Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 48 Discovery, Suite 250 Irvine, California 92618 (Address of principal executive offices) (Zip Code) (949) 453-3990 For the fiscal year ended June 30, 2023 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE ...

Financial Data and Key Metrics Changes - For Q4 2023, the company reported revenue of $34.9 million, which is up 6% sequentially but down 3% year-over-year [27] - GAAP gross margin for Q4 2023 was 39.5%, compared to 44.4% in the prior quarter and 41.9% in the year-ago quarter, primarily due to product mix [29] - GAAP net loss was $1.7 million or $0.05 per share in Q4 2023, compared to a net income of $2.5 million or $0.07 per share in the year-ago quarter [30] Business Line Data and Key Metrics Changes - Embedded Solutions products had a strong quarter, contributing approximately $3.4 million from an embedded compute sale [27] - System Solutions revenue was relatively flat quarter-over-quarter, including $1.4 million from Gridspertise [28] - Software and Services revenues were down sequentially due to lower design services revenue, but improvement is expected going forward [29] Market Data and Key Metrics Changes - The company noted a slight increase in channel inventories, but it remains within historical norms [14] - Demand for large programs, particularly from Gridspertise and Togg, is expected to drive growth in fiscal 2024 [16] Company Strategy and Development Direction - The company anticipates over 30% growth in fiscal 2024, with revenue guidance set between $175 million and $185 million [39] - Gridspertise is identified as a lead smart grid customer, with significant revenue expected from the QED platform [33] - The company is focusing on new compute designs and has seen traction with various applications, including smart cities and electric vehicles [33][38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in fiscal 2024, citing a record backlog and steady demand environment [32] - The company expects to maintain gross margins in the mid- to low-40s, with some benefits from lower supply chain costs [45] - Management acknowledged some weakness in certain parts of the business post-COVID but emphasized growth drivers from large programs [16] Other Important Information - The company is in the process of searching for a new CEO, with in-person interviews underway [40] - The company has resolved component shortages that could affect deliveries in fiscal 2024 [35] Q&A Session Summary Question: Can you provide a number for the opportunities discussed? - Management indicated that the number of opportunities has continued to grow, particularly in smart cities, smart grid, and automotive applications [2] Question: What is the expected growth from Gridspertise? - Management expects year-on-year growth with Gridspertise based on current pricing and unit forecasts [4] Question: How should gross margins be viewed for the full year? - Management anticipates gross margins for the full fiscal year to be close to those of fiscal 2023, with benefits from revenue increases and cost relief [5] Question: What is the outlook for the Embedded business? - Management indicated that the Embedded compute side may see a soft couple of quarters but expects new design wins to ramp in Q3 [7] Question: Can you confirm the production goal with Togg? - Management confirmed that the production goal with Togg remains at $50 million, with recent orders exceeding expectations [10] Question: Are there any projects expected to contribute to revenue in the next fiscal year? - Some projects may contribute to fiscal 2024, but most are expected to contribute in fiscal 2025 [11] Question: How is the competitive landscape? - Management noted no significant new entrants in the market and emphasized their competitive advantages [18]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________ to ___________. Commission file number: 1-16027 LANTRONIX, INC. (Exact name of registrant as specified in its charter) Delaware 33-0362767 (S ...

