Lantronix (LTRX) 10-K 23 Aug 18 2018 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Jun. 30, 2018	Aug. 17, 2018	Dec. 29, 2017
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, 2018
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			$ 16,789,000
Entity Common Stock, Shares Outstanding		18,944,698
Document Fiscal Period Focus	FY
Document Fiscal Year Focus	2,018

Consolidated Balance Sheets

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Current assets:
Cash and cash equivalents	$ 9,568	$ 8,073
Accounts receivable (net of allowance for doubtful accounts of $168 and $55 at June 30, 2018 and 2017, respectively)	4,244	3,432
Inventories, net	8,439	6,959
Contract manufacturers' receivable	649	476
Prepaid expenses and other current assets	370	440
Total current assets	23,270	19,380
Property and equipment, net	1,036	1,218
Goodwill	9,488	9,488
Other assets	61	46
Total assets	33,855	30,132
Current liabilities:
Accounts payable	3,942	2,717
Accrued payroll and related expenses	2,808	3,084
Warranty reserve	99	125
Other current liabilities	2,877	3,063
Total current liabilities	9,726	8,989
Long-term capital lease obligations	4	59
Other non-current liabilities	312	396
Total liabilities	10,042	9,444
Commitments and contingencies (Note 8)	0	0
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; 18,908,196 and 17,808,696 shares issued and outstanding at June 30, 2018 and 2017, respectively	2	2
Additional paid-in capital	212,995	210,550
Accumulated deficit	(189,555)	(190,235)
Accumulated other comprehensive income	371	371
Total stockholders' equity	23,813	20,688
Total liabilities and stockholders' equity	$ 33,855	$ 30,132

Consolidated Balance Sheets (Pa

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Assets
Allowance for Receivables	$ 168	$ 55
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	18,908,196	17,808,696
Common Stock Outstanding	18,908,196	17,808,696

Consolidated Statements of Oper

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Income Statement [Abstract]
Net revenue	$ 45,580	$ 44,730
Cost of revenue	20,212	21,150
Gross profit	25,368	23,580
Operating expenses:
Selling, general and administrative	16,499	15,803
Research and development	8,065	7,960
Total operating expenses	24,564	23,763
Income (loss) from operations	804	(183)
Interest expense, net	(18)	(23)
Other expense, net	(8)	(3)
Income (loss) before income taxes	778	(209)
Provision for income taxes	98	68
Net income (loss) and comprehensive income (loss)	$ 680	$ (277)
Net income (loss) per share (basic)	$ 0.04	$ (0.02)
Net income (loss) per share (diluted)	$ 0.04	$ (0.02)
Weighted-average common shares (basic)	18,171	17,451
Weighted-average common shares (diluted)	19,158	17,451

Consolidated Statements of Stoc

Consolidated Statements of Stockholders Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-In Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Total
Beginning balance, shares at Jun. 30, 2016	17,254,000
Beginning 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 shares	555,000
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 income (loss)			(277)		(277)
Ending balance, shares at Jun. 30, 2017	17,809,000
Ending balance, value at Jun. 30, 2017	$ 2	210,550	(190,235)	371	20,688
Shares issued pursuant to stock awards, net shares	1,099,000
Shares issued pursuant to stock awards, net value		1,489			1,489
Tax withholding paid on behalf of employees for restricted shares		(213)			(213)
Share-based compensation		1,169			1,169
Net income (loss)			680		680
Ending balance, shares at Jun. 30, 2018	18,908,000
Ending balance, value at Jun. 30, 2018	$ 2	$ 212,995	$ (189,555)	$ 371	$ 23,813

Consolidated Statements of Cash

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Operating activities
Net income (loss)	$ 680	$ (277)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Share-based compensation	1,169	912
Depreciation and amortization	442	594
Changes in operating assets and liabilities:
Accounts receivable	(812)	(268)
Inventories	(1,480)	(375)
Contract manufacturers' receivable	(173)	(107)
Prepaid expenses and other current assets	70	140
Other assets	(23)	13
Accounts payable	1,202	(7)
Accrued payroll and related expenses	(276)	1,267
Warranty reserve	(26)	(13)
Other liabilities	(264)	193
Net cash provided by operating activities	509	2,072
Investing activities
Purchases of property and equipment	(229)	(236)
Net cash used in investing activities	(229)	(236)
Financing activities
Tax withholding paid on behalf of employees for restricted shares	(213)	(194)
Net proceeds from issuances of common stock	1,489	529
Payment of capital lease obligations	(61)	(60)
Net cash provided by financing activities	1,215	275
Increase in cash and cash equivalents	1,495	2,111
Cash and cash equivalents at beginning of year	8,073	5,962
Cash and cash equivalents at end of year	9,568	8,073
Supplemental disclosure of cash flow information
Interest paid	18	23
Income taxes paid	$ 87	$ 73

