Lantronix (LTRX) 10-K 24 Aug 17 2017 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Jun. 30, 2017	Aug. 01, 2017	Dec. 31, 2016
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, 2017
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			$ 11,186,000
Entity Common Stock, Shares Outstanding		17,839,697
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,017

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Current assets:
Cash and cash equivalents	$ 8,073	$ 5,962
Accounts receivable (net of allowance for doubtful accounts of $55 and $37 at June 30, 2017 and 2016, respectively)	3,432	3,164
Inventories, net	6,959	6,584
Contract manufacturers' receivable	476	369
Prepaid expenses and other current assets	440	580
Total current assets	19,380	16,659
Property and equipment, net	1,218	1,569
Goodwill	9,488	9,488
Other assets	46	63
Total assets	30,132	27,779
Current liabilities:
Accounts payable	2,717	2,721
Accrued payroll and related expenses	3,084	1,817
Warranty reserve	125	138
Other current liabilities	3,063	2,922
Total current liabilities	8,989	7,598
Long-term capital lease obligations	59	116
Other non-current liabilities	396	347
Total liabilities	9,444	8,061
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; 17,808,696 and 17,253,799 shares issued and outstanding at June 30, 2017 and 2016, respectively	2	2
Additional paid-in capital	210,550	209,297
Accumulated deficit	(190,235)	(189,952)
Accumulated other comprehensive income	371	371
Total stockholders' equity	20,688	19,718
Total liabilities and stockholders' equity	$ 30,132	$ 27,779

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Assets
Allowance for Receivables	$ 55	$ 37
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	17,808,696	17,253,799
Common Stock Outstanding	17,808,696	17,253,799

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands		12 Months Ended
		Jun. 30, 2017	Jun. 30, 2016
Income Statement [Abstract]
Net revenue	[1]	$ 44,730	$ 40,592
Cost of revenue		21,150	21,214
Gross profit		23,580	19,378
Operating expenses:
Selling, general and administrative		15,803	14,396
Research and development		7,960	6,910
Total operating expenses		23,763	21,306
Loss from operations		(183)	(1,928)
Interest expense, net		(23)	(32)
Other income (expense), net		(3)	61
Loss before income taxes		(209)	(1,899)
Provision for income taxes		68	63
Net loss and comprehensive loss		$ (277)	$ (1,962)
Net loss per share (basic and diluted)		$ (0.02)	$ (0.13)
Weighted-average shares (basic and diluted)		17,451	15,260
Net revenue from related parties		$ 0	$ 113
[1]	Includes net revenue from related parties

Consolidated Statements Of Stoc

Consolidated Statements Of Stockholders’ Equity - USD ($) shares in Thousands, $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Total
Beginning balance, shares at Jun. 30, 2015	15,090
Beginning balance, value at Jun. 30, 2015	$ 2	$ 206,326	$ (187,990)	$ 371	$ 18,709
Shares issued pursuant to stock awards, net - stock issued	222
Shares issued pursuant to stock awards, net value		174			174
Shares issued pursuant to equity offering, shares	1,942
Shares issued pursuant to equity offering, value		1,975			1,975
Tax withholding paid on behalf of employees for restricted shares		(48)			(48)
Share-based compensation		870			870
Net loss			(1,962)		(1,962)
Ending balance, shares at Jun. 30, 2016	17,254
Ending balance, value at Jun. 30, 2016	$ 2	209,297	(189,952)	371	19,718
Cumulative effect of accounting change		6	(6)
Shares issued pursuant to stock awards, net - stock issued	555
Shares issued pursuant to stock awards, net value		529			529
Tax withholding paid on behalf of employees for restricted shares		(194)			(194)
Share-based compensation		912			912
Net loss			(277)		(277)
Ending balance, shares at Jun. 30, 2017	17,809
Ending balance, value at Jun. 30, 2017	$ 2	$ 210,550	$ (190,235)	$ 371	$ 20,688

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Operating activities
Net loss	$ (277)	$ (1,962)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Share-based compensation	912	870
Depreciation and amortization	594	759
Provision for excess and obsolete inventories	299	293
Loss on disposal of property and equipment	0	7
Changes in operating assets and liabilities:
Accounts receivable	(268)	(506)
Inventories	(674)	2,626
Contract manufacturers' receivable	(107)	0
Prepaid expenses and other current assets	140	(180)
Other assets	13	16
Accounts payable	(7)	(965)
Accrued payroll and related expenses	1,267	132
Warranty reserve	(13)	(25)
Other liabilities	193	(905)
Cash received related to tenant lease incentives	0	53
Net cash provided by operating activities	2,072	213
Investing activities
Purchases of property and equipment	(236)	(570)
Net cash used in investing activities	(236)	(570)
Financing activities
Tax withholding paid on behalf of employees for restricted shares	(194)	(48)
Proceeds from borrowings on line of credit	0	2,100
Payment of borrowings on line of credit	0	(2,800)
Net proceeds from issuances of common stock	529	2,149
Payment of capital lease obligations	(60)	(71)
Net cash provided by financing activities	275	1,330
Increase in cash and cash equivalents	2,111	973
Cash and cash equivalents at beginning of year	5,962	4,989
Cash and cash equivalents at end of year	8,073	5,962
Supplemental disclosure of cash flow information
Interest paid	23	32
Income taxes paid	$ 73	$ 32

