Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2015 | Jul. 31, 2015 | Dec. 31, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | LANTRONIX INC | ||
Entity Central Index Key | 1,114,925 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2015 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --06-30 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 11,800,000 | ||
Entity Common Stock, Shares Outstanding | 15,104,710 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,015 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 4,989 | $ 6,264 |
Accounts receivable (net of allowance for doubtful accounts of $45 and $34 at June 30, 2015 and 2014, respectively) | 2,658 | 3,631 |
Inventories, net | 9,503 | 8,404 |
Contract manufacturers' receivable | 369 | 359 |
Prepaid expenses and other current assets | 400 | 524 |
Total current assets | 17,919 | 19,182 |
Property and equipment, net | 1,471 | 1,487 |
Goodwill | 9,488 | 9,488 |
Deferred tax assets | 442 | 400 |
Other assets | 93 | 125 |
Total assets | 29,413 | 30,682 |
Current liabilities: | ||
Accounts payable | 3,633 | 4,547 |
Line of credit | 700 | 0 |
Accrued payroll and related expenses | 1,685 | 1,863 |
Warranty reserve | 163 | 150 |
Deferred tax liabilities | 442 | 400 |
Other current liabilities | 3,849 | 3,418 |
Total current liabilities | 10,472 | 10,378 |
Long-term capital lease obligations | 152 | 7 |
Other non-current liabilities | 80 | 131 |
Total liabilities | $ 10,704 | $ 10,516 |
Commitments and contingencies (Note 8) | ||
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; 15,089,720 and 14,787,158 shares issued and outstanding at June 30, 2015 and 2014, respectively | 2 | 1 |
Additional paid-in capital | 206,326 | 205,013 |
Accumulated deficit | (187,990) | (185,219) |
Accumulated other comprehensive income | 371 | 371 |
Total stockholders' equity | 18,709 | 20,166 |
Total liabilities and stockholders' equity | $ 29,413 | $ 30,682 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Assets | ||
Allowance for Receivables | $ 45 | $ 34 |
Stockholders Equity | ||
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 | 15,089,720 | 14,787,158 |
Common Stock Outstanding | 15,089,720 | 14,787,158 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) $ in Thousands | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | ||
Income Statement [Abstract] | |||
Net revenue | [1] | $ 42,946 | $ 44,546 |
Cost of revenue | 22,648 | 22,261 | |
Gross profit | 20,298 | 22,285 | |
Operating expenses: | |||
Selling, general and administrative | 16,041 | 16,355 | |
Research and development | 6,923 | 6,746 | |
Total operating expenses | 22,964 | 23,101 | |
Loss from operations | (2,666) | (816) | |
Interest expense, net | (17) | (28) | |
Other expense, net | (30) | (28) | |
Loss before income taxes | (2,713) | (872) | |
Provision for income taxes | 58 | 61 | |
Net loss | $ (2,771) | $ (933) | |
Net loss per share (basic and diluted) | $ (.19) | $ (0.06) | |
Weighted-average shares (basic and diluted) | 14,904,000 | 14,657,000 | |
Net revenue from related parties | $ 298 | $ 524 | |
[1] | Includes net revenue from related parties |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Beginning balance, shares at Jun. 30, 2013 | 14,580,000 | ||||
Beginning balance, value at Jun. 30, 2013 | $ 1 | $ 203,871 | $ (184,286) | $ 371 | $ 19,957 |
Shares issued pursuant to stock awards, net - stock issued | 207,000 | 273 | 273 | ||
Share-based compensation | $ 869 | $ 869 | |||
Net loss and comprehensive loss | (933) | (933) | |||
Ending balance, shares at Jun. 30, 2014 | 14,787,000 | ||||
Ending balance, value at Jun. 30, 2014 | $ 1 | 205,013 | (185,219) | 371 | 20,166 |
Shares issued pursuant to stock awards, net - stock issued | 303,000 | ||||
Shares issued pursuant to stock awards, net value | $ 1 | 351 | 352 | ||
Minimum tax withholding paid on behalf of employees for restricted shares | (53) | (53) | |||
Share-based compensation | 1,015 | 1,015 | |||
Net loss and comprehensive loss | (2,771) | (2,771) | |||
Ending balance, shares at Jun. 30, 2015 | 15,090,000 | ||||
Ending balance, value at Jun. 30, 2015 | $ 2 | $ 206,326 | $ (187,990) | $ 371 | $ 18,709 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Operating activities | ||
Net loss | $ (2,771) | $ (933) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 1,015 | 869 |
Depreciation | 878 | 895 |
Provision for excess and obsolete inventories | 222 | 207 |
Loss (gain) on disposal of property and equipment | (2) | 2 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 973 | (1,032) |
Inventories | (1,321) | 130 |
Contract manufacturers' receivable | (10) | 248 |
Prepaid expenses and other current assets | 124 | (93) |
Other assets | 12 | (38) |
Accounts payable | (960) | 1,575 |
Accrued payroll and related expenses | (178) | 347 |
Warranty reserve | 13 | (43) |
Other liabilities | 365 | (577) |
Net cash provided by (used in) operating activities | (1,640) | 1,557 |
Investing activities | ||
Purchases of property and equipment, net | (577) | (595) |
Net cash used in investing activities | (577) | (595) |
Financing activities | ||
Minimum tax withholding paid on behalf of employees for restricted shares | (53) | 0 |
Payment of term loan | 0 | (167) |
Proceeds from borrowings on line of credit | 1,000 | 0 |
Payment of borrowings on line of credit | (300) | 0 |
Net proceeds from issuances of common stock | 352 | 273 |
Payment of capital lease obligations | (57) | (47) |
Net cash provided by financing activities | 942 | 59 |
Increase (decrease) in cash and cash equivalents | (1,275) | 1,021 |
Cash and cash equivalents at beginning of year | 6,264 | 5,243 |
Cash and cash equivalents at end of year | 4,989 | 6,264 |
Supplemental disclosure of cash flow information | ||
Interest paid | 19 | 29 |
Income taxes paid | $ 39 | $ 52 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
1. Summary of Significant Accounting Policies | The Company Lantronix, Inc. (referred to in these consolidated financial statements as Lantronix, we, us, or our), incorporated in California in June 1989 and re-incorporated in Delaware in May 2000, is a specialized networking company providing machine to machine (M2M) and Internet of Things (IoT) solutions. Our products deliver secure connectivity, device management and mobility for today's increasingly connected world. By networking and managing devices and machines that have never before been connected, we enable our customers to realize the possibilities of the IoT. 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. At June 30, 2015, approximately $2.9 million of our tangible assets were located outside of the United States (U.S.), and were substantially comprised of inventory held at (i) our third-party logistics provider in Hong Kong and (ii) contract manufacturers in China. 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 the allowance for doubtful accounts, sales returns and allowances, inventory reserves, goodwill valuation, deferred income tax asset valuation allowances, share-based compensation and warranty reserves. To the extent there are material differences between our estimates and actual results, future results of operations will be affected. Revenue Recognition We recognize revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price to the buyer is fixed or determinable; and collectability is reasonably assured. For each of the fiscal years ended June 30, 2015 and 2014, approximately 99% of our net revenues came from sales of hardware products. The remaining 1% of our net revenues in each of these years was primarily attributable to professional engineering services and extended warranty services. We sell extended warranty services which extend the warranty period for an additional one to three years, depending upon the product. Warranty net revenue is deferred and recognized ratably over the warranty service period. When product revenue is recognized, we establish an estimated allowance for future product returns based on historical returns experience. We also record reductions of revenue for pricing adjustments, such as competitive pricing programs and rebates, in the same period that the related revenue is recognized, based on approved pricing adjustments and historical experience. A significant portion of our sales are made to distributors under agreements which include a limited right to return unsold products and price protection provisions. Given these provisions, we have concluded the price to the customer is not fixed and determinable at the time we deliver products to these distributors. Accordingly, revenue and the related cost of revenue from sales to these distributors is not recognized until the distributor resells the product. In addition, when the deferred revenue attributable to any distributor exceeds their receivable balance due to Lantronix at the balance sheet date, such excess is reclassified from net accounts receivable to a customer deposit and refunds liability, which is included in other current liabilities on the accompanying consolidated balance sheets. Multiple-Element Arrangements From time to time, we may enter into arrangements with customers that provide for multiple deliverables that generally include the sale of products, professional engineering services and other product qualification or certification services (collectively, the deliverables). Pursuant to the applicable accounting guidance, when multiple deliverables in an arrangement are separated into different units of accounting, the arrangement consideration is allocated to the identified separate units that have stand-alone value at the inception of the contract based on a relative selling price hierarchy. We determine the relative selling price for a deliverable based on its vendor-specific objective evidence of selling price (VSOE), if available, third-party evidence (TPE), if VSOE is not available, and our best estimate of selling price (BESP), if neither VSOE nor TPE is available. We recognize the relative fair value of the deliverables as they are delivered assuming all other revenue recognition criteria are met. Allowance for Doubtful Accounts We maintain 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, including our assessment of the collectability of specific customer accounts, the aging of accounts receivable, our history of bad debts and general industry conditions. 