Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jun. 30, 2020 | Aug. 31, 2020 | Dec. 31, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | LANTRONIX INC | ||
Entity Central Index Key | 0001114925 | ||
Document Type | 10-K | ||
Document Period End Date | Jun. 30, 2020 | ||
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 | Non-accelerated Filer | ||
Entity Public Float | $ 43,842,000 | ||
Entity Common Stock, Shares Outstanding | 28,292,841 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2020 | ||
Entity Shell Company | false | ||
Entity Small Business | true | ||
Entity Emerging Growth | false | ||
Entity Interactive Data Current | Yes | ||
Entity File Number | 001-16027 | ||
Entity Incorporation State Code | DE |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 7,691 | $ 18,282 |
Accounts receivable (net of allowance for doubtful accounts of $460 and $36 at June 30, 2020 and 2019, respectively) | 11,411 | 7,388 |
Inventories, net | 13,781 | 10,509 |
Contract manufacturers' receivable | 337 | 1,324 |
Prepaid expenses and other current assets | 1,290 | 687 |
Total current assets | 34,510 | 38,190 |
Property and equipment, net | 1,587 | 1,199 |
Goodwill | 15,810 | 9,488 |
Purchased intangible assets, net | 12,449 | 0 |
Other assets | 3,577 | 67 |
Total assets | 67,933 | 48,944 |
Current liabilities: | ||
Accounts payable | 5,331 | 4,716 |
Accrued payroll and related expenses | 2,658 | 2,060 |
Short-term debt, net | 1,472 | 0 |
Other current liabilities | 6,308 | 4,696 |
Total current liabilities | 15,769 | 11,472 |
Long-term debt, net | 3,682 | 0 |
Other non-current liabilities | 1,962 | 206 |
Total liabilities | 21,413 | 11,678 |
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; 28,231,054 and 22,811,743 shares issued and outstanding at June 30, 2020 and 2019, respectively | 3 | 2 |
Additional paid-in capital | 246,265 | 226,274 |
Accumulated deficit | (200,119) | (189,381) |
Accumulated other comprehensive income | 371 | 371 |
Total stockholders' equity | 46,520 | 37,266 |
Total liabilities and stockholders' equity | $ 67,933 | $ 48,944 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Assets | ||
Allowance for Receivables | $ 460 | $ 36 |
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 | 28,231,054 | 22,811,743 |
Common Stock Outstanding | 28,231,054 | 22,811,743 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||
Net revenue | $ 59,878 | $ 46,890 |
Cost of revenue | 32,978 | 20,617 |
Gross profit | 26,900 | 26,273 |
Operating expenses: | ||
Selling, general and administrative | 19,582 | 15,851 |
Research and development | 9,691 | 9,079 |
Restructuring, severance and related charges | 3,844 | 1,146 |
Acquisition-related costs | 2,284 | 410 |
Impairment of long-lived asset | 0 | 275 |
Amortization of purchased intangible assets | 2,037 | 0 |
Total operating expenses | 37,438 | 26,761 |
Loss from operations | (10,538) | (488) |
Interest income (expense), net | (133) | 236 |
Other income (expense), net | 77 | (15) |
Loss before income taxes | (10,594) | (267) |
Provision for income taxes | 144 | 141 |
Net loss and comprehensive loss | $ (10,738) | $ (408) |
Net loss per share - basic and diluted | $ (0.42) | $ (0.02) |
Weighted-average common shares - basic and diluted | 25,281 | 21,580 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Accumulated Other Comprehensive Income | Total |
Beginning balance, shares at Jun. 30, 2018 | 18,908 | ||||
Beginning balance, value at Jun. 30, 2018 | $ 2 | $ 212,995 | $ (189,555) | $ 371 | $ 23,813 |
Cumulative effect of accounting change | 582 | 582 | |||
Shares issued pursuant to equity offering, net, shares | 2,700 | ||||
Shares issued pursuant to equity offering, net, value | 9,774 | 9,774 | |||
Shares issued pursuant to stock awards, net shares | 1,204 | ||||
Shares issued pursuant to stock awards, net value | 1,823 | 1,823 | |||
Tax withholding paid on behalf of employees for restricted shares | (189) | (189) | |||
Share-based compensation | 1,871 | 1,871 | |||
Net loss | (408) | (408) | |||
Ending balance, shares at Jun. 30, 2019 | 22,812 | ||||
Ending balance, value at Jun. 30, 2019 | $ 2 | 226,274 | (189,381) | 371 | 37,266 |
Shares issued pursuant to stock awards, net shares | 1,140 | ||||
Shares issued pursuant to stock awards, net value | 1,158 | 1,158 | |||
Tax withholding paid on behalf of employees for restricted shares | (379) | (379) | |||
Share-based compensation | 3,639 | 3,639 | |||
Issuance of shares related to acquisition, shares | 4,279 | ||||
Issuance of shares related to acquisition, value | $ 1 | 15,573 | 15,574 | ||
Net loss | (10,738) | (10,738) | |||
Ending balance, shares at Jun. 30, 2020 | 28,231 | ||||
Ending balance, value at Jun. 30, 2020 | $ 3 | $ 246,265 | $ (200,119) | $ 371 | $ 46,520 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating activities | ||
Net loss | $ (10,738) | $ (408) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Share-based compensation | 3,639 | 1,871 |