1. Summary of Significant Accou

1. Summary of Significant Accounting Policies	12 Months Ended
	Jun. 30, 2017
Accounting Policies [Abstract]
1. Summary of Significant Accounting Policies	The Company Lantronix, Inc. (referred to in these notes to consolidated financial statements as “Lantronix”, “we,” “our,” or “us”), is a global provider of secure data access and management solutions for Internet of Things (“IoT”) assets. Our mission is to be the leading supplier of IoT solutions that enable companies to dramatically simplify the creation, deployment, and management of IoT projects while providing secure access to data for applications and people. We were incorporated in California in 1989 and re-incorporated in Delaware in 2000. 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, 2017, approximately $2,480,000 of our tangible assets were located outside of the United States (“U.S.”), a large portion of which was comprised of inventory held at (i) our third-party logistics provider in Hong Kong and (ii) our 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. Reclassifications Certain reclassifications have been made to the prior fiscal year financial information to conform to the current fiscal year presentation. 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, 2017 and 2016, approximately 99% of our net revenue 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. Actual product returns or pricing adjustments that differ from our estimates could result in increases or decreases to our net revenue. A significant portion of our sales are made to distributors under agreements which contain a limited right to return unsold products and price adjustment provisions. Given these provisions, we have concluded the price to these distributors is not fixed and determinable at the time we deliver products to them. 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, 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 the length of time the receivables are past due, 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 periodic 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 primarily 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 to which 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 fiscal years ended June 30, 2017 and 2016 we 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, other than long-term debt, 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 currencies were previously their respective local currencies 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, 2017 and 2016. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2017 or 2016. 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 net realizable value. 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 require 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. Capitalized software costs are 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 acquired 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. We begin by assessing qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying value. Based on that qualitative assessment, if we conclude that it is more likely than not that the fair value of our single reporting unit is less than its carrying value, we conduct a quantitative goodwill impairment test, which involves comparing the estimated fair value of our single reporting unit with its carrying value, including goodwill. We estimate the fair value of our single reporting unit using a combination of the income and market approach. If the carrying value of the reporting unit exceeds its estimated fair value, we recognize an impairment loss for the difference. During the fourth quarter of the fiscal year ended June 30, 2017, we made a qualitative assessment of whether goodwill impairment existed and did not determine that it was more likely that 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 by a taxing authority. 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 our shared-based awards over the requisite service period. We record amortization of share-based compensation expense ratably over the requisite service period of the grant. We recognize the impact of forfeitures on our share-based compensation expense as such forfeitures occur. 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. Development costs of computer software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, we believe our current process for developing products is essentially completed concurrently with the establishment of technological feasibility and thus, software development costs have been expensed as incurred. Warranty The standard warranty periods we provide 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 for any known or anticipated product warranty issues. Advertising Expenses Advertising costs are expensed in the period incurred. Segment Information We have one operating and reportable business segment. Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the new guidance, a goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its estimated fair value. Companies continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. We adopted this guidance beginning with our annual goodwill impairment test for the fiscal year ended June 30, 2017. Such adoption did not have a material effect on our financial statements. 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 APIC and accumulated deficit. Going forward, we do not expect the adoption of this guidance to have a material effect on our financial statements. In February 2016, FASB issued an accounting standard that revises lease accounting guidance. Most prominent among the changes in the standard is the recognition of right-of-use (“ROU”) assets and lease liabilities by lessees for those leases classified as operating leases under the existing guidance. We will be required to recognize and measure leases existing at, or entered into after, the beginning of the earliest comparative period presented using a modified retrospective approach, with certain practical expedients available. The standard will be effective for Lantronix in the fiscal year beginning July 1, 2019. Early adoption is permitted. While we are continuing to assess the potential impacts of this standard, we currently expect the most significant impact on our financial statements will be the recognition of ROU assets and lease liabilities for operating leases. 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 did not have a material impact on our financial statements and related disclosures. Revenue from Contracts with Customers In May 2014, 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 two methods of adoption: (i) retrospectively to each prior reporting period presented (the full retrospective method), or (ii) retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application (the cumulative catch-up transition method). We expect to adopt the standard in the fiscal year beginning July 1, 2018 using the full retrospective method to restate each prior reporting period presented. We currently anticipate the standard will have a material impact on our financial statements and disclosures. We continue to make progress in assessing all potential impacts of the standard, including any impacts of recently issued amendments. We currently believe the most significant impact of the standard relates to our accounting for sales made to distributors under agreements which contain a limited right to return unsold products and price adjustment provisions. Under the existing revenue guidance, we have historically concluded that the price to these distributors is not fixed and determinable at the time we deliver products to them. Accordingly, revenue from sales to these distributors has not historically been recognized until the distributor resells the product. By contrast, under the new standard, we expect to recognize revenue, including estimates for applicable variable consideration, predominantly at the time of shipment to these distributors. We have not yet determined the quantitative impact that the standard will have on our financial statements and related disclosures.

2. Supplemental Financial Infor

2. Supplemental Financial Information	12 Months Ended
	Jun. 30, 2017
Supplemental Financial Information
2. Supplemental Financial Information	Inventories The following table presents details of our inventories: June 30, 2017 2016 (In thousands) Finished goods $ 4,191 $ 3,822 Raw materials 1,694 1,653 Finished goods held by distributors 1,074 1,109 Inventories, net $ 6,959 $ 6,584 Property and Equipment The following table presents details of property and equipment: June 30, 2017 2016 (In thousands) Computer, software and office equipment $ 3,462 $ 3,298 Furniture and fixtures 465 468 Production, development and warehouse equipment 4,002 3,724 Construction-in-progress* 304 509 Property and equipment, gross 8,233 7,999 Less accumulated depreciation (7,015 ) (6,430 ) Property and equipment, net $ 1,218 $ 1,569 * Includes $275,000 and $470,000 of capitalized software costs at June 30, 2017 and 2016, respectively. The following table presents details of property and equipment recorded in connection with capital lease obligations: June 30, 2017 2016 (In thousands) Property and equipment $ 250 $ 266 Less accumulated depreciation (122 ) (71 ) Total $ 128 $ 195 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. Warranty Reserve The following table presents details of our warranty reserve: Years Ended June 30, 2017 2016 (In thousands) Beginning balance $ 138 $ 163 Charged to cost of revenues 65 91 Usage (78 ) (116 ) Ending balance $ 125 $ 138 Other Liabilities The following table presents details of our other liabilities: June 30, 2017 2016 (In thousands) Current Customer deposits and refunds $ 1,119 $ 663 Accrued raw materials purchases 484 582 Deferred revenue 196 427 Capital lease obligations 61 64 Taxes payable 275 275 Accrued operating expenses 928 911 Total other current liabilities $ 3,063 $ 2,922 Non-current Deferred rent $ 200 $ 225 Deferred revenue 196 122 Total other non-current liabilities $ 396 $ 347 Advertising Expenses The following table presents details of our advertising expenses: Years Ended June 30, 2017 2016 (In thousands) Advertising expenses $ 31 $ 173 Computation of Net Loss per Share The following table presents the computation of net loss per share: Years Ended June 30, 2017 2016 (In thousands, except per share data) Numerator: Net loss $ (277 ) $ (1,962 ) Denominator: Weighted-average shares outstanding (basic and diluted) 17,451 15,260 Net loss per share (basic and diluted) $ (0.02 ) $ (0.13 ) 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, 2017 2016 (In thousands) Common stock equivalents 1,503 3,450 Severance and Related Charges Fiscal Year Ended June 30, 2017 In January 2017, we initiated personnel changes to our European sales team. The expenses totaled $246,000 and consisted primarily of severance costs, and to a lesser extent, a facility lease termination cost. The following table presents details of the liability we recorded related to this plan: Year Ended June 30, 2017 (In thousands) Beginning balance $ – Charges 246 Payments (209 ) Ending balance $ 37 Substantially all of the remaining liability balance at June 30, 2017 relates to facility lease payments, and is included in accrued payroll and related expenses in the accompanying consolidated balance sheet at June 30, 2017. Fiscal Year Ended June 30, 2016 In February 2016, we initiated a strategic realignment plan to enable us to reallocate resources intended to optimize our sales and product development efforts. The activities were substantially completed by June 30, 2016, and consisted of severance, lease termination and other associated costs. These activities resulted in total charges of approximately $247,000, and are included in the applicable functional line items within our consolidated statement of operations for the fiscal year ended June 30, 2016. Separation Agreement with Former President and Chief Executive Officer In December 2015, we entered into a separation and release agreement (the “Separation Agreement”) with Kurt F. Busch, our former President and Chief Executive Officer. The Separation Agreement provided for (i) release of all claims by Mr. Busch in favor of Lantronix; (ii) a cash payment to Mr. Busch of $271,000, which was paid in January 2016; and (iii) the acceleration of vesting of 50,000 restricted stock units (“RSUs”), for which we recorded a net $52,000 share-based compensation charge. Both the $271,000 cash payment and the share-based compensation charge are included in selling, general and administrative expense in our consolidated statement of operations for the fiscal year ended June 30, 2016. 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, 2017 2016 (In thousands) Accrued property and equipment paid for in the subsequent period $ 3 $ 43 Non-cash acquisition of property and equipment under capital leases $ – $ 37 Non-cash acquisition of property and equipment through non-monetary exchange $ – $ 10 Non-cash tenant improvements paid by landlord $ – $ 190