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 ongoing 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 principally of cash and cash equivalents, accounts receivable, contract manufacturers receivable, accounts payable, accrued liabilities and long-term debt. 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 that 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. We do not have any assets or liabilities that were measured at fair value on a recurring basis, and during the years ended June 30, 2015 and June 30, 2014 did not have any assets or liabilities that were measured at fair value on a non-recurring basis. We believe all of our financial instruments recorded values approximate their current fair values because of the nature and short duration of these instruments. The fair value of long-term debt approximates its carrying value because the related effective rates of interest approximate current market rates available to us for debt with similar terms and similar remaining maturities. 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 currency was previously the local currency 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, 2015 and 2014. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2015 or 2014. 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 market. 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 provide for 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. Capitalized Internal Use Software Costs We capitalize the costs of computer software developed or obtained for internal use. Capitalized computer software costs consist of purchased software licenses and implementation costs. The capitalized software costs are being amortized on a straight-line basis over a period of three to five years. Goodwill Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the 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. Based on a qualitative assessment, if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we conduct a two-step goodwill impairment test. The first step of the impairment test involves comparing the estimated fair value of our single reporting unit with its carrying value, including goodwill. If the carrying amount of the reporting unit exceeds the reporting units fair value, we perform the second step of the analysis, which involves comparing the implied fair value of the reporting units goodwill with the carrying value of that goodwill, the difference of which represents the impairment loss. During the fourth quarter of the fiscal year ended June 30, 2015, we made a qualitative assessment of whether goodwill impairment exists 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. 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. 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 stock options and other equity instruments over the requisite service period. We record amortization of share-based compensation expense ratably over the requisite service period of the grant. We also estimate forfeitures based on historical experience in our calculation of share-based compensation expense. Net Income (Loss) Per Share Net income (loss) per share (basic) is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the fiscal year. Net income (loss) per share (diluted) 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. We believe our current process for developing products is essentially completed concurrently with the establishment of technological feasibility. Software development costs incurred after the establishment of technological feasibility have not been material and, therefore, have been expensed as incurred. Warranty The warranty periods for our products generally 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 additionally for any known product warranty issues. Although we engage in product quality programs and processes, our warranty obligation is affected by product failure rates, use of materials or service delivery costs that differ from our estimates. As a result, increases or decreases to warranty reserves could be required, which could impact our gross margins. Advertising Expenses Advertising costs are expensed in the period incurred. Segment Information We have one operating and reportable segment. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued an accounting standard which will supersede existing revenue recognition guidance under current U.S. GAAP. The new standard is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In doing so, among other things, companies will generally need to use more judgment and make more estimates than under the current guidance. The standard permits the use of either the retrospective or cumulative effect transition method. In July 2015, the FASB deferred the effective date of the standard by an additional year; however, it provided companies the option to adopt one year earlier, commensurate with the original effective date. Accordingly, the standard will be effective for Lantronix in the fiscal year beginning July 1, 2018, with an option to adopt the standard for the fiscal year beginning July 1, 2017. We are currently evaluating this standard and have not yet selected a transition method, or the effective date on which we plan to adopt the standard, nor have we determined the effect of the standard on our financial statements and related disclosures. In August 2014, the FASB issued a new standard that will require management of an entity to assess, for each annual and interim period, if there is substantial doubt about the entitys ability to continue as a going concern within one year of the financial statement issuance date. The definition of substantial doubt within the new standard incorporates a likelihood threshold of probable similar to the use of that term under current U.S. GAAP for loss contingencies. Certain disclosures will be required if conditions give rise to substantial doubt. The standard will be effective for Lantronix in the fiscal year beginning July 1, 2016. Early adoption is permitted. We are currently evaluating the impact of this standard on our financial statements and related disclosures. In July 2015, the FASB issued final guidance that simplifies the subsequent measurement of inventory for which cost is determined by methods other than last-in first-out (LIFO) and the retail inventory method. For inventory within the scope of the new guidance, entities will be required to compare the cost of inventory t |
2. Supplemental Financial Infor
2. Supplemental Financial Information | 12 Months Ended |
Jun. 30, 2015 | |
Supplemental Financial Information Details - Other Liabilities | |
2. Supplemental Financial Information | Inventories The following table presents details of our inventories: June 30, 2015 2014 (In thousands) Finished goods $ 6,044 $ 5,162 Raw materials 1,835 1,890 Inventory at distributors 1,337 1,242 Large scale integration chips * 287 110 Inventories, net $ 9,503 $ 8,404 * This item is sold individually and embedded into our products. Property and Equipment The following table presents details of property and equipment: June 30, 2015 2014 (In thousands) Computer and office equipment $ 3,547 $ 3,368 Furniture and fixtures 990 966 Production, development and warehouse equipment 3,595 3,151 Construction-in-progress 282 250 Property and equipment, gross 8,414 7,735 Less accumulated depreciation (6,943 ) (6,248 ) Property and equipment, net $ 1,471 $ 1,487 As of June 30, 2015, approximately $29,000 of our net property and equipment was held in our foreign subsidiaries, mainly consisting of office equipment and furniture. The following table presents details of property and equipment recorded in connection with capital lease obligations: June 30, 2015 2014 (In thousands) Property and equipment $ 386 $ 160 Less accumulated depreciation (108 ) (102 ) Total $ 278 $ 58 The amortization of property and equipment recorded in connection with capital lease obligations is included within depreciation expense recorded in the applicable functional line items on our consolidated statements of operations. The following table presents details of the unamortized costs capitalized as internal use software included in computer and office equipment: June 30, 2015 2014 (In thousands) Capitalized internal use software $ $ 213 The following table presents the details of depreciation of capitalized internal use software: Years Ended June 30, 2015 2014 (In thousands) Depreciation of capitalized internal use software $ 213 $ 237 Warranty Reserve The following table presents details of our warranty reserve: Years Ended June 30, 2015 2014 (In thousands) Beginning balance $ 150 $ 193 Charged to cost of revenues 112 40 Usage (99 ) (83 ) Ending balance $ 163 $ 150 Other Liabilities The following table presents details of our other liabilities: June 30, 2015 2014 (In thousands) Current Customer deposits and refunds $ 854 $ 711 Accrued raw materials purchases 916 1,138 Deferred revenue 690 128 Capital lease obligations 62 47 Taxes payable 247 235 Accrued operating expenses 1,080 1,159 Total other current liabilities $ 3,849 $ 3,418 Non-current Deferred rent $ $ 40 Deferred revenue 80 91 Total other non-current liabilities $ 80 $ 131 The increase in deferred revenue is primarily related to two customer projects that are expected to be completed during the first half of the fiscal year ending June 30, 2016. Advertising Expenses The following table presents details of our advertising expenses: Years Ended June 30, 2015 2014 (In thousands) Advertising expenses $ 185 $ 168 Computation of Net Loss per Share The following table presents the computation of net loss per share: Years Ended June 30, 2015 2014 (In thousands, except per share data) Numerator: Net loss $ (2,771 ) $ (933 ) Denominator: Weighted-average shares outstanding (basic and diluted) 14,904 14,657 Net loss per share (basic and diluted) $ (0.19 ) $ (0.06 ) 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. Years Ended June 30, 2015 2014 (In thousands) Common stock equivalents 2,323 1,693 Supplemental Cash Flow Information The following table presents non-cash investing and financing transactions excluded from the consolidated statements of cash flows: Years Ended June 30, 2015 2014 (In thousands) Accrued property and equipment paid for in the subsequent period $ 46 $ 102 Non-cash acquisition of property and equipment under capital leases $ 217 $ |
3. Bank Line of Credit
3. Bank Line of Credit | 12 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
3. Bank Line of Credit | On September 30, 2014, we entered into an amendment (the Amendment) to our existing Loan and Security Agreement dated May 23, 2006 (as amended, the Loan Agreement) with Silicon Valley Bank (SVB). The Amendment provides, among other things, for (i) a renewal of our $4.0 million revolving line of credit with an extended maturity date of September 30, 2016 and (ii) a modification of the revolving credit line borrowing base formula to include a portion of our foreign accounts receivable to the borrowing base and increase the borrowing limit related to domestic accounts receivable. The Loan Agreement provides for an interest rate per annum equal to the greater of the prime rate plus 0.75% or 4.0%, provided that we maintain a monthly quick ratio of 1.0 to 1.0 or greater. The quick ratio measures our ability to use our cash and cash equivalents maintained at SVB to extinguish or retire our current liabilities immediately. If this ratio is not met, the interest rate will become the greater of the prime rate plus 1.25% or 4.0%. The Loan Agreement includes a covenant requiring us to maintain a certain Minimum Tangible Net Worth (Minimum TNW), which is currently required to be at least $6.0 million. This amount is subject to adjustment upward to the extent we raise additional equity or debt financing or achieve net income in future quarters. Our Actual Tangible Net Worth (Actual TNW) is calculated as total stockholders equity, less goodwill. If we continue to incur net losses, we may have difficulty satisfying the Minimum TNW financial covenant in the future, in which case we may be unable to borrow funds under the Loan Agreement and any amounts outstanding may need to be repaid immediately. The following table sets forth the Minimum TNW compared to our Actual TNW: June 30, 2015 (In thousands) Minimum TNW $ 6,000 Actual TNW $ 9,221 The following table presents certain information with respect to the Loan Agreement with SVB: June 30, 2015 2014 (In thousands) Outstanding borrowings on the line of credit $ 700 $ Available borrowing capacity on the line of credit $ 1,736 $ 1,721 Outstanding letters of credit $ 110 $ 113 Our outstanding letters of credit at June 30, 2015 and 2014 were used as security deposits. |
4. Stockholders' Equity
4. Stockholders' Equity | 12 Months Ended |
Jun. 30, 2015 | |
Equity [Abstract] | |
4. Stockholders' Equity | Stock Incentive Plans We have stock incentive plans in effect under which non-qualified and incentive 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. Our current stock incentive program is governed by our Amended and Restated 2010 Stock Incentive Plan (Amended and Restated 2010 SIP), which was approved by our board of directors and shareholders during the fiscal year ended June 30, 2013. Upon approval of this plan, the number of shares of common stock reserved for issuance pursuant to awards made under the plan increased from 1,350,000 to 3,050,000. In addition, shares reserved for issuance under this plan include rollover shares, which are any shares subject to equity compensation awards granted under the Lantronix, Inc. Amended and Restated 2000 Stock Plan that expire or otherwise terminate without having been exercised in full or that are forfeited or repurchased by Lantronix by virtue of their failure to vest. A maximum of 2,100,000 such shares are eligible for rollover. The Amended and Restated 2010 SIP authorizes awards of stock options (both incentive and non-qualified), stock appreciation rights, non-vested shares, restricted stock units and performance shares. New shares are issued to satisfy stock option exercises and share issuances. As of June 30, 2015, approximately 980,000 shares remain available for issuance under the Amended and Restated 2010 SIP. The Compensation Committee of our board of directors determines eligibility, vesting schedules and exercise prices for options and shares granted under the plans. Stock option awards are generally granted with an exercise price equal to the market price of our common stock at the date of grant. Stock option awards generally have a contractual term of 7 to 10 years. Share-based awards generally vest and become exercisable over a one to four year service period. As of June 30, 2015, no stock appreciation rights, non-vested shares, or performance shares were outstanding. No income tax benefit was realized from activity in the share-based plans during the fiscal years ended June 30, 2015 and 2014. Stock Option Awards The fair value of each stock option grant was estimated on the grant date using the Black-Scholes-Merton (BSM) option-pricing formula. Expected volatilities were based on the historical volatility of our stock price. The expected term of options granted was estimated using the simplified method, as permitted by guidance issued by the Securities and Exchange Commission. We use the simplified method because we believe we are unable to rely on our limited historical exercise data or alternative information as a reasonable basis upon which to estimate the expected term of such options. The risk-free interest rate assumption was based on the U.S. Treasury interest rates appropriate for the expected term of our stock options. The fair value of options granted was estimated using the following weighted-average assumptions for all of our stock option plans: Years Ended June 30, 2015 2014 Expected term (in years) 4.82 4.96 Expected volatility 67% 74% Risk-free interest rate 1.63% 1.61% Dividend yield 0.00% 0.00% The following table presents a summary of activity under all of our stock option plans: Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Shares Per Share Term Value (In thousands) (In years) (In thousands) Balance at June 30, 2014 2,719 $ 2.35 Options granted 990 1.86 Options forfeited (38 ) 1.87 Options expired (75 ) 4.28 Options exercised (50 ) 1.46 Balance at June 30, 2015 3,546 $ 2.19 4.6 $ 92 Vested or expected to vest at June 30, 2015 3,344 $ 2.21 4.5 $ 89 Options exercisable at June 30, 2015 2,167 $ 2.42 3.9 $ 64 The following table presents a summary of grant-date fair value and intrinsic value information for all of our stock option plans: Years Ended June 30, 2015 2014 (In thousands, except per share data) Weighted-average grant-date fair value per share $ 1.04 $ 0.95 Intrinsic value of options exercised $ 14 $ 30 Restricted Stock Units The fair value of our restricted stock units (RSUs) is based on the closing market price of our common stock on the date of grant. The following table presents a summary of activity with respect to RSUs during the fiscal year ended June 30, 2015: Number of Shares Weighted Average Grant Date Fair Value per Share (In thousands) Balance of restricted stock units at June 30, 2014 61 $ 1.40 Restricted stock units granted 28 1.98 Restricted stock units vested (61 ) 1.40 Balance of restricted stock units at June 30, 2015 28 $ 1.98 Employee Stock Purchase Plan We have an Employee Stock Purchase Plan (the ESPP), under which 1,300,000 shares of our common stock were initially reserved for future issuance. The ESPP is intended to provide employees with an opportunity to purchase our common stock through accumulated payroll deductions. Each of our employees (including officers) is eligible to participate in the ESPP, subject to certain limitations as defined in the ESPP. The ESPP is implemented by consecutive, overlapping offering periods lasting 24 months (an Offering Period), with a new Offering Period commencing on the first trading day on or after May 16 and November 16 of each year. Common stock may be purchased under the ESPP every six months (a Purchase Period), at a price not less than 85% of the lesser of the fair market value of our common stock on the (i) the first trading day of each Offering Period or (ii) the last trading day of each Purchase Period. To the extent the fair market value of our common stock on the enrollment date of a new Offering Period is lower than the fair market value of our common stock on the enrollment date of the immediately preceding Offering Period, then all participants in the immediately preceding Offering Period will be automatically withdrawn from such Offering Period immediately after the exercise of their options on the exercise date immediately preceding the new Offering Period and automatically re-enrolled in the new Offering Period as of the first day thereof. Generally, a participant in the ESPP may withdraw from an Offering Period at any time without affecting his or her eligibility to participate in future Offering Periods and may increase or decrease the rate of their payroll deductions during an Offering Period. The per share fair value of stock purchase rights granted in connection with the ESPP was estimated using the following weighted average assumptions: Years Ended June 30, 2015 2014 Expected term (in years) 1.25 1.22 Expected volatility 57% 53% Risk-free interest rate 0.32% 0.19% Dividend yield 0.00% 0.00% The following table presents a summary of activity under our ESPP: Year Ended June 30, 2015 (In thousands, except per share data) Shares available for issuance at June 30, 2014 1,126 Shares issued (220 ) Shares available for issuance at June 30, 2015 906 Weighted average purchase price per share $ 1.26 Intrinsic value of ESPP shares on purchase date $ 101 Share-Based Compensation Expense The following table presents a summary of share-based compensation expense included in each functional line item on our consolidated statements of operations: Years Ended June 30, 2015 2014 (In thousands) Cost of revenues $ 69 $ 45 Selling, general and administrative 745 606 Research and development 201 218 Total share-based compensation expense $ 1,015 $ 869 The following table summarizes the remaining unrecognized share-based compensation expense related to our outstanding share-based awards as of June 30, 2015: Remaining Unrecognized Compensation Cost Remaining Weighted Average Years to Recognize (In thousands) Stock options $ 1,248 2.6 Restricted stock units 3 0.1 Stock purchase rights under ESPP 72 2.3 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 will increase to the extent that we grant additional share-based awards. |
5. 401(k) Plan
5. 401(k) Plan | 12 Months Ended |
Jun. 30, 2015 | |
Compensation and Retirement Disclosure [Abstract] | |
5. 401(k) Plan | We have a savings plan (the Plan) which is qualified under Section 401(k) of the Internal Revenue Code. Eligible employees may elect to make contributions to the Plan through salary deferrals up to 100% of their base pay, subject to limitations. In October 2014, we reinstated a limited matching contribution under which we made approximately $84,000 in contributions to participants in the Plan during the fiscal year ended June 30, 2015. In addition, we have the ability to make discretionary profit sharing contributions, subject to limitations. During the fiscal years ended June 30, 2015 and 2014, we made no such contributions to the Plan. |
6. Litigation
6. Litigation | 12 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
6. Litigation | From time to time, we are subject to other 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. |
7. Income Taxes
7. Income Taxes | 12 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
7. Income Taxes | The income tax provision consists of the following components: Years Ended June 30, 2015 2014 (In thousands) Current: Federal $ 2 $ State 3 1 Foreign 53 60 58 61 Deferred: Federal State Provision for income taxes $ 58 $ 61 The following table presents U.S. and foreign income (loss) before income taxes: Years Ended June 30, 2015 2014 (In thousands) United States $ (2,569 ) $ (984 ) Foreign (144 ) 112 Loss before income taxes $ (2,713 ) $ (872 ) The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows: Years Ended June 30, 2015 2014 (In thousands) Deferred tax assets: Tax losses and credits $ 31,097 $ 31,443 Reserves not currently deductible 2,780 2,693 Deferred compensation 593 2,640 Inventory capitalization 1,007 1,013 Marketing rights 263 368 Depreciation 453 494 Other 185 Gross deferred tax assets 36,378 38,651 Valuation allowance (35,994 ) (37,853 ) Deferred tax assets, net 384 798 Deferred tax liabilities: State taxes (384 ) (798 ) Deferred tax liabilities (384 ) (798 ) Net deferred tax assets (liabilities) $ $ We have recorded a valuation allowance against our net deferred tax assets. If or when realized, the tax benefits relating to, and the reversal of, approximately $4.3 million of the valuation allowance will be accounted for as an increase in additional paid-in capital as a result of tax deductible compensation arising from stock option exercises. The valuation allowance was established due to uncertainties surrounding the realization of the deferred tax assets. The following table presents a reconciliation of the income tax provision to taxes computed at the U.S. federal statutory rate: Years Ended June 30, 2015 2014 (In thousands) Statutory federal provision (benefit) for income taxes $ (923 ) $ (292 ) Increase (decrease) resulting from: State taxes, net of federal benefit (56 ) Change in tax rate 569 Stock options 1,986 Permanent differences 15 20 Change in valuation allowance (1,909 ) 24 Deferred compensation 209 191 Foreign tax rate variances 102 22 Other 65 96 Provision for income taxes $ 58 $ 61 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. As a result of the annual limitation, a portion of these carryforwards may expire before ultimately becoming available to reduce future income tax liabilities. The following table summarizes our NOLs: June 30, 2015 (In thousands) Federal $ 87,726 State $ 29,517 Our NOL carryovers for federal income tax purposes begin to expire in the fiscal year ending June 30, 2021. Our NOL carryovers for state income tax purposes began to expire in the fiscal year ended June 30, 2013. Deferred income taxes were not provided on undistributed earnings of certain foreign subsidiaries because such undistributed earnings are expected to be reinvested indefinitely. The following table summarizes our liability for uncertain tax positions for the fiscal year ended June 30, 2015 (in thousands): Balance as of June 30, 2014 $ 6,700 Change in balances related to uncertain tax positions Balance as of June 30, 2015 $ 6,700 At June 30, 2015, we had $6.7 million of gross unrecognized tax benefits. Of the total unrecognized benefits at June 30, 2015, $6.6 million was recorded as a reduction to deferred tax assets, which caused a corresponding reduction in our valuation allowance of $6.6 million. To the extent such portion of unrecognized tax benefits is recognized at a time such valuation allowance no longer exists, the recognition would reduce the effective tax rate. Our continuing practice is to recognize interest and penalties related to income tax matters in income tax expense. During the fiscal years ended June 30, 2015 and 2014 we recorded an immaterial expense for interest and penalties related to income tax matters in the provision for income taxes. At June 30, 2015, we had approximately $155,000 of accrued interest and penalties related to uncertain tax positions. At June 30, 2015, our fiscal 2012 through 2015 tax years remain open to examination by the federal taxing jurisdiction and our fiscal 2011 through 2015 tax years remain open to examination by the state taxing jurisdictions. However, we have NOLs beginning in fiscal 2001 which would cause the statute of limitations to remain open for the year in which the NOL was incurred. Our fiscal 2008 through fiscal 2015 tax years remain open to examination by foreign taxing authorities. We do not anticipate that the amount of unrecognized tax benefits as of June 30, 2015 will significantly increase or decrease within the next 12 months. |
8. Commitments and Contingencie
8. Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
8. Commitments and Contingencies | Leases We lease office equipment and office and warehouse facilities under non-cancelable capital and operating leases. In January 2015, we entered into a building lease agreement (the Lease) with the Irvine Company, LLC (the Landlord), in which we have leased approximately 27,000 square feet of office space for our corporate headquarters in Irvine, California. The Lease commenced in early July 2015, when we took possession of the premises and commenced our regular business activities. The term of the Lease is 65 months from the commencement date. The Lease replaced our existing corporate headquarters lease with the Landlord, which terminated effective as of the day preceding the commencement date of the Lease, with no early termination fee. Additionally, the Landlord provided us a tenant improvement allowance of up to $242,600 for tenant improvements and other qualified expenses. The following schedule represents minimum lease payments for all non-cancelable operating and capital leases as of June 30, 2015: Capital Operating Years Ending June 30, Leases Leases Total (In thousands) 2016 $ 71 $ 685 $ 756 2017 61 574 635 2018 55 517 572 2019 47 504 551 2020 526 526 Thereafter 230 230 Total 234 $ 3,036 $ 3,270 Amounts representing interest (20 ) Present value of net minimum lease payments 214 Less: capital lease obligations, short-term portion (included in other current liabilities) 62 Capital lease obligations, long-term portion $ 152 The following table presents rent expense: Years Ended June 30, 2015 2014 (In thousands) Rent expense $ 757 $ 806 |