Amortization of purchased intangible assets | 2,037 | 0 |
Depreciation and amortization | 768 | 464 |
Amortization of manufacturing profit in acquired inventory associated with acquisitions | 255 | 0 |
Impairment of long-lived asset | 0 | 275 |
Loss on disposal of property and equipment | 16 | 10 |
Amortization of deferred debt issuance costs | 18 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,809 | (1,967) |
Inventories | 3,365 | (2,532) |
Contract manufacturers' receivable | 987 | (675) |
Prepaid expenses and other current assets | 366 | (224) |
Other assets | 1,065 | (18) |
Accounts payable | (2,599) | 765 |
Accrued payroll and related expenses | 349 | (748) |
Other liabilities | (4,858) | 1,439 |
Net cash used in operating activities | (2,521) | (1,748) |
Investing activities | ||
Purchases of property and equipment | (572) | (891) |
Cash payment for acquisitions, net of cash and cash equivalents acquired | (13,402) | 0 |
Net cash used in investing activities | (13,974) | (891) |
Financing activities | ||
Net proceeds from issuances of common stock | 1,158 | 11,597 |
Tax withholding paid on behalf of employees for restricted shares | (379) | (189) |
Net proceeds from issuance of debt | 5,886 | 0 |
Payment of borrowings on term loan | (750) | 0 |
Payment of lease liabilities | (11) | (55) |
Net cash provided by financing activities | 5,904 | 11,353 |
Increase in cash and cash equivalents | (10,591) | 8,714 |
Cash and cash equivalents at beginning of year | 18,282 | 9,568 |
Cash and cash equivalents at end of year | 7,691 | 18,282 |
Supplemental disclosure of cash flow information | ||
Interest paid | 218 | 18 |
Income taxes paid | $ 101 | $ 115 |
1. Summary of Significant Accou
1. Summary of Significant Accounting Policies | 12 Months Ended |
Jun. 30, 2020 | |
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 software as a service (“SaaS”), engineering services, and hardware for Edge Computing, the Internet of Things (“IoT”), and Remote Environment Management (“REM”). Lantronix enables its customers to provide reliable and secure solutions while accelerating their time to market. Lantronix’s products and services dramatically simplify operations through the creation, development, deployment, and management of customer projects at scale while providing quality, reliability and security. 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, 2020, approximately $6,426,000 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 warehouse in Canada, (ii) our third-party logistics provider in Hong Kong and (iii) our contract manufacturers in China, Malaysia and Thailand. 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, revenue recognition, business combinations, inventory valuation, goodwill valuation, deferred income tax asset valuation allowances, share-based compensation, restructuring charges and warranty reserves. To the extent there are material differences between our estimates and actual results, future results of operations will be affected. Impact of COVID-19 The spread of the COVID-19 virus has caused an economic downturn on a global scale, as well as significant volatility in the financial markets. In March 2020, the World Health Organization declared the spread of the COVID-19 virus a pandemic. Government reactions to the public health crisis with mitigation measures have created significant uncertainties in the U.S. and global economies. The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict and which may cause the actual results to differ from the estimates and assumptions we are required to make in the preparation of financial statements according to U.S. GAAP. In order to protect our employee population and comply with local directives, most of our employees transitioned to remote working arrangements commencing in March 2020, which are still continuing through the date hereof. To facilitate the increased data traffic associated with remote access, we have upgraded some of our information technology systems. We have also made changes relating to videoconferencing by providing most of our employees with a new videoconferencing and collaboration platform to accommodate better remote collaboration and communication. To date, remote working has not had a significant adverse impact on our financial results or our operations, including, financial reporting and disclosure controls and procedures. Reclassifications Certain reclassifications have been made to the prior fiscal year financial information to conform to the current fiscal year presentation. Revenue Recognition Refer to Note 2 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, 2020 and 2019 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, 2020 and 2019. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2020 or 2019. 