Financial Data and Key Metrics Changes - For Q2 fiscal 2023, revenue was $31.5 million, down from $33.7 million in Q2 fiscal 2022, and a sequential decline of 1% [18] - GAAP net loss was $2.6 million or $0.07 per share, compared to a net loss of $2.4 million or $0.08 per share in Q2 fiscal 2022 [19] - Non-GAAP net income was $1.4 million or $0.04 per share, down from $3.3 million or $0.10 per share in the same quarter last year [19] - Gross margin for Q2 fiscal 2023 was 44%, consistent with the prior quarter and a 900 basis point improvement year-over-year [18] Business Line Data and Key Metrics Changes - Embedded IoT Solutions revenue totaled $13.7 million, down 9% sequentially and 12% year-over-year, representing 43% of total revenues [6] - Software and services revenue was approximately $2.9 million, up 41% sequentially and 71% year-over-year, with ARR from software and services totaling just over $5.2 million [7] - Systems Solutions revenue was $14.9 million, approximately 47% of total revenues, up 2% sequentially but down 9% year-over-year [22] Market Data and Key Metrics Changes - The company noted that demand for embedded Ethernet and WiFi solutions was healthy, but supply disruptions continued to limit the ability to meet customer demand [6] - Shipments to electric vehicle customers continued as planned, with the factory in Turkey reportedly unaffected by recent earthquakes [6] Company Strategy and Development Direction - The company finalized its largest contract in history, a $40 million smart grid compute platform, which is expected to ramp up significantly in fiscal 2024 [5][21] - The company aims for $250 million in annual revenue in the intermediate term, supported by a strong opportunity pipeline exceeding $200 million [21] - The management is focusing on transforming the sales strategy to target larger deals and longer sales cycles, moving from a channel-centric model to a more direct engagement approach [37] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing a backlog near record highs and a slowly improving supply chain as factors that will support growth [23] - The company anticipates a resumption of growth for the remainder of the fiscal year, driven by solid bookings and a strong opportunity funnel [23] - Management highlighted that while there are still challenges in the supply chain, improvements are being seen, particularly in channel inventory levels [28] Other Important Information - The company expects to receive aggregate prepayments of $20 million during the next six months, which will positively impact the balance sheet [4][20] - The company is experiencing some challenges with specific components affecting WiFi shipments, but overall supply chain conditions are improving [28] Q&A Session Summary Question: Can you provide more details on the Gridspertise contract ramp-up? - Management indicated that the contract is expected to ramp up strongly in Q1 fiscal 2024 and continue into the December quarter, with additional SKUs being discussed for follow-on engagement [25] Question: What is the current state of the supply chain? - Management noted that while there are still problematic components, the supply chain is improving overall, with a reduction in channel inventory observed [28] Question: How will the Gridspertise contract impact gross margins? - Management expects no margin dilution from the Gridspertise contract and anticipates improvements in gross margins as recurring revenue grows [36] Question: What is the outlook for core business growth over the next few years? - Management indicated that the core business should see mid to high-single digit growth, with some older product lines declining while funds are redirected to higher growth opportunities [58]

PART I. FINANCIAL INFORMATION [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for the three and six months ended December 31, 2022, including balance sheets, statements of operations, and cash flows Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Dec 31, 2022 | June 30, 2022 | | :--- | :--- | :--- | | Cash and cash equivalents | $6,805 | $17,221 | | Inventories, net | $49,156 | $37,679 | | Total current assets | $90,045 | $90,033 | | Goodwill | $27,151 | $20,768 | | Total assets | $147,785 | $137,374 | | Total current liabilities | $39,475 | $35,521 | | Long-term debt, net | $17,723 | $14,274 | | Total liabilities | $68,267 | $57,478 | | Total stockholders' equity | $79,518 | $79,896 | Condensed Consolidated Statements of Operations (in thousands) | Metric | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Net revenue | $31,506 | $33,681 | $63,301 | $61,386 | | Gross profit | $13,794 | $14,440 | $27,830 | $26,903 | | Loss from operations | $(2,111) | $(1,739) | $(3,482) | $(3,499) | | Net loss | $(2,609) | $(2,395) | $(4,262) | $(4,678) | | Net loss per