Lantronix Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Lantronix Inc. has filed its Q3 FY2024 10-Q report detailing financial performance and business operations.</b>

AI Summary

LANTRONIX INC (LTRX) filed a Quarterly Report (10-Q) with the SEC on May 2, 2024. Lantronix Inc. filed its quarterly report (10-Q) for the period ending March 31, 2024. The filing covers the third quarter of fiscal year 2024. Key financial statement information and business operations are detailed. The report includes data for the three months and nine months ended March 31, 2024, and comparative periods. The company is incorporated in Delaware and its fiscal year ends on June 30.

Why It Matters

For investors and stakeholders tracking LANTRONIX INC, this filing contains several important signals. This 10-Q filing provides investors with the latest financial data and operational insights into Lantronix Inc.'s performance for the third quarter of fiscal year 2024. Understanding the details within this report is crucial for assessing the company's financial health, growth trajectory, and potential risks moving forward.

Risk Assessment

Risk Level: medium — LANTRONIX INC shows moderate risk based on this filing. The filing is a standard quarterly report, but specific financial performance details and forward-looking statements within the full report would be needed to assess risk more precisely.

Analyst Insight

Review the detailed financial statements and management's discussion and analysis within the 10-Q to understand the company's performance and outlook.

Key Numbers

• 2024-03-31 — Period End Date (CONFORMED PERIOD OF REPORT)
• 2024-05-02 — Filing Date (FILED AS OF DATE)
• 2024-03-31 — Q3 End Date (Fiscal Year 2024)
• 2023-03-31 — Prior Year Q3 End Date (Fiscal Year 2023)

Key Players & Entities

• LANTRONIX INC (company) — FILER
• 0001683168-24-002895 (filing_id) — ACCESSION NUMBER
• 2024-03-31 (date) — CONFORMED PERIOD OF REPORT
• 2024-05-02 (date) — FILED AS OF DATE
• 0001114925 (company_id) — CENTRAL INDEX KEY
• 3576 (sic_code) — STANDARD INDUSTRIAL CLASSIFICATION
• DE (state) — STATE OF INCORPORATION
• 0630 (fiscal_year_end) — FISCAL YEAR END

FAQ

Industry Context

Lantronix Inc. operates in the technology sector, specifically focusing on IoT (Internet of Things) solutions and related networking equipment.

Regulatory Implications

This filing is a standard Form 10-Q, a quarterly report required by the Securities and Exchange Commission (SEC) for publicly traded companies in the United States.

What Investors Should Do

1. Analyze the financial statements for revenue, net income, and cash flow for the reported periods.
2. Review the Management's Discussion and Analysis of Financial Condition and Results of Operations for insights into performance drivers and trends.
3. Examine any disclosed risk factors or legal proceedings that could impact the company.

Key Dates

• 2024-03-31: Quarter End — End of the third fiscal quarter for 2024.
• 2024-05-02: Filing Date — Date the 10-Q report was officially filed with the SEC.

Year-Over-Year Comparison

This is the initial filing analyzed for the specified period; comparative data from previous filings will be available within the full report.

Key Financial Figures

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

Filing Documents

• lantronix_i10q-033124.htm (10-Q) — 920KB
• lantronix_ex3101.htm (EX-31.1) — 11KB
• lantronix_ex3102.htm (EX-31.2) — 11KB
• lantronix_ex3201.htm (EX-32.1) — 7KB
• image_001.jpg (GRAPHIC) — 4KB
• 0001683168-24-002895.txt (&nbsp;) — 4552KB
• ltrx-20240331.xsd (EX-101.SCH) — 33KB
• ltrx-20240331_cal.xml (EX-101.CAL) — 57KB
• ltrx-20240331_def.xml (EX-101.DEF) — 103KB
• ltrx-20240331_lab.xml (EX-101.LAB) — 297KB
• ltrx-20240331_pre.xml (EX-101.PRE) — 254KB
• lantronix_i10q-033124_htm.xml (XML) — 631KB

Financial Statements

Financial Statements 4 Unaudited Condensed Consolidated Balance Sheets at March 31, 2024 and June 30, 2023 4 Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2024 and 2023 5 Unaudited Condensed Consolidated Statements of Stockholders' Equity for the Three and Nine Months Ended March 31, 2024 and 2023 6 Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2024 and 2023 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 22 Item 3.