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. Business Combinations We allocate the fair value of the purchase consideration of a business acquisitions to the tangible assets, liabilities, and intangible assets acquired, including in-process research and development (“IPR&D”), based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized over the asset’s estimated useful life. Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred. 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, 2020, we performed 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. Purchased Intangible Assets Included within "purchased intangible assets, net" at June 30, 2020 are customer lists, developed technology, tradenames, and other intangible assets acquired in connection with various business combinations. Such capitalized costs and intangible assets are being amortized over a period of one to five years. Long-Lived Assets and Intangible Assets We assess the impairment of long-lived assets and intangible assets whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. We estimated the future cash flows, undiscounted and without interest charges, expected to be generated by the assets from its use or eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. 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. Restructuring Charges We recognize costs and related liabilities for restructuring activities when they are incurred. Our restructuring charges are primarily comprised of employee separation costs, asset impairments and contract exit costs. Employee separation costs include one-time termination benefits that are recognized as a liability at estimated fair value, at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Ongoing termination benefits are recognized as a liability at estimated fair value when the amount of such benefits are probable and reasonably estimable. Contract exit costs include contract termination fees and right-of-use asset impairments recognized on the date that we have vacated the premises or ceased use of the leased facilities. A liability for contract termination fees is recognized in the period in which we terminate the contract. Advertising Expenses Advertising expenses are recorded in the period incurred and totaled $185,000 and $118,000 for the fiscal years ended June 30, 2020 and 2019, respectively. Segment Information We have one operating and reportable business segment. Recent Accounting Pronouncements Shared-Based Compensation On July 1, 2019, Lantronix adopted Accounting Standard Update (“ASU”) No. 2018-07 that expands the scope of existing share-based compensation guidance for employees. The standard includes 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 adoption of the standard did not have a material impact on our financial statements. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02 (“ASU 2016-02” or “Topic 842”) 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 based on the present value of lease payments over the lease term by lessees for those leases classified as operating leases under the existing guidance. We adopted Topic 842 on July 1, 2019 using the modified retrospective approach by applying the new standard to leases existing at the date of adoption and not restating comparative prior periods. The adoption did not have a material impact on our results of operations or cash flows. Refer to Note 4 Current Expected Credit Losses In June 2016, the FASB issued a new standard requiring financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The standard eliminates the threshold for initial recognition in current GAAP and reflects an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. The standard is effective for the Company beginning in the first quarter of fiscal year 2024. The adoption of this guidance is not expected to have a material effect on the Company's consolidated financial statements. |
2. Business Combinations
2. Business Combinations | 12 Months Ended |
Jun. 30, 2020 | |
Business Combinations [Abstract] | |
Business Combinations | 2. Business Combinations Acquisition of Maestro On July 5, 2019 (the "Acquisition Date"), Lantronix acquired all outstanding shares of Maestro Wireless Solutions Limited, a Hong Kong private company limited by shares (“MWS”), Fargo Telecom Asia Limited, a Hong Kong private company limited by shares (“FTA” and together with MWS and their respective subsidiaries, the “Acquired Companies” or “Maestro”) for $5,355,000 in cash. The acquisition provides complementary cellular connectivity technologies to our portfolio of IoT solutions. We recorded Maestro’s tangible and intangible assets and liabilities based on their estimated fair values as of the Acquisition Date and allocated the remaining purchase consideration to goodwill. Our valuation assumptions of acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets. During fiscal 2020 we adjusted the preliminary purchase price allocation to increase accounts receivable and inventories by $18,000 and $32,000, respectively, and to reduce certain amounts allocated to other assets, accounts