3. Bank Line of Credit

3. Bank Line of Credit	12 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
3. Bank Line of Credit	We are party to a Loan and Security Agreement (as amended, the “Loan Agreement”) with Silicon Valley Bank (“SVB”), which provides a $4,000,000 revolving line of credit, based on qualified accounts receivable. The Loan Agreement has a 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 June 30, 2017, we met the 1.0 to 1.0 or greater quick ratio requirement. The Loan Agreement also includes a covenant requiring us to maintain a certain Minimum Tangible Net Worth (“Minimum TNW”), currently required to be approximately $6,021,000. 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. The following table presents the Minimum TNW compared to our Actual TNW: June 30, 2017 (In thousands) Minimum TNW $ 6,021 Actual TNW $ 11,200 The following table presents certain information with respect to the Loan Agreement with SVB: June 30, 2017 2016 (In thousands) Outstanding borrowings on the line of credit $ – $ – Available borrowing capacity on the line of credit $ 2,812 $ 2,620 Outstanding letters of credit $ 51 $ 51 Our outstanding letters of credit at June 30, 2017 and 2016 were used as security deposits.

4. Stockholders' Equity

4. Stockholders' Equity	12 Months Ended
	Jun. 30, 2017
Equity [Abstract]
4. Stockholders' Equity	Stock Incentive Plans We have stock incentive plans in effect under which non-qualified and incentive stock 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 (the “2010 SIP”). Shares reserved for issuance under this plan include rollover shares, which are any shares subject to equity compensation awards granted under our previous 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 of such shares are eligible for rollover. The 2010 SIP authorizes awards of stock options (both incentive and non-qualified), stock appreciation rights, non-vested shares, RSUs and performance shares. New shares are issued to satisfy stock option exercises and share issuances. As of June 30, 2017, approximately 1,888,000 shares remain available for issuance under the 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 seven to ten years. Share-based awards generally vest and become exercisable over a one to four year service period. As of June 30, 2017, 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, 2017 and 2016. Stock Option Awards The fair value of each stock option grant is estimated on the grant date using the Black-Scholes-Merton option-pricing formula. Expected volatilities are based on the historical volatility of our stock price. The expected term of options granted is 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 is based on the U.S. Treasury interest rates appropriate for the expected term of our stock options. The following weighted-average assumptions were used to estimate the fair value of all of our stock option grants: Years Ended June 30, 2017 2016 Expected term (in years) 4.77 4.99 Expected volatility 65% 67% Risk-free interest rate 1.43% 1.48% Dividend yield 0.00% 0.00% The following table presents a summary of activity for all of our stock options: Weighted-Average Exercise Remaining Aggregate Number of Price Contractual Intrinsic Shares Per Share Term Value (In thousands) (In years) (In thousands) Balance of options outstanding at June 30, 2016 3,606 $ 1.85 Options granted 923 1.71 Options forfeited (71 ) 1.59 Options expired (128 ) 3.18 Options exercised (146 ) 1.76 Balance of options outstanding at June 30, 2017 4,184 $ 1.78 4.2 $ 3,333 Options exercisable at June 30, 2017 2,294 $ 2.05 3.0 $ 1,368 The following table presents a summary of grant-date fair value and intrinsic value information for all of our stock options: Years Ended June 30, 2017 2016 (In thousands, except per share data) Weighted-average grant-date fair value per share $ 0.93 $ 0.64 Intrinsic value of options exercised $ 120 $ – Restricted Stock Units The fair value of our 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 our RSUs during the fiscal year ended June 30, 2017: Number of Shares Weighted- Average Grant Date Fair Value per Share (In thousands) Balance of RSUs outstanding at June 30, 2016 460 $ 1.10 Granted 85 1.81 Vested (245 ) 1.11 Balance of RSUs outstanding at June 30, 2017 300 $ 1.29 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 his or her payroll deductions during an Offering Period. The per share fair value of stock purchase rights granted under the ESPP was estimated using the following weighted-average assumptions: Years Ended June 30, 2017 2016 Expected term (in years) 1.25 1.25 Expected volatility 74% 62% Risk-free interest rate 1.01% 0.62% Dividend yield 0.00% 0.00% The following table presents a summary of activity under our ESPP during the fiscal year ended June 30, 2017: Year Ended June 30, 2017 (In thousands, except per share data) Shares available for issuance at June 30, 2016 736 Shares issued (260 ) Shares available for issuance at June 30, 2017 476 Weighted average purchase price per share $ 1.05 Intrinsic value of ESPP shares on purchase date $ 259 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, 2017 2016 (In thousands) Cost of revenues $ 48 $ 63 Selling, general and administrative 683 632 Research and development 181 175 Total share-based compensation expense $ 912 $ 870 The following table summarizes the remaining unrecognized share-based compensation expense related to our outstanding share-based awards as of June 30, 2017: Remaining Unrecognized Compensation Expense Remaining Weighted- Average Years to Recognize (In thousands) Stock options $ 1,324 2.8 Restricted stock units 347 1.7 Stock purchase rights under ESPP 219 1.2 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. Private Placement Sale of Common Stock In June 2016, we issued 1,941,748 shares of our common stock to Hale Capital Partners, LP for an aggregate purchase price of $2,000,000. After legal fees, we received net proceeds of $1,975,000 from the sale of these shares.

5. 401(k) Plan

5. 401(k) Plan	12 Months Ended
	Jun. 30, 2017
Retirement Benefits [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. We made approximately $136,000 and $112,000 in matching contributions to participants in the Plan during the fiscal years ended June 30, 2017 and 2016, respectively. In addition, we may make discretionary profit sharing contributions, subject to limitations. During the fiscal years ended June 30, 2017 and 2016, we made no such contributions to the Plan.

