Lantronix (LTRX) 10-Q 28 Oct 16 2017 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Sep. 30, 2016	Oct. 21, 2016
Document And Entity Information
Entity Registrant Name	LANTRONIX INC
Entity Central Index Key	1,114,925
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
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 Common Stock, Shares Outstanding		17,253,799
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2,017

Unaudited Condensed Consolidate

Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Current assets:
Cash and cash equivalents	$ 6,097	$ 5,962
Accounts receivable, net	3,189	3,164
Inventories, net	7,390	6,584
Contract manufacturers' receivable	286	369
Prepaid expenses and other current assets	479	580
Total current assets	17,441	16,659
Property and equipment, net	1,491	1,569
Goodwill	9,488	9,488
Other assets	49	63
Total assets	28,469	27,779
Current liabilities:
Accounts payable	2,825	2,721
Accrued payroll and related expenses	1,881	1,817
Warranty reserve	152	138
Other current liabilities	3,349	2,922
Total current liabilities	8,207	7,598
Long-term capital lease obligations	102	116
Other non-current liabilities	345	347
Total liabilities	8,654	8,061
Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock	2	2
Additional paid-in capital	209,504	209,297
Accumulated deficit	(190,062)	(189,952)
Accumulated other comprehensive income	371	371
Total stockholders' equity	19,815	19,718
Total liabilities and stockholders' equity	$ 28,469	$ 27,779

Unaudited Condensed Consolidat3

Unaudited Condensed Consolidated Statements of Operations - USD ($) $ in Thousands		3 Months Ended
		Sep. 30, 2016	Sep. 30, 2015
Income Statement [Abstract]
Net revenue	[1]	$ 10,940	$ 10,573
Cost of revenue		5,240	5,506
Gross profit		5,700	5,067
Operating expenses:
Selling, general and administrative		3,842	3,725
Research and development		1,945	1,671
Total operating expenses		5,787	5,396
Loss from operations		(87)	(329)
Interest expense, net		(7)	(6)
Other income (expense), net		(3)	19
Loss before income taxes		(97)	(316)
Provision for income taxes		7	15
Net loss		$ (104)	$ (331)
Net loss per share (basic and diluted)		$ (.01)	$ (.02)
Weighted-average shares (basic and diluted)		17,254,000	15,103,000
Net revenue from related parties		$ 0	$ 68
[1]	Includes net revenue from related parties

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Operating activities
Net loss	$ (104)	$ (331)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Share-based compensation	201	233
Depreciation	151	218
Provision for excess and obsolete inventories	13	73
Changes in operating assets and liabilities:
Accounts receivable	(25)	(312)
Inventories	(819)	442
Contract manufacturers' receivable	83	4
Prepaid expenses and other current assets	101	85
Other assets	13	26
Accounts payable	104	(722)
Accrued payroll and related expenses	64	115
Warranty reserve	14	(36)
Other liabilities	427	(67)
Cash received related to tenant lease incentives	0	53
Net cash provided by (used in) operating activities	223	(219)
Investing activities
Purchases of property and equipment	(72)	(15)
Net cash used in investing activities	(72)	(15)
Financing activities
Minimum tax withholding paid on behalf of employees for restricted shares	0	(16)
Proceeds from borrowings on line of credit	0	700
Payment of borrowings on line of credit	0	(700)
Payment of capital lease obligations	(16)	(21)
Net cash used in financing activities	(16)	(37)
Increase (decrease) in cash and cash equivalents	135	(271)
Cash and cash equivalents at beginning of period	5,962	4,989
Cash and cash equivalents at end of period	$ 6,097	$ 4,718