payable, and other liabilities totaling $195,000, which resulted in a net offsetting decrease to goodwill of $93,000. The purchase price allocation is as follows (in thousands): Cash and cash equivalents $ 282 Accounts receivable 1,338 Inventories, net 1,643 Other assets 529 Purchased intangible assets 1,910 Goodwill 2,876 Accounts payable (1,545 ) Other liabilities (1,678 ) Total consideration $ 5,355 The factors that contributed to a purchase price resulting in the recognition of goodwill include our belief that the acquisition will create a more diverse IoT company with respect to product offerings and our belief that we are committed to improving cost structures in accordance with our operational and restructuring plans which should result in a realization of cost savings and an improvement of overall efficiencies. Depending on the structure of a particular acquisition, goodwill and identifiable intangible assets may not be deductible for tax purposes. We have determined that goodwill and identifiable intangible assets related to this acquisition are deductible. Acquisition-related costs were expensed in the periods in which the costs were incurred. The valuation of identifiable intangible assets and their estimated useful lives are as follows: Asset Fair Value Weighted Average Useful Life (years) (In thousands) Developed technology $ 1,530 5.0 Customer relationship 100 2.0 Order backlog 110 1.0 Non-compete agreements 30 2.0 Trade name 140 1.0 The intangible assets are amortized on a straight-line basis over the estimated weighted-average useful lives. Acquisition of Intrinsyc On January 16, 2020 (the “Closing Date”), we completed the acquisition of Intrinsyc Technologies Corporation (“Intrinsyc”), a company existing under the laws of British Columbia, Canada. Pursuant to the terms of the agreement, dated October 30, 2019 (the “Agreement”), by and between Lantronix and Intrinsyc, all of the outstanding common shares of Intrinsyc were acquired by Lantronix. Under the Agreement, we paid $0.50 in cash and 0.2275 of a share of our common stock for each issued and outstanding common share of Intrinsyc. Pursuant to the Agreement, we paid, in the aggregate, approximately $11,519,000 in cash and issued approximately 4,279,000 shares of Lantronix common stock to Intrinsyc shareholders. Following the acquisition, Intrinsyc shareholders owned just under 16% of the outstanding shares of Lantronix common stock. Pursuant to the Agreement, Lantronix agreed to exchange certain options to purchase Intrinsyc shares and restricted stock units (“RSUs”) for cash payments, Lantronix common stock options or RSUs or a combination thereof, as further outlined in the Agreement. The acquisition provides us with complementary IoT computing and embedded product development capabilities and expands our IoT market opportunity. A summary of the purchase consideration for Intrinsyc is as follows (in thousands): Cash consideration to selling shareholders $ 11,022 Cash consideration for vested equity awards 497 Share consideration 15,574 Total purchase consideration $ 27,093 We recorded Intrinsyc’s tangible and intangible assets and liabilities based on their estimated fair values as of the Closing Date and allocated the remaining purchase consideration to goodwill. Our valuation assumptions of acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets. During fiscal 2020 we adjusted the preliminary purchase price allocation to reduce certain amounts allocated to other assets by $18,000 and other liabilities by $21,000, which resulted in a net offsetting decrease to goodwill of $3,000. The purchase price allocation is as follows (in thousands): Cash and cash equivalents $ 3,190 Accounts receivable 5,524 Inventories, net 5,281 Other assets 2,606 Purchased intangible assets 12,576 Goodwill 3,446 Accounts payable (1,552 ) Other liabilities (3,978 ) Total consideration $ 27,093 The factors that contributed to a purchase price resulting in the recognition of goodwill include our belief that the acquisition will create a more diverse IoT company with respect to product offerings and our belief that we are committed to improving cost structures in accordance with our operational and restructuring plans which should result in a realization of cost savings and an improvement of overall efficiencies. Depending on the structure of a particular acquisition, goodwill and identifiable intangible assets may not be deductible for tax purposes. We have determined that goodwill and identifiable intangible assets related to this acquisition are deductible. Acquisition-related costs were expensed in the periods in which the costs were incurred. The valuation of identifiable intangible assets and their estimated useful lives are as follows: Asset Fair Value Weighted Average Useful Life (years) (In thousands) Developed technology $ 2,311 5.0 Customer relationship 8,930 6.0 Order backlog 730 1.2 Non-compete agreements 370 1.0 