6. Litigation

6. Litigation	12 Months Ended
	Jun. 30, 2017
Litigation
6. Litigation	From time to time, we are subject to 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, 2017
Income Tax Disclosure [Abstract]
Income Taxes	The income tax provision consists of the following components: Years Ended June 30, 2017 2016 (In thousands) Current: Federal $ – $ – State 6 2 Foreign 62 61 68 63 Deferred: Federal – – State – – – – Provision for income taxes $ 68 $ 63 The following table presents U.S. and foreign income (loss) before income taxes: Years Ended June 30, 2017 2016 (In thousands) United States $ (465 ) $ (2,021 ) Foreign 256 122 Loss before income taxes $ (209 ) $ (1,899 ) The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows: Years Ended June 30, 2017 2016 Deferred tax assets: (In thousands) Tax losses and credits $ 31,024 $ 31,005 Reserves not currently deductible 3,114 2,763 Deferred compensation 482 398 Inventory capitalization 754 1,126 Marketing rights 85 175 Depreciation 252 430 Other 218 216 Gross deferred tax assets 35,929 36,113 Valuation allowance (35,449 ) (35,850 ) Deferred tax assets, net 480 263 Deferred tax liabilities: State taxes (480 ) (263 ) Deferred tax liabilities (480 ) (263 ) Net deferred tax assets (liabilities) $ – $ – We have recorded a valuation allowance against our net deferred tax assets. 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, 2017 2016 (In thousands) Statutory federal provision (benefit) for income taxes $ (71 ) $ (646 ) Increase (decrease) resulting from: State taxes, net of federal benefit 4 (38 ) Change in tax rate 86 15 Stock options (14 ) 250 Permanent differences 25 10 Change in valuation allowance (236 ) (133 ) Deferred compensation 44 185 Section 956 inclusion 102 – Foreign tax rate variances (25 ) 19 Other 153 401 Provision for income taxes $ 68 $ 63 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. Because 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, 2017 (In thousands) Federal $ 88,464 State $ 10,937 Our NOL carryovers for federal income tax purposes will 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, 2017 (in thousands): Balance as of June 30, 2016 $ 6,600 Change in balances related to uncertain tax positions – Balance as of June 30, 2017 $ 6,600 At June 30, 2017, we had $6,600,000 of gross unrecognized tax benefits. Of the total unrecognized benefits at June 30, 2017, $6,600,000 was recorded as a reduction to deferred tax assets, which caused a corresponding reduction in our valuation allowance of $6,600,000. 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, 2017 and 2016 we recorded an immaterial expense for interest and penalties related to income tax matters in the provision for income taxes. At June 30, 2017, we had approximately $184,000 of accrued interest and penalties related to uncertain tax positions. At June 30, 2017, our fiscal years ended June 30, 2014 through 2017 remain open to examination by the federal taxing jurisdiction and our fiscal years ended June 30, 2013 through 2017 remain open to examination by the state taxing jurisdictions. However, we have NOLs beginning in fiscal year ended June 30, 2001 which would cause the statute of limitations to remain open for the year in which the NOL was incurred. Our fiscal years ended June 30, 2010 through 2017 remain open to examination by foreign taxing authorities. We do not anticipate that the amount of unrecognized tax benefits as of June 30, 2017 will significantly increase or decrease within the next 12 months.

8. Commitments and Contingencie

8. Commitments and Contingencies	12 Months Ended
	Jun. 30, 2017
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. We currently lease approximately 27,000 square feet of office space for our corporate headquarters in Irvine, California. The lease for this facility commenced in July 2015, and is for a term of 65 months. The lease agreement provided for a tenant improvement allowance from the landlord of up to $243,000 for tenant improvements and other qualified expenses for which the landlord paid for approximately $190,000 in tenant improvements, and reimbursed Lantronix for the remaining $53,000. The following schedule represents minimum lease payments for all non-cancelable operating and capital leases as of June 30, 2017: Capital Operating Years Ending June 30, Leases Leases Total (In thousands) 2018 $ 65 $ 670 $ 735 2019 57 592 649 2020 5 550 555 2021 – 256 256 Total 127 $ 2,068 $ 2,195 Amounts representing interest (7 ) Present value of net minimum lease payments 120 Less: capital lease obligations, short-term portion (included in other current liabilities) 61 Capital lease obligations, long-term portion $ 59 The following table presents rent expense: Years Ended June 30, 2017 2016 (In thousands) Rent expense $ 717 $ 738

9. Significant Geographic, Cust

9. Significant Geographic, Customer and Supplier Information	12 Months Ended
	Jun. 30, 2017
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, which is based on the “bill-to” location of our customers: Years Ended June 30, 2017 2016 Americas 55% 51% Europe, Middle East, and Africa 30% 32% Asia Pacific Japan 15% 17% Total 100% 100% The following table presents sales to significant countries as a percentage of net revenue, which is based on the “bill-to” location of our customers: Years Ended June 30, 2017 2016 U.S. and Canada 55% 50% Germany 15% 17% United Kingdom 8% 9% Japan 7% 8% Customers The following table presents sales to our significant customers as a percentage of net revenue: Years Ended June 30, 2017 2016 Top five customers (1)(2) 50% 50% Ingram Micro 17% 20% Arrow 11% 11% Tech Data 10% * * Less than 10% (1) Includes Ingram Micro, Arrrow and Tech Data for year ended June 30, 2017. Includes Ingram Micro and Arrow for year ended June 30, 2016. (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 had no net revenue from related parties for the fiscal year ended June 30, 2017. Net revenue from related parties represented less than 1% of our total net revenues for the fiscal year ended June 30, 2016. Suppliers We do not own or operate a manufacturing facility. All 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.

10. Subsequent Event

10. Subsequent Event	12 Months Ended
	Jun. 30, 2017
Subsequent Events [Abstract]
10. Subsequent Event	In July 2017, we initiated a plan aimed at realigning personnel resources to better fit our current business needs. In connection with this plan, we estimate incurring a charge ranging from approximately $450,000 to $525,000, primarily consisting of severance-related costs.