1. Summary of Significant Accou

1. Summary of Significant Accounting Policies	12 Months Ended
	Jun. 30, 2018
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	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 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, 2018, approximately $3,591,000 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 valuation, 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, 2018 and 2017, over 99% of our net revenue came from sales of hardware products. Our remaining 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 limited rights 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. Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the amount we expect to collect, which is net of 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, and accrued liabilities. 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, 2018 and 2017 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 approximate their current fair values because of the nature and short duration of these instruments. 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, 2018 and 2017. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2018 or 2017. 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, 2018, 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 ratably over the requisite service period. We recognize the impact of forfeitures on our share-based compensation expense as such forfeitures occur. Net Income (Loss) Per Share Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the fiscal year. Diluted net income (loss) per share 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 expenses are recorded in the period incurred and totaled $213,000 and $108,000 for the fiscal years ended June 30, 2018 and 2017, respectively. Segment Information We have one operating and reportable business segment. Recent Accounting Pronouncements Shared-Based Compensation In June 2018, the Financial Accounting Standards Board (“FASB”) issued an accounting standard that expands the scope of existing share-based compensation guidance for employees. The new standard will include share-based payment transactions for acquiring goods and services from nonemployees, whereby share-based payments to nonemployees will be measured and recorded at the fair value of the equity instruments that an entity is obligated to issue on the grant date. The standard will be effective for us beginning July 1, 2019, with early adoption permitted. Entities are required to adopt the standard using a modified retrospective approach with a cumulative adjustment to opening retained earnings in the year of adoption for the remeasurement of liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established. We are currently evaluating the date we intend to adopt this guidance and currently do not anticipate that the adoption of this guidance will have a material impact on our consolidated financial statements. Leases 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. The standard requires entities 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. In July 2018, FASB issued a practical expedient that would allow entities the option to apply the provisions of the new lease guidance at the effective date of adoption without adjusting the comparative periods presented. The standard will be effective for Lantronix in the fiscal year beginning July 1, 2019, with early adoption 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 our operating leases. We have not yet determined which practical expedients we intend to utilize in connection with adopting the new standard, nor have we determined any quantitative impacts on our financial statements. Revenue from Contracts with Customers In May 2014, FASB issued an accounting standard which superseded previous revenue recognition guidance under 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 previous 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 modified retrospective transition method). The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We will adopt the standard in the fiscal year beginning July 1, 2018 using the modified retrospective transition method, with the cumulative effect recognized in our accumulated deficit at the date of adoption. We believe the most significant impact of adopting the standard relates to the timing of when revenue is recognized for sales made to distributors under agreements which contain limited rights to return unsold products and price adjustment provisions. Under the previous 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, and thus revenue from sales to these distributors has not historically been recognized until the distributor resells the product. By contrast, under the new standard, we will recognize revenue when we transfer control to the distributor rather than deferring recognition until the distributor resells the products. In addition, we will establish appropriate accruals for the variable consideration aspect of sales to distributors, estimated primarily based on historical experience, including estimates for returns and price adjustments. Further, given certain requirements in the new standard regarding the presentation of estimated return assets and refund liabilities, we expect the adoption will result in an increase in our accounts receivable, net and a decrease in our inventories, net. We currently expect to record a decrease to the opening balance of accumulated deficit between $500,000 and $700,000 as a result of adopting the new standard.

2. Supplemental Financial Infor

2. Supplemental Financial Information	12 Months Ended
	Jun. 30, 2018
Supplemental Financial Information
Supplemental Financial Information	2. Supplemental Financial Information Inventories The following table presents details of our inventories: June 30, 2018 2017 (In thousands) Finished goods $ 5,359 $ 4,191 Raw materials 2,547 1,694 Finished goods held by distributors 533 1,074 Inventories, net $ 8,439 $ 6,959 Property and Equipment The following table presents details of property and equipment: June 30, 2018 2017 (In thousands) Computer, software and office equipment $ 3,801 $ 3,737 Furniture and fixtures 450 465 Production, development and warehouse equipment 4,137 4,002 Construction-in-progress 50 29 Property and equipment, gross 8,438 8,233 Less accumulated depreciation (7,402 ) (7,015 ) Property and equipment, net $ 1,036 $ 1,218 The following table presents details of property and equipment recorded in connection with capital lease obligations: June 30, 2018 2017 (In thousands) Property and equipment $ 250 $ 250 Less accumulated depreciation (182 ) (122 ) Total $ 68 $ 128 The depreciation and amortization of property and equipment recorded in connection with capital lease obligations is included within depreciation and amortization 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, 2018 2017 (In thousands) Beginning balance $ 125 $ 138 Charged to cost of revenues 168 65 Usage (194 ) (78 ) Ending balance $ 99 $ 125 Other Liabilities The following table presents details of our other liabilities: June 30, 2018 2017 (In thousands) Current Customer deposits and refunds $ 916 $ 1,119 Accrued raw materials purchases 460 484 Deferred revenue 305 196 Capital lease obligations 55 61 Taxes payable 296 275 Accrued operating expenses 845 928 Total other current liabilities $ 2,877 $ 3,063 Non-current Deferred rent $ 137 $ 200 Deferred revenue 175 196 Total other non-current liabilities $ 312 $ 396 Computation of Net Income (Loss) per Share The following table presents the computation of net income (loss) per share: Years Ended June 30, 2018 2017 (In thousands, except per share data) Numerator: Net income (loss) $ 680 $ (277 ) Denominator: Weighted-average shares outstanding - basic 18,171 17,451 Effect of dilutive securities: 987 – Weighted-average shares outstanding - diluted 19,158 17,451 Net income (loss) per share - basic $ 0.04 $ (0.02 ) Net income (loss) per share - diluted $ 0.04 $ (0.02 ) The following table presents the common stock equivalents excluded from the diluted net loss per share calculation because they were anti-dilutive for the periods presented. These excluded common stock equivalents could be dilutive in the future. Years Ended June 30, 2018 2017 (In thousands) Common stock equivalents 644 1,503 Severance and Related Charges Fiscal Year Ended June 30, 2018 From July 2017 through September 2017, we realigned certain personnel resources throughout our organization, primarily to optimize our operations and engineering efforts. These activities resulted in total charges of approximately $506,000 and consisted primarily of severance costs, and to a lesser extent, termination costs related to our facility lease in Hong Kong. These charges are included in the applicable functional line items within the accompanying consolidated statement of operations for the fiscal year ended June 30, 2018. As of June 30, 2018, we have no remaining liabilities related to these activities. Fiscal Year Ended June 30, 2017 In January 2017, we initiated personnel changes to our European sales team. These activities resulted in total charges of $246,000 and consisted primarily of severance costs, and to a lesser extent, a facility lease termination cost. These charges are included in the applicable functional line items within the accompanying consolidated statement of operations for the fiscal year ended June 30, 2017. 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, 2018 2017 (In thousands) Accrued property and equipment paid for in the subsequent period $ 23 $ 3

3. Bank Line of Credit

3. Bank Line of Credit	12 Months Ended
	Jun. 30, 2018
Debt Disclosure [Abstract]
Bank Line of Credit	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, 2018, we met the 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 $6,681,000. The Minimum TNW is subject to adjustment upward to the extent we raise additional equity or debt financing or achieve net income in future periods. 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, 2018 (In thousands) Minimum TNW $ 6,681 Actual TNW $ 14,325 The following table presents certain information with respect to the Loan Agreement: June 30, 2018 2017 (In thousands) Outstanding borrowings on the line of credit $ – $ – Available borrowing capacity on the line of credit $ 2,503 $ 2,812 Outstanding letters of credit $ 51 $ 51 Our outstanding letters of credit at June 30, 2018 and 2017 were used as security deposits.

