Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Dec. 31, 2018 | Jan. 18, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | LANTRONIX INC | |
Entity Central Index Key | 1,114,925 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --06-30 | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Common Stock, Shares Outstanding | 22,213,219 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,019 | |
Entity Small Business | true | |
Entity Emerging Growth | false |
Unaudited Condensed Consolidate
Unaudited Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 19,367 | $ 9,568 |
Accounts receivable, net | 6,134 | 4,244 |
Inventories, net | 9,352 | 8,439 |
Contract manufacturers' receivable | 419 | 649 |
Prepaid expenses and other current assets | 752 | 370 |
Total current assets | 36,024 | 23,270 |
Property and equipment, net | 1,184 | 1,036 |
Goodwill | 9,488 | 9,488 |
Other assets | 55 | 61 |
Total assets | 46,751 | 33,855 |
Current liabilities: | ||
Accounts payable | 4,317 | 3,942 |
Accrued payroll and related expenses | 2,731 | 2,808 |
Warranty reserve | 106 | 99 |
Other current liabilities | 3,325 | 2,877 |
Total current liabilities | 10,479 | 9,726 |
Other non-current liabilities | 256 | 316 |
Total liabilities | 10,735 | 10,042 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity: | ||
Common stock | 2 | 2 |
Additional paid-in capital | 224,422 | 212,995 |
Accumulated deficit | (188,779) | (189,555) |
Accumulated other comprehensive income | 371 | 371 |
Total stockholders' equity | 36,016 | 23,813 |
Total liabilities and stockholders' equity | $ 46,751 | $ 33,855 |
Unaudited Condensed Consolida_2
Unaudited Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Statement [Abstract] | ||||
Net revenue | $ 12,114 | $ 11,336 | $ 24,393 | $ 21,942 |
Cost of revenue | 5,453 | 5,022 | 10,991 | 10,034 |
Gross profit | 6,661 | 6,314 | 13,402 | 11,908 |
Operating expenses: | ||||
Selling, general and administrative | 4,159 | 4,173 | 8,631 | 8,159 |
Research and development | 2,279 | 1,874 | 4,577 | 4,095 |
Total operating expenses | 6,438 | 6,047 | 13,208 | 12,254 |
Income (loss) from operations | 223 | 267 | 194 | (346) |
Interest income (expense), net | 60 | (5) | 56 | (9) |
Other income (expense), net | 8 | 1 | (2) | 2 |
Income (loss) before income taxes | 291 | 263 | 248 | (353) |
Provision for income taxes | 14 | 38 | 54 | 63 |
Net income (loss) | $ 277 | $ 225 | $ 194 | $ (416) |
Net income (loss) per share - basic | $ 0.01 | $ 0.01 | $ 0.01 | $ (0.02) |
Net income (loss) per share - diluted | $ 0.01 | $ 0.01 | $ 0.01 | $ (0.02) |
Weighted-average common shares - basic | 22,091 | 18,073 | 20,721 | 17,970 |
Weighted-average common shares - diluted | 23,442 | 18,739 | 22,263 | 17,970 |
Unaudited Condensed Consolida_3
Unaudited Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Operating activities | ||
Net income (loss) | $ 194 | $ (416) |
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities: | ||
Share-based compensation | 929 | 582 |
Depreciation and amortization | 219 | 226 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (713) | (530) |
Inventories | (1,375) | (102) |
Contract manufacturers' receivable | 230 | (63) |
Prepaid expenses and other current assets | (289) | (38) |
Accounts payable | 369 | 1,252 |
Accrued payroll and related expenses | (77) | (420) |
Warranty reserve | 7 | (4) |
Other liabilities | 193 | (398) |
Net cash (used in) provided by operating activities | (313) | 89 |
Investing activities | ||
Purchases of property and equipment | (355) | (76) |
Net cash used in investing activities | (355) | (76) |
Financing activities | ||
Net proceeds from issuances of common stock | 10,667 | 454 |
Tax withholding paid on behalf of employees for restricted shares | (169) | (88) |
Payment of capital lease obligations | (31) | (29) |
Net cash provided by financing activities | 10,467 | 337 |
Increase in cash and cash equivalents | 9,799 | 350 |
Cash and cash equivalents at beginning of period | 9,568 | 8,073 |
Cash and cash equivalents at end of period | $ 19,367 | $ 8,423 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 6 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 1. Summary of Significant Accounting Policies The Company Lantronix, Inc., which we refer to herein as the Company, 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 and related Information Technology (“IT”) management solutions that enable companies to dramatically simplify the creation, deployment, and management of IoT projects while providing secure access to data for applications and people. Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Lantronix have been prepared in accordance with United States generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended June 30, 2018, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018, which was filed with the SEC on August 23, 2018. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the consolidated financial position of Lantronix at December 31, 2018, the consolidated results of our operations for the three and six months ended December 31, 2018 and our consolidated cash flows for the six months ended December 31, 2018. All intercompany accounts and transactions have been eliminated. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three and six months ended December 31, 2018 are not necessarily indicative of the results to be expected for the full year or any future interim periods. Reclassifications Certain reclassifications have been made to the prior fiscal year financial information to conform with the current fiscal year presentation. Reclassification had no impact on net income or cash flows. 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. 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. The standard will be effective for Lantronix in the fiscal year beginning July 1, 2019, with early adoption permitted. We are currently evaluating this guidance and do not anticipate that adoption will have a material impact on our consolidated financial statements. Leases In February 2016, FASB issued an accounting standard that revises lease accounting guidance. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use (“ROU”) asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in a manner similar to that called for by guidance for operating leases prior to the adoption of the new standard. 