1. Summary of Significant Acc17

1. Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Jun. 30, 2017
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, 2017, approximately $2,480,000 of our tangible assets were located outside of the United States (“U.S.”), a large portion of which was comprised of inventory held at (i) our third-party logistics provider in Hong Kong and (ii) our 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.
Reclassifications	Reclassifications Certain reclassifications have been made to the prior fiscal year financial information to conform to the current fiscal year presentation.
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, 2017 and 2016, approximately 99% of our net revenue 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. Actual product returns or pricing adjustments that differ from our estimates could result in increases or decreases to our net revenue. A significant portion of our sales are made to distributors under agreements which contain a limited right to return unsold products and price adjustment provisions. Given these provisions, we have concluded the price to these distributors is not fixed and determinable at the time we deliver products to them. 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, 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 the length of time the receivables are past due, 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 periodic 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 primarily 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 to which 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 fiscal years ended June 30, 2017 and 2016 we 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, other than long-term debt, 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 currencies were previously their respective local currencies 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, 2017 and 2016. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2017 or 2016.
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 net realizable value. 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 require 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. Capitalized software costs are 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 acquired 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. We begin by assessing qualitative factors to determine whether it is more likely than not that the fair value of our single reporting unit is less than its carrying value. Based on that qualitative assessment, if we conclude that it is more likely than not that the fair value of our single reporting unit is less than its carrying value, we conduct a quantitative goodwill impairment test, which involves comparing the estimated fair value of our single reporting unit with its carrying value, including goodwill. We estimate the fair value of our single reporting unit using a combination of the income and market approach. If the carrying value of the reporting unit exceeds its estimated fair value, we recognize an impairment loss for the difference. During the fourth quarter of the fiscal year ended June 30, 2017, we made a qualitative assessment of whether goodwill impairment existed and did not determine that it was more likely that 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 by a taxing authority. 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 our shared-based awards over the requisite service period. We record amortization of share-based compensation expense ratably over the requisite service period of the grant. We recognize the impact of forfeitures on our share-based compensation expense as such forfeitures occur.
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. Development costs of computer software to be sold, leased or otherwise marketed are subject to capitalization beginning when a product’s technological feasibility has been established and ending when a product is available for general release to customers. In most instances, we believe our current process for developing products is essentially completed concurrently with the establishment of technological feasibility and thus, software development costs have been expensed as incurred.
Warranty	Warranty The standard warranty periods we provide 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 for any known or anticipated product warranty issues.
Advertising Expenses	Advertising Expenses Advertising costs are expensed in the period incurred.
Segment Information	Segment Information We have one operating and reportable business segment.
Recent Accounting Pronouncements	Recent Accounting Pronouncements In January 2017, the Financial Accounting Standards Board (“FASB”) issued guidance to simplify the accounting for goodwill impairment. The guidance removes Step 2 of the goodwill impairment test, which requires a hypothetical purchase price allocation. Under the new guidance, a goodwill impairment will be the amount by which a reporting unit’s carrying value exceeds its estimated fair value. Companies continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. We adopted this guidance beginning with our annual goodwill impairment test for the fiscal year ended June 30, 2017. Such adoption did not have a material effect on our financial statements. 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 APIC and accumulated deficit. Going forward, we do not expect the adoption of this guidance to have a material effect on our financial statements. In February 2016, FASB issued an accounting standard that revises lease accounting guidance. Most prominent among the changes in the standard is the recognition of right-of-use (“ROU”) assets and lease liabilities by lessees for those leases classified as operating leases under the existing guidance. We will be required to recognize and measure leases existing at, or entered into after, the beginning of the earliest comparative period presented using a modified retrospective approach, with certain practical expedients available. The standard will be effective for Lantronix in the fiscal year beginning July 1, 2019. Early adoption is permitted. While we are continuing to assess the potential impacts of this standard, we currently expect the most significant impact on our financial statements will be the recognition of ROU assets and lease liabilities for operating leases. 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 did not have a material impact on our financial statements and related disclosures. Revenue from Contracts with Customers In May 2014, 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 two methods of adoption: (i) retrospectively to each prior reporting period presented (the full retrospective method), or (ii) retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application (the cumulative catch-up transition method). We expect to adopt the standard in the fiscal year beginning July 1, 2018 using the full retrospective method to restate each prior reporting period presented. We currently anticipate the standard will have a material impact on our financial statements and disclosures. We continue to make progress in assessing all potential impacts of the standard, including any impacts of recently issued amendments. We currently believe the most significant impact of the standard relates to our accounting for sales made to distributors under agreements which contain a limited right to return unsold products and price adjustment provisions. Under the existing revenue guidance, we have historically concluded that the price to these distributors is not fixed and determinable at the time we deliver products to them. Accordingly, revenue from sales to these distributors has not historically been recognized until the distributor resells the product. By contrast, under the new standard, we expect to recognize revenue, including estimates for applicable variable consideration, predominantly at the time of shipment to these distributors. We have not yet determined the quantitative impact that the standard will have on our financial statements and related disclosures.

2. Supplemental Financial Inf18

2. Supplemental Financial Information (Tables)	12 Months Ended
	Jun. 30, 2017
Supplemental Financial Information
Schedule of Inventory	June 30, 2017 2016 (In thousands) Finished goods $ 4,191 $ 3,822 Raw materials 1,694 1,653 Finished goods held by distributors 1,074 1,109 Inventories, net $ 6,959 $ 6,584
Schedule of Property and Equipment	June 30, 2017 2016 (In thousands) Computer, software and office equipment $ 3,462 $ 3,298 Furniture and fixtures 465 468 Production, development and warehouse equipment 4,002 3,724 Construction-in-progress* 304 509 Property and equipment, gross 8,233 7,999 Less accumulated depreciation (7,015 ) (6,430 ) Property and equipment, net $ 1,218 $ 1,569 * Includes $275,000 and $470,000 of capitalized software costs at June 30, 2017 and 2016, respectively.
Schedule of Capital Leased Assets	June 30, 2017 2016 (In thousands) Property and equipment $ 250 $ 266 Less accumulated depreciation (122 ) (71 ) Total $ 128 $ 195
Schedule of Warranty Reserve	Years Ended June 30, 2017 2016 (In thousands) Beginning balance $ 138 $ 163 Charged to cost of revenues 65 91 Usage (78 ) (116 ) Ending balance $ 125 $ 138
Schedule of Other Liabilities	June 30, 2017 2016 (In thousands) Current Customer deposits and refunds $ 1,119 $ 663 Accrued raw materials purchases 484 582 Deferred revenue 196 427 Capital lease obligations 61 64 Taxes payable 275 275 Accrued operating expenses 928 911 Total other current liabilities $ 3,063 $ 2,922 Non-current Deferred rent $ 200 $ 225 Deferred revenue 196 122 Total other non-current liabilities $ 396 $ 347
Schedule of Advertising Expenses	Years Ended June 30, 2017 2016 (In thousands) Advertising expenses $ 31 $ 173
Schedule of Computation of Net Loss per Share	Years Ended June 30, 2017 2016 (In thousands, except per share data) Numerator: Net loss $ (277 ) $ (1,962 ) Denominator: Weighted-average shares outstanding (basic and diluted) 17,451 15,260 Net loss per share (basic and diluted) $ (0.02 ) $ (0.13 )
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share	Years Ended June 30, 2017 2016 (In thousands) Common stock equivalents 1,503 3,450
Schedule of Severance and Related Charges	Year Ended June 30, 2017 (In thousands) Beginning balance $ – Charges 246 Payments (209 ) Ending balance $ 37
Schedule of Supplemental Cash Flow Information	Years Ended June 30, 2017 2016 (In thousands) Accrued property and equipment paid for in the subsequent period $ 3 $ 43 Non-cash acquisition of property and equipment under capital leases $ – $ 37 Non-cash acquisition of property and equipment through non-monetary exchange $ – $ 10 Non-cash tenant improvements paid by landlord $ – $ 190

3. Bank Line of Credit (Tables)

3. Bank Line of Credit (Tables)	12 Months Ended
	Jun. 30, 2017
Debt Disclosure [Abstract]
Schedule of Minimum Tangible Net Worth	June 30, 2017 (In thousands) Minimum TNW $ 6,021 Actual TNW $ 11,200
Availability under the Line of Credit	June 30, 2017 2016 (In thousands) Outstanding borrowings on the line of credit $ – $ – Available borrowing capacity on the line of credit $ 2,812 $ 2,620 Outstanding letters of credit $ 51 $ 51