4. Stockholders' Equity

4. Stockholders' Equity	12 Months Ended
	Jun. 30, 2018
Equity [Abstract]
Stockholders' Equity	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 (as amended, the “2010 SIP”). Shares reserved for issuance under the 2010 SIP 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 us 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 non-qualified and incentive), stock appreciation rights, non-vested shares, restricted stock units (“RSUs”) and performance shares. New shares are issued to satisfy stock option exercises and share issuances. As of June 30, 2018, approximately 1,378,000 shares remain available for issuance under the 2010 SIP. We have also granted stock options and RSUs under individual inducement award agreements. The Compensation Committee of our board of directors determines eligibility, vesting schedules and exercise prices for stock options and shares granted under the plans. Stock options are generally granted with an exercise price equal to the market price of our common stock on the grant date. Stock options 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, 2018, 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, 2018 and 2017. 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 stock 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, 2018 2017 Expected term (in years) 4.8 4.8 Expected volatility 65% 65% Risk-free interest rate 1.81% 1.43% 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, 2017 4,184 $ 1.78 Options granted 950 2.16 Options forfeited (183 ) 1.71 Options expired (322 ) 3.70 Options exercised (698 ) 1.70 Balance of options outstanding at June 30, 2018 3,931 $ 1.73 4.3 $ 4,408 Options exercisable at June 30, 2018 2,071 $ 1.70 3.2 $ 2,393 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, 2018 2017 (In thousands, except per share data) Weighted-average grant date fair value per share $ 1.18 $ 0.93 Intrinsic value of options exercised $ 693 $ 120 Restricted Stock Units The fair value of our RSUs is based on the closing market price of our common stock on the grant date. The following table presents a summary of activity with respect to our RSUs during the fiscal year ended June 30, 2018: Number of Shares Weighted-Average Grant Date Fair Value per Share (In thousands) Balance of RSUs outstanding at June 30, 2017 300 $ 1.29 Granted 40 2.05 Vested (200 ) 1.27 Balance of RSUs outstanding at June 30, 2018 140 $ 1.51 Employee Stock Purchase Plan We have a 2013 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 (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. For purposes of measuring share-based compensation expense and calculating net income (loss) per share, we account for common stock purchase rights granted under the ESPP in the same manner as our other shared-based awards. 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, 2018 2017 Expected term (in years) 1.3 1.3 Expected volatility 64% 74% Risk-free interest rate 1.76% 1.01% Dividend yield 0.00% 0.00% The following table presents a summary of activity under our ESPP during the fiscal year ended June 30, 2018: Year Ended June 30, 2018 (In thousands, except per share data) Shares available for issuance at June 30, 2017 476 Shares issued (328 ) Shares available for issuance at June 30, 2018 148 Weighted-average purchase price per share $ 1.25 Intrinsic value of ESPP shares on purchase date $ 316 Share-Based Compensation Expense The following table presents a summary of share-based compensation expense included in each applicable functional line item on our consolidated statements of operations: Years Ended June 30, 2018 2017 (In thousands) Cost of revenues $ 53 $ 48 Selling, general and administrative 924 683 Research and development 192 181 Total share-based compensation expense $ 1,169 $ 912 The following table presents a summary of the remaining unrecognized share-based compensation expense related to our outstanding share-based awards as of June 30, 2018: Remaining Unrecognized Compensation Expense Remaining Weighted-Average Years to Recognize (In thousands) Stock options $ 1,556 2.6 RSUs $ 167 0.9 Common stock purchase rights under ESPP $ 235 1.6 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 expense will increase to the extent that we grant additional share-based awards.

5. 401(k) Plan

5. 401(k) Plan	12 Months Ended
	Jun. 30, 2018
Retirement Benefits [Abstract]
401(k) Plan	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. We made approximately $150,000 and $136,000 in matching contributions to participants in the Plan during the fiscal years ended June 30, 2018 and 2017, respectively. In addition, we may make discretionary profit sharing contributions, subject to limitations. During the fiscal years ended June 30, 2018 and 2017, we made no such contributions to the Plan.