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 guidance (“ASU 2018-11”), which offers a practical expedient that allows entities the option to apply the provisions of the new lease standard by recognizing a cumulative effect adjustment at the effective date of adoption without adjusting the prior comparative periods presented. For public companies, adoption of the standard is required for annual periods beginning after December 15, 2018. Lantronix will adopt the standard in the fiscal year beginning July 1, 2019. We currently expect the most significant impact of adopting this standard on our financial statements will be the recognition of ROU assets and lease liabilities for our operating leases. We anticipate the valuation of our ROU assets and lease liabilities will be based on the estimated present value of the applicable future lease commitments. We also continue to assess the appropriate discount rate that will be applied to our valuation estimates. We expect to elect certain practical expedients, including the transition option provided in ASU 2018-11, in connection with adopting the new standard. We have not yet determined any quantitative impacts of adoption of this standard on our consolidated financial statements. Through the adoption date, we will continue our assessments, which may cause us to identify additional impacts that this standard will have on our consolidated financial statements. Revenue from Contracts with Customers Refer to Note 2 below regarding our adoption of the new revenue standard under FASB’s Accounting Standards Codification 606: Revenue from Contracts with Customers (“ASC 606”). |
2. Revenue Recognition
2. Revenue Recognition | 6 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | 2. Revenue Recognition Nature of Net Revenue Most of our net revenue is currently derived from sales of hardware products. We also derive a small portion of our net revenue from professional engineering services, extended warranty services, and software licenses. Extended warranty services generally extend the warranty period on our hardware products for an additional one to three years, depending upon the product. In addition to the products and services described directly above, during the past year we have introduced a number of ready-to-use applications as well as software-as-a-service (“SaaS”) offerings for our IoT and IT Management product lines, including Lantronix Gateway Central, MACH10 ® TM Net Revenue by Product Line and Geographic Region We organize our products and solutions into three product lines: IoT, IT Management and Other. Our IoT products typically connect to one or more existing machines or are built into new industrial devices to provide network connectivity. Our IT Management product line includes console management, power management, and keyboard-video-mouse (commonly referred to as KVM) products that provide remote access to IT and networking infrastructure deployed in test labs, data centers, branch offices and server rooms. We categorize products that are non-focus or end-of-life as Other. We conduct our business globally and manage our sales teams by three geographic regions: the Americas; Europe, Middle East, and Africa (“EMEA”); and Asia Pacific Japan. The following tables present our net revenue by product line and by geographic region. Net revenues by geographic region are based on the “bill-to” location of our customers: Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 (In thousands) IoT $ 9,070 $ 7,961 $ 18,037 $ 16,419 IT Management 2,888 3,218 5,989 5,007 Other 156 157 367 516 $ 12,114 $ 11,336 $ 24,393 $ 21,942 Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 (In thousands) Americas $ 6,182 $ 6,292 $ 13,096 $ 11,989 EMEA 4,080 3,172 7,600 6,336 Asia Pacific Japan 1,852 1,872 3,697 3,617 $ 12,114 $ 11,336 $ 24,393 $ 21,942 Revenue Recognition Policy and Significant Judgments Revenue is recognized upon the transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. In accordance with ASC 606, we apply the following five-step approach in determining the amount and timing of revenue to be recognized: (i) identifying the contract with a customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations in the contract and (v) recognizing revenue when the performance obligation is satisfied. On occasion, we enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations. Revenue is recognized net of (i) any taxes collected from customers, which are subsequently remitted to governmental authorities and (ii) shipping and handling costs collected from customers. Product Shipments Most of our product revenue is recognized as a distinct single performance obligation when products are tendered to a carrier for delivery, which represents the point in time that our customer obtains control of the promised products. A smaller portion of our product revenue is recognized when our customer receives delivery of the promised products. A significant portion of our products are sold to distributors under agreements which contain (i) limited rights to return unsold products and (ii) price adjustment provisions, both of which are accounted for as variable consideration when estimating the amount of revenue to recognize. We base our estimates for returns and price adjustments primarily on historical experience; however, we also consider contractual allowances, approved pricing adjustments and other known or anticipated returns and price adjustments in a given period. Such estimates are generally made at the time of shipment to the customer and updated at the end of each reporting period as additional information becomes available and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Our estimates of accrued variable consideration are included in other current liabilities in the accompanying unaudited condensed consolidated balance sheet at December 31, 2018. Services and Multiple Performance Obligations Revenues from our extended warranty and services are generally recognized ratably over the applicable service period. We expect revenues from future sales of our SaaS products to be recognized ratably over the applicable service period as well. Revenues from professional engineering services are generally recognized as services are performed. From time to time, we may enter into contracts with customers that include promises to transfer multiple deliverables that may include sales of products, professional engineering services and other product qualification or certification services. Determining whether the deliverables in such arrangements are considered distinct performance obligations that should be accounted for separately versus together often requires judgment. We consider performance obligations to be distinct when the customer can benefit from the promised good or service on its own or by combining it with other resources readily available and when the promised good or service is separately identifiable from other promised goods or services in the contract. In such arrangements, we allocate revenue on a relative standalone selling price basis by maximizing the use of observable inputs to determine the standalone selling price for each performance obligation. Contract Balances In certain instances, the timing of revenue recognition may differ from the timing of invoicing