4. Stockholders' Equity (Tables

4. Stockholders' Equity (Tables)	12 Months Ended
	Jun. 30, 2017
Schedule of share-based compensation expense by functional line item	Years Ended June 30, 2017 2016 (In thousands) Cost of revenues $ 48 $ 63 Selling, general and administrative 683 632 Research and development 181 175 Total share-based compensation expense $ 912 $ 870
Schedule of unrecognized share-based compensation expense	Remaining Unrecognized Compensation Expense Remaining Weighted- Average Years to Recognize (In thousands) Stock options $ 1,324 2.8 Restricted stock units 347 1.7 Stock purchase rights under ESPP 219 1.2
Stock Options [Member]
Schedule of Stock Options Valuation Assumptions	Years Ended June 30, 2017 2016 Expected term (in years) 4.77 4.99 Expected volatility 65% 67% Risk-free interest rate 1.43% 1.48% 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 of options outstanding at June 30, 2016 3,606 $ 1.85 Options granted 923 1.71 Options forfeited (71 ) 1.59 Options expired (128 ) 3.18 Options exercised (146 ) 1.76 Balance of options outstanding at June 30, 2017 4,184 $ 1.78 4.2 $ 3,333 Options exercisable at June 30, 2017 2,294 $ 2.05 3.0 $ 1,368
Summary of option grant-date fair value and intrinsic value information	Years Ended June 30, 2017 2016 (In thousands, except per share data) Weighted-average grant-date fair value per share $ 0.93 $ 0.64 Intrinsic value of options exercised $ 120 $ –
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 RSUs outstanding at June 30, 2016 460 $ 1.10 Granted 85 1.81 Vested (245 ) 1.11 Balance of RSUs outstanding at June 30, 2017 300 $ 1.29
ESPP [Member]
Schedule of Stock Options Valuation Assumptions	Years Ended June 30, 2017 2016 Expected term (in years) 1.25 1.25 Expected volatility 74% 62% Risk-free interest rate 1.01% 0.62% Dividend yield 0.00% 0.00%
Summary of other-than-option activity	Year Ended June 30, 2017 (In thousands, except per share data) Shares available for issuance at June 30, 2016 736 Shares issued (260 ) Shares available for issuance at June 30, 2017 476 Weighted average purchase price per share $ 1.05 Intrinsic value of ESPP shares on purchase date $ 259

7. Income Taxes (Tables)

7. Income Taxes (Tables)	12 Months Ended
	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Schedule of Components of Income Tax Expense	Years Ended June 30, 2017 2016 (In thousands) Current: Federal $ – $ – State 6 2 Foreign 62 61 68 63 Deferred: Federal – – State – – – – Provision for income taxes $ 68 $ 63
Schedule of Income before Income Tax, Domestic and Foreign	Years Ended June 30, 2017 2016 (In thousands) United States $ (465 ) $ (2,021 ) Foreign 256 122 Loss before income taxes $ (209 ) $ (1,899 )
Schedule of Deferred Tax Assets and Liabilities	Years Ended June 30, 2017 2016 Deferred tax assets: (In thousands) Tax losses and credits $ 31,024 $ 31,005 Reserves not currently deductible 3,114 2,763 Deferred compensation 482 398 Inventory capitalization 754 1,126 Marketing rights 85 175 Depreciation 252 430 Other 218 216 Gross deferred tax assets 35,929 36,113 Valuation allowance (35,449 ) (35,850 ) Deferred tax assets, net 480 263 Deferred tax liabilities: State taxes (480 ) (263 ) Deferred tax liabilities (480 ) (263 ) Net deferred tax assets (liabilities) $ – $ –
Schedule of Effective Income Tax Reconciliation	Years Ended June 30, 2017 2016 (In thousands) Statutory federal provision (benefit) for income taxes $ (71 ) $ (646 ) Increase (decrease) resulting from: State taxes, net of federal benefit 4 (38 ) Change in tax rate 86 15 Stock options (14 ) 250 Permanent differences 25 10 Change in valuation allowance (236 ) (133 ) Deferred compensation 44 185 Section 956 inclusion 102 – Foreign tax rate variances (25 ) 19 Other 153 401 Provision for income taxes $ 68 $ 63
Summary of Operating Loss Carryforwards	June 30, 2017 (In thousands) Federal $ 88,464 State $ 10,937
Summary of uncertain tax position	Balance as of June 30, 2016 $ 6,600 Change in balances related to uncertain tax positions – Balance as of June 30, 2017 $ 6,600

8. Commitments and Contingenc22

8. Commitments and Contingencies (Tables)	12 Months Ended
	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Schedule of Minimum Lease Payments	Capital Operating Years Ending June 30, Leases Leases Total (In thousands) 2018 $ 65 $ 670 $ 735 2019 57 592 649 2020 5 550 555 2021 – 256 256 Total 127 $ 2,068 $ 2,195 Amounts representing interest (7 ) Present value of net minimum lease payments 120 Less: capital lease obligations, short-term portion (included in other current liabilities) 61 Capital lease obligations, long-term portion $ 59
Schedule of Rent Expense	Years Ended June 30, 2017 2016 (In thousands) Rent expense $ 717 $ 738

9. Significant Geographic, Prod

9. Significant Geographic, Product Line, Customer and Supplier Information (Tables)	12 Months Ended
	Jun. 30, 2017
Segment Reporting [Abstract]
Schedule of Revenue by Geographic Area	Years Ended June 30, 2017 2016 Americas 55% 51% Europe, Middle East, and Africa 30% 32% Asia Pacific Japan 15% 17% Total 100% 100%
Schedule of Significant countries as a percentage of net revenue	Years Ended June 30, 2017 2016 U.S. and Canada 55% 50% Germany 15% 17% United Kingdom 8% 9% Japan 7% 8%
Schedule of Revenue by Major Customers	Years Ended June 30, 2017 2016 Top five customers (1)(2) 50% 50% Ingram Micro 17% 20% Arrow 11% 11% Tech Data 10% *

2. Supplemental Financial Inf24

2. Supplemental Financial Information (Details - Inventories) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Supplemental Financial Information
Finished goods	$ 4,191	$ 3,822
Raw materials	1,694	1,653
Finished goods held by distributors	1,074	1,109
Inventories, net	$ 6,959	$ 6,584

2. Supplemental Financial Inf25

2. Supplemental Financial Information (Details - Property and Equipment) - USD ($) $ in Thousands		Jun. 30, 2017	Jun. 30, 2016
Property and equipment, gross		$ 8,233	$ 7,999
Less accumulated depreciation		(7,015)	(6,430)
Property and equipment, net		1,218	1,569
Computer, software and office equipment [Member]
Property and equipment, gross		3,462	3,298
Furniture and Fixtures [Member]
Property and equipment, gross		465	468
Production, development and warehouse equipment [Member]
Property and equipment, gross		4,002	3,724
Construction in Progress [Member]
Property and equipment, gross	[1]	304	509
Capitalized software costs		$ 275	$ 470
[1]	Includes $275,000 and $470,000 of capitalized software costs at June 30, 2017 and 2016, respectively.