6. Litigation

6. Litigation	12 Months Ended
	Jun. 30, 2018
Litigation
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, 2018
Income Tax Disclosure [Abstract]
Income Taxes	7. Income Taxes The provision for income taxes consists of the following components: Years Ended June 30, 2018 2017 (In thousands) Current: Federal $ – $ – State (1 ) 6 Foreign 99 62 98 68 Deferred: Federal – – State – – Foreign – – Provision for income taxes $ 98 $ 68 The following table presents U.S. and foreign income (loss) before income taxes: Years Ended June 30, 2018 2017 (In thousands) United States $ 504 $ (465 ) Foreign 274 256 Income (loss) before income taxes $ 778 $ (209 ) The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows: Years Ended June 30, 2018 2017 (In thousands) Deferred tax assets: Tax losses and credits $ 19,870 $ 31,024 Reserves not currently deductible 1,714 3,114 Deferred compensation 276 482 Inventory capitalization 369 754 Marketing rights – 85 Depreciation 106 252 Other 114 218 Gross deferred tax assets 22,449 35,929 Valuation allowance (22,155 ) (35,449 ) Deferred tax assets, net 294 480 Deferred tax liabilities: State taxes (294 ) (480 ) Deferred tax liabilities (294 ) (480 ) Net deferred tax assets (liabilities) $ – $ – We have recorded a valuation allowance against our net deferred tax assets, due to uncertainties surrounding the realization of the deferred tax assets. The following table presents a reconciliation of the provision for income taxes to taxes computed at the U.S. federal statutory rate: Years Ended June 30, 2018 2017 (In thousands) Statutory federal provision (benefit) for income taxes $ 214 $ (71 ) Increase (decrease) resulting from: Change in tax rate 12,887 86 Officer compensation 49 – Stock options (100 ) (14 ) Other permanent differences (5 ) 25 Change in valuation allowance (13,204 ) (236 ) Deferred compensation – 44 One-time transition tax 63 – Foreign tax rate variances 23 (25 ) Other 171 259 Provision for income taxes $ 98 $ 68 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. Due to the annual limitation, a portion of these carryforwards may expire before ultimately becoming available to reduce future income tax liabilities. The following table presents our NOLs: June 30, 2018 (In thousands) Federal $ 89,755 State $ 13,270 For federal income tax purposes, our NOL carryovers generated for tax years beginning before July 1, 2018 will begin to expire in the fiscal year ending June 30, 2021. For state income tax purposes, our NOLs began to expire in the fiscal year ended June 30, 2013. Pursuant to the Tax Cuts and Jobs Act (the “2017 Act”) enacted by the U.S. federal government in December 2017, discussed further below, for federal income tax purposes, NOL carryovers generated for our tax years beginning after June 30, 2018 can be carried forward indefinitely, but will be subject to a taxable income limitation. We continue to assert that our foreign earnings are indefinitely reinvested in our overseas operations and as such, deferred income taxes were not provided on undistributed earnings of certain foreign subsidiaries. However, given the passage of the 2017 Act, we may re-evaluate our position. Tax Cuts and Jobs Act The 2017 Act changes existing U.S. tax law to, among other things (i) lower U.S. corporate tax rates and implement a territorial tax system, (ii) generally reduce a company’s ability to utilize accumulated NOLs and (iii) require the calculation of a one-time transition tax on certain previously unrepatriated foreign earnings and profits (“E&P”) as part of the transition to the new territorial tax system. In addition, the 2017 Act impacts a company’s estimates of its deferred tax assets and liabilities. Since we have a June 30 fiscal year-end, the lower U.S. corporate tax rate is phased in, resulting in a blended rate of approximately 28% for our fiscal year ended June 30, 2018, and a statutory rate of 21% for our fiscal years thereafter. Pursuant to U.S. GAAP, changes in tax rates and tax laws are accounted for in the period of enactment, and the resulting effects are recorded as discrete components of the provision for income taxes related to continuing operations in the same period. We have evaluated the impact of the 2017 Act on our consolidated financial statements for the fiscal year ended June 30, 2018. In doing so, we estimated a one-time transition tax liability with respect to our calculated unrepatriated foreign E&P of approximately $63,000. We have offset this liability by utilizing our existing NOLs, resulting in no net effect to our provision for income taxes for the fiscal year ended June 30, 2018. Additionally, we have recorded a decrease in our net deferred tax assets of approximately $12,850,000, with a corresponding offset to our estimated full valuation allowance against our net deferred tax assets, resulting in no net effect on our provision for income taxes. Unrecognized Tax Benefits The following table summarizes our liability for uncertain tax positions for the fiscal year ended June 30, 2018 (in thousands): Year Ended June 30, 2018 Balance as of June 30, 2017 $ 6,600 Change in balances related to uncertain tax positions – Balance as of June 30, 2018 $ 6,600 At June 30, 2018, we had $6,600,000 of gross unrecognized tax benefits. Of the total unrecognized tax benefits at June 30, 2018, $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, 2018 and 2017 we recorded an immaterial expense for interest and penalties related to income tax matters in the provision for income taxes. At June 30, 2018, we had approximately $200,000 of accrued interest and penalties related to uncertain tax positions. At June 30, 2018, our fiscal years ended June 30, 2014 through 2018 remain open to examination by the federal taxing jurisdiction and our fiscal years ended June 30, 2013 through 2018 remain open to examination by the state taxing jurisdictions. However, we have NOLs beginning in the 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, 2011 through 2018 remain open to examination by foreign taxing authorities. We do not anticipate that the amount of unrecognized tax benefits as of June 30, 2018 will significantly increase or decrease within the next 12 months.

8. Commitments and Contingencie

8. Commitments and Contingencies	12 Months Ended
	Jun. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	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, is for a term of 65 months and provides for annual rent increases. 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 presents minimum lease payments for all non-cancelable operating and capital leases as of June 30, 2018: Capital Operating Years Ending June 30, Leases Leases Total (In thousands) 2019 57 573 630 2020 4 549 553 2021 – 255 255 Total 61 $ 1,377 $ 1,438 Amounts representing interest (2 ) Present value of net minimum lease payments 59 Less: capital lease obligations, short-term portion (included in other current liabilities) 55 Capital lease obligations, long-term portion $ 4 The following table presents rent expense: Years Ended June 30, 2018 2017 (In thousands) Rent expense $ 717 $ 717

9. Significant Geographic, Cust

9. Significant Geographic, Customer and Supplier Information	12 Months Ended
	Jun. 30, 2018
Segment Reporting [Abstract]
Significant Geographic, Product Line, Customer and Supplier Information	9. Significant Geographic, 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, 2018 2017 Americas 55% 55% Europe, Middle East, and Africa 30% 30% Asia Pacific Japan 15% 15% 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, 2018 2017 U.S. and Canada 54% 55% Germany 16% 15% United Kingdom 7% 8% Japan 7% 7% Customers The following table presents sales to our significant customers as a percentage of net revenue: Years Ended June 30, 2018 2017 Top five customers (1)(2) 51% 50% Ingram Micro 19% 17% Arrow 12% 11% Tech Data * 10% * Less than 10% (1) Includes Ingram Micro, Arrow and Tech Data for the fiscal years ended June 30, 2018 and 2017. (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 years ended June 30, 2018 and 2017. Suppliers We do not own or operate a manufacturing facility. All of our products are manufactured by third-party contract manufacturers and foundries located primarily in Asia. We have several single-sourced supplier relationships, either because alternative sources are not available or because the relationship is advantageous to us. If these suppliers are unable to provide a timely and reliable supply of components, we could experience manufacturing delays that could adversely affect our consolidated results of operations.

10. Subsequent Event

10. Subsequent Event	12 Months Ended
	Jun. 30, 2018
Subsequent Events [Abstract]
Subsequent Event	10. Subsequent Event During the quarter ending September 30, 2018, we initiated a plan to realign certain personnel resources to better fit our current business needs. In connection with this plan, for the quarter ending September 30, 2018, we estimate incurring charges ranging from approximately 250,000 to $300,000, primarily consisting of severance-related costs.