to our customers. We record a contract asset receivable when revenue is recognized prior to invoicing, and a contract or deferred revenue liability when revenue is recognized subsequent to invoicing. With respect to product shipments, we expect to fulfill contract obligations within one year and so we have elected not to separately disclose the amount nor the timing of recognition of these remaining performance obligations. For contract balances related to contracts that include services and multiple performance obligations, refer to the deferred revenue discussion below. There were no unbilled contract asset receivable balances as of July 1, 2018, the transition date for ASC 606. Payment terms and conditions vary by customer, but generally include a requirement of payment within 30 to 60 days from the invoice date. We do not consider this a significant period of time and have elected not to determine whether contracts with customers contain significant financing components. The primary purpose of our invoicing terms is to provide customers with simplified and predictable ways of purchasing our products and services, not to provide financing to them. Deferred Revenue Deferred revenue is currently comprised primarily of unearned revenue related to our extended warranty services. These services are generally invoiced at the beginning of the contract period and revenue is recognized ratably over the service period. Current and non-current deferred revenue balances represent revenue allocated to the remaining unsatisfied performance obligations at the end of a reporting period and are included in other current liabilities and other non-current liabilities, respectively, in the accompanying unaudited condensed consolidated balance sheets. The following table presents the changes in our deferred revenue balance for the six months ended December 31, 2018 (in thousands): Balance, July 1, 2018 $ 480 New performance obligations 96 Recognition of revenue as a result of satisfying performance obligations (179 ) Balance, December 31, 2018 $ 397 Less: non-current portion of deferred revenue (163 ) Current portion, December 31, 2018 $ 234 We expect to recognize substantially all of the non-current portion of deferred revenue over the next two to three years. Costs to Obtain or Fulfill a Contract with a Customer In accordance with applicable accounting guidance, we recognize an asset for the incremental costs of obtaining or fulfilling a contract with a customer if we expect the benefit of those costs to be longer than one year. We apply a practical expedient to expense costs as incurred for costs to obtain a contract when the amortization period would have been one year or less. These costs primarily relate to commissions earned and paid to our internal sales team and to certain external sales representatives, and are recorded in selling, general and administrative expenses in the accompanying unaudited condensed consolidated statements of operations. As of December 31, 2018, we do not have any assets recorded pertaining to incremental costs to obtain or fulfill a contract with a customer. Adoption of New Revenue Standard and Change in Accounting Policy On July 1, 2018, we adopted ASC 606 using the modified retrospective method and applied it to contracts that were not completed as of that date. Upon adoption, we recorded a non-cash cumulative effect adjustment of $582,000 to our accumulated deficit as of July 1, 2018. The prior year comparative financial information has not been restated and continues to be presented under the accounting standards in effect for the respective periods. The primary impact to Lantronix of adopting ASC 606 relates to a shift in 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 revenue standards that we followed prior to adopting ASC 606, we concluded that the prices to these distributors were not fixed and determinable at the time we deliver products to them and accordingly, revenues from sales to these distributors, and the related inventory costs, were not recognized until the distributors resold the products. By contrast, upon adopting ASC 606, we now recognize revenue, including estimates for variable consideration, when we transfer control of the products to the distributor rather than deferring recognition until the distributor resells the products. The following table summarizes the significant changes to our accompanying unaudited condensed consolidated balance sheet in connection with adopting ASC 606: Balance at ASC 606 Adoption Balance at June 30, 2018 Adjustments July 1, 2018 (In thousands) Assets: Accounts receivable, net $ 4,244 $ 1,177 $ 5,421 Inventories, net 8,439 (462 ) 7,977 Prepaid expenses and other current assets 370 93 463 Liabilities and Shareholders' Equity: Other current liabilities $ 2,877 $ 226 $ 3,103 Accumulated deficit (189,555 ) 582 (188,973 ) The following tables summarize the significant impacts of adopting ASC 606 on our financial statements as of December 31, 2018 and for the three and six months ended December 31, 2018: Condensed Consolidated Balance Sheet December 31, 2018 As Reported Impact of Adoption Balances Without Adoption of ASC 606 (In thousands) Assets: Accounts receivable, net $ 6,134 $ (3,600 ) $ 2,534 Inventories, net 9,352 1,446 10,798 Prepaid expenses and other current assets 752 (156 ) 596 Liabilities and Shareholders' Equity: Other current liabilities $ 3,325 14 3,339 Accumulated deficit (188,779 ) (2,324 ) $ (191,103 ) Accounts receivable, net and inventories, net, as reported at December 31, 2018, differ from the balances that would have been recorded without the adoption of ASC 606 since we no longer record deferred revenue and inventory balances for products held at certain distributor customers awaiting sell-through. Additionally, under ASC 606 we record contract assets and contract liabilities as estimates for variable consideration, which are recorded to prepaid expenses and other current assets and other current liabilities, respectively. The accumulated deficit balance, as reported, differs from the balance without the adoption of ASC 606 as a result of the adjustments discussed above. Condensed Consolidated Statement of Operations Three Months Ended December 31, 2018 As Reported Impact of Adoption Amounts Without Adoption of ASC 606 (In thousands, except per share amounts) Net revenue $ 12,114 $ (1,038 ) $ 11,076 Cost of revenue 5,453 (201 ) 5,252 Net income (loss) 277 (836 ) (559 ) Net income (loss) per share - basic $ 0.01 $ (0.04 ) $ (0.03 ) Net income (loss) per share - diluted $ 0.01 $ (0.04 ) $ (0.03 ) Six Months Ended December 31, 2018 As Reported Impact of Adoption Amounts Without Adoption of ASC 606 (In thousands, except per share amounts) Net revenue $ 24,393 $ (2,666 ) $ 21,727 Cost of revenue 10,991 (922 ) 10,069 Net income (loss) 194 (1,742 ) (1,548 ) Net income (loss) per share - basic $ 0.01 $ (0.08 ) $ (0.07 ) Net income (loss) per share - diluted $ 0.01 $ (0.08 ) $ (0.07 ) Net revenue, as reported, for the three and six months ended December 31, 2018 differs from the recalculated net revenue without the adoption of ASC 606 due to the difference in timing of when we recognize revenue for sales to certain distributor customers, as further described above. More specifically, as of June 30, 2018, inventories held by our distributor customers were at historically low levels. During the three and six months ended December 31, 2018, our distributor customers increased their purchases and brought their inventories up to levels that were more consistent with what they have held historically. This had the impact of lower sell-through net revenues as recalculated without the effect of adopting ASC 606. Likewise, the differences in cost of revenue, net income (loss) and net income (loss) per share in the tables directly above are primarily attributable to the difference in net revenue. |
3. Supplemental Financial Infor
3. Supplemental Financial Information | 6 Months Ended |
Dec. 31, 2018 | |
Supplemental Financial Information | |
Supplemental Financial Information | 3. Supplemental Financial Information Inventories Inventories are stated at the lower of cost (first-in, first-out) or net realizable value and consist of the following: December 31, June 30, 2018 2018 (In thousands) Finished goods $ 6,246 $ 5,892 Raw materials 3,106 2,547 Inventories, net $ 9,352 $ 8,439 Other Liabilities The following table presents details of our other liabilities: December 31, June 30, 2018 2018 (In thousands) Current Accrued variable consideration $ 1,087 $ – Customer deposits and refunds 191 916 Accrued raw materials purchases 631 460 Deferred revenue 234 305 Capital lease obligations 28 55 Taxes payable 312 296 Accrued operating expenses 842 845 Total other current liabilities $ 3,325 $ 2,877 Non-current Deferred rent $ 93 $ 137 Deferred revenue 163 175 Capital lease obligations – 4 Total other non-current liabilities $ 256 $ 316 Computation of Net Income (Loss) per Share Basic and diluted net income (loss) per share is calculated by dividing net income (loss) by the weighted-average number of common shares outstanding during the applicable period. The following table presents the computation of net income (loss) per share: Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 (In thousands, except per share data) Numerator: Net income (loss) $ 277 $ 225 $ 194 $ (416 ) Denominator: Weighted-average common shares outstanding - basic 22,091 18,073 20,721 17,970 Effect of dilutive securities: 1,351 666 1,542 – Denominator for net income (loss) per share - diluted 23,442 18,739 22,263 17,970 Net income (loss) per share - basic $ 0.01 $ 0.01 $ 0.01 $ (0.02 ) Net income (loss) per share - diluted $ 0.01 $ 0.01 $ 0.01 $ (0.02 ) The following table presents the common stock equivalents excluded from the diluted net income (loss) per share calculation, because they were anti-dilutive for the periods presented. These excluded common stock equivalents could be dilutive in the future. Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 (In thousands) Common stock equivalents 70 1,647 4 2,056 Severance and Related Charges Current Fiscal Year During the six months ended December 31, 2018, we initiated a plan to realign certain personnel resources to better fit our current business needs. These activities were substantially completed by September 30, 2018 and resulted in a total charge of approximately $460,000, which included $323,000 in severance-related costs and $137,000 in share-based compensation expense. These costs are included in the applicable functional line items within the accompanying unaudited condensed consolidated statements of operations for the six months ended December 31, 2018. The following table presents details of the liability we recorded related to these activities: Six Months Ended December 31, 2018 (In thousands) Beginning balance $ – Charges 323 Payments (251 ) Ending balance $ 72 The ending balance is recorded in accrued payroll and related expenses on the accompanying unaudited condensed consolidated balance sheet at December 31, 2018. Prior Fiscal Year During the six months ended December 31, 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 $527,000 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 unaudited condensed consolidated statement of operations for the six months ended December 31, 2017. Supplemental Cash Flow Information The following table presents non-cash investing transactions excluded from the accompanying unaudited condensed consolidated statements of cash flows: Six Months Ended December 31, 2018 2017 (In thousands) Accrued property and equipment paid for in the subsequent period $ 6 $ 44 |
4. Warranty Reserve
4. Warranty Reserve | 6 Months Ended |
Dec. 31, 2018 | |
Product Warranties Disclosures [Abstract] | |
Warranty Reserve | 4. Warranty Reserve 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. The following table presents details of our warranty reserve: Six Months Ended Year Ended December 31, June 30, 2018 2018 (In thousands) Beginning balance $ 99 $ 125 Charged to cost of revenue 29 168 Usage (22 ) (194 ) Ending balance $ 106 $ 99 |
5. Bank Line of Credit
5. Bank Line of Credit | 6 Months Ended |
Dec. 31, 2018 | |
Debt Disclosure [Abstract] | |
Bank Line of Credit | 5. Bank Line of Credit In October 2018, we entered into a new Loan and Security Agreement (the “Loan Agreement”) with Silicon Valley Bank (“SVB”), as our previous agreement expired at the end of September 2018. The Loan Agreement provides us with a $4.0 million revolving line of credit based on qualified accounts receivable and has a maturity date of September 30, 2020. There were no outstanding borrowings as of December 31, 2018 or June 30, 2018. The Loan Agreement provides for an interest rate per annum equal to the greater of (i) the prime rate plus 0.50% or (ii) 5.00%, 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 (i) the prime rate plus 1.00% or (ii) 5.00%. At December 31, 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 $7,321,000. The Minimum TNW is subject to upward adjustment 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. At December 31, 2018, our Actual TNW was $26,528,000. |
6. Stockholders' Equity
6. Stockholders' Equity | 6 Months Ended |
Dec. 31, 2018 | |
Equity [Abstract] | |