1. Summary of Significant Accou

1. Summary of Significant Accounting Policies	3 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	The Company Lantronix, Inc. (the “Company,” “Lantronix,” “we,” “our,” or “us”) is a global provider of secure data access and management for Internet of Things (“IoT”) and information technology assets. Our mission is to be the leading provider of IoT gateways that enable companies to dramatically simplify the creation, deployment, and management of IoT projects while providing secure access to data for applications and people. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Lantronix have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended June 30, 2016, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2016, which was filed with the SEC on August 24, 2016. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that in the opinion of management, are necessary to present fairly the consolidated financial position of Lantronix at September 30, 2016 and the consolidated results of our operations for the three months ended September 30, 2016 and our consolidated cash flows for the three months ended September 30, 2016. All intercompany accounts and transactions have been eliminated. It should be understood that accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year or any future interim periods. Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting standard which superseded existing revenue recognition guidance under current U.S. GAAP. The standard is a comprehensive 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 a retrospective or cumulative effect transition method. In July 2015, 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. More recently, FASB has issued guidance clarifying certain topics such as (i) gross versus net revenue reporting, (ii) identifying performance obligations and licensing and (iii) accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. 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, FASB issued an accounting standard which requires management of an entity to assess, for each annual and interim period, if there is substantial doubt about the entity’s 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 are required if conditions give rise to substantial doubt about the entity’s ability to continue as a going concern. The standard became effective for Lantronix for the fiscal year beginning July 1, 2016. The adoption of this standard has not had and is not expected to have a material impact on our financial statements and related disclosures. In February 2016, FASB issued an accounting standard that revises lease accounting guidance. The standard requires lessees to put most leases on their balance sheets, but recognize expenses on their income statements in a manner similar to the previous guidance. The standard will be effective for Lantronix in the fiscal year beginning July 1, 2019. Early adoption is permitted. We are currently evaluating the impact of this standard on our financial statements and related disclosures. In March 2016, FASB issued accounting guidance that changes how companies account for certain aspects of share-based payments to employees. Among other things, under the new guidance companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in-capital (“APIC”), but will instead record such items as income tax expense or benefit in the income statement, and APIC pools will be eliminated. Companies will apply this guidance prospectively. Another component of the new guidance allows companies to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards, whereby forfeitures can be estimated, as required historically, or recognized when they occur. If elected, the change to recognize forfeitures when they occur needs to be adopted using a modified retrospective approach. Lantronix adopted this guidance early for the fiscal year beginning July 1, 2016. In connection with the adoption, we have elected to recognize the impact of forfeitures on our share-based compensation expense as such forfeitures occur. Accordingly, as of July 1, 2016, we recorded a cumulative effect adjustment of approximately $6,000 to increase additional paid in-capital and accumulated deficit. Going forward, we do not expect the adoption of this guidance to have a material effect on our financial statements.

2. Supplemental Financial Infor

2. Supplemental Financial Information	3 Months Ended
	Sep. 30, 2016
Supplemental Financial Information Details - Net Loss Per Share
Supplemental Financial Information	Inventories Inventories are stated at the lower of cost (first-in, first-out) or net realizable value and consist of the following: September 30, June 30, 2016 2016 (In thousands) Finished goods $ 4,300 $ 3,822 Raw materials 1,794 1,653 Finished goods held by distributors 1,296 1,109 Inventories, net $ 7,390 $ 6,584 Other Liabilities The following table presents details of our other liabilities: September 30, June 30, 2016 2016 (In thousands) Current Customer deposits and refunds $ 873 $ 663 Accrued raw materials purchases 803 582 Deferred revenue 243 427 Capital lease obligations 62 64 Taxes payable 255 275 Accrued operating expenses 1,113 911 Total other current liabilities $ 3,349 $ 2,922 Non-current Deferred rent $ 218 $ 225 Deferred revenue 127 122 Total other non-current liabilities $ 345 $ 347 Computation of Net Loss per Share Basic and diluted net loss per share is calculated by dividing net loss by the weighted-average number of common shares outstanding during the applicable period. The following table presents the computation of net loss per share: Three Months Ended September 30, 2016 2015 (In thousands, except per share data) Numerator: Net loss $ (104 ) $ (331 ) Denominator: Weighted-average common shares outstanding (basic and diluted) 17,254 15,103 Net loss per share (basic and diluted) $ (0.01 ) $ (0.02 ) 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. Three Months Ended September 30, 2016 2015 (In thousands) Common stock equivalents 3,012 3,550 Supplemental Cash Flow Information The following table presents non-cash investing and financing transactions excluded from the unaudited condensed consolidated statements of cash flows: Three Months Ended September 30, 2016 2015 (In thousands) Accrued property and equipment paid for in the subsequent period $ – $ 11 Non-cash tenant improvements paid by landlord $ – $ 190