Trademarks and trade names 235 1.0 The intangible assets are amortized on a straight-line basis over the estimated weighted-average useful lives. Valuation Methodology Completed technology for Maestro and order backlog for both Maestro and Intrinsyc were valued by performing a discounted cash flow analysis using the multiperiod excess earnings method. This method includes discounting the projected cash flows associated with each technology over its expected life. Projected cash flows attributable to the completed technology and order backlog were discounted to their present value at a rate commensurate with the perceived risk. Customer relationships were valued based on the distributor method, which is a variation of the multiperiod excess earnings method, and considers the profit margin a market participant distributor would obtain in selling the related products. The useful lives of customer relationships are estimated based primarily upon customer turnover data. Non-compete agreements were valued using a with and without method. Under this method, estimated prospective financial information (“PFI”) is calculated with the existence and ownership of an intangible asset and compared to the PFI in the absence of the ownership of the intangible asset. The after-tax differential PFI attributable to the intangible asset is then discounted to its present value. Completed technology for Intrinsyc and trademarks and trade names for both Maestro and Intrinsyc were valued using the relief-from-royalty method. This method is an income approach that estimates the portion of a company’s earnings attributable to an asset based on the royalty rate the company would have paid for the use of the asset if it did not own it. Royalty payments are estimated by applying a royalty rate to the prospective revenue attributable to the intangible asset. The resulting annual royalty payments are tax-affected and then discounted to present value. Assumptions used in forecasting cash flows for each of the identified intangible assets included consideration of the following: · Historical performance including sales and profitability. · Business prospects and industry expectations. · Estimated economic life of asset. · Development of new technologies. · Acquisition of new customers · Attrition of existing customers. · Obsolescence of technology over time. Supplemental Pro Forma Information (Unaudited) The following supplemental pro forma data summarizes our results of operations for the periods presented, as if we completed the acquisitions of Maestro and Intrinsyc as of the first day of fiscal 2019. The supplemental pro forma data reports actual operating results adjusted to include the pro forma effect and timing of the impact in amortization expense of identified intangible assets, restructuring costs, the purchase accounting effect on inventories acquired, and transaction costs. In accordance with the pro forma acquisition date, we recorded in the fiscal 2019 supplemental pro forma data (i) cost of goods sold from manufacturing profit in acquired inventory of $262,000, (ii) acquisition related restructuring costs of $2,845,000 and (iii) acquisition-related costs of $2,284,000, with a corresponding reduction in the fiscal 2020 supplemental pro forma data. Additionally, we recorded $3,754,000 of amortization expense in the fiscal 2019 supplemental pro forma data, and additional amortization expense of $414,000 in the fiscal 2020 supplemental pro forma data to represent the amount related to assets that would not have been fully amortized. Net sales related to products and services from the acquisitions of Maestro and Intrinsyc contributed approximately 33% to 38% of net sales for the fiscal year ended June 30, 2020. Post-acquisition net sales and earnings on a standalone basis are generally impracticable to determine, as on the Acquisition Date and Closing Date, we implemented a plan developed prior to the completion of the acquisitions and began to immediately integrate the acquisition into existing operations, engineering groups, sales distribution networks and management structure. Supplemental pro forma data is as follows: Years Ended June 30, 2020 2019 (In thousands, except per share amounts) Pro forma net revenue $ 73,883 $ 82,395 Pro forma net loss (5,643 ) (11,115 ) Pro forma net loss per share Basic and Diluted $ (0.22 ) $ (0.43 ) |
3. Revenue