Stockholders' Equity | 6. Stockholders’ Equity Public Offering On September 18, 2018, we entered into an underwriting agreement with Needham & Company, LLC and Lake Street Capital Markets, LLC (the “Underwriters”) relating to the offer and sale of 2,500,000 shares of our common stock, par value $0.0001 per share, to the public at a price of $4.00 per share. We also granted the Underwriters a 30-day option to purchase up to 375,000 additional shares of our common stock to cover over-allotments, if any (the “Option Shares”). Pursuant to the underwriting agreement, we sold an aggregate of 2,700,000 shares, including 200,000 Option Shares, to the Underwriters and received proceeds net of underwriting discounts and expenses of approximately $9,775,000. Stock Incentive Plans Our stock incentive plans permit the granting of stock options (both incentive and nonqualified stock options), restricted stock units (“RSUs”), stock appreciation rights, non-vested stock, and performance shares to certain employees, directors and consultants. As of December 31, 2018, no stock appreciation rights, non-vested stock, or performance shares were outstanding. Stock Options The following table presents a summary of activity during the six months ended December 31, 2018 with respect to our stock options: Weighted- Average Number of Exercise Price Shares per Share (In thousands) Balance of options outstanding at June 30, 2018 3,931 $ 1.73 Granted 72 3.58 Forfeited (114 ) 1.88 Expired (4 ) 1.98 Exercised (533 ) 1.77 Balance of options outstanding at December 31, 2018 3,352 $ 1.76 Restricted Stock Units The following table presents a summary of activity during the six months ended December 31, 2018 with respect to our RSUs: Weighted- Average Grant Date Number of Fair Value Shares per Share (In thousands) Balance of RSUs outstanding at June 30, 2018 140 $ 1.51 Granted 666 5.04 Vested (93 ) 1.25 Forfeited (14 ) 2.20 Balance of RSUs outstanding at December 31, 2018 699 $ 4.89 Employee Stock Purchase Plan Our 2013 Employee Stock Purchase Plan (“ESPP”) is intended to provide employees with an opportunity to purchase our common stock through accumulated payroll deductions at the end of a specified purchase period. Each of our employees (including officers) is eligible to participate in our ESPP, subject to certain limitations as set forth in our ESPP. In November 2018, our stockholders approved an amendment to the ESPP to increase the number of shares of common stock reserved for issuance under the ESPP by 500,000 shares. The following table presents a summary of activity under our ESPP during the six months ended December 31, 2018: Number of Shares (In thousands) Shares available for issuance at June 30, 2018 148 Reserved for issuance 500 Shares issued (69 ) Shares available for issuance at December 31, 2018 579 Share-Based Compensation Expense The following table presents a summary of share-based compensation expense included in each applicable functional line item on our accompanying unaudited condensed consolidated statements of operations: Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 (In thousands) Cost of revenue $ 23 $ 13 $ 40 $ 26 Selling, general and administrative 337 239 737 451 Research and development 91 58 152 105 Total share-based compensation expense $ 451 $ 310 $ 929 $ 582 The following table presents the remaining unrecognized share-based compensation expense related to our outstanding share-based awards as of December 31, 2018: Remaining Remaining Unrecognized Weighted- Compensation Average Years Expense To Recognize (In thousands) Stock options $ 1,246 2.1 RSUs 3,099 3.5 Stock purchase rights under ESPP 60 0.4 $ 4,405 If there are any modifications or cancellations of the underlying unvested share-based awards, we may be required to accelerate, increase or cancel remaining unearned share-based compensation expense. Future share-based compensation expense and unearned share-based compensation will increase to the extent that we grant additional share-based awards. |
7. Income Taxes
7. Income Taxes | 6 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 7. Income Taxes We utilize the liability method of accounting for income taxes. The following table presents our effective tax rates based upon our provision for income taxes for the periods shown: Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 Effective tax rate 5% 14% 22% 18% The difference between our effective tax rates in the periods presented above and the federal statutory rate is primarily due to a tax benefit from our domestic losses being recorded with a full valuation allowance, as well as the effect of foreign earnings taxed at rates differing from the federal statutory rate. We record net deferred tax assets to the extent we believe it is more likely than not that these assets will be realized. Due to our cumulative losses and uncertainty of generating future taxable income, we have provided a full valuation allowance against our net deferred tax assets as of December 31, 2018 and June 30, 2018. |
8. Commitments and Contingencie
8. Commitments and Contingencies | 6 Months Ended |
Dec. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 8. Commitments and Contingencies From time to time, we are involved in various legal proceedings and claims arising in the ordinary course of our business. Although the results of legal proceedings and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not, individually or in the aggregate, have a material adverse effect on our business, operating results, financial condition or cash flows. However, regardless of the outcome, litigation can have an adverse impact on us because of legal costs, diversion of management time and resources, and other factors. |
1. Summary of Significant Acc_2
1. Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Dec. 31, 2018 | |
Accounting Policies [Abstract] | |
The Company | The Company Lantronix, Inc., which we refer to herein as the Company, 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 and related Information Technology (“IT”) management solutions that enable companies to dramatically simplify the creation, deployment, and management of IoT projects while providing secure access to data for applications and people. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements of Lantronix have been prepared in accordance with United States generally accepted accounting principles for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended June 30, 2018, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2018, which was filed with the SEC on August 23, 2018. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the consolidated financial position of Lantronix at December 31, 2018, the consolidated results of our operations for the three and six months ended December 31, 2018 and our consolidated cash flows for the six months ended December 31, 2018. All intercompany accounts and transactions have been eliminated. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end. The results of operations for the three and six months ended December 31, 2018 are not necessarily indicative of the results to be expected for the full year or any future interim periods. |