Quantitative and Qualitative Disclosures about Market Risk

Quantitative and Qualitative Disclosures about Market Risk 32 Item 4.

Controls and Procedures

Controls and Procedures 32 PART II. OTHER INFORMATION 33 Item 1.

Legal Proceedings

Legal Proceedings 33 Item 1A

Risk Factors

Risk Factors 33 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 48 Item 3. Defaults Upon Senior Securities 48 Item 4. Mine Safety Disclosures 49 Item 5. Other Information 49 Item 6. Exhibits 49 2 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q for the three months ended March 31, 2024 (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 statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking

FINANCIAL INFORMATION

PART I. FINANCIAL INFORMATION Item 1.

Financial Statements

Financial Statements LANTRONIX, INC. UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands) March 31, June 30, 2024 2023 Assets Current assets: Cash and cash equivalents $ 24,642 $ 13,452 Accounts receivable, net 28,542 27,682 Inventories, net 40,552 49,736 Contract manufacturers' receivables 1,562 3,019 Prepaid expenses and other current assets 2,586 2,662 Total current assets 97,884 96,551 Property and equipment, net 4,409 4,629 Goodwill 27,824 27,824 Intangible assets, net 6,561 10,565 Lease right-of-use assets 10,128 11,583 Other assets 586 472 Total assets $ 147,392 $ 151,624 Liabilities and stockholders' equity Current liabilities: Accounts payable $ 13,845 $ 12,401 Accrued payroll and related expenses 4,539 2,431 Current portion of long-term debt, net 3,002 2,743 Other current liabilities 22,188 28,813 Total current liabilities 43,574 46,388 Long-term debt, net 13,970 16,221 Other non-current liabilities 11,763 11,459 Total liabilities 69,307 74,068 Commitments and contingencies (Note 9) - - Stockholders' equity: Common stock 4 4 Additional paid-in capital 301,117 295,686 Accumulated deficit ( 223,407 ) ( 218,505 ) Accumulated other comprehensive income 371 371 Total stockholders' equity 78,085 77,556 Total liabilities and stockholders' equity $ 147,392 $ 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 Nine Months Ended March 31, March 31, 2024 2023 2024 2023 Net revenue $ 41,183 $ 32,964 $ 111,252 $ 96,265 Cost of revenue 24,679 18,328 65,620 53,799 Gross profit 16,504 14,636 45,632 42,466 Operating expenses: Selling, general and administrative 9,753 9,946 29,147 28,916 Research and development 5,186 5,067 15,017 14,677 Restructuring, severance and related charges 350 490 900 664 Acquisition-related costs – – – 315 Fair value remeasurement of earnout consideration – 140 ( 9 ) ( 533 ) Amortization of intangible assets 1,310 1,424 4,004 4,340 Total operating expenses 16,599 17,067 49,059 48,379 Loss from operations ( 95 ) ( 2,431 ) ( 3,427 ) ( 5,913 ) Interest expense, net ( 171 ) ( 465 ) ( 741 ) ( 1,081 ) Other income (expense), net 2 ( 29 ) ( 2 ) ( 21 ) Loss before income taxes ( 264 ) ( 2,925 ) ( 4,170 ) ( 7,015 ) Provision for income taxes 159 140 732 312 Net loss $ ( 423 ) $ ( 3,065 ) $ ( 4,902 ) $ ( 7,327 ) Net loss per share - basic and diluted $ ( 0.01 ) $ ( 0.08 ) $ ( 0.13 ) $ ( 0.20 ) Weighted-average common shares - basic and diluted 37,509 36,548 37,283 36,105 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 March 31, 2024 Accumulated Additional Other Total Common Stock Paid-In Accumulated Comprehensive Stockholders' Shares Amount Capital Deficit Income Equity Balance at December 31, 2023 37,476 $ 4 $ 299,385 $ ( 222,984 ) $ 371 $ 76,776 Shares issued pursuant to stock awards, net 103 – 22 – – 22 Tax withholding paid on behalf of employees for restricted shares – – ( 162 ) – – ( 162 ) Share-based compensation – – 1,872 – – 1,872 Net loss – – – ( 423 ) – ( 423 ) Balance at March 31, 2024 37,579 $ 4 $ 301,117 $ ( 223,407 ) $ 371 $ 78,085 Three Months Ended March 31, 2023 Accumulated Additional Other Total Common Stock Paid-In Accumulated Comprehensive Stockholders' Shares Amount Capital Deficit Income Equity Balance at December 31, 2022 36,517 $ 4 $ 292,930 $ ( 213,787 ) $ 371 $ 79,518 Shares issued pursuant to stock awards, net 92 – 23 – – 23 Tax withholding paid on behalf of employees for restricted shares – – ( 176 ) – – ( 176 ) Share-based compensation – – 1,728 – – 1,728 Net loss – – – ( 3,065 ) – ( 3,065 ) Balance at March 31, 2023 36,609 $ 4 $ 294,505 $ ( 216,852 ) $ 371 $ 78,028 Nine Months Ended March 31, 2024 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 704 – 522 – – 522 Tax withholding paid on behalf of employees for restricted shares – – ( 881 ) – – ( 881 ) Share-based compensation – – 5,790 – – 5,790 Net loss – – – ( 4,902 ) – ( 4,902 ) Balance at March 31, 2024 37,579 $ 4 $ 301,117 $ ( 223,407 ) $