2. Supplemental Financial Inf26

2. Supplemental Financial Information (Details - Capital lease obligations) - Capital lease obligations [Member] - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Property and equipment under capital leases	$ 250	$ 266
Less accumulated depreciation	(122)	(71)
Property and equipment under capital leases, net	$ 128	$ 195

2. Supplemental Financial Inf27

2. Supplemental Financial Information (Details - Warranty reserve) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Supplemental Financial Information
Beginning balance	$ 138	$ 163
Charged to cost of revenues	65	91
Usage	(78)	(116)
Ending balance	$ 125	$ 138

2. Supplemental Financial Inf28

2. Supplemental Financial Information (Details - Other liabilities) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Current
Customer deposits and refunds	$ 1,119	$ 663
Accrued raw materials purchases	484	582
Deferred revenue	196	427
Capital lease obligations	61	64
Taxes payable	275	275
Other accrued liabilities	928	911
Total other current liabilities	3,063	2,922
Non-current
Deferred rent	200	225
Deferred revenue	196	122
Total other non-current liabilities	$ 396	$ 347

2. Supplemental Financial Inf29

2. Supplemental Financial Information (Details - Advertising expense) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Supplemental Financial Information
Advertising expenses	$ 31	$ 173

2. Supplemental Financial Inf30

2. Supplemental Financial Information (Details - Net Loss per Share) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Numerator:
Net loss and comprehensive loss	$ (277)	$ (1,962)
Denominator:
Weighted-average shares outstanding (basic and diluted)	17,451	15,260
Net loss per share (basic and diluted)	$ (0.02)	$ (0.13)

2. Supplemental Financial Inf31

2. Supplemental Financial Information (Details - Equivalents) - shares shares in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Supplemental Financial Information
Common stock equivalents	1,503	3,450

2. Supplemental Financial Inf32

2. Supplemental Financial Information (Details- Severance and related charges) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Supplemental Financial Information
Beginning balance	$ 0
Charges	246	$ 247
Payments	(209)
Ending balance	$ 37	$ 0

2. Supplemental Financial Inf33

2. Supplemental Financial Information (Details - Non-cash acquisition) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Supplemental Cash Flow Information
Accrued property and equipment paid for in the subsequent period	$ 3	$ 43
Non-cash acquisition of property and equipment under capital leases	0	37
Non-cash acquisition of property and equipment through non-monetary exchange	0	10
Non-cash tenant improvements paid by landlord	$ 0	$ 190

2. Supplemental Financial Inf34

2. Supplemental Financial Information (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Selling, general and administrative expenses	$ 15,803	$ 14,396
Restructuring charges	$ 246	247
Kurt F. Busch [Member] | Separation Agreement [Member]
Selling, general and administrative expenses		271
Kurt F. Busch [Member] | Share Based Compensation [Member]
Selling, general and administrative expenses		$ 52
Stock units vested		50,000

3. Bank Line of Credit (Details

3. Bank Line of Credit (Details - TNW) $ in Thousands	Jun. 30, 2017USD ($)
Debt Disclosure [Abstract]
Minimum TNW	$ 6,021
Actual TNW	$ 11,200

3. Bank Line of Credit (Detai36

3. Bank Line of Credit (Details - Credit Line) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Debt Disclosure [Abstract]
Outstanding borrowings on the line of credit	$ 0	$ 0
Available borrowing capacity	2,812	2,620
Outstanding letters of credit	$ 51	$ 51

3. Bank Line of Credit and Debt

3. Bank Line of Credit and Debt (Details Narrative)	12 Months Ended
	Jun. 30, 2017USD ($)
Debt Disclosure [Abstract]
Revolving Line	$4.0 million revolving line
Credit line maximum borrowing amount	$ 4,000,000
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. 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 June 30, 2017, we met the 1.0 to 1.0 or greater quick ratio requirement.

4. Stockholders Equity (Details

4. Stockholders Equity (Details - Option assumptions) - Stock Options [Member]	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Expected term (in years)	4 years 9 months 7 days	4 years 11 months 27 days
Expected volatility	65.00%	67.00%
Risk-free interest rate	1.43%	1.48%
Dividend yield	0.00%	0.00%

4. Stockholders Equity (Detai39

4. Stockholders Equity (Details - Option activity) - Stock Options [Member] $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2017USD ($)$ / sharesshares
Number of shares
Number of Shares Options Outstanding, Beginning | shares	3,606
Number of Shares Options Granted | shares	923
Number of Shares Options Forfeited | shares	(71)
Number of Shares Options Expired | shares	(128)
Number of Shares Options Exercised | shares	(146)
Number of Shares Options Outstanding, Ending | shares	4,184
Number of Shares Options Options exercisable at end of period | shares	2,294
Weighted Average Exercise Price per share
Exercise Price Outstanding, Beginning | $ / shares	$ 1.85
Exercise Price Granted | $ / shares	1.71
Exercise Price Forfeited | $ / shares	1.59
Exercise Price Expired | $ / shares	3.18
Exercise Price Exercised | $ / shares	1.76
Exercise Price Outstanding, Ending | $ / shares	1.78
Exercise Price Options exercisable at end of period | $ / shares	$ 2.05
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending	4 years 2 months 12 days
Weighted Average Remaining Contractual Life (in years) Exercisable	3 years
Aggregate Intrinsic Value Outstanding, Ending | $	$ 3,333
Aggregate Intrinsic Value Exercisable | $	$ 1,368

4. Stockholders Equity (Detai40

4. Stockholders Equity (Details - Other option information) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Weighted-average grant-date fair value per share	$ 0.93	$ 0.64
Intrinsic value of options exercised	$ 120	$ 0

4. Stockholders Equity (Detai41

4. Stockholders Equity (Details - RSU activity) - Restricted Stock Units (RSUs) [Member] shares in Thousands	12 Months Ended
	Jun. 30, 2017$ / sharesshares
Number of RSU's Shares
Balance of RSU's, beginning | shares	460
Granted | shares	85
Vested | shares	(245)
Balance of RSU's, ending | shares	300
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	1.81
RSU Shares Vested, Weighted-Average Grant-Date Fair Value per Share | $ / shares	1.11
RSU Shares Weighted-Average Grant-Date Fair Value per Share, ending | $ / shares	$ 1.29

4. Stockholders Equity (Detai42

4. Stockholders Equity (Details - ESPP Assumptions) - ESPP [Member]	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Expected term (in years)	1 year 3 months	1 year 3 months
Expected volatility	74.00%	62.00%
Risk-free interest rate	1.01%	0.62%
Dividend yield	0.00%	0.00%