Reclassifications | Reclassifications Certain reclassifications have been made to the prior fiscal year financial information to conform with the current fiscal year presentation. Reclassification had no impact on net income or cash flows. |
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. 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. The standard will be effective for Lantronix in the fiscal year beginning July 1, 2019, with early adoption permitted. We are currently evaluating this guidance and do not anticipate that adoption will have a material impact on our consolidated financial statements. Leases In February 2016, FASB issued an accounting standard that revises lease accounting guidance. The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight-line basis over the term of the lease. A lessee is also required to record a right-of-use (“ROU”) asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for in a manner similar to that called for by guidance for operating leases prior to the adoption of the new standard. 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 guidance (“ASU 2018-11”), which offers a practical expedient that allows entities the option to apply the provisions of the new lease standard by recognizing a cumulative effect adjustment at the effective date of adoption without adjusting the prior comparative periods presented. For public companies, adoption of the standard is required for annual periods beginning after December 15, 2018. Lantronix will adopt the standard in the fiscal year beginning July 1, 2019. We currently expect the most significant impact of adopting this standard on our financial statements will be the recognition of ROU assets and lease liabilities for our operating leases. We anticipate the valuation of our ROU assets and lease liabilities will be based on the estimated present value of the applicable future lease commitments. We also continue to assess the appropriate discount rate that will be applied to our valuation estimates. We expect to elect certain practical expedients, including the transition option provided in ASU 2018-11, in connection with adopting the new standard. We have not yet determined any quantitative impacts of adoption of this standard on our consolidated financial statements. Through the adoption date, we will continue our assessments, which may cause us to identify additional impacts that this standard will have on our consolidated financial statements. Revenue from Contracts with Customers Refer to Note 2 below regarding our adoption of the new revenue standard under FASB’s Accounting Standards Codification 606: Revenue from Contracts with Customers (“ASC 606”). |
2. Revenue Recognition (Tables)
2. Revenue Recognition (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Net revenue by product lines | Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 (In thousands) IoT $ 9,070 $ 7,961 $ 18,037 $ 16,419 IT Management 2,888 3,218 5,989 5,007 Other 156 157 367 516 $ 12,114 $ 11,336 $ 24,393 $ 21,942 |
Net revenue by geographic region | Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 (In thousands) Americas $ 6,182 $ 6,292 $ 13,096 $ 11,989 EMEA 4,080 3,172 7,600 6,336 Asia Pacific Japan 1,852 1,872 3,697 3,617 $ 12,114 $ 11,336 $ 24,393 $ 21,942 |
Changes in deferred revenue | Balance, July 1, 2018 $ 480 New performance obligations 96 Recognition of revenue as a result of satisfying performance obligations (179 ) Balance, December 31, 2018 $ 397 Less: non-current portion of deferred revenue (163 ) Current portion, December 31, 2018 $ 234 |
Effect of changes from adopting ASC 606 | The following table summarizes the significant changes to our accompanying unaudited condensed consolidated balance sheet in connection with adopting ASC 606: Balance at ASC 606 Adoption Balance at June 30, 2018 Adjustments July 1, 2018 (In thousands) Assets: Accounts receivable, net $ 4,244 $ 1,177 $ 5,421 Inventories, net 8,439 (462 ) 7,977 Prepaid expenses and other current assets 370 93 463 Liabilities and Shareholders' Equity: Other current liabilities $ 2,877 $ 226 $ 3,103 Accumulated deficit (189,555 ) 582 (188,973 ) The following tables summarize the significant impacts of adopting ASC 606 on our financial statements as of December 31, 2018 and for the three and six months ended December 31, 2018: Condensed Consolidated Balance Sheet December 31, 2018 As Reported Impact of Adoption Balances Without Adoption of ASC 606 (In thousands) Assets: Accounts receivable, net $ 6,134 $ (3,600 ) $ 2,534 Inventories, net 9,352 1,446 10,798 Prepaid expenses and other current assets 752 (156 ) 596 Liabilities and Shareholders' Equity: Other current liabilities $ 3,325 14 3,339 Accumulated deficit (188,779 ) (2,324 ) $ (191,103 ) Condensed Consolidated Statement of Operations Three Months Ended December 31, 2018 As Reported Impact of Adoption Amounts Without Adoption of ASC 606 (In thousands, except per share amounts) Net revenue $ 12,114 $ (1,038 ) $ 11,076 Cost of revenue 5,453 (201 ) 5,252 Net income (loss) 277 (836 ) (559 ) Net income (loss) per share - basic $ 0.01 $ (0.04 ) $ (0.03 ) Net income (loss) per share - diluted $ 0.01 $ (0.04 ) $ (0.03 ) Six Months Ended December 31, 2018 As Reported Impact of Adoption Amounts Without Adoption of ASC 606 (In thousands, except per share amounts) Net revenue $ 24,393 $ (2,666 ) $ 21,727 Cost of revenue 10,991 (922 ) 10,069 Net income (loss) 194 (1,742 ) (1,548 ) Net income (loss) per share - basic $ 0.01 $ (0.08 ) $ (0.07 ) Net income (loss) per share - diluted $ 0.01 $ (0.08 ) $ (0.07 ) |
3. Supplemental Financial Inf_2
3. Supplemental Financial Information (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Supplemental Financial Information | |
Schedule of Inventory | December 31, June 30, 2018 2018 (In thousands) Finished goods $ 6,246 $ 5,892 Raw materials 3,106 2,547 Inventories, net $ 9,352 $ 8,439 |
Schedule of Other Liabilities | December 31, June 30, 2018 2018 (In thousands) Current Accrued variable consideration $ 1,087 $ – Customer deposits and refunds 191 916 Accrued raw materials purchases 631 460 Deferred revenue 234 305 Capital lease obligations 28 55 Taxes payable 312 296 Accrued operating expenses 842 845 Total other current liabilities $ 3,325 $ 2,877 Non-current Deferred rent $ 93 $ 137 Deferred revenue 163 175 Capital lease obligations – 4 Total other non-current liabilities $ 256 $ 316 |
Schedule of Computation of Net Loss per Share | Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 (In thousands, except per share data) Numerator: Net income (loss) $ 277 $ 225 $ 194 $ (416 ) Denominator: Weighted-average common shares outstanding - basic 22,091 18,073 20,721 17,970 Effect of dilutive securities: 1,351 666 1,542 – Denominator for net income (loss) per share - diluted 23,442 18,739 22,263 17,970 Net income (loss) per share - basic $ 0.01 $ 0.01 $ 0.01 $ (0.02 ) Net income (loss) per share - diluted $ 0.01 $ 0.01 $ 0.01 $ (0.02 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 (In thousands) Common stock equivalents 70 1,647 4 2,056 |