3. Revenue | 12 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 3. Revenue 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. 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 consolidated balance sheets. Services Revenues from our extended warranty and services are generally recognized ratably over the applicable service period. We expect revenues from future sales of our software-as-a-service (“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. As a result of our recent acquisition of Intrinsyc (see Note 2 · Time & Materials (“T&M”) – services consist of revenues from software modification, consulting implementation, training and integration services. These services are set forth separately in the contractual arrangements such that the total price of the customer arrangement is expected to vary depending on the actual time and materials incurred based on the customer’s needs. · Fixed Price – arrangements to render specific consulting and software modification services which tend to be more complex. Performance obligations for T&M contracts qualify for the "Right to Invoice" practical expedient within the revenue guidance. Under this practical expedient, we may recognize revenue, over time, in the amount to which we have a right to invoice. In addition, we are not required to estimate variable consideration upon inception of the contract and reassess the estimate each reporting period. We determined that this method best represents the transfer of services as, upon billing, we have a right to consideration from a customer in an amount that directly corresponds with the value to the customer of our performance completed to date. We recognize revenue on fixed price contracts, over time, using the proportion of our actual costs incurred (generally labor hours expended) to the total costs expected to complete the contract performance obligation. We determined that this method best represents the transfer of services as the proportion closely depicts the efforts or inputs completed towards the satisfaction of a fixed price contract performance obligation. Multiple Performance Obligations 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. Net Revenue by Product Line and Geographic Region In June 2016, the FASB issued a new standard requiring financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The standard eliminates the threshold for initial recognition in current GAAP and reflects an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. The standard is effective beginning in the first quarter of our fiscal year 2024. The adoption of this guidance is not expected to have a material effect on our consolidated financial statements. 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 (“APJ”). 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: Years Ended June 30, 2020 2019 (In thousands) IoT $ 49,911 $ 35,299 REM 9,228 10,845 Other 739 746 $ 59,878 $ 46,890 Years Ended June 30, 2020 2019 (In thousands) Americas $ 33,279 $ 25,179 EMEA 15,588 14,586 APJ 11,011 7,125 $ 59,878 $ 46,890 The following table presents product revenues and service revenues as a percentage of our total net revenue: Year Ended June 30, 2020 2019 Product revenues 96% 99% Service revenues 4% 1% Service revenue is comprised primarily of professional services, software license subscriptions, and extended warranties. 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. Deferred Revenue Deferred revenue is primarily comprised of unearned revenue related to our extended warranty services and certain software 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 respectively included in other current liabilities and other non-current liabilities in the accompanying consolidated balance sheets. The following table presents the changes in our deferred revenue balance for the year ended June 30, 2020 (in thousands): Balance, July 1, 2019 $ 486 New performance obligations 392 Performance obligations assumed from acquisitions 738 Recognition of revenue as a result of satisfying performance obligations (792 ) Balance, June 30, 2020 $ 824 Less: non-current portion of deferred revenue (166 ) Current portion, June 30, 2020 $ 658 We expect to recognize substantially all of the non-current portion of deferred revenue over the next 2 to 4 years. |
4. Leases
4. Leases | 12 Months Ended |
Jun. 30, 2020 | |
Lessee Disclosure [Abstract] | |
Leases | 4. Leases On July 1, 2019, we adopted Topic 842 and elected the available practical expedient to recognize the cumulative effect of initially adopting the standard as an adjustment to the opening balance sheet of the period of adoption (i.e., July 1, 2019). We also elected other available practical expedients and will not separate lease components from non-lease components for office leases, or reassess historical lease classification, whether existing or expired contracts are or contain leases, or the initial direct costs for existing leases as of July 1, 2019. The consolidated balance sheets and results from operations for reporting periods beginning after July 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with the historic accounting under Topic 840. Adoption of the standard resulted in the recording of net operating and financing lease ROU assets and corresponding operating and financing lease liabilities of $984,000 and $1,114,000, respectively, on July 1, 2019. The adoption of the standard did not materially affect the consolidated statements of operations and had no impact on cash flows. Our leases include