9. Significant Geographic, Prod
9. Significant Geographic, Product Line, Customer and Supplier Information | 12 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
9. Significant Geographic, Product Line, Customer and Supplier Information | The following table presents our sales within geographic regions as a percentage of net revenue: Years Ended June 30, 2015 2014 Americas 54% 53% Europe, Middle East, and Africa 30% 30% Asia Pacific 8% 9% Japan 8% 8% Total 100% 100% The following table presents sales to significant countries as a percentage of net revenue: Years Ended June 30, 2015 2014 U.S. and Canada 54% 53% Germany 17% 17% United Kingdom 9% 8% Japan 8% 8% Customers The following table presents sales to our significant customers and related parties as a percentage of net revenue: Years Ended June 30, 2015 2014 Top five customers (1)(2) 50% 48% Ingram Micro 21% 12% Tech Data * 13% Related parties 1% 1% * Less than 10% (1) Includes Ingram Micro and Tech Data (2) All top five customers are distributors, who are part of our product distribution system No other customer represented more than 10% of our annual net revenue during these fiscal years. Related Party Transactions We have historically reported net revenues from two international customers, Lynx IT-Systeme GmbH (Lynx) and Barix AG, as related party transactions due to common ownership by our largest stockholder and Lantronix director, Bernhard Bruscha. Beginning on February 1, 2014, we no longer sell our products directly to Lynx, and therefore, as of this date, our net revenue from related parties only includes net revenues from Barix AG. Subsequent to February 1, 2014, Lynx continued to purchase our products from independent third party distributors and such sales are not included in our net revenue from related parties. As of June 30, 2015, we had approximately $59,000 in receivables outstanding from Barix AG, which is included in net accounts receivable in the accompanying Consolidated Balance Sheet. Suppliers We do not own or operate a manufacturing facility. All of our products are manufactured by third-party contract manufacturers and foundries located primarily in Asia. 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. |
1. Summary of Significant Acc16
1. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2015 | |
Accounting Policies [Abstract] | |
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. At June 30, 2015, approximately $2.9 million of our tangible assets were located outside of the United States (U.S.), and were substantially comprised of inventory held at (i) our third-party logistics provider in Hong Kong and (ii) contract manufacturers in China. |
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 the allowance for doubtful accounts, sales returns and allowances, inventory reserves, goodwill valuation, deferred income tax asset valuation allowances, share-based compensation and warranty reserves. To the extent there are material differences between our estimates and actual results, future results of operations will be affected. |
Revenue Recognition | Revenue Recognition We recognize revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred or services have been rendered; the price to the buyer is fixed or determinable; and collectability is reasonably assured. For each of the fiscal years ended June 30, 2015 and 2014, approximately 99% of our net revenues came from sales of hardware products. The remaining 1% of our net revenues in each of these years was primarily attributable to professional engineering services and extended warranty services. We sell extended warranty services which extend the warranty period for an additional one to three years, depending upon the product. Warranty net revenue is deferred and recognized ratably over the warranty service period. When product revenue is recognized, we establish an estimated allowance for future product returns based on historical returns experience. We also record reductions of revenue for pricing adjustments, such as competitive pricing programs and rebates, in the same period that the related revenue is recognized, based on approved pricing adjustments and historical experience. A significant portion of our sales are made to distributors under agreements which include a limited right to return unsold products and price protection provisions. Given these provisions, we have concluded the price to the customer is not fixed and determinable at the time we deliver products to these distributors. Accordingly, revenue and the related cost of revenue from sales to these distributors is not recognized until the distributor resells the product. In addition, when the deferred revenue attributable to any distributor exceeds their receivable balance due to Lantronix at the balance sheet date, such excess is reclassified from net accounts receivable to a customer deposit and refunds liability, which is included in other current liabilities on the accompanying consolidated balance sheets. Multiple-Element Arrangements From time to time, we may enter into arrangements with customers that provide for multiple deliverables that generally include the sale of products, professional engineering services and other product qualification or certification services (collectively, the deliverables). Pursuant to the applicable accounting guidance, when multiple deliverables in an arrangement are separated into different units of accounting, the arrangement consideration is allocated to the identified separate units that have stand-alone value at the inception of the contract based on a relative selling price hierarchy. We determine the relative selling price for a deliverable based on its vendor-specific objective evidence of selling price (VSOE), if available, third-party evidence (TPE), if VSOE is not available, and our best estimate of selling price (BESP), if neither VSOE nor TPE is available. We recognize the relative fair value of the deliverables as they are delivered assuming all other revenue recognition criteria are met. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts We maintain 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, including our assessment of the collectability of specific customer accounts, the aging of accounts receivable, our history of bad debts and general industry conditions. 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 ongoing 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 principally of cash and cash equivalents, accounts receivable, contract manufacturers receivable, accounts payable, accrued liabilities and long-term debt. 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 that 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. We do not have any assets or liabilities that were measured at fair value on a recurring basis, and during the years ended June 30, 2015 and June 30, 2014 did not have any assets or liabilities that were measured at fair value on a non-recurring basis. We believe all of our financial instruments recorded values approximate their current fair values because of the nature and short duration of these instruments. The fair value of long-term debt approximates its carrying value because the related effective rates of interest approximate current market rates available to us for debt with similar terms and similar remaining maturities. |
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 currency was previously the local currency 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, 2015 and 2014. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2015 or 2014. |
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 market. 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 provide for 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. |
Capitalized Internal Use Software Costs | Capitalized Internal Use Software Costs We capitalize the costs of computer software developed or obtained for internal use. Capitalized computer software costs consist of purchased software licenses and implementation costs. The capitalized software costs are being amortized on a straight-line basis over a period of three to five years. |
Goodwill | Goodwill Goodwill is recorded as the difference, if any, between the aggregate consideration paid for an acquisition and the fair value of the 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. Based on a qualitative assessment, if we conclude that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, we conduct a two-step goodwill impairment test. The first step of the impairment test involves comparing the estimated fair value of our single reporting unit with its carrying value, including goodwill. If the carrying amount of the reporting unit exceeds the reporting units fair value, we perform the second step of the analysis, which involves comparing the implied fair value of the reporting units goodwill with the carrying value of that goodwill, the difference of which represents the impairment loss. During the fourth quarter of the fiscal year ended June 30, 2015, we made a qualitative assessment of whether goodwill impairment exists 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. |