3. Warranty Reserve

3. Warranty Reserve	3 Months Ended
	Sep. 30, 2016
Product Warranties Disclosures [Abstract]
Warranty Reserve	The standard warranty periods for our products typically range from one to five years. We establish reserves for estimated product warranty costs at the time revenue is recognized based upon our historical warranty experience, and additionally, for any known product warranty issues. Our warranty obligation is affected by product failure rates, and the use of materials or service delivery costs that could differ from our estimates. As a result, increases or decreases to warranty reserves could be required, which could impact our gross margins. The following table presents details of our warranty reserve: Three Months Ended Year Ended September 30, June 30, 2016 2016 (In thousands) Beginning balance $ 138 $ 163 Charged to cost of revenues 30 91 Usage (16 ) (116 ) Ending balance $ 152 $ 138

4. Bank Line of Credit

4. Bank Line of Credit	3 Months Ended
	Sep. 30, 2016
Debt Disclosure [Abstract]
Bank Line of Credit	On September 22, 2016, 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 a renewal of our $4.0 million revolving line of credit based on qualified accounts receivable with an extended maturity date of September 30, 2018. The Loan Agreement provides for an interest rate per annum equal to the greater of the prime rate plus 0.75% or 4.25%, 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 4.25%. At September 30, 2016, we met the 1.0 to 1.0 or greater quick ratio. The Loan Agreement includes a covenant requiring us to maintain a certain Minimum Tangible Net Worth (“Minimum TNW”), currently required to be at least $6.0 million. The Minimum TNW 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 presents the Minimum TNW compared to our Actual TNW: September 30, 2016 (In thousands) Minimum TNW $ 6,000 Actual TNW $ 10,327 The following table presents certain information with respect to the Loan Agreement with SVB: September 30, June 30, 2016 2016 (In thousands) Outstanding borrowings on the line of credit $ – $ – Available borrowing capacity $ 3,140 $ 2,620 Outstanding letters of credit $ 51 $ 51 Our outstanding letters of credit were used as security deposits.

5. Stockholders' Equity

5. Stockholders' Equity	3 Months Ended
	Sep. 30, 2016
Equity [Abstract]
Stockholders' Equity	Stock Incentive Plans Our stock incentive plans permit the granting of stock options (both incentive and nonqualified stock options), restricted stock units (“RSUs”), stock appreciation rights, non-vested stock, and performance shares to certain employees, directors and consultants. As of September 30, 2016, no stock appreciation rights, non-vested stock, or performance shares were outstanding. Stock Options The following table presents a summary of activity during the three months ended September 30, 2016 with respect to our stock options: Weighted- Average Number of Exercise Price Shares per Share (In thousands) Balance of options outstanding at June 30, 2016 3,606 $ 1.85 Options granted 637 1.36 Options forfeited (5 ) 1.54 Options expired (52 ) 2.59 Balance of options outstanding at September 30, 2016 4,186 $ 1.77 Restricted Stock Units The following table presents a summary of activity during the three months ended September 30, 2016 with respect to our RSUs: Weighted- Average Grant Date Number of Fair Value Shares per Share (In thousands) Balance of RSUs outstanding at June 30, 2016 460 $ 1.10 RSUs granted 40 1.37 Balance of RSUs outstanding at September 30, 2016 500 $ 1.12 Employee Stock Purchase Plan Our 2013 Employee Stock Purchase Plan (the “ESPP”) is intended to provide employees with an opportunity to purchase our common stock through accumulated payroll deductions at the end of a specified purchase period. Each of our employees (including officers) is eligible to participate in the ESPP, subject to certain limitations as set forth in the ESPP. The following table presents a summary of activity under our ESPP during the three months ended September 30, 2016: Number of Shares (In thousands) Shares available for issuance at June 30, 2016 736 Shares issued – Shares available for issuance at September 30, 2016 736 Share-Based Compensation Expense The following table presents a summary of share-based compensation expense included in each functional line item on our unaudited condensed consolidated statements of operations: Three Months Ended September 30, 2016 2015 (In thousands) Cost of revenues $ 11 $ 18 Selling, general and administrative 149 171 Research and development 41 44 Total share-based compensation expense $ 201 $ 233 The following table presents the remaining unrecognized share-based compensation expense related to our outstanding share-based awards as of September 30, 2016: Remaining Remaining Unrecognized Weighted- Compensation Average Years Expense To Recognize (In thousands) Stock options $ 1,409 3.4 Restricted stock units 414 2.3 Stock purchase rights under ESPP 155 1.4 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.