financial statements

financial statements. 6 LANTRONIX, INC. UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) Nine Months Ended March 31, 2024 2023 Operating activities Net loss $ ( 4,902 ) $ ( 7,327 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Share-based compensation 5,790 5,381 Depreciation and amortization 1,599 1,223 Amortization of intangible assets 4,004 4,340 Amortization of manufacturing profit in acquired inventory associated with acquisitions 696 181 Loss on disposal of property and equipment – ( 10 ) Amortization of deferred debt issuance costs 83 77 Fair value remeasurement of earnout consideration ( 9 ) ( 533 ) Changes in operating assets and liabilities, net of assets and liabilities acquired: Accounts receivable ( 860 ) 2,553 Inventories 8,488 ( 10,637 ) Contract manufacturers' receivable 1,457 1,139 Prepaid expenses and other current assets 76 2,260 Lease right-of-use assets 1,455 1,332 Other assets ( 114 ) ( 31 ) Accounts payable 1,390 ( 5,782 ) Accrued payroll and related expenses 2,108 ( 1,918 ) Other liabilities ( 4,913 ) 6,796 Net cash provided by (used in) operating activities 16,348 ( 956 ) Investing activities Purchases of property and equipment ( 1,325 ) ( 2,325 ) Cash payment for acquisition, net of cash and cash equivalents acquired – ( 4,650 ) Net cash used in investing activities ( 1,325 ) ( 6,975 ) Financing activities Net proceeds from issuances of common stock 522 752 Tax withholding paid on behalf of employees for restricted shares ( 881 ) ( 674 ) Earnout consideration paid for acquisition ( 1,262 ) – Net proceeds from issuance of debt – 4,909 Payment of borrowings on term loan ( 2,075 ) ( 1,475 ) Net proceeds from borrowing on line of credit – 2,000 Payment of borrowings on line of credit – ( 2,000 ) Payment of lease liabilities ( 137 ) ( 7 )

financial statements

financial statements. 7 LANTRONIX, INC. NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL March 31, 2024 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 March 31, 2024, the consolidated results of our operations for the three and nine months ended March 31, 2024 and our consolidated cash flows for the nine months ended March 31, 2024. All intercompany accounts and transactions have been eliminated. Significant Accounting Policies Use of Estimates The preparation of condensed consolidated financial

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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