of our operations for the three and six months ended December 31, 2023 and our consolidated cash flows for the six months ended December 31, 2023. All intercompany accounts and transactions have been eliminated. Significant Accounting Policies Use of Estimates The preparation of condensed consolidated

financial statements

financial statements. 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 exclusive 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

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View this 10-Q filing on SEC EDGAR