6. Income Taxes

6. Income Taxes	3 Months Ended
	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Income Taxes	We utilize the liability method of accounting for income taxes. The following table presents our effective tax rates based upon our provision for income taxes for the periods shown: Three Months Ended September 30, 2016 2015 Effective tax rate 7% 5% The difference between our effective tax rates in the periods presented above and the federal statutory rate is primarily due to a tax benefit from our domestic losses being recorded with a full valuation allowance, as well as the effect of foreign earnings taxed at rates differing from the federal statutory rate. We record net deferred tax assets to the extent that we believe these assets will more likely than not be realized. As a result of our cumulative losses and uncertainty of generating future taxable income, we have provided a full valuation allowance against our net deferred tax assets as of September 30, 2016 and June 30, 2016.

7. Commitments and Contingencie

7. Commitments and Contingencies	3 Months Ended
	Sep. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	From time to time, we are involved in various legal proceedings and claims arising in the ordinary course of our business. Although the results of legal proceedings and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not, individually or in the aggregate, have a material adverse effect on our business, operating results, financial condition or cash flows. However, regardless of the outcome, litigation can have an adverse impact on us because of legal costs, diversion of management time and resources, and other factors.

1. Summary of Significant Acc12

1. Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Sep. 30, 2016
Accounting Policies [Abstract]
The Company	The Company Lantronix, Inc. (the “Company,” “Lantronix,” “we,” “our,” or “us”) is a global provider of secure data access and management for Internet of Things (“IoT”) and information technology assets. Our mission is to be the leading provider of IoT gateways that enable companies to dramatically simplify the creation, deployment, and management of IoT projects while providing secure access to data for applications and people.
Basis of Presentation	Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Lantronix have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended June 30, 2016, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2016, which was filed with the SEC on August 24, 2016. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that in the opinion of management, are necessary to present fairly the consolidated financial position of Lantronix at September 30, 2016 and the consolidated results of our operations for the three months ended September 30, 2016 and our consolidated cash flows for the three months ended September 30, 2016. All intercompany accounts and transactions have been eliminated. It should be understood that accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three months ended September 30, 2016 are not necessarily indicative of the results to be expected for the full year or any future interim periods.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued an accounting standard which superseded existing revenue recognition guidance under current U.S. GAAP. The standard is a comprehensive 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 a retrospective or cumulative effect transition method. In July 2015, 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. More recently, FASB has issued guidance clarifying certain topics such as (i) gross versus net revenue reporting, (ii) identifying performance obligations and licensing and (iii) accounting for shipping and handling fees and costs and accounting for consideration given by a vendor to a customer. 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, FASB issued an accounting standard which requires management of an entity to assess, for each annual and interim period, if there is substantial doubt about the entity’s 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 are required if conditions give rise to substantial doubt about the entity’s ability to continue as a going concern. The standard became effective for Lantronix for the fiscal year beginning July 1, 2016. The adoption of this standard has not had and is not expected to have a material impact on our financial statements and related disclosures. In February 2016, FASB issued an accounting standard that revises lease accounting guidance. The standard requires lessees to put most leases on their balance sheets, but recognize expenses on their income statements in a manner similar to the previous guidance. The standard will be effective for Lantronix in the fiscal year beginning July 1, 2019. Early adoption is permitted. We are currently evaluating the impact of this standard on our financial statements and related disclosures. In March 2016, FASB issued accounting guidance that changes how companies account for certain aspects of share-based payments to employees. Among other things, under the new guidance companies will no longer record excess tax benefits and certain tax deficiencies in additional paid-in-capital (“APIC”), but will instead record such items as income tax expense or benefit in the income statement, and APIC pools will be eliminated. Companies will apply this guidance prospectively. Another component of the new guidance allows companies to make an accounting policy election for the impact of forfeitures on the recognition of expense for share-based payment awards, whereby forfeitures can be estimated, as required historically, or recognized when they occur. If elected, the change to recognize forfeitures when they occur needs to be adopted using a modified retrospective approach. Lantronix adopted this guidance early for the fiscal year beginning July 1, 2016. In connection with the adoption, we have elected to recognize the impact of forfeitures on our share-based compensation expense as such forfeitures occur. Accordingly, as of July 1, 2016, we recorded a cumulative effect adjustment of approximately $6,000 to increase additional paid in-capital and accumulated deficit. Going forward, we do not expect the adoption of this guidance to have a material effect on our financial statements.