1. Summary of Significant Acc17

1. Summary of Significant Accounting Policies (Policies)	12 Months Ended
	Jun. 30, 2018
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, 2018, approximately $3,591,000 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 valuation, 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, 2018 and 2017, over 99% of our net revenue came from sales of hardware products. Our remaining 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 limited rights 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.
Accounts Receivable and Allowance for Doubtful Accounts	Accounts Receivable and Allowance for Doubtful Accounts Accounts receivable are stated at the amount we expect to collect, which is net of 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, and accrued liabilities. 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, 2018 and 2017 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 approximate their current fair values because of the nature and short duration of these instruments.
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, 2018 and 2017. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2018 or 2017.
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.a
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, 2018, 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 ratably over the requisite service period. 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 net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the fiscal year. Diluted net income (loss) per share 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 expenses are recorded in the period incurred and totaled $213,000 and $108,000 for the fiscal years ended June 30, 2018 and 2017, respectively.
Segment Information	Segment Information We have one operating and reportable business segment.
Recent Accounting Pronouncements	Recent Accounting Pronouncements Shared-Based Compensation In June 2018, the Financial Accounting Standards Board (“FASB”) issued an accounting standard that expands the scope of existing share-based compensation guidance for employees. The new standard will include share-based payment transactions for acquiring goods and services from nonemployees, whereby share-based payments to nonemployees will be measured and recorded at the fair value of the equity instruments that an entity is obligated to issue on the grant date. The standard will be effective for us beginning July 1, 2019, with early adoption permitted. Entities are required to adopt the standard using a modified retrospective approach with a cumulative adjustment to opening retained earnings in the year of adoption for the remeasurement of liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established. We are currently evaluating the date we intend to adopt this guidance and currently do not anticipate that the adoption of this guidance will have a material impact on our consolidated financial statements. Leases 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. The standard requires entities 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. In July 2018, FASB issued a practical expedient that would allow entities the option to apply the provisions of the new lease guidance at the effective date of adoption without adjusting the comparative periods presented. The standard will be effective for Lantronix in the fiscal year beginning July 1, 2019, with early adoption 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 our operating leases. We have not yet determined which practical expedients we intend to utilize in connection with adopting the new standard, nor have we determined any quantitative impacts on our financial statements. Revenue from Contracts with Customers In May 2014, FASB issued an accounting standard which superseded previous revenue recognition guidance under 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 previous 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 modified retrospective transition method). The standard is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. We will adopt the standard in the fiscal year beginning July 1, 2018 using the modified retrospective transition method, with the cumulative effect recognized in our accumulated deficit at the date of adoption. We believe the most significant impact of adopting the standard relates to the timing of when revenue is recognized for sales made to distributors under agreements which contain limited rights to return unsold products and price adjustment provisions. Under the previous 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, and thus revenue from sales to these distributors has not historically been recognized until the distributor resells the product. By contrast, under the new standard, we will recognize revenue when we transfer control to the distributor rather than deferring recognition until the distributor resells the products. In addition, we will establish appropriate accruals for the variable consideration aspect of sales to distributors, estimated primarily based on historical experience, including estimates for returns and price adjustments. Further, given certain requirements in the new standard regarding the presentation of estimated return assets and refund liabilities, we expect the adoption will result in an increase in our accounts receivable, net and a decrease in our inventories, net. We currently expect to record a decrease to the opening balance of accumulated deficit between $500,000 and $700,000 as a result of adopting the new standard.

2. Supplemental Financial Inf18

2. Supplemental Financial Information (Tables)	12 Months Ended
	Jun. 30, 2018
Supplemental Financial Information
Schedule of Inventory	June 30, 2018 2017 (In thousands) Finished goods $ 5,359 $ 4,191 Raw materials 2,547 1,694 Finished goods held by distributors 533 1,074 Inventories, net $ 8,439 $ 6,959
Schedule of Property and Equipment	June 30, 2018 2017 (In thousands) Computer, software and office equipment $ 3,801 $ 3,737 Furniture and fixtures 450 465 Production, development and warehouse equipment 4,137 4,002 Construction-in-progress 50 29 Property and equipment, gross 8,438 8,233 Less accumulated depreciation (7,402 ) (7,015 ) Property and equipment, net $ 1,036 $ 1,218
Schedule of Capital Leased Assets	June 30, 2018 2017 (In thousands) Property and equipment $ 250 $ 250 Less accumulated depreciation (182 ) (122 ) Total $ 68 $ 128
Schedule of Warranty Reserve	Years Ended June 30, 2018 2017 (In thousands) Beginning balance $ 125 $ 138 Charged to cost of revenues 168 65 Usage (194 ) (78 ) Ending balance $ 99 $ 125
Schedule of Other Liabilities	June 30, 2018 2017 (In thousands) Current Customer deposits and refunds $ 916 $ 1,119 Accrued raw materials purchases 460 484 Deferred revenue 305 196 Capital lease obligations 55 61 Taxes payable 296 275 Accrued operating expenses 845 928 Total other current liabilities $ 2,877 $ 3,063 Non-current Deferred rent $ 137 $ 200 Deferred revenue 175 196 Total other non-current liabilities $ 312 $ 396
Schedule of Computation of Net Loss per Share	Years Ended June 30, 2018 2017 (In thousands, except per share data) Numerator: Net income (loss) $ 680 $ (277 ) Denominator: Weighted-average shares outstanding - basic 18,171 17,451 Effect of dilutive securities: 987 – Weighted-average shares outstanding - diluted 19,158 17,451 Net income (loss) per share - basic $ 0.04 $ (0.02 ) Net income (loss) per share - diluted $ 0.04 $ (0.02 )
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share	Years Ended June 30, 2018 2017 (In thousands) Common stock equivalents 644 1,503
Schedule of Supplemental Cash Flow Information	Years Ended June 30, 2018 2017 (In thousands) Accrued property and equipment paid for in the subsequent period $ 23 $ 3

3. Bank Line of Credit (Tables)

3. Bank Line of Credit (Tables)	12 Months Ended
	Jun. 30, 2018
Debt Disclosure [Abstract]
Schedule of Minimum Tangible Net Worth	June 30, 2018 (In thousands) Minimum TNW $ 6,681 Actual TNW $ 14,325
Availability under the Line of Credit	June 30, 2018 2017 (In thousands) Outstanding borrowings on the line of credit $ – $ – Available borrowing capacity on the line of credit $ 2,503 $ 2,812 Outstanding letters of credit $ 51 $ 51