share | $(0.07) | $(0.08) | $(0.12) | $(0.15) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | $(9,951) | $(5,405) | | Net cash used in investing activities | $(6,644) | $(24,189) | | Net cash provided by financing activities | $6,179 | $56,219 | | Increase (decrease) in cash | $(10,416) | $26,625 | [Notes to Unaudited Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Unaudited%20Condensed%20Consolidated%20Financial%20Statements) These notes provide detailed information on significant accounting policies, revenue recognition, the Uplogix acquisition, debt agreements, and stockholders' equity Net Revenue by Product Line (in thousands) | Product Line | Three Months Ended Dec 31, 2022 | Three Months Ended Dec 31, 2021 | Six Months Ended Dec 31, 2022 | Six Months Ended Dec 31, 2021 | | :--- | :--- | :--- | :--- | :--- | | Embedded IoT Solutions | $13,668 | $15,604 | $28,763 | $27,980 | | IoT System Solutions | $14,913 | $16,366 | $29,534 | $29,524 | | Software & Services | $2,925 | $1,711 | $5,004 | $3,882 | | **Total** | **$31,506** | **$33,681** | **$63,301** | **$61,386** | - On September 12, 2022, the company acquired Uplogix, Inc. for **$8.0 million**, subject to adjustments, plus a potential earnout of up to **$4.0 million** based on revenue targets. The acquisition aims to scale the company's out-of-band remote management solutions[45](index=45&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk) - In September 2022, the company amended its loan agreement with Silicon Valley Bank (SVB), securing an additional term loan of **$5.0 million** and borrowing **$2.0 million** on its revolving credit facility. The company was in compliance with all financial covenants as of December 31, 2022[74](index=74&type=chunk)[75](index=75&type=chunk)[79](index=79&type=chunk) - Share-based compensation expense for the three and six months ended December 31, 2022, was **$1.9 million** and **$3.7 million**, respectively. As of December 31, 2022, there was **$10.8 million** of total remaining unrecognized share-based compensation expense[88](index=88&type=chunk)[89](index=89&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a net revenue decrease for Q2 FY2023, improved gross margin, and a significant decrease in cash primarily due to the Uplogix acquisition and inventory build-up [Results of Operations – Q2 FY2023 vs. Q2 FY2022](index=29&type=section&id=Results%20of%20Operations%20%E2%80%93%20Three%20Months%20Ended%20December%2031%2C%202022%20Compared%20to%20the%20Three%20Months%20Ended%20December%2031%2C%202021) Net revenue for Q2 FY2023 decreased by 6.5% due to declines in IoT solutions, partially offset by a 71.0% increase in Software & Services, leading to a net loss of $2.6 million - Net revenue for Q2 FY2023 decreased by **6.5%** year-over-year, driven by declines in Embedded IoT Solutions and IoT System Solutions, which were partially offset by a **71.0%** increase in Software & Services revenue[113](index=113&type=chunk)[114](index=114&type=chunk) - Gross margin improved to **43.8%** from **42.9%** in the prior year quarter, primarily due to a sales mix shift towards higher-margin extended warranty services from the Uplogix acquisition and certain NICs and optics products[118](index=118&type=chunk) - Selling, general and administrative (SG&A) expenses increased by **9.8%** to **$9.8 million**, mainly due to higher facilities costs for a new warehouse, increased depreciation, and higher share-based compensation[120](index=120&type=chunk) - Research and development (R&D) expenses increased by **18.0%** to **$5.1 million**, driven by higher personnel costs from acquisitions and internal growth, increased product certification costs, and higher share-based compensation[121](index=121&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash and cash equivalents decreased by **$10.4 million** during the six months ended December 31, 2022, primarily due to cash used in operating and investing activities, partially offset by financing activities - Cash and cash equivalents decreased by **$10.4 million** in the first six months of fiscal 2023, from **$17.2 million** to **$6.8 million**[137](index=137&type=chunk) - Net cash used in operating activities was **$9.9 million**, an increase from **$5.4 million** in the prior year period, mainly due to a **$7.9 million** increase in inventories to manage long-lead time components and fulfill a new customer agreement[21](index=21&type=chunk)[144](index=144&type=chunk)[145](index=145&type=chunk) - Net cash used in investing activities was **$6.6 million**, consisting of **$4.7 million** for the Uplogix acquisition and **$2.0 million** for property and equipment purchases[147](index=147&type=chunk) - Net cash provided by financing activities was **$6.2 million**, primarily from **$7.0 million** in gross proceeds from credit