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. 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 stock options and other equity instruments over the requisite service period. We record amortization of share-based compensation expense ratably over the requisite service period of the grant. We also estimate forfeitures based on historical experience in our calculation of share-based compensation expense. |
Net Income (Loss) Per Share | Net Income (Loss) Per Share Net income (loss) per share (basic) is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the fiscal year. Net income (loss) per share (diluted) 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. We believe our current process for developing products is essentially completed concurrently with the establishment of technological feasibility. Software development costs incurred after the establishment of technological feasibility have not been material and, therefore, have been expensed as incurred. |
Warranty | Warranty The warranty periods for our products generally 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 additionally for any known product warranty issues. Although we engage in product quality programs and processes, our warranty obligation is affected by product failure rates, use of materials or service delivery costs that differ from our estimates. As a result, increases or decreases to warranty reserves could be required, which could impact our gross margins. |
Advertising Expenses | Advertising Expenses Advertising costs are expensed in the period incurred. |
Segment Information | Segment Information We have one operating and reportable segment. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (FASB) issued an accounting standard which will supersede existing revenue recognition guidance under current U.S. GAAP. The new standard is a comprehensive new revenue recognition model that requires a company to recognize revenue to depict the transfer of goods or services to a customer at an amount that reflects the consideration it expects to receive in exchange for those goods or services. In doing so, among other things, companies will generally need to use more judgment and make more estimates than under the current guidance. The standard permits the use of either the retrospective or cumulative effect transition method. In July 2015, the FASB deferred the effective date of the standard by an additional year; however, it provided companies the option to adopt one year earlier, commensurate with the original effective date. Accordingly, the standard will be effective for Lantronix in the fiscal year beginning July 1, 2018, with an option to adopt the standard for the fiscal year beginning July 1, 2017. We are currently evaluating this standard and have not yet selected a transition method, or the effective date on which we plan to adopt the standard, nor have we determined the effect of the standard on our financial statements and related disclosures. In August 2014, the FASB issued a new standard that will require management of an entity to assess, for each annual and interim period, if there is substantial doubt about the entitys ability to continue as a going concern within one year of the financial statement issuance date. The definition of substantial doubt within the new standard incorporates a likelihood threshold of probable similar to the use of that term under current U.S. GAAP for loss contingencies. Certain disclosures will be required if conditions give rise to substantial doubt. The standard will be effective for Lantronix in the fiscal year beginning July 1, 2016. Early adoption is permitted. We are currently evaluating the impact of this standard on our financial statements and related disclosures. In July 2015, the FASB issued final guidance that simplifies the subsequent measurement of inventory for which cost is determined by methods other than last-in first-out (LIFO) and the retail inventory method. For inventory within the scope of the new guidance, entities will be required to compare the cost of inventory t |
2. Supplemental Financial Inf17
2. Supplemental Financial Information (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Supplemental Financial Information Details - Other Liabilities | |
Schedule of Inventory | June 30, 2015 2014 (In thousands) Finished goods $ 6,044 $ 5,162 Raw materials 1,835 1,890 Inventory at distributors 1,337 1,242 Large scale integration chips * 287 110 Inventories, net $ 9,503 $ 8,404 |
Schedule of Property and Equipment | June 30, 2015 2014 (In thousands) Computer and office equipment $ 3,547 $ 3,368 Furniture and fixtures 990 966 Production, development and warehouse equipment 3,595 3,151 Construction-in-progress 282 250 Property and equipment, gross 8,414 7,735 Less accumulated depreciation (6,943 ) (6,248 ) Property and equipment, net $ 1,471 $ 1,487 |
Schedule of Capital Leased Assets | June 30, 2015 2014 (In thousands) Property and equipment $ 386 $ 160 Less accumulated depreciation (108 ) (102 ) Total $ 278 $ 58 |
Schedule of Unamortized Capitalized Software | June 30, 2015 2014 (In thousands) Capitalized internal use software $ $ 213 |
Schedule of Depreciation of capitalized internal use software | Years Ended June 30, 2015 2014 (In thousands) Depreciation of capitalized internal use software $ 213 $ 237 |
Schedule of Warranty Reserve | Years Ended June 30, 2015 2014 (In thousands) Beginning balance $ 150 $ 193 Charged to cost of revenues 112 40 Usage (99 ) (83 ) Ending balance $ 163 $ 150 |
Schedule of Other Liabilities | June 30, 2015 2014 (In thousands) Current Customer deposits and refunds $ 854 $ 711 Accrued raw materials purchases 916 1,138 Deferred revenue 690 128 Capital lease obligations 62 47 Taxes payable 247 235 Accrued operating expenses 1,080 1,159 Total other current liabilities $ 3,849 $ 3,418 Non-current Deferred rent $ $ 40 Deferred revenue 80 91 Total other non-current liabilities $ 80 $ 131 |
Schedule of Advertising Expenses | Years Ended June 30, 2015 2014 (In thousands) Advertising expenses $ 185 $ 168 |
Schedule of Computation of Net Loss per Share | Years Ended June 30, 2015 2014 (In thousands, except per share data) Numerator: Net loss $ (2,771 ) $ (933 ) Denominator: Weighted-average shares outstanding (basic and diluted) 14,904 14,657 Net loss per share (basic and diluted) $ (0.19 ) $ (0.06 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Years Ended June 30, 2015 2014 (In thousands) Common stock equivalents 2,323 1,693 |
Schedule of Supplemental Cash Flow Information | Years Ended June 30, 2015 2014 (In thousands) Accrued property and equipment paid for in the subsequent period $ 46 $ 102 Non-cash acquisition of property and equipment under capital leases $ 217 $ |
3. Bank Line of Credit (Tables)
3. Bank Line of Credit (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Schedule of Minimum Tangible Net Worth | June 30, 2015 (In thousands) Minimum TNW $ 6,000 Actual TNW $ 9,221 |
Availability under the Line of Credit | June 30, 2015 2014 (In thousands) Outstanding borrowings on the line of credit $ 700 $ Available borrowing capacity on the line of credit $ 1,736 $ 1,721 Outstanding letters of credit $ 110 $ 113 |
4. Stockholders' Equity (Tables
4. Stockholders' Equity (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Schedule of share-based compensation expense by functional line item | Years Ended June 30, 2015 2014 (In thousands) Cost of revenues $ 69 $ 45 Selling, general and administrative 745 606 Research and development 201 218 Total share-based compensation expense $ 1,015 $ 869 |
Schedule of unrecognized share-based compensation expense | Remaining Unrecognized Compensation Cost Remaining Weighted Average Years to Recognize (In thousands) Stock options $ 1,248 2.6 Restricted stock units 3 0.1 Stock purchase rights under ESPP 72 2.3 |
Stock Options | |
Schedule of Stock Options Valuation Assumptions | Years Ended June 30, 2015 2014 Expected term (in years) 4.82 4.96 Expected volatility 67% 74% Risk-free interest rate 1.63% 1.61% Dividend yield 0.00% 0.00% |
Summary of stock option activity | Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Shares Per Share Term Value (In thousands) (In years) (In thousands) Balance at June 30, 2014 2,719 $ 2.35 Options granted 990 1.86 Options forfeited (38 ) 1.87 Options expired (75 ) 4.28 Options exercised (50 ) 1.46 Balance at June 30, 2015 3,546 $ 2.19 4.6 $ 92 Vested or expected to vest at June 30, 2015 3,344 $ 2.21 4.5 $ 89 Options exercisable at June 30, 2015 2,167 $ 2.42 3.9 $ 64 |
Summary of option grant-date fair value and intrinsic value information | Years Ended June 30, 2015 2014 (In thousands, except per share data) Weighted-average grant-date fair value per share $ 1.04 $ 0.95 Intrinsic value of options exercised $ 14 $ 30 |
Restricted Stock Units (RSUs) [Member] | |
Summary of other-than-option activity | Number of Shares Weighted Average Grant Date Fair Value per Share (In thousands) Balance of restricted stock units at June 30, 2014 61 $ 1.40 Restricted stock units granted 28 1.98 Restricted stock units vested (61 ) 1.40 Balance of restricted stock units at June 30, 2015 28 $ 1.98 |
ESPP | |
Schedule of Stock Options Valuation Assumptions | Years Ended June 30, 2015 2014 Expected term (in years) 1.25 1.22 Expected volatility 57% 53% Risk-free interest rate 0.32% 0.19% Dividend yield 0.00% 0.00% |
Summary of other-than-option activity | Year Ended June 30, 2015 (In thousands, except per share data) Shares available for issuance at June 30, 2014 1,126 Shares issued (220 ) Shares available for issuance at June 30, 2015 906 Weighted average purchase price per share $ 1.26 Intrinsic value of ESPP shares on purchase date $ 101 |