4. Stockholders' Equity (Tables

4. Stockholders' Equity (Tables)	12 Months Ended
	Jun. 30, 2018
Schedule of share-based compensation expense by functional line item	Years Ended June 30, 2018 2017 (In thousands) Cost of revenues $ 53 $ 48 Selling, general and administrative 924 683 Research and development 192 181 Total share-based compensation expense $ 1,169 $ 912
Schedule of unrecognized share-based compensation expense	Remaining Unrecognized Compensation Expense Remaining Weighted-Average Years to Recognize (In thousands) Stock options $ 1,556 2.6 RSUs $ 167 0.9 Common stock purchase rights under ESPP $ 235 1.6
Stock Options [Member]
Schedule of Stock Options Valuation Assumptions	Years Ended June 30, 2018 2017 Expected term (in years) 4.8 4.8 Expected volatility 65% 65% Risk-free interest rate 1.81% 1.43% 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, 2017 4,184 $ 1.78 Options granted 950 2.16 Options forfeited (183 ) 1.71 Options expired (322 ) 3.70 Options exercised (698 ) 1.70 Balance of options outstanding at June 30, 2018 3,931 $ 1.73 4.3 $ 4,408 Options exercisable at June 30, 2018 2,071 $ 1.70 3.2 $ 2,393
Summary of option grant-date fair value and intrinsic value information	Years Ended June 30, 2018 2017 (In thousands, except per share data) Weighted-average grant date fair value per share $ 1.18 $ 0.93 Intrinsic value of options exercised $ 693 $ 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, 2017 300 $ 1.29 Granted 40 2.05 Vested (200 ) 1.27 Balance of RSUs outstanding at June 30, 2018 140 $ 1.51
ESPP [Member]
Schedule of Stock Options Valuation Assumptions	Years Ended June 30, 2018 2017 Expected term (in years) 1.3 1.3 Expected volatility 64% 74% Risk-free interest rate 1.76% 1.01% Dividend yield 0.00% 0.00%
Summary of other-than-option activity	Year Ended June 30, 2018 (In thousands, except per share data) Shares available for issuance at June 30, 2017 476 Shares issued (328 ) Shares available for issuance at June 30, 2018 148 Weighted-average purchase price per share $ 1.25 Intrinsic value of ESPP shares on purchase date $ 316

7. Income Taxes (Tables)

7. Income Taxes (Tables)	12 Months Ended
	Jun. 30, 2018
Income Tax Disclosure [Abstract]
Schedule of Components of Income Tax Expense	Years Ended June 30, 2018 2017 (In thousands) Current: Federal $ – $ – State (1 ) 6 Foreign 99 62 98 68 Deferred: Federal – – State – – Foreign – – Provision for income taxes $ 98 $ 68
Schedule of Income before Income Tax, Domestic and Foreign	Years Ended June 30, 2018 2017 (In thousands) United States $ 504 $ (465 ) Foreign 274 256 Income (loss) before income taxes $ 778 $ (209 )
Schedule of Deferred Tax Assets and Liabilities	Years Ended June 30, 2018 2017 (In thousands) Deferred tax assets: Tax losses and credits $ 19,870 $ 31,024 Reserves not currently deductible 1,714 3,114 Deferred compensation 276 482 Inventory capitalization 369 754 Marketing rights – 85 Depreciation 106 252 Other 114 218 Gross deferred tax assets 22,449 35,929 Valuation allowance (22,155 ) (35,449 ) Deferred tax assets, net 294 480 Deferred tax liabilities: State taxes (294 ) (480 ) Deferred tax liabilities (294 ) (480 ) Net deferred tax assets (liabilities) $ – $ –
Schedule of Effective Income Tax Reconciliation	Years Ended June 30, 2018 2017 (In thousands) Statutory federal provision (benefit) for income taxes $ 214 $ (71 ) Increase (decrease) resulting from: Change in tax rate 12,887 86 Officer compensation 49 – Stock options (100 ) (14 ) Other permanent differences (5 ) 25 Change in valuation allowance (13,204 ) (236 ) Deferred compensation – 44 One-time transition tax 63 – Foreign tax rate variances 23 (25 ) Other 171 259 Provision for income taxes $ 98 $ 68
Summary of Operating Loss Carryforwards	June 30, 2018 (In thousands) Federal $ 89,755 State $ 13,270
Summary of uncertain tax position	Year Ended June 30, 2018 Balance as of June 30, 2017 $ 6,600 Change in balances related to uncertain tax positions – Balance as of June 30, 2018 $ 6,600

8. Commitments and Contingenc22

8. Commitments and Contingencies (Tables)	12 Months Ended
	Jun. 30, 2018
Commitments and Contingencies Disclosure [Abstract]
Schedule of Minimum Lease Payments	Capital Operating Years Ending June 30, Leases Leases Total (In thousands) 2019 57 573 630 2020 4 549 553 2021 – 255 255 Total 61 $ 1,377 $ 1,438 Amounts representing interest (2 ) Present value of net minimum lease payments 59 Less: capital lease obligations, short-term portion (included in other current liabilities) 55 Capital lease obligations, long-term portion $ 4
Schedule of Rent Expense	Years Ended June 30, 2018 2017 (In thousands) Rent expense $ 717 $ 717

9. Significant Geographic, Prod

9. Significant Geographic, Product Line, Customer and Supplier Information (Tables)	12 Months Ended
	Jun. 30, 2018
Segment Reporting [Abstract]
Schedule of Revenue by Geographic Area	Years Ended June 30, 2018 2017 Americas 55% 55% Europe, Middle East, and Africa 30% 30% Asia Pacific Japan 15% 15% Total 100% 100%
Schedule of Significant countries as a percentage of net revenue	Years Ended June 30, 2018 2017 U.S. and Canada 54% 55% Germany 16% 15% United Kingdom 7% 8% Japan 7% 7%
Schedule of Revenue by Major Customers	Years Ended June 30, 2018 2017 Top five customers (1)(2) 51% 50% Ingram Micro 19% 17% Arrow 12% 11% Tech Data * 10%

1. Summary of Significant Acc24

1. Summary of Significant Accounting Policies (Details Narrative) - USD ($)	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Accounting Policies [Abstract]
Advertising expense	$ 213,000	$ 108,000

2. Supplemental Financial Inf25

2. Supplemental Financial Information (Details - Inventories) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Supplemental Financial Information
Finished goods	$ 5,359	$ 4,191
Raw materials	2,547	1,694
Finished goods held by distributors	533	1,074
Inventories, net	$ 8,439	$ 6,959

2. Supplemental Financial Inf26

2. Supplemental Financial Information (Details - Property and Equipment) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Property and equipment, gross	$ 8,438	$ 8,233
Less accumulated depreciation	(7,402)	(7,015)
Property and equipment, net	1,036	1,218
Computer, software and office equipment [Member]
Property and equipment, gross	3,801	3,737
Furniture and Fixtures [Member]
Property and equipment, gross	450	465
Production, development and warehouse equipment [Member]
Property and equipment, gross	4,137	4,002
Construction in Progress [Member]
Property and equipment, gross	$ 50	$ 29

2. Supplemental Financial Inf27

2. Supplemental Financial Information (Details - Capital lease obligations) - Capital lease obligations [Member] - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Property and equipment under capital leases	$ 250	$ 250
Less accumulated depreciation	(182)	(122)
Property and equipment under capital leases, net	$ 68	$ 128