facilities with SVB[148](index=148&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=36&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, the company is not required to provide quantitative and qualitative disclosures about market risk - The company is not required to provide quantitative and qualitative disclosures about market risk because it qualifies as a smaller reporting company[149](index=149&type=chunk) [Controls and Procedures](index=36&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022, following the implementation of a new ERP system - Management concluded that the company's disclosure controls and procedures were effective as of December 31, 2022[151](index=151&type=chunk) - In October 2022, the company implemented a new enterprise resource planning (ERP) system, which led to modifications of existing internal controls and the implementation of new control activities[152](index=152&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=37&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, but does not anticipate a material adverse effect on its financial condition or operations - The company states that while it is involved in various legal proceedings from time to time, it does not currently believe the outcome of these matters will have a material adverse effect on its business or financial condition[92](index=92&type=chunk) [Risk Factors](index=37&type=section&id=Item%201A.%20Risk%20Factors) This section details the risks and uncertainties facing the company, including supply chain constraints, cybersecurity threats, and the increasing focus on ESG matters - The business faces risks from the ongoing COVID-19 pandemic, which could impact demand, distribution, and manufacturing capabilities[159](index=159&type=chunk)[161](index=161&type=chunk) - The company is experiencing supply chain constraints, particularly for semiconductor chips, which has led to increased lead times and costs. Reliance on single-source suppliers and contract manufacturers in Asia presents further risk[162](index=162&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk) - Cybersecurity breaches pose a significant risk, potentially compromising sensitive data, exposing the company to liability, and damaging its reputation. Products, especially SaaS offerings like ConsoleFlow™, are vulnerable to cyberattacks[186](index=186&type=chunk)[187](index=187&type=chunk)[188](index=188&type=chunk) - A new risk factor has been added regarding the increasing attention on Environmental, Social, and Governance (ESG) matters, which may impose additional costs, impact the ability to attract talent and investors, and expose the company to new risks[210](index=210&type=chunk) - The implementation of a new company-wide ERP system in October 2022 carries risks of business disruption, higher-than-anticipated costs, and potential failures in internal controls over financial reporting[215](index=215&type=chunk) [Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including required certifications and Inline XBRL documents

Lantronix, Inc. (NASDAQ:LTRX) Q1 2023 Earnings Conference Call November 9, 2022 5:00 PM ET Company Participants Rob Adams - Corporate Development and IR Jeremy Whitaker - Chief Financial Officer Paul Pickle - President, Chief Executive Officer Conference Call Participants Mike Walkley - Canaccord Genuity Christian Schwab - Craig-Hallum Capital Group Scott Searle - Roth Capital Harry Wilmerding - Needham Operator Good afternoon, everyone, and welcome to the Lantronix First Quarter 2023 Earnings Conference Ca ...

Part I [Business](index=6&type=section&id=Item%201.%20Business) Lantronix provides global Industrial and Enterprise IoT solutions across three product lines, pursuing growth through innovation and strategic acquisitions - Lantronix provides global Industrial and Enterprise IoT solutions for various applications including Video Surveillance and Robotics[19](index=19&type=chunk) - The company's portfolio includes **Embedded IoT Modules**, **IoT Systems Solutions**, and **Software and Engineering Services**[21](index=21&type=chunk) - The growth strategy combines continuous innovation with strategic acquisitions, notably Intrinsyc (2020) and Transition Networks (2021), to expand IoT and REM solutions[24](index=24&type=chunk)[25](index=25&type=chunk)[26](index=26&type=chunk) - Manufacturing is primarily outsourced to third-party contract manufacturers in Asia[48](index=48&type=chunk) - A majority of sales are conducted through distributors to various end customers including OEMs and systems integrators[44](index=44&type=chunk) - As of August 16, 2022, the company had **348 total employees**, with **335 full-time**[54](index=54&type=chunk) [Risk Factors](index=12&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant operational, technological, financial, and