Schedule of severance and related charges | Six Months Ended December 31, 2018 (In thousands) Beginning balance $ – Charges 323 Payments (251 ) Ending balance $ 72 |
Schedule of Supplemental Cash Flow Information | Six Months Ended December 31, 2018 2017 (In thousands) Accrued property and equipment paid for in the subsequent period $ 6 $ 44 |
4. Warranty Reserve (Tables)
4. Warranty Reserve (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Product Warranties Disclosures [Abstract] | |
Schedule of warranty reserve | Six Months Ended Year Ended December 31, June 30, 2018 2018 (In thousands) Beginning balance $ 99 $ 125 Charged to cost of revenue 29 168 Usage (22 ) (194 ) Ending balance $ 106 $ 99 |
6. Stockholders' Equity (Tables
6. Stockholders' Equity (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Schedule of share-based compensation expense | Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 (In thousands) Cost of revenue $ 23 $ 13 $ 40 $ 26 Selling, general and administrative 337 239 737 451 Research and development 91 58 152 105 Total share-based compensation expense $ 451 $ 310 $ 929 $ 582 |
Schedule of unrecognized share-based compensation expense | Remaining Remaining Unrecognized Weighted- Compensation Average Years Expense To Recognize (In thousands) Stock options $ 1,246 2.1 RSUs 3,099 3.5 Stock purchase rights under ESPP 60 0.4 $ 4,405 |
Stock Options [Member] | |
Summary of stock option activity | Weighted- Average Number of Exercise Price Shares per Share (In thousands) Balance of options outstanding at June 30, 2018 3,931 $ 1.73 Granted 72 3.58 Forfeited (114 ) 1.88 Expired (4 ) 1.98 Exercised (533 ) 1.77 Balance of options outstanding at December 31, 2018 3,352 $ 1.76 |
Restricted Stock Units (RSUs) [Member] | |
Schedule of restricted stock activity | Weighted- Average Grant Date Number of Fair Value Shares per Share (In thousands) Balance of RSUs outstanding at June 30, 2018 140 $ 1.51 Granted 666 5.04 Vested (93 ) 1.25 Forfeited (14 ) 2.20 Balance of RSUs outstanding at December 31, 2018 699 $ 4.89 |
ESPP [Member] | |
Summary of other-than-option activity | Number of Shares (In thousands) Shares available for issuance at June 30, 2018 148 Reserved for issuance 500 Shares issued (69 ) Shares available for issuance at December 31, 2018 579 |
7. Income Taxes (Tables)
7. Income Taxes (Tables) | 6 Months Ended |
Dec. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Effective Income Tax Rate | Three Months Ended Six Months Ended December 31, December 31, 2018 2017 2018 2017 Effective tax rate 5% 14% 22% 18% |
2. Revenue Recognition (Details
2. Revenue Recognition (Details - Revenue by product) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 12,114 | $ 11,336 | $ 24,393 | $ 21,942 |
IoT Revenue [Member] | ||||
Revenues | 9,070 | 7,961 | 18,037 | 16,419 |
IT Management [Member] | ||||
Revenues | 2,888 | 3,218 | 5,989 | 5,007 |
Other Revenue [Member] | ||||
Revenues | $ 156 | $ 157 | $ 367 | $ 516 |
2. Revenue Recognition (Detai_2
2. Revenue Recognition (Details - Revenue by geographic region) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Revenues | $ 12,114 | $ 11,336 | $ 24,393 | $ 21,942 |
Americas [Member] | ||||
Revenues | 6,182 | 6,292 | 13,096 | 11,989 |
E M E A [Member] | ||||
Revenues | 4,080 | 3,172 | 7,600 | 6,336 |
Asia Pacific [Member] | ||||
Revenues | $ 1,852 | $ 1,872 | $ 3,697 | $ 3,617 |
2. Revenue Recognition (Detai_3
2. Revenue Recognition (Details - Deferred Revenue) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue, beginning balance | $ 480 | |
New performance obligations | 96 | |
Recognition of revenue as a result of satisfying performance obligations | (179) | |
Deferred revenue, ending balance | 397 | |
Deferred revenue, non-current portion | (163) | $ (175) |
Deferred revenue, current portion | $ 234 | $ 305 |
2. Revenue Recognition (Detai_4
2. Revenue Recognition (Details - ASC 606 changes to BS) - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 |
Assets: | ||
Accounts receivable, net | $ 6,134 | $ 4,244 |
Inventories, net | 9,352 | 8,439 |
Prepaid expenses and other current assets | 752 | 370 |
Liabilities and Shareholders' Equity | ||
Other current liabilities | 3,325 | 2,877 |
Accumulated deficit | (188,779) | (189,555) |
Without Adoption of ASC 606 [Member] | ||
Assets: | ||
Accounts receivable, net | 2,534 | |
Inventories, net | 10,798 | |
Prepaid expenses and other current assets | 596 | |
Liabilities and Shareholders' Equity | ||
Other current liabilities | 3,339 | |
Accumulated deficit | (191,103) | |
Balance at July 1, 2018 [Member] | ||
Assets: | ||
Accounts receivable, net | 5,421 | |
Inventories, net | 7,977 | |
Prepaid expenses and other current assets | 463 | |
Liabilities and Shareholders' Equity | ||
Other current liabilities | 3,103 | |
Accumulated deficit | (188,973) | |
Impact of Adoption ASC 606 [Member] | ||
Assets: | ||
Accounts receivable, net | (3,600) | 1,177 |
Inventories, net | 1,446 | (462) |
Prepaid expenses and other current assets | (156) | 93 |
Liabilities and Shareholders' Equity | ||
Other current liabilities | 14 | 226 |
Accumulated deficit | $ (2,324) | $ 582 |
2. Revenue Recognition (Detai_5
2. Revenue Recognition (Details - ASC 606 changes to IS) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Net revenue | $ 12,114 | $ 11,336 | $ 24,393 | $ 21,942 |
Cost of revenue | 5,453 | 5,022 | 10,991 | 10,034 |
Net income (loss) | $ 277 | $ 225 | $ 194 | $ (416) |
Net income (loss) per share - basic | $ 0.01 | $ 0.01 | $ 0.01 | $ (0.02) |
Net income (loss) per share - diluted | $ 0.01 | $ 0.01 | $ 0.01 | $ (0.02) |
Without Adoption of ASC 606 [Member] | ||||
Net revenue | $ 11,076 | $ 21,727 | ||
Cost of revenue | 5,252 | 10,069 | ||
Net income (loss) | $ (559) | $ (1,548) | ||
Net income (loss) per share - basic | $ (0.03) | $ (0.07) | ||
Net income (loss) per share - diluted | $ (0.03) | $ (0.07) | ||
Impact of Adoption ASC 606 [Member] | ||||
Net revenue | $ (1,038) | $ (2,666) | ||
Cost of revenue | (201) | (922) | ||
Net income (loss) | $ (836) | $ (1,742) | ||
Net income (loss) per share - basic | $ (0.04) | $ (0.08) | ||
Net income (loss) per share - diluted | $ (0.04) | $ (0.08) |
3. Supplemental Financial Inf_3
3. Supplemental Financial Information (Details - Inventories) - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 |
Supplemental Financial Information | ||
Finished goods | $ 6,246 | $ 5,892 |
Raw materials | 3,106 | 2,547 |
Inventories, net | $ 9,352 | $ 8,439 |
3. Supplemental Financial Inf_4
3. Supplemental Financial Information (Details - Other liabilities) - USD ($) $ in Thousands | Dec. 31, 2018 | Jun. 30, 2018 |