2. Supplemental Financial Inf28

2. Supplemental Financial Information (Details - Warranty reserve) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Supplemental Financial Information
Beginning balance	$ 125	$ 138
Charged to cost of revenues	168	65
Usage	(194)	(78)
Ending balance	$ 99	$ 125

2. Supplemental Financial Inf29

2. Supplemental Financial Information (Details - Other liabilities) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Current
Customer deposits and refunds	$ 916	$ 1,119
Accrued raw materials purchases	460	484
Deferred revenue	305	196
Capital lease obligations	55	61
Taxes payable	296	275
Other accrued liabilities	845	928
Total other current liabilities	2,877	3,063
Non-current
Deferred rent	137	200
Deferred revenue	175	196
Total other non-current liabilities	$ 312	$ 396

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, 2018	Jun. 30, 2017
Numerator:
Net income (loss)	$ 680	$ (277)
Denominator:
Weighted-average common shares outstanding (basic)	18,171	17,451
Effect of dilutive securities:
Stock awards	987	0
Denominator for net income (loss) per share (diluted)	19,158	17,451
Net income (loss) per share (basic)	$ 0.04	$ (0.02)
Net income (loss) per share (diluted)	$ 0.04	$ (0.02)

2. Supplemental Financial Inf31

2. Supplemental Financial Information (Details - Equivalents) - shares shares in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Supplemental Financial Information
Common stock equivalents	644	1,503

2. Supplemental Financial Inf32

2. Supplemental Financial Information (Details - Non-cash acquisition) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Supplemental Cash Flow Information
Accrued property and equipment paid for in the subsequent period	$ 23	$ 3

2. Supplemental Financial Inf33

2. Supplemental Financial Information (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Supplemental Financial Information
Restructuring charges	$ 506	$ 246

3. Bank Line of Credit (Details

3. Bank Line of Credit (Details - TNW) $ in Thousands	Jun. 30, 2018USD ($)
Debt Disclosure [Abstract]
Minimum TNW	$ 6,681
Actual TNW	$ 14,325

3. Bank Line of Credit (Detai35

3. Bank Line of Credit (Details - Credit Line) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Debt Disclosure [Abstract]
Outstanding borrowings on the line of credit	$ 0	$ 0
Available borrowing capacity	2,503	2,812
Outstanding letters of credit	$ 51	$ 51

3. Bank Line of Credit and Debt

3. Bank Line of Credit and Debt (Details Narrative) $ in Thousands	12 Months Ended
	Jun. 30, 2018USD ($)
Debt Disclosure [Abstract]
Revolving Line	$4.0 million revolving line
Credit line maximum borrowing amount	$ 4,000
Maturity date	Sep. 30, 2018
Interest rate description	The Loan Agreement provides for an interest rate per annum equal to the greater of the prime rate plus 0.75% or 4.25%, provided that we maintain a monthly quick ratio of 1.0 to 1.0 or greater. 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, 2018, we met the quick ratio requirement.

4. Stockholders Equity (Details

4. Stockholders Equity (Details - Option assumptions) - Stock Options [Member]	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Expected term (in years)	4 years 9 months 18 days	4 years 9 months 18 days
Expected volatility	65.00%	65.00%
Risk-free interest rate	1.81%	1.43%
Dividend yield	0.00%	0.00%

4. Stockholders Equity (Detai38

4. Stockholders Equity (Details - Option activity) - Stock Options [Member] $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2018USD ($)$ / sharesshares
Number of shares
Number of Shares Options Outstanding, Beginning | shares	4,184
Number of Shares Options Granted | shares	950
Number of Shares Options Forfeited | shares	(183)
Number of Shares Options Expired | shares	(322)
Number of Shares Options Exercised | shares	(698)
Number of Shares Options Outstanding, Ending | shares	3,931
Number of Shares Options Options exercisable at end of period | shares	2,071
Weighted Average Exercise Price per share
Exercise Price Outstanding, Beginning | $ / shares	$ 1.78
Exercise Price Granted | $ / shares	2.16
Exercise Price Forfeited | $ / shares	1.71
Exercise Price Expired | $ / shares	3.70
Exercise Price Exercised | $ / shares	1.70
Exercise Price Outstanding, Ending | $ / shares	1.73
Exercise Price Options exercisable at end of period | $ / shares	$ 1.70
Weighted Average Remaining Contractual Life (in years) Outstanding, Ending	4 years 3 months 19 days
Weighted Average Remaining Contractual Life (in years) Exercisable	3 years 2 months 12 days
Aggregate Intrinsic Value Outstanding, Ending | $	$ 4,408
Aggregate Intrinsic Value Exercisable | $	$ 2,393

4. Stockholders Equity (Detai39

4. Stockholders Equity (Details - Other option information) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Weighted-average grant-date fair value per share	$ 1.18	$ 0.93
Intrinsic value of options exercised	$ 693	$ 120

4. Stockholders Equity (Detai40

4. Stockholders Equity (Details - RSU activity) - Restricted Stock Units (RSUs) [Member] shares in Thousands	12 Months Ended
	Jun. 30, 2018$ / sharesshares
Number of RSU's Shares
Balance of RSU's, beginning | shares	300
Granted | shares	40
Vested | shares	(200)
Balance of RSU's, ending | shares	140
Weighted Average Grant Date Fair Value per share
RSU Shares Weighted-Average Grant-Date Fair Value per Share, beginning | $ / shares	$ 1.29
RSU Shares Granted, Weighted-Average Grant-Date Fair Value per Share | $ / shares	2.05
RSU Shares Vested, Weighted-Average Grant-Date Fair Value per Share | $ / shares	1.27
RSU Shares Weighted-Average Grant-Date Fair Value per Share, ending | $ / shares	$ 1.51

4. Stockholders Equity (Detai41

4. Stockholders Equity (Details - ESPP Assumptions) - ESPP [Member]	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Expected term (in years)	1 year 3 months 19 days	1 year 3 months 19 days
Expected volatility	64.00%	74.00%
Risk-free interest rate	1.76%	1.01%
Dividend yield	0.00%	0.00%

4. Stockholders Equity (Detai42

4. Stockholders Equity (Details - ESPP activity) - ESPP [Member] $ / shares in Units, shares in Thousands, $ in Thousands	12 Months Ended
	Jun. 30, 2018USD ($)$ / sharesshares
Shares available for issuance at beginning of year	476
Shares issued	(328)
Shares available for future issuance at end of year	148
Weighted average purchase price per share | $ / shares	$ 1.25
Intrinsic value of ESPP shares on purchase date | $	$ 316