international risks, including supply chain constraints, cybersecurity threats, historical net losses, and geopolitical factors - The COVID-19 pandemic continues to pose risks, potentially causing demand volatility and supply chain disruptions[63](index=63&type=chunk)[64](index=64&type=chunk) - The company faces ongoing supply constraints for critical components like semiconductor chips, leading to increased costs and delays[65](index=65&type=chunk) - Reliance on third-party manufacturers in Asia creates risks related to delivery, quality control, geopolitical instability, and trade law changes[67](index=67&type=chunk)[68](index=68&type=chunk) - Cybersecurity breaches pose a significant threat, potentially compromising data, disrupting operations, and damaging reputation[91](index=91&type=chunk)[92](index=92&type=chunk) - The company has a history of net losses and cannot guarantee future profitability or positive cash flow, potentially requiring additional capital[101](index=101&type=chunk)[102](index=102&type=chunk) - International operations are subject to risks from tariffs, trade barriers, geopolitical events, and foreign currency fluctuations[104](index=104&type=chunk)[106](index=106&type=chunk)[108](index=108&type=chunk) - A majority of sales are through distributors, with the **top five accounting for approximately 44% of net revenue in fiscal 2022**, posing a risk if relationships change[81](index=81&type=chunk) [Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the Securities and Exchange Commission - None[120](index=120&type=chunk) [Properties](index=24&type=section&id=Item%202.%20Properties) Lantronix leases all its facilities, with corporate headquarters in Irvine, California, and other key operations in Minnesota, Canada, India, and Germany Leased Facilities Overview | Locations | Primary Use | Approximate Square Footage | | :--- | :--- | :--- | | Irvine, California, U.S.A. | Corporate headquarters; sales and marketing, research and development, operations and administration | 14,000 | | Plymouth, Minnesota, U.S.A. | Operations and warehousing, engineering, sales and marketing | 66,000 | | Vancouver, British Columbia, Canada | Engineering | 12,000 | | Hyderabad, India | Engineering | 18,000 | | Illmenau, Germany | Engineering, sales and marketing | 7,500 | | Taiwan | Engineering, sales and marketing | 5,500 | | Shanghai, China | Sales and marketing | 1,000 | [Legal Proceedings](index=24&type=section&id=Item%203.%20Legal%20Proceedings) The company reports no material legal proceedings - None[122](index=122&type=chunk) [Mine Safety Disclosures](index=24&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - None[123](index=123&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Lantronix common stock trades on Nasdaq under LTRX, with no history or current intent to pay cash dividends, and no share repurchases in Q4 FY2022 - The company's common stock trades on the Nasdaq Capital Market with the symbol "**LTRX**"[125](index=125&type=chunk) - Lantronix has never paid cash dividends and does not anticipate paying any in the foreseeable future[126](index=126&type=chunk) - No shares of common stock were repurchased during the fourth quarter of fiscal 2022[127](index=127&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2022, net revenue grew **81.4% to $129.7 million**, driven by acquisitions and organic growth, while gross margin declined to **42.9%** and net loss widened to **$5.4 million** due to increased operating expenses [Recent Developments](index=26&type=section&id=Recent%20Developments) Recent developments include the **$30.7 million** acquisition of TN Companies, a **$32.6 million** public offering, and ongoing supply chain challenges due to the COVID-19 pandemic - On August 2, 2021, Lantronix acquired the Transition Networks and Net2Edge businesses (TN Companies) for approximately **$30.65 million**[132](index=132&type=chunk) - In November 2021, the company raised approximately **$32.6 million** in net proceeds from an underwritten public offering of **4.7 million** shares of common stock[134](index=134&type=chunk)[135](index=135&type=chunk) - The company's supply chain continues to face challenges from the COVID-19 pandemic, leading to increased costs and shipment delays[138](index=138&type=chunk)[139](index=139&type=chunk) [Critical Accounting Policies and Estimates](index=27&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) Critical accounting policies involve significant judgment in revenue recognition, inventory valuation, deferred income taxes (with a full valuation allowance), business combinations, and annual goodwill impairment testing - Revenue recognition requires significant judgment, especially for distributor sales involving variable consideration from return rights and price adjustments[143](index=143&type=chunk) - Inventory