2. Supplemental Financial Inf13

2. Supplemental Financial Information (Tables)	3 Months Ended
	Sep. 30, 2016
Supplemental Financial Information Details - Net Loss Per Share
Schedule of Inventory	September 30, June 30, 2016 2016 (In thousands) Finished goods $ 4,300 $ 3,822 Raw materials 1,794 1,653 Finished goods held by distributors 1,296 1,109 Inventories, net $ 7,390 $ 6,584
Schedule of Other Liabilities	September 30, June 30, 2016 2016 (In thousands) Current Customer deposits and refunds $ 873 $ 663 Accrued raw materials purchases 803 582 Deferred revenue 243 427 Capital lease obligations 62 64 Taxes payable 255 275 Accrued operating expenses 1,113 911 Total other current liabilities $ 3,349 $ 2,922 Non-current Deferred rent $ 218 $ 225 Deferred revenue 127 122 Total other non-current liabilities $ 345 $ 347
Schedule of Computation of Net Loss per Share	Three Months Ended September 30, 2016 2015 (In thousands, except per share data) Numerator: Net loss $ (104 ) $ (331 ) Denominator: Weighted-average common shares outstanding (basic and diluted) 17,254 15,103 Net loss per share (basic and diluted) $ (0.01 ) $ (0.02 )
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share	Three Months Ended September 30, 2016 2015 (In thousands) Common stock equivalents 3,012 3,550
Schedule of Supplemental Cash Flow Information	Three Months Ended September 30, 2016 2015 (In thousands) Accrued property and equipment paid for in the subsequent period $ – $ 11 Non-cash tenant improvements paid by landlord $ – $ 190

3. Warranty Reserve (Tables)

3. Warranty Reserve (Tables)	3 Months Ended
	Sep. 30, 2016
Product Warranties Disclosures [Abstract]
Schedule of warranty reserve	Three Months Ended Year Ended September 30, June 30, 2016 2016 (In thousands) Beginning balance $ 138 $ 163 Charged to cost of revenues 30 91 Usage (16 ) (116 ) Ending balance $ 152 $ 138

4. Bank Line of Credit (Tables)

4. Bank Line of Credit (Tables)	3 Months Ended
	Sep. 30, 2016
Debt Disclosure [Abstract]
Schedule of Minimum Tangible Net Worth	September 30, 2016 (In thousands) Minimum TNW $ 6,000 Actual TNW $ 10,327
Availability under the Line of Credit	September 30, June 30, 2016 2016 (In thousands) Outstanding borrowings on the line of credit $ – $ – Available borrowing capacity $ 3,140 $ 2,620 Outstanding letters of credit $ 51 $ 51