4. Stockholders Equity (Detai43

4. Stockholders Equity (Details - Share based compensation) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Total share-based compensation	$ 1,169	$ 912
Cost of revenues [Member]
Total share-based compensation	53	48
Selling, general and administrative [Member]
Total share-based compensation	924	683
Research and development [Member]
Total share-based compensation	$ 192	$ 181

4. Stockholders Equity (Detai44

4. Stockholders Equity (Details - Unrecognized expense) $ in Thousands	12 Months Ended
	Jun. 30, 2018USD ($)
Stock Options [Member]
Unrecognized share-based compensation expense	$ 1,556
Weighted average years to recognize	2 years 7 months 6 days
Restricted Stock Units (RSUs) [Member]
Unrecognized share-based compensation expense	$ 167
Weighted average years to recognize	10 months 25 days
ESPP [Member]
Unrecognized share-based compensation expense	$ 235
Weighted average years to recognize	1 year 7 months 6 days

4. Stockholders' Equity (Detail

4. Stockholders' Equity (Details Narrative) shares in Thousands	Jun. 30, 2018shares
2010 SIP [Member]
Shares available for issuance under stock incentive plans	1,378

5. 401(k) Plan (Details Narrati

5. 401(k) Plan (Details Narrative) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Retirement Benefits [Abstract]
Contributions made by Company	$ 150	$ 136

7. Income Taxes (Details - Inco

7. Income Taxes (Details - Income tax provision) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Current:
Federal	$ 0	$ 0
State	(1)	6
Foreign	99	62
Total Current taxes	98	68
Deferred:
Federal	0	0
State	0	0
Foreign	0	0
Total Deferred Taxes	0	0
Provision for income taxes	$ 98	$ 68

7. Income Taxes (Details - US a

7. Income Taxes (Details - US and foreign income) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Income Tax Disclosure [Abstract]
United States	$ 504	$ (465)
Foreign	274	256
Income (loss) before income taxes	$ 778	$ (209)

7. Income Taxes (Details - Defe

7. Income Taxes (Details - Deferred tax assets) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Deferred tax assets:
Tax losses and credits	$ 19,870	$ 31,024
Reserves not currently deductible	1,714	3,114
Deferred compensation	276	482
Inventory capitalization	369	754
Marketing rights	0	85
Depreciation	106	252
Other	114	218
Gross deferred tax assets	22,449	35,929
Valuation allowance	(22,155)	(35,449)
Deferred tax assets, net	294	480
Deferred tax liabilities:
State taxes	(294)	(480)
Deferred tax liabilities	(294)	(480)
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, 2018	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Statutory federal provision (benefit) for income taxes	$ 214	$ (71)
Increase (decrease) resulting from:
Change in tax rate	12,887	86
Officer compensation	49	0
Stock options	(100)	(14)
Other permanent differences	(5)	25
Change in valuation allowance	(13,204)	(236)
Deferred compensation	0	44
One-time transition tax	63	0
Foreign tax rate variances	23	(25)
Other	171	259
Provision for income taxes	$ 98	$ 68

7. Income Taxes (Details - NOL'

7. Income Taxes (Details - NOL's) $ in Thousands	Jun. 30, 2018USD ($)
Income Tax Disclosure [Abstract]
Federal	$ 89,755
State	$ 13,270

7. Income Taxes (Details - Unce

7. Income Taxes (Details - Uncertain tax positions) $ in Thousands	12 Months Ended
	Jun. 30, 2018USD ($)
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	12 Months Ended
	Jun. 30, 2018USD ($)
Income Tax Disclosure [Abstract]
Accrued interest and penalties related to uncertain tax positions	$ 200
U.S. statutory federal rate	28.00%
Decrease in deferred tax assets	$ (12,850)

8. Commitments and Contingenc54

8. Commitments and Contingencies (Details - Capital lease) - USD ($) $ in Thousands	Jun. 30, 2018	Jun. 30, 2017
Capital Leases
2,019	$ 57
2,020	4
2,021
Total	61
Amounts representing interest	(2)
Present value of net minimum lease payments	59
Less: capital lease obligations, short-term portion (included in other current liabilities)	55
Capital lease obligations, long-term portion	4	$ 59
Operating Leases
2,019	573
2,020	549
2,021	255
Total	1,377
Total lease payments 2019	630
Total lease payments 2020	553
Total lease payments 2021	255
Total lease payments	$ 1,438

8. Commitments and Contingenc55

8. Commitments and Contingencies (Details - rent expense) - USD ($) $ in Thousands	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 717	$ 717

9. Significant Geographic, Cu56

9. Significant Geographic, Customer and Supplier Information (Details - Geographic) - Sales Revenue, Net [Member]	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Geographic regions, net revenue percentage	100.00%	100.00%
America [Member]
Geographic regions, net revenue percentage	55.00%	55.00%
Euprope, Middle East, Africa [Member]
Geographic regions, net revenue percentage	30.00%	30.00%
Asia Pacific Japan [Member]
Geographic regions, net revenue percentage	15.00%	15.00%

9. Significant Geographic, Cu57

9. Significant Geographic, Customer and Supplier Information (Details - by country) - Sales Revenue, Net [Member]	12 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Significant countries, net revenue percentage	100.00%	100.00%
U.S. and Canada [Member]
Significant countries, net revenue percentage	54.00%	55.00%
GERMANY [Member]
Significant countries, net revenue percentage	16.00%	15.00%
UNITED KINGDOM [Member]
Significant countries, net revenue percentage	7.00%	8.00%
JAPAN [Member]
Significant countries, net revenue percentage	7.00%	7.00%

9. Significant Geographic, Cu58

9. Significant Geographic, Customer and Supplier Information (Details - Significant customers) - Sales Revenue, Net [Member]	12 Months Ended
	Jun. 30, 2018		Jun. 30, 2017
Significant customers, net revenue percentage	100.00%		100.00%
Top five customers [Member]
Significant customers, net revenue percentage	51.00%		50.00%
Ingram Micro [Member]
Significant customers, net revenue percentage	19.00%		17.00%
Arrow [Member]
Significant customers, net revenue percentage	12.00%		11.00%
Tech Data [Member]
Significant customers, net revenue percentage		[1]	10.00%
[1]	Less than 10%