4. Stockholders Equity (Detai43

4. Stockholders Equity (Details - ESPP activity) - ESPP [Member] $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2017USD ($)$ / sharesshares
Shares available for issuance at beginning of year	736
Shares issued	(260)
Shares available for future issuance at end of year	476
Weighted average purchase price per share | $ / shares	$ 1.05
Intrinsic value of ESPP shares on purchase date | $	$ 259

4. Stockholders Equity (Detai44

4. Stockholders Equity (Details - Share based compensation) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Total share-based compensation	$ 912	$ 870
Cost of revenues [Member]
Total share-based compensation	48	63
Selling, general and administrative [Member]
Total share-based compensation	683	632
Research and development [Member]
Total share-based compensation	$ 181	$ 175

4. Stockholders Equity (Detai45

4. Stockholders Equity (Details - Unrecognized expense) $ in Thousands	12 Months Ended
	Jun. 30, 2017USD ($)
Stock Options [Member]
Unrecognized share-based compensation expense	$ 1,324
Weighted average years to recognize	2 years 9 months 18 days
Restricted Stock Units (RSUs) [Member]
Unrecognized share-based compensation expense	$ 347
Weighted average years to recognize	1 year 8 months 12 days
ESPP [Member]
Unrecognized share-based compensation expense	$ 219
Weighted average years to recognize	1 year 2 months 12 days

4. Stockholders' Equity (Detail

4. Stockholders' Equity (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Stock sold new, value		$ 1,975
Proceeds from sale of stock, net	$ 529	$ 2,149
2010 SIP [Member]
Shares available for issuance under stock incentive plans	1,888,000
Hale Capital Partners, LP [Member]
Stock sold new, shares	1,941,748
Stock sold new, value	$ 2,000
Proceeds from sale of stock, net	$ 1,975

5. 401(k) Plan (Details Narrati

5. 401(k) Plan (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Retirement Benefits [Abstract]
Contributions made by Company	$ 136	$ 112

7. Income Taxes (Details - Inco

7. Income Taxes (Details - Income tax provision) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Current:
Federal	$ 0	$ 0
State	6	2
Foreign	62	61
Total Current taxes	68	63
Deferred:
Federal	0	0
State	0	0
Total Deferred Taxes	0	0
Provision for income taxes	$ 68	$ 63

7. Income Taxes (Details - US a

7. Income Taxes (Details - US and foreign income) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Income Tax Disclosure [Abstract]
United States	$ (465)	$ (2,021)
Foreign	256	122
Loss before income taxes	$ (209)	$ (1,899)

7. Income Taxes (Details - Defe

7. Income Taxes (Details - Deferred tax assets) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Deferred tax assets:
Tax losses and credits	$ 31,024	$ 31,005
Reserves not currently deductible	3,114	2,763
Deferred compensation	482	398
Inventory capitalization	754	1,126
Marketing rights	85	175
Depreciation	252	430
Other	218	216
Gross deferred tax assets	35,929	36,113
Valuation allowance	(35,449)	(35,850)
Deferred tax assets, net	480	263
Deferred tax liabilities:
State taxes	(480)	(263)
Deferred tax liabilities	(480)	(263)
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, 2017	Jun. 30, 2016
Income Tax Disclosure [Abstract]
Statutory federal provision (benefit) for income taxes	$ (71)	$ (646)
Increase (decrease) resulting from:
State taxes, net of federal benefit	4	(38)
Change in tax rate	86	15
Stock options	(14)	250
Permanent differences	25	10
Change in valuation allowance	(236)	(133)
Deferred compensation	44	185
Section 956 inclusion	102	0
Foreign tax rate variances	(25)	19
Other	153	401
Provision for income taxes	$ 68	$ 63

7. Income Taxes (Details - NOL'

7. Income Taxes (Details - NOL's) $ in Thousands	Jun. 30, 2017USD ($)
Income Tax Disclosure [Abstract]
Federal	$ 88,464
State	$ 10,937

7. Income Taxes (Details - Unce

7. Income Taxes (Details - Uncertain tax positions) $ in Thousands	12 Months Ended
	Jun. 30, 2017USD ($)
Income Tax Disclosure [Abstract]
Balance, beginning	$ 6,600
Change in balances related to uncertain tax positions	0
Balance, ending	$ 6,600

7. Income Taxes (Details Narrat

7. Income Taxes (Details Narrative) $ in Thousands	Jun. 30, 2017USD ($)
Income Tax Disclosure [Abstract]
Accrued interest and penalties related to uncertain tax positions	$ 184

8. Commitments and Contingenc55

8. Commitments and Contingencies (Details - Capital lease) - USD ($) $ in Thousands	Jun. 30, 2017	Jun. 30, 2016
Capital Leases
2,018	$ 65
2,019	57
2,020	5
2,021	0
Total	127
Amounts representing interest	(7)
Present value of net minimum lease payments	120
Less: capital lease obligations, short-term portion (included in other current liabilities)	61
Capital lease obligations, long-term portion	59	$ 116
Operating Leases
2,018	670
2,019	592
2,020	550
2,021	256
Total	2,068
Total lease payments 2018	735
Total lease payments 2019	649
Total lease payments 2020	555
Total lease payments 2021	256
Total lease payments	$ 2,195

8. Commitments and Contingenc56

8. Commitments and Contingencies (Details - rent expense) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 717	$ 738

9. Significant Geographic, Cu57

9. Significant Geographic, Customer and Supplier Information (Details - Geographic) - Sales Revenue, Net [Member]	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
America [Member]
Geographic regions, net revenue percentage	55.00%	51.00%
Euprope, Middle East, Africa [Member]
Geographic regions, net revenue percentage	30.00%	32.00%
Asia Pacific Japan [Member]
Geographic regions, net revenue percentage	15.00%	17.00%

9. Significant Geographic, Cu58

9. Significant Geographic, Customer and Supplier Information (Details - by country) - Sales Revenue, Net [Member]	12 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
U.S. and Canada [Member]
Significant countries, net revenue percentage	55.00%	50.00%
GERMANY [Member]
Significant countries, net revenue percentage	15.00%	17.00%
UNITED KINGDOM [Member]
Significant countries, net revenue percentage	8.00%	9.00%
JAPAN [Member]
Significant countries, net revenue percentage	7.00%	8.00%

9. Significant Geographic, Cu59

9. Significant Geographic, Customer and Supplier Information (Details - Significant customers) - Sales Revenue, Net [Member]		12 Months Ended
		Jun. 30, 2017		Jun. 30, 2016
Top five customers [Member]
Significant customers, net revenue percentage	[1]	50.00%	[2]	50.00%	[3]
Ingram Micro [Member]
Significant customers, net revenue percentage		17.00%		20.00%
Arrow [Member]
Significant customers, net revenue percentage		11.00%		11.00%
Tech Data [Member]
Significant customers, net revenue percentage		10.00%		0.00%	[4]
[1]	All top five customers are distributors, who are part of our product distribution system.
[2]	Includes Ingram Micro, Arrrow and Tech Data
[3]	Includes Ingram Micro and Arrow
[4]	Less than 10%