5. Stockholders' Equity (Tables

5. Stockholders' Equity (Tables)	3 Months Ended
	Sep. 30, 2016
Schedule of share-based compensation expense	Three Months Ended September 30, 2016 2015 (In thousands) Cost of revenues $ 11 $ 18 Selling, general and administrative 149 171 Research and development 41 44 Total share-based compensation expense $ 201 $ 233
Schedule of unrecognized share-based compensation expense	Remaining Remaining Unrecognized Weighted- Compensation Average Years Expense To Recognize (In thousands) Stock options $ 1,409 3.4 Restricted stock units 414 2.3 Stock purchase rights under ESPP 155 1.4
Stock Options [Member]
Summary of stock option activity	Weighted- Average Number of Exercise Price Shares per Share (In thousands) Balance of options outstanding at June 30, 2016 3,606 $ 1.85 Options granted 637 1.36 Options forfeited (5 ) 1.54 Options expired (52 ) 2.59 Balance of options outstanding at September 30, 2016 4,186 $ 1.77
Restricted Stock Units (RSUs) [Member]
Summary of other-than-option activity	Weighted- Average Grant Date Number of Fair Value Shares per Share (In thousands) Balance of RSUs outstanding at June 30, 2016 460 $ 1.10 RSUs granted 40 1.37 Balance of RSUs outstanding at September 30, 2016 500 $ 1.12
ESPP [Member]
Summary of other-than-option activity	Number of Shares (In thousands) Shares available for issuance at June 30, 2016 736 Shares issued – Shares available for issuance at September 30, 2016 736

6. Income Taxes (Tables)

6. Income Taxes (Tables)	3 Months Ended
	Sep. 30, 2016
Income Tax Disclosure [Abstract]
Schedule of Effective Income Tax Rate	Three Months Ended September 30, 2016 2015 Effective tax rate 7% 5%

2. Supplemental Financial Inf18

2. Supplemental Financial Information (Details - Inventories) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Supplemental Financial Information Details - Net Loss Per Share
Finished goods	$ 4,300	$ 3,822
Raw materials	1,794	1,653
Finished goods held by distributors	1,296	1,109
Inventories, net	$ 7,390	$ 6,584

2. Supplemental Financial Inf19

2. Supplemental Financial Information (Details - Other liabilities) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Current
Customer deposits and refunds	$ 873	$ 663
Accrued raw materials purchases	803	582
Deferred revenue	243	427
Capital lease obligations	62	64
Taxes payable	255	275
Other accrued liabilities	1,113	911
Total other current liabilities	3,349	2,922
Non-current
Deferred rent	218	225
Deferred revenue	127	122
Total other non-current liabilities	$ 345	$ 347

2. Supplemental Financial Inf20

2. Supplemental Financial Information (Details - Net Loss per Share) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Numerator:
Net loss and comprehensive loss	$ (104)	$ (331)
Denominator:
Weighted-average shares outstanding (basic and diluted)	17,254,000	15,103,000
Net loss per share (basic and diluted)	$ (.01)	$ (.02)

2. Supplemental Financial Inf21

2. Supplemental Financial Information (Details - Equivalents) - shares	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Supplemental Financial Information Details - Net Loss Per Share
Common stock equivalents	3,012,000	3,550,000

2. Supplemental Financial Inf22

2. Supplemental Financial Information (Details - Non-cash acquisition) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Supplemental Cash Flow Information
Accrued property and equipment paid for in the subsequent period	$ 0	$ 11
Non-cash tenant improvements paid by landlord	$ 0	$ 190

3. Warranty Reserve (Details -

3. Warranty Reserve (Details - Warranty reserve) - USD ($) $ in Thousands	3 Months Ended	12 Months Ended
	Sep. 30, 2016	Jun. 30, 2016
Product Warranties Disclosures [Abstract]
Beginning balance	$ 138	$ 163
Charged to cost of revenues	30	91
Usage	(16)	(116)
Ending balance	$ 152	$ 138

4. Bank Line of Credit (Details

4. Bank Line of Credit (Details - TNW) $ in Thousands	Sep. 30, 2016USD ($)
Debt Disclosure [Abstract]
Minimum TNW	$ 6,000
Actual TNW	$ 10,327