is valued at the lower of cost or net realizable value, with estimates for future demand determining reserves for excess and obsolete inventory[149](index=149&type=chunk) - A **full valuation allowance** has been recorded against net deferred tax assets due to historical net operating losses and future taxable income uncertainty[152](index=152&type=chunk) - Goodwill is tested for impairment annually, and the qualitative assessment for fiscal 2022 indicated no impairment[154](index=154&type=chunk)[157](index=157&type=chunk) [Results of Operations - Fiscal Years Ended June 30, 2022 and 2021](index=31&type=section&id=Results%20of%20Operations%20-%20Fiscal%20Years%20Ended%20June%2030%2C%202022%20and%202021) In fiscal 2022, net revenue grew **81.4% to $129.7 million**, driven by acquisitions and organic growth, while gross margin declined to **42.9%** and net loss widened to **$5.4 million** due to increased operating expenses Net Revenue by Product Line (FY2022 vs FY2021) | Product Line | FY2022 (in thousands) | FY2021 (in thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Embedded IoT Solutions | $61,773 | $38,611 | $23,162 | 60.0% | | IoT System Solutions | $59,019 | $24,189 | $34,830 | 144.0% | | Software & Services | $8,863 | $8,677 | $186 | 2.1% | | **Total Net Revenue** | **$129,655** | **$71,477** | **$58,178** | **81.4%** | Net Revenue by Geographic Region (FY2022 vs FY2021) | Geographic Region | FY2022 (in thousands) | FY2021 (in thousands) | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Americas | $77,799 | $38,638 | $39,161 | 101.4% | | EMEA | $22,542 | $17,186 | $5,356 | 31.2% | | APJ | $29,314 | $15,653 | $13,661 | 87.3% | | **Total Net Revenue** | **$129,655** | **$71,477** | **$58,178** | **81.4%** | Gross Profit (FY2022 vs FY2021) | Metric | FY2022 (in thousands) | FY2021 (in thousands) | | :--- | :--- | :--- | | Gross Profit | $55,586 | $33,025 | | Gross Margin (% of Net Revenue) | 42.9% | 46.2% | Operating Expenses (FY2022 vs FY2021) | Expense Category (in thousands) | FY2022 | FY2021 | | :--- | :--- | :--- | | Selling, general and administrative | $34,529 | $20,808 | | Research and development | $17,687 | $11,113 | | **Total Operating Expenses** | **$60,597** | **$36,362** | Net Loss Summary (FY2022 vs FY2021) | Metric | FY2022 (in thousands) | FY2021 (in thousands) | | :--- | :--- | :--- | | Net Loss | $(5,362) | $(4,044) | | Net Loss per Share | $(0.16) | $(0.14) | [Liquidity and Capital Resources](index=36&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity improved in fiscal 2022 with cash and working capital increases, primarily from a **$32.6 million** public offering, despite negative operating cash flow of **$9.4 million** driven by net loss and a **$22.6 million** inventory increase Key Liquidity Metrics (as of June 30) | Metric (in thousands) | 2022 | 2021 | | :--- | :--- | :--- | | Working capital | $54,512 | $20,289 | | Cash and cash equivalents | $17,221 | $9,739 | - In November 2021, a public offering of common stock generated net cash proceeds of approximately **$32.6 million**[191](index=191&type=chunk) - In January 2022, the company terminated its **$12.0 million** mezzanine term loan facility[192](index=192&type=chunk) Consolidated Cash Flows Summary (in thousands) | Activity | FY2022 | FY2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(9,416) | $4,304 | | Net cash used in investing activities | $(25,747) | $(783) | | Net cash provided by (used in) financing activities | $42,645 | $(1,473) | - Net inventories increased by **$22.6 million (150.2%)** during fiscal 2022, partly due to the TN Companies acquisition and supply chain constraints[201](index=201&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not required as Lantronix qualifies as a "smaller reporting company" - Not required for a "smaller reporting company"[206](index=206&type=chunk) [Financial Statements and Supplementary Data](index=38&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section incorporates consolidated financial statements and the independent auditor's report, highlighting critical audit matters regarding inventory reserve and intangible asset valuation from the TN Companies acquisition - The full consolidated financial statements and the independent registered public accounting firm's report are included in the report, beginning on page F-1[206](index=206&type=chunk)[229](index=229&type=chunk)[230](index=230&type=chunk) - The independent auditor identified two Critical Audit Matters for fiscal year 2022: **Inventory – Excess and Obsolete Reserve** and **Valuation of Intangible Assets in TN Companies Acquisition**[245](index=245&type=chunk)[246](index=246&type=chunk)[249](index=249&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=38&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[207](index=207&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%209A.