7. Income Taxes (Tables)
7. Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | Years Ended June 30, 2015 2014 (In thousands) Current: Federal $ 2 $ State 3 1 Foreign 53 60 58 61 Deferred: Federal State Provision for income taxes $ 58 $ 61 |
Schedule of Income before Income Tax, Domestic and Foreign | Years Ended June 30, 2015 2014 (In thousands) United States $ (2,569 ) $ (984 ) Foreign (144 ) 112 Loss before income taxes $ (2,713 ) $ (872 ) |
Schedule of Deferred Tax Assets and Liabilities | Years Ended June 30, 2015 2014 (In thousands) Deferred tax assets: Tax losses and credits $ 31,097 $ 31,443 Reserves not currently deductible 2,780 2,693 Deferred compensation 593 2,640 Inventory capitalization 1,007 1,013 Marketing rights 263 368 Depreciation 453 494 Other 185 Gross deferred tax assets 36,378 38,651 Valuation allowance (35,994 ) (37,853 ) Deferred tax assets, net 384 798 Deferred tax liabilities: State taxes (384 ) (798 ) Deferred tax liabilities (384 ) (798 ) Net deferred tax assets (liabilities) $ $ |
Schedule of Effective Income Tax Reconciliation | Years Ended June 30, 2015 2014 (In thousands) Statutory federal provision (benefit) for income taxes $ (923 ) $ (292 ) Increase (decrease) resulting from: State taxes, net of federal benefit (56 ) Change in tax rate 569 Stock options 1,986 Permanent differences 15 20 Change in valuation allowance (1,909 ) 24 Deferred compensation 209 191 Foreign tax rate variances 102 22 Other 65 96 Provision for income taxes $ 58 $ 61 |
Summary of Operating Loss Carryforwards | June 30, 2015 (In thousands) Federal $ 87,726 State $ 29,517 |
Summary of uncertain tax position | Balance as of June 30, 2014 $ 6,700 Change in balances related to uncertain tax positions Balance as of June 30, 2015 $ 6,700 |
8. Commitments and Contingenc21
8. Commitments and Contingencies (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Minimum Lease Payments | Capital Operating Years Ending June 30, Leases Leases Total (In thousands) 2016 $ 71 $ 685 $ 756 2017 61 574 635 2018 55 517 572 2019 47 504 551 2020 526 526 Thereafter 230 230 Total 234 $ 3,036 $ 3,270 Amounts representing interest (20 ) Present value of net minimum lease payments 214 Less: capital lease obligations, short-term portion (included in other current liabilities) 62 Capital lease obligations, long-term portion $ 152 |
Schedule of Rent Expense | Years Ended June 30, 2015 2014 (In thousands) Rent expense $ 757 $ 806 |
9. Significant Geographic, Pr22
9. Significant Geographic, Product Line, Customer and Supplier Information (Tables) | 12 Months Ended |
Jun. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geographic Area | Years Ended June 30, 2015 2014 Americas 54% 53% Europe, Middle East, and Africa 30% 30% Asia Pacific 8% 9% Japan 8% 8% Total 100% 100% |
Schedule of Significant countries as a percentage of net revenue | Years Ended June 30, 2015 2014 U.S. and Canada 54% 53% Germany 17% 17% United Kingdom 9% 8% Japan 8% 8% |
Schedule of Revenue by Major Customers | Years Ended June 30, 2015 2014 Top five customers (1)(2) 50% 48% Ingram Micro 21% 12% Tech Data * 13% Related parties 1% 1% |
2. Supplemental Financial Inf23
2. Supplemental Financial Information (Details - Inventories) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Supplemental Financial Information Details - Other Liabilities | ||
Finished goods | $ 6,044 | $ 5,162 |
Raw materials | 1,835 | 1,890 |
Inventory at distributors | 1,337 | 1,242 |
Large scale integration chips | 287 | 110 |
Inventories, net | $ 9,503 | $ 8,404 |
2. Supplemental Financial Inf24
2. Supplemental Financial Information (Details - Property and Equipment) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Property and equipment, gross | $ 8,414 | $ 7,735 |
Less accumulated depreciation | (6,943) | (6,248) |
Property and equipment, net | 1,471 | 1,487 |
Computer and office equipment | ||
Property and equipment, gross | 3,547 | 3,368 |
Furniture and Fixtures | ||
Property and equipment, gross | 990 | 966 |
Production, development and warehouse equipment | ||
Property and equipment, gross | 3,595 | 3,151 |
Construction in Progress [Member] | ||
Property and equipment, gross | $ 282 | $ 250 |
2. Supplemental Financial Inf25
2. Supplemental Financial Information (Details - Capital lease obligations) - Capital lease obligations - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Property and equipment | $ 386 | $ 160 |
Less accumulated depreciation | (108) | (102) |
Total | $ 278 | $ 58 |
2. Supplemental Financial Inf26
2. Supplemental Financial Information (Details - Capitalized software) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Supplemental Financial Information Details - Other Liabilities | ||
Capitalized internal use software | $ 0 | $ 213 |
Depreciation of capitalized internal use software | $ 213 | $ 237 |
2. Supplemental Financial Inf27
2. Supplemental Financial Information (Details - Warranty reserve) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Supplemental Financial Information Details - Other Liabilities | ||
Beginning balance | $ 150 | $ 193 |
Charged to cost of revenues | 112 | 40 |
Usage | (99) | (83) |
Ending balance | $ 163 | $ 150 |
2. Supplemental Financial Inf28
2. Supplemental Financial Information (Details - Other liabilities) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Current | ||
Customer deposits and refunds | $ 854 | $ 711 |
Accrued raw materials purchases | 916 | 1,138 |
Deferred revenue | 690 | 128 |
Capital lease obligations | 62 | 47 |
Taxes payable | 247 | 235 |
Other accrued liabilities | 1,080 | 1,159 |
Total other current liabilities | 3,849 | 3,418 |
Non-current | ||
Deferred rent | 0 | 40 |
Deferred revenue | 80 | 91 |
Total other non-current liabilities | $ 80 | $ 131 |
2. Supplemental Financial Inf29
2. Supplemental Financial Information (Details - Advertising expense) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Supplemental Financial Information Details - Other Liabilities | ||
Advertising expenses | $ 185 | $ 168 |
2. Supplemental Financial Inf30
2. Supplemental Financial Information (Details - Net Loss per Share) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Numerator: | ||
Net loss | $ (2,771) | $ (933) |
Denominator: | ||
Weighted-average shares outstanding (basic and diluted) | 14,904,000 | 14,657,000 |
Net loss per share (basic and diluted) | $ (.19) | $ (0.06) |
2. Supplemental Financial Inf31
2. Supplemental Financial Information (Details - Equivalents) - shares | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Supplemental Financial Information Details - Other Liabilities | ||
Common stock equivalents | 2,323,000 | 1,693,000 |
2. Supplemental Financial Inf32
2. Supplemental Financial Information (Details - Non-cash acquisition) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Supplemental Financial Information Details - Other Liabilities | ||
Accrued property and equipment paid for in the subsequent period | $ 46 | $ 102 |
Non-cash acquisition of property and equipment under capital leases | $ 217 | $ 0 |
2. Supplemental Financial Inf33
2. Supplemental Financial Information (Details Narrative) $ in Thousands | Jun. 30, 2015USD ($) |
Foreign Subsidiaries | |
Fixed assets held in foreign subsidiaries | $ 29 |
3. Bank Line of Credit (Details
3. Bank Line of Credit (Details - TNW) $ in Thousands | Jun. 30, 2015USD ($) |
Debt Disclosure [Abstract] | |
Minimum TNW | $ 6,000 |
Actual TNW | $ 9,221 |
3. Bank Line of Credit (Detai35
3. Bank Line of Credit (Details - Credit Line) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Debt Disclosure [Abstract] | ||
Term Loan | $ 700 | $ 0 |
Available borrowing capacity | 1,736 | 1,721 |
Outstanding letters of credit | $ 110 | $ 113 |
3. Bank Line of Credit and Debt
3. Bank Line of Credit and Debt (Details Narrative) | 12 Months Ended |
Jun. 30, 2015 | |
Debt Disclosure [Abstract] | |
Revolving Line | Two-year $4.0 million maximum revolving line |
Term Loan | Three-year $2.0 million term loan |
Maturity date | Sep. 30, 2014 |
Interest rate description | Rate per annum equal to the greater of the prime rate plus 0.75% or 4.0%, provided that we maintain a monthly quick ratio of 1.0 to 1.0 or greater. The quick ratio measures our ability to use our cash and cash equivalents maintained at SVB (or quick assets) to extinguish or retire our current liabilities immediately. If this ratio is not met, the interest rate will become the greater of the prime rate plus 1.25% or 4.0%. Additionally, the interest rate on the Term Loan was reduced to the prime rate plus 1.50%, payable monthly. |
4. Stockholders Equity (Details
4. Stockholders Equity (Details - Option assumptions) - Stock Options | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Expected term (in years) | 4 years 9 months 25 days | 4 years 11 months 16 days |
Expected volatility | 67.00% | 74.00% |
Risk-free interest rate | 1.63% | 1.61% |
Dividend yield | 0.00% | 0.00% |
4. Stockholders Equity (Detai38
4. Stockholders Equity (Details - Option activity) - Jun. 30, 2015 - Stock Options - USD ($) $ / shares in Units, $ in Thousands | Total |
Number of shares | |
Number of Shares Options Outstanding, Beginning | 2,719,000 |
Number of Shares Options Granted | 990,000 |
Number of Shares Options Forfeited | (38,000) |
Number of Shares Options Expired | (75,000) |
Number of Shares Options Exercised | (50,000) |
Number of Shares Options Outstanding, Ending | 3,546,000 |
Number of Shares Options Vested or expected to vest at end of period | 3,344,000 |
Number of Shares Options Options exercisable at end of period | 2,167,000 |