4. Bank Line of Credit (Detai25

4. Bank Line of Credit (Details - Credit Line) - USD ($) $ in Thousands	Sep. 30, 2016	Jun. 30, 2016
Debt Disclosure [Abstract]
Outstanding borrowings on the line of credit	$ 0	$ 0
Available borrowing capacity	3,140	2,620
Outstanding letters of credit	$ 51	$ 51

4. Bank Line of Credit and Debt

4. Bank Line of Credit and Debt (Details Narrative) $ in Thousands	3 Months Ended
	Sep. 30, 2016USD ($)
Debt Disclosure [Abstract]
Revolving Line	$4.0 million maximum revolving line
Credit line maximum borrowing amount	$ 4,000
Maturity date	Sep. 30, 2018
Interest rate description	The Loan Agreement provides for an interest rate per annum equal to the greater of the prime rate plus 0.75% or 4.25%, provided that we maintain a monthly quick ratio of 1.0 to 1.0 or greater.

5. Stockholders Equity (Details

5. Stockholders Equity (Details - Option activity) - Stock Options [Member]	3 Months Ended
	Sep. 30, 2016$ / sharesshares
Number of shares
Number of Shares Options Outstanding, Beginning | shares	3,606,000
Number of Shares Options Granted | shares	637,000
Number of Shares Options Forfeited | shares	(5,000)
Number of Shares Options Expired | shares	(52,000)
Number of Shares Options Outstanding, Ending | shares	4,186,000
Weighted Average Exercise Price per share
Exercise Price Outstanding, Beginning | $ / shares	$ 1.85
Exercise Price Granted | $ / shares	1.36
Exercise Price Forfeited | $ / shares	1.54
Exercise Price Expired | $ / shares	2.59
Exercise Price Outstanding, Ending | $ / shares	$ 1.77

5. Stockholders Equity (Detai28

5. Stockholders Equity (Details - RSU activity) - Restricted Stock Units (RSUs) [Member]	3 Months Ended
	Sep. 30, 2016$ / sharesshares
Number of RSU's Shares
Balance of RSU's, beginning | shares	460,000
Granted | shares	40,000
Balance of RSU's, ending | shares	500,000
Weighted Average Grant Date Fair Value per share
RSU Shares Weighted-Average Grant-Date Fair Value per Share, beginning | $ / shares	$ 1.10
RSU Shares Granted, Weighted-Average Grant-Date Fair Value per Share | $ / shares	1.37
RSU Shares Weighted-Average Grant-Date Fair Value per Share, ending | $ / shares	$ 1.12

5. Stockholders Equity (Detai29

5. Stockholders Equity (Details - ESPP activity) - ESPP [Member]	3 Months Ended
	Sep. 30, 2016shares
Shares available for issuance at beginning of period	736,000
Shares issued	0
Shares available for issuance at end of period	736,000

5. Stockholders Equity (Detai30

5. Stockholders Equity (Details - Share based compensation) - USD ($) $ in Thousands	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Total share-based compensation	$ 201	$ 233
Cost of revenues [Member]
Total share-based compensation	11	18
Selling, general and administrative [Member]
Total share-based compensation	149	171
Research and development [Member]
Total share-based compensation	$ 41	$ 44

5. Stockholders Equity (Detai31

5. Stockholders Equity (Details - Unrecognized expense) $ in Thousands	3 Months Ended
	Sep. 30, 2016USD ($)
Stock Options [Member]
Unrecognized share-based compensation expense	$ 1,409
Weighted average years to recognize	3 years 4 months 24 days
Restricted Stock Units (RSUs) [Member]
Unrecognized share-based compensation expense	$ 414
Weighted average years to recognize	2 years 3 months 18 days
ESPP [Member]
Unrecognized share-based compensation expense	$ 155
Weighted average years to recognize	1 year 4 months 24 days

6. Income Taxes (Details - Effe

6. Income Taxes (Details - Effective tax rate)	3 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Income Tax Disclosure [Abstract]
Effective tax rate	7.00%	5.00%