%20Controls%20and%20Procedures) As of June 30, 2022, management concluded that disclosure controls and internal control over financial reporting were effective, with no material changes during Q4 FY2022 - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2022[209](index=209&type=chunk) - Management concluded that internal control over financial reporting was effective as of June 30, 2022, based on the COSO 2013 framework[210](index=210&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2022[212](index=212&type=chunk) [Other Information](index=39&type=section&id=Item%209B.%20Other%20Information) On December 2, 2021, a change in control agreement was executed with CFO Jeremy Whitaker, outlining severance benefits upon specific termination events following a change in control - A change in control agreement was executed with CFO Jeremy Whitaker on December 2, 2021, outlining severance benefits upon specific termination events following a change in control[213](index=213&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=39&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) The company reports no information under this item - None[216](index=216&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=40&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is incorporated by reference from the company's definitive Proxy Statement for the 2022 annual meeting of stockholders - Information required by this item is incorporated by reference from the company's definitive Proxy Statement for the 2022 annual meeting of stockholders[219](index=219&type=chunk)[222](index=222&type=chunk) [Executive Compensation](index=40&type=section&id=Item%2011.%20Executive%20Compensation) The information required for this item concerning executive compensation is incorporated by reference from the company's definitive Proxy Statement for its 2022 annual meeting of stockholders - Information required by this item is incorporated by reference from the company's definitive Proxy Statement[223](index=223&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=40&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) The information required for this item concerning security ownership is incorporated by reference from the company's definitive Proxy Statement for its 2022 annual meeting of stockholders - Information required by this item is incorporated by reference from the company's definitive Proxy Statement[224](index=224&type=chunk) [Certain Relationships and Related Transactions and Director Independence](index=40&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%20and%20Director%20Independence) The information required for this item concerning related party transactions and director independence is incorporated by reference from the company's definitive Proxy Statement for its 2022 annual meeting of stockholders - Information required by this item is incorporated by reference from the company's definitive Proxy Statement[225](index=225&type=chunk) [Principal Accountant Fees and Services](index=40&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) The information required for this item concerning principal accountant fees and services is incorporated by reference from the company's definitive Proxy Statement for its 2022 annual meeting of stockholders - Information required by this item is incorporated by reference from the company's definitive Proxy Statement[226](index=226&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=41&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the consolidated financial statements and exhibits filed as part of the Form 10-K report, including financial statements, corporate governance documents, and various agreements - This section contains the list of consolidated financial statements filed with the report, which begin on page F-1[229](index=229&type=chunk)[230](index=230&type=chunk) - A detailed list of exhibits is provided, including corporate governance documents, material contracts, and SEC-required certifications[230](index=230&type=chunk)[231](index=231&type=chunk)[232](index=232&type=chunk) [Form 10-K Summary](index=44&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company has not provided a summary for the Form 10-K - None[234](index=234&type=chunk)

Lantronix, Inc. (NASDAQ:LTRX) Q4 2022 Earnings Conference Call August 25, 2022 5:00 PM ET Company Participants Rob Adams - Corporate Development and IR Paul Pickle - President and CEO Jeremy Whitaker - CFO Conference Call Participants Michael Walkley - Canaccord Genuity Scott Searle - Roth Capital Partners Christian Schwab - Craig-Hallum Capital Group Jaeson Schmidt - Lake Street Capital Markets Ryan Koontz - Needham & Company Operator Good day and welcome to the Lantronix Fourth Quarter 2022 Results Confer ...