Current | ||
Accrued variable consideration | $ 1,087 | $ 0 |
Customer deposits and refunds | 191 | 916 |
Accrued raw materials purchases | 631 | 460 |
Deferred revenue | 234 | 305 |
Capital lease obligations | 28 | 55 |
Taxes payable | 312 | 296 |
Acccrued operating expenses | 842 | 845 |
Total other current liabilities | 3,325 | 2,877 |
Non-current | ||
Deferred rent | 93 | 137 |
Deferred revenue | 163 | 175 |
Capital lease obligations | 0 | 4 |
Total other non-current liabilities | $ 256 | $ 316 |
3. Supplemental Financial Inf_5
3. Supplemental Financial Information (Details - Net Loss per Share) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Numerator: | ||||
Net income (loss) | $ 277 | $ 225 | $ 194 | $ (416) |
Denominator: | ||||
Weighted-average common shares outstanding - basic | 22,091 | 18,073 | 20,721 | 17,970 |
Effect of dilutive securities | 1,351 | 666 | 1,542 | 0 |
Denominator for net income (loss) per share - diluted | 23,442 | 18,739 | 22,263 | 17,970 |
Net income (loss) per share - basic | $ 0.01 | $ 0.01 | $ 0.01 | $ (0.02) |
Net income (loss) per share - diluted | $ 0.01 | $ 0.01 | $ 0.01 | $ (0.02) |
3. Supplemental Financial Inf_6
3. Supplemental Financial Information (Details - Equivalents) - shares shares in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Supplemental Financial Information | ||||
Common stock equivalents | 70 | 1,647 | 4 | 2,056 |
3. Supplemental Financial Inf_7
3. Supplemental Financial Information (Details- Severance and related charges) $ in Thousands | 6 Months Ended |
Dec. 31, 2018USD ($) | |
Supplemental Financial Information | |
Severance costs, beginning balance | $ 0 |
Charges | 323 |
Payments | (251) |
Severance costs, ending balance | $ 72 |
3. Supplemental Financial Inf_8
3. Supplemental Financial Information (Details- Supplemental Cash Flow Info) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Supplemental Financial Information | ||
Accrued property and equipment paid for in the subsequent period | $ 6 | $ 44 |
3. Supplemental Financial Inf_9
3. Supplemental Financial Information (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Labor and related charges | $ 460 | $ 527 |
Severance related costs [Member] | ||
Labor and related charges | 323 | $ 527 |
Share-based Compensation [Member] | ||
Labor and related charges | $ 137 |
4. Warranty Reserve (Details -
4. Warranty Reserve (Details - Warranty reserve) - USD ($) $ in Thousands | 6 Months Ended | 12 Months Ended |
Dec. 31, 2018 | Jun. 30, 2018 | |
Product Warranties Disclosures [Abstract] | ||
Beginning balance | $ 99 | $ 125 |
Charged to cost of revenue | 29 | 168 |
Usage | (22) | (194) |
Ending balance | $ 106 | $ 99 |
5. Bank Line of Credit and Debt
5. Bank Line of Credit and Debt (Details Narrative) - USD ($) $ in Thousands | 6 Months Ended | |
Dec. 31, 2018 | Jun. 30, 2018 | |
Debt Disclosure [Abstract] | ||
Credit line maximum borrowing amount | $ 4,000 | |
Maturity date | Sep. 30, 2020 | |
Line of credit outstanding | $ 0 | $ 0 |
Minimum TNW | 7,321 | |
Actual TNW | $ 26,528 |
6. Stockholders Equity (Details
6. Stockholders Equity (Details - Option activity) - Stock Options [Member] shares in Thousands | 6 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Number of shares | |
Number of Shares Options Outstanding, Beginning | shares | 3,931 |
Number of Shares Options Granted | shares | 72 |
Number of Shares Options Forfeited | shares | (114) |
Number of Shares Options Expired | shares | (4) |
Number of Shares Options Exercised | shares | (533) |
Number of Shares Options Outstanding, Ending | shares | 3,352 |
Weighted Average Exercise Price per share | |
Exercise Price Outstanding, Beginning | $ / shares | $ 1.73 |
Exercise Price Granted | $ / shares | 3.58 |
Exercise Price Forfeited | $ / shares | 1.88 |
Exercise Price Expired | $ / shares | 1.98 |
Exercise Price Exercised | $ / shares | 1.77 |
Exercise Price Outstanding, Ending | $ / shares | $ 1.76 |
6. Stockholders Equity (Detai_2
6. Stockholders Equity (Details - RSU activity) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 6 Months Ended |
Dec. 31, 2018$ / sharesshares | |
Number of RSU's Shares | |
Balance of RSU's, beginning | shares | 140 |
Granted | shares | 666 |
Vested | shares | (93) |
Forfeited | shares | (14) |
Balance of RSU's, ending | shares | 699 |
Weighted Average Grant Date Fair Value per share | |
RSU Shares Weighted-Average Grant-Date Fair Value per Share, beginning | $ / shares | $ 1.51 |
RSU Shares Granted, Weighted-Average Grant-Date Fair Value per Share | $ / shares | 5.04 |
RSU Shares Vested, Weighted-Average Grant-Date Fair Value per Share | $ / shares | 1.25 |
RSU Shares Forfeited, Weighted-Average Grant-Date Fair Value per Share | $ / shares | 2.20 |
RSU Shares Weighted-Average Grant-Date Fair Value per Share, ending | $ / shares | $ 4.89 |
6. Stockholders Equity (Detai_3
6. Stockholders Equity (Details - ESPP activity) - ESPP [Member] shares in Thousands | 6 Months Ended |
Dec. 31, 2018shares | |
Shares available for issuance at beginning of period | 148 |
Shares reserved for issuance | 500 |
Shares issued | (69) |
Shares available for issuance at end of period | 579 |
6. Stockholders Equity (Detai_4
6. Stockholders Equity (Details - Share based compensation) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Total share-based compensation | $ 451 | $ 310 | $ 929 | $ 582 |
Cost of revenue [Member] | ||||
Total share-based compensation | 23 | 13 | 40 | 26 |
Selling, general and administrative [Member] | ||||
Total share-based compensation | 337 | 239 | 737 | 451 |
Research and development [Member] | ||||
Total share-based compensation | $ 91 | $ 58 | $ 152 | $ 105 |
6. Stockholders Equity (Detai_5
6. Stockholders Equity (Details - Unrecognized expense) $ in Thousands | 6 Months Ended |
Dec. 31, 2018USD ($) | |
Unrecognized share-based compensation expense | $ 4,405 |
Stock Options [Member] | |
Unrecognized share-based compensation expense | $ 1,246 |
Weighted average years to recognize | 2 years 1 month 6 days |
Restricted Stock Units (RSUs) [Member] | |
Unrecognized share-based compensation expense | $ 3,099 |
Weighted average years to recognize | 3 years 6 months |
ESPP [Member] | |
Unrecognized share-based compensation expense | $ 60 |
Weighted average years to recognize | 4 months 24 days |
6. Stockholders Equity (Detai_6
6. Stockholders Equity (Details Narrative) - Public Offering [Member] shares in Thousands, $ in Thousands | 6 Months Ended |
Dec. 31, 2018USD ($)shares | |
Stock issued new, shares | shares | 2,700 |
Proceeds from sale of stock | $ | $ 9,775 |
7. Income Taxes (Details - Effe
7. Income Taxes (Details - Effective tax rate) | 3 Months Ended | 6 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2018 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||||
Effective tax rate | 5.00% | 14.00% | 22.00% | 18.00% |