Weighted Average Exercise Price per share | |
Exercise Price Outstanding, Beginning | $ 2.35 |
Exercise Price Granted | 1.86 |
Exercise Price Forfeited | 1.87 |
Exercise Price Expired | 4.28 |
Exercise Price Exercised | 1.46 |
Exercise Price Outstanding, Ending | 2.19 |
Exercise Price Vested or expected to vest at end of period | 2.21 |
Exercise Price Options exercisable at end of period | $ 2.42 |
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending | 4 years 7 months 6 days |
Weighted Average Remaining Contractual Life (in years), Options vested or expected to vest | 4 years 6 months |
Weighted Average Remaining Contractual Life (in years) Exercisable | 3 years 10 months 24 days |
Aggregate Intrinsic Value Outstanding, Ending | $ 92 |
Aggregate Intrinsic Value, Options vested or expected to vest | 89 |
Aggregate Intrinsic Value Exercisable | $ 64 |
4. Stockholders Equity (Detai39
4. Stockholders Equity (Details - Other option information) - Stock Options - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Weighted-average grant-date fair value per share | $ 1.04 | $ 0.95 |
Intrinsic value of options exercised | $ 14 | $ 30 |
4. Stockholders Equity (Detai40
4. Stockholders Equity (Details - RSU activity) - 12 months ended Jun. 30, 2015 - Restricted Stock Units (RSUs) [Member] - $ / shares | Total |
Number of RSU's Shares | |
Balance of RSU's, beginning | 61 |
Granted | 28 |
Vested | (61) |
Balance of RSU's, ending | 28 |
Weighted Average Grant Date Fair Value per share | |
RSU Shares Weighted-Average Grant-Date Fair Value per Share, beginning | $ 1.40 |
RSU Shares Granted, Weighted-Average Grant-Date Fair Value per Share | 1.98 |
RSU Shares Vested, Weighted-Average Grant-Date Fair Value per Share | 1.40 |
RSU Shares Weighted-Average Grant-Date Fair Value per Share, ending | $ 1.98 |
4. Stockholders Equity (Detai41
4. Stockholders Equity (Details - ESPP Assumptions) - ESPP | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Expected term (in years) | 1 year 3 months | 1 year 2 months 19 days |
Expected volatility | 57.00% | 53.00% |
Risk-free interest rate | 0.32% | 0.19% |
Dividend yield | 0.00% | 0.00% |
4. Stockholders Equity (Detai42
4. Stockholders Equity (Details - ESPP activity) - Jun. 30, 2015 - ESPP - USD ($) $ / shares in Units, $ in Thousands | Total |
Shares available for issuance at beginning of year | 1,126,000 |
Shares issued | (220,000) |
Shares available for future issuance at end of year | 906,000 |
Weighted average purchase price per share | $ 1.26 |
Intrinsic value of ESPP shares on purchase date | $ 101 |
4. Stockholders Equity (Detai43
4. Stockholders Equity (Details - Share based compensation) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Total share-based compensation | $ 1,015 | $ 869 |
Cost of revenues | ||
Total share-based compensation | 69 | 45 |
Selling, general and administrative | ||
Total share-based compensation | 745 | 606 |
Research and development | ||
Total share-based compensation | $ 201 | $ 218 |
4. Stockholders Equity (Detai44
4. Stockholders Equity (Details - Unrecognized expense) - Jun. 30, 2015 - USD ($) $ in Thousands | Total |
Stock Options | |
Unrecognized share-based compensation expense | $ 1,248 |
Weighted average years to recognize | 2 years 7 months 6 days |
Restricted Stock Units (RSUs) [Member] | |
Unrecognized share-based compensation expense | $ 3 |
Weighted average years to recognize | 1 month 6 days |
ESPP | |
Unrecognized share-based compensation expense | $ 72 |
Weighted average years to recognize | 2 years 3 months 18 days |
4. Stockholders' Equity (Detail
4. Stockholders' Equity (Details Narrative) | Jun. 30, 2015shares |
Stock Options | |
Shares available for issuance under stock incentive plans | 980,000 |
5. 401(k) Plan (Details Narrati
5. 401(k) Plan (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Compensation and Retirement Disclosure [Abstract] | ||
Contributions made by Company | $ 84 | $ 0 |
7. Income Taxes (Details - Inco
7. Income Taxes (Details - Income tax provision) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Current: | ||
Federal | $ 2 | $ 0 |
State | 3 | 1 |
Foreign | 53 | 60 |
Total Current taxes | 58 | 61 |
Deferred: | ||
Federal | 0 | 0 |
State | 0 | 0 |
Total Deferred Taxes | 0 | 0 |
Provision for income taxes | $ 58 | $ 61 |
7. Income Taxes (Details - US a
7. Income Taxes (Details - US and foreign income) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||
United States | $ (2,569) | $ (984) |
Foreign | (144) | 112 |
Loss before income taxes | $ (2,713) | $ (872) |
7. Income Taxes (Details - Defe
7. Income Taxes (Details - Deferred tax assets) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Deferred tax assets: | ||
Tax losses and credits | $ 31,097 | $ 31,443 |
Reserves not currently deductible | 2,780 | 2,693 |
Deferred compensation | 593 | 2,640 |
Inventory capitalization | 1,007 | 1,013 |
Marketing rights | 263 | 368 |
Depreciation | 453 | 494 |
Other | 185 | 0 |
Gross deferred tax assets | 36,378 | 38,651 |
Valuation allowance | (35,994) | (37,853) |
Deferred tax assets, net | 384 | 798 |
Deferred tax liabilities: | ||
State taxes | (384) | (798) |
Deferred tax liabilities | (384) | (798) |
Net deferred tax assets (liabilities) | $ 0 | $ 0 |
7. Income Taxes (Details - Reco
7. Income Taxes (Details - Reconciliation) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal provision (benefit) for income taxes | $ (923) | $ (292) |
Increase (decrease) resulting from: | ||
State taxes, net of federal benefit | (56) | 0 |
Change in tax rate | 569 | 0 |
Stock options | 1,986 | 0 |
Permanent differences | 15 | 20 |
Change in valuation allowance | (1,909) | 24 |
Deferred compensation | 209 | 191 |
Foreign tax rate variances | 102 | 22 |
Other | 65 | 96 |
Provision for income taxes | $ 58 | $ 61 |
7. Income Taxes (Details - NOL'
7. Income Taxes (Details - NOL's) $ in Thousands | Jun. 30, 2015USD ($) |
Income Tax Disclosure [Abstract] | |
Federal | $ 87,726 |
State | $ 29,517 |
7. Income Taxes (Details - Unce
7. Income Taxes (Details - Uncertain tax positions) $ in Thousands | 12 Months Ended |
Jun. 30, 2015USD ($) | |
Income Tax Disclosure [Abstract] | |
Balance, beginning | $ 6,700 |
Change in balances related to uncertain tax positions | 0 |
Balance, ending | $ 6,700 |
7. Income Taxes (Details Narrat
7. Income Taxes (Details Narrative) - Jun. 30, 2015 - USD ($) $ in Thousands | Total |
Income Tax Disclosure [Abstract] | |
Net operating loss expiration date | Jun. 30, 2021 |
Accrued interest and penalties related to uncertain tax positions | $ 155,000 |
8. Commitments and Contingenc54
8. Commitments and Contingencies (Details - Capital lease) - USD ($) $ in Thousands | Jun. 30, 2015 | Jun. 30, 2014 |
Capital Leases | ||
2,016 | $ 71 | |
2,017 | 61 | |
2,018 | 55 | |
2,019 | 47 | |
2,020 | 0 | |
Thereafter | 0 | |
Total | 234 | |
Amounts representing interest | (20) | |
Present value of net minimum lease payments | 214 | |
Less: capital lease obligations, short-term portion (included in other current liabilities) | 62 | |
Capital lease obligations, long-term portion | 152 | $ 7 |
Operating Leases | ||
2,016 | 685 | |
2,017 | 574 | |
2,018 | 517 | |
2,019 | 504 | |
2,020 | 526 | |
Thereafter | 230 | |
Total | 3,036 | |
Total lease payments 2016 | 756 | |
Total lease payments 2017 | 635 | |
Total lease payments 2018 | 572 | |
Total lease payments 2019 | 551 | |
Total lease payments 2020 | 526 | |
Total lease payments thereafter | 230 | |
Total lease payments | $ 3,270 |
8. Commitments and Contingenc55
8. Commitments and Contingencies (Details - rent expense) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Rent expense | $ 757 | $ 806 |
9. Significant Geographic, Cust
9. Significant Geographic, Customer and Supplier Information (Details - Geographic) - Sales Revenue, Net [Member] | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
America | ||
Geographic regions, net revenue percentage | 54.00% | 53.00% |
Euprope, Middle East, Africa | ||
Geographic regions, net revenue percentage | 30.00% | 30.00% |
Asia Pacific | ||
Geographic regions, net revenue percentage | 8.00% | 9.00% |
JAPAN | ||
Geographic regions, net revenue percentage | 8.00% | 8.00% |
9. Significant Geographic, Cu57
9. Significant Geographic, Customer and Supplier Information (Details - by country) - Sales Revenue, Net [Member] | 12 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
U.S. and Canada | ||
Significant countries, net revenue percentage | 54.00% | 53.00% |
GERMANY | ||
Significant countries, net revenue percentage | 17.00% | 17.00% |
UNITED KINGDOM | ||
Significant countries, net revenue percentage | 9.00% | 8.00% |
JAPAN | ||
Significant countries, net revenue percentage | 8.00% | 8.00% |
9. Significant Geographic, Cu58
9. Significant Geographic, Customer and Supplier Information (Details - Significant customers) - Sales Revenue, Net [Member] | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | ||
Top five customers | |||
Significant customers, net revenue percentage | 50.00% | 48.00% | |
Ingram Micro | |||
Significant customers, net revenue percentage | 21.00% | 12.00% | |
Tech Data | |||
Significant customers, net revenue percentage | 0.00% | [1] | 13.00% |
Related Parties | |||
Significant customers, net revenue percentage | 1.00% | 1.00% | |
[1] | Less than 10% |
9. Significant Geographic, Cu59
9. Significant Geographic, Customer and Supplier Information (Details Narrative) $ in Thousands | Jun. 30, 2015USD ($) |
Barix | |
Accounts receivable, related parties | $ 59 |