Revenue Growth - For the three months ended March 31, 2022, net revenue increased by $15,216,000 or 88.9% compared to the same period in 2021, driven by a 109.3% increase in IoT product line revenue and a 9.3% increase in REM product line revenue [127]. - IoT product line revenue for the three months ended March 31, 2022 was $28,587,000, accounting for 88.4% of total net revenue, with a significant contribution from the acquisition of the TN Companies, which represented approximately 30% of total net revenues [128][129]. - REM product line revenue for the three months ended March 31, 2022 was $3,614,000, representing 11.2% of total net revenue, primarily due to increased unit sales of the SLS product family in the Americas [128][130]. - Net revenue for the nine months ended March 31, 2022 was $93,710,000, an 84.3% increase from $50,839,000 in the same period of 2021, driven by a 91.8% increase in IoT product line revenue [138]. - Net revenue from the IoT product line for the nine months ended March 31, 2022 was $41,683,000, contributing 85.3% to total net revenue, with a 91.8% increase from the previous year [139]. - The Americas region accounted for $58,748,000 or 62.7% of total net revenue for the nine months ended March 31, 2022, reflecting a 113.1% increase from $27,567,000 in 2021 [139]. Loss and Expenses - The company reported a net loss of $3,190,000 for the three months ended March 31, 2022, compared to a net loss of $1,187,000 for the same period in 2021, primarily due to increased costs related to the acquisition of the TN Companies [127]. - The net loss for the nine months ended March 31, 2022 was $7,868,000, compared to a net loss of $2,948,000 for the same period in 2021, primarily due to acquisition-related costs [138]. - Selling, general and administrative expenses for the three months ended March 31, 2022 increased to $8,326,000, a 66.7% increase from $4,995,000 in 2021, representing 25.8% of net revenue compared to 29.2% in 2021 [135]. - Selling, general and administrative expenses for the nine months ended March 31, 2022 totaled $25,167,000, a 70.7% increase from $14,747,000 in 2021, representing 26.9% of net revenue [144]. - Research and development expenses for the three months ended March 31, 2022 were $4,483,000, a 78.0% increase from $2,519,000 in 2021, accounting for 13.9% of net revenue [137]. - Research and development expenses for the nine months ended March 31, 2022, increased by $5,294,000, or 70.2%, compared to the same period in 2021, totaling $7,540,000 [145]. - The company incurred approximately $760,000 in restructuring, severance, and related charges during the nine months ended March 31, 2022, primarily due to headcount reductions and restructuring efforts [146]. - Acquisition-related costs amounted to approximately $763,000 during the nine months ended March 31, 2022, mainly for banking, legal, and professional fees associated with the TN Companies acquisition [148]. Cash Flow and Financing - The company raised approximately $32,600,000 in net proceeds from an underwritten offering of 4,700,000 shares at an initial price of $7.50 per share [120]. - Net cash provided by financing activities was $43,876,000 for the nine months ended March 31, 2022, driven by net proceeds from a public offering of $32,600,000 and $29,500,000 from credit facilities [169]. - Cash used in operating activities increased by $8,650,000, resulting in a net cash outflow of $6,066,000 for the nine months ended March 31, 2022 [163]. - Cash and cash equivalents increased by $13,043,000, totaling $22,782,000 as of March 31, 2022, compared to $9,739,000 on June 30, 2021 [154]. Inventory and Receivables - Net inventories increased by $18,107,000, or 120.2%, from June 30, 2021, to March 31, 2022, with $7,830,000 attributed to the TN Companies acquisition [165]. - Accounts receivable rose by $9,674,000, or 71.6%, from June 30, 2021, to March 31, 2022, with $5,156,000 from the TN Companies acquisition [166]. Operational Challenges - The company continues to face supply chain challenges, including increased costs of components and logistics, which have led to delays in shipments to some customers [123]. - The company is adjusting its go-to-market strategy by adding more distributors and value-added resellers to mitigate potential revenue declines due to the ongoing COVID-19 pandemic [122]. Gross Profit and Margin - Gross profit for the three months ended March 31, 2022 was $13,616,000, a 76.4% increase from $7,718,000 in the same period of 2021, with a gross margin decrease from 45.1% to 42.1% due to higher supply chain costs [133]. - Gross profit for the nine months ended March 31, 2022 was $40,519,000, a 76.5% increase from $22,953,000 in 2021, with a gross margin decrease from 45.1% to 43.2% [143]. SaaS Platform - The company’s SaaS platform enables single pane of glass management for IoT and REM deployments, facilitating easy deployment, monitoring, and management across global operations [112][114].

Call Start: 17:00 January 1, 0000 5:23 PM ET Lantronix (NASDAQ:LTRX) Q3 2022 Earnings Conference Call May 4, 2022, 5:00 PM ET Company Participants Paul Pickle – President, Chief Executive Officer Jeremy Whitaker – Chief Financial Officer Rob Adams – Investor Relations Conference Call Participants Michael Walkley – Canaccord Genuity Christian Schwab – Craig-Hallum Capital Group Chad Tivo – Needham Operator Good afternoon and welcome to the Lantronix Third Quarter 2022 Earnings Conference Call. All participa ...