office buildings for facilities worldwide and car leases in Germany, which are all classified as operating leases. We also have financing leases related to office equipment in the United States. On October 1, 2019 we entered into a lease agreement for an office in Hyderabad, India, which replaced and expanded our existing office space there. In May 2020 we entered into an extension to our office lease for our corporate headquarters in Irvine, California. The amendment extends the term of the lease by 13 months through January 2022. We determine if an arrangement is a lease at inception. Certain leases include renewal options that are under the Company's sole discretion. The renewal options were included in the ROU asset and lease liability calculation if it is reasonably assured that we will exercise the option. As our leases generally do not provide an implicit rate, we use our collateralized incremental borrowing rate based on the information available at the lease commencement date, including lease term, in determining the present value of lease payments. Lease expense for these leases is recognized on a straight-line basis over the lease term. Components of lease expense and supplemental cash flow information: Year Ended 2020 Components of lease expense (In thousands) Operating lease cost $ 1,579 Financing lease cost $ 14 Supplemental cash flow information Cash paid for amounts included in the measurement of operating lease liabilities $ 1,131 Cash paid for amounts included in the measurement of financing lease liabilities $ 11 Right-of-use assets obtained in exchange for lease obligation $ 1,857 The weighted-average remaining lease term is 1.3 years. The weighted-average discount rate is 6.14 percent. Maturities of lease liabilities as of June 30, 2020 were as follows: Years ending June 30, Operating Financing (In thousands) 2021 $ 1,472 $ 9 2022 1,106 9 2023 376 9 2024 274 3 2025 72 – Total remaining lease payments 3,300 30 less: imputed interest (261 ) – Lease liability $ 3,039 $ 30 Reported as: Current liabilities $ 1,264 $ 9 Non-current liabilities $ 1,775 $ 21 The lease liabilities and ROU assets as of June 30, 2020 include leases assumed in the acquisitions of Maestro and Intrinsyc if the remaining lease term at the acquisition date was determined to exceed one year. Refer to Note 2 |
5. Supplemental Financial Infor
5. Supplemental Financial Information | 12 Months Ended |
Jun. 30, 2020 | |
Supplemental Financial Information | |
Supplemental Financial Information | 5. Supplemental Financial Information Inventories The following table presents details of our inventories: June 30, 2020 2019 (In thousands) Finished goods $ 7,522 $ 6,084 Raw materials 6,259 4,425 Inventories, net $ 13,781 $ 10,509 Property and Equipment The following table presents details of property and equipment: June 30, 2020 2019 (In thousands) Computer, software and office equipment $ 3,992 $ 3,839 Furniture and fixtures 511 450 Production, development and warehouse equipment 4,777 4,229 Construction-in-progress – 201 Property and equipment, gross 9,280 8,719 Less accumulated depreciation (7,693 ) (7,520 ) Property and equipment, net $ 1,587 $ 1,199 Impairment of Long-Lived Asset During the fourth quarter of the fiscal year ended June 30, 2019, we determined that the carrying value of a software platform license we had previously purchased from a third party was impaired. This asset had been recorded as part of the “Computer, software and office equipment” category in the table above. We purchased this platform and contemplated utilizing it in connection with the development of certain of our software offerings. Based on strategic changes in our product roadmap plan, along with key changes in our executive management team that occurred during the fiscal year ended June 30, 2019, we concluded that that we would not achieve future cash flows related to this asset. Accordingly, we recorded a charge of $275,000 in the accompanying consolidated statement of operations for the year ended June 30, 2019 to write off the asset’s carrying value. Purchased Intangible Assets The following table presents details of purchased intangible assets: June 30, 2020 June 30, 2019 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value (In thousands) Developed technology $ 3,841 $ (497 ) $ 3,344 $ – $ – $ – Customer relationship 9,030 (726 ) 8,304 – – – Order backlog 840 (384 ) 456 – – – Non-compete agreements 400 (184 ) 216 – – – Trademark and trade name 375 (246 ) 129 – – – $ 14,486 $ (2,037 ) $ 12,449 $ – $ – $ – We do not currently have any purchased intangible assets with indefinite useful lives. As of June 30, 2020, future estimated amortization expense is as follows: Years Ending June 30, (In thousands) 2021 $ 3,094 2022 2,240 2023 2,240 2024 2,240 2025 1,784 Thereafter 851 $ 12,449 Goodwill The following table presents details of our goodwill balance: Year Ended June 30, 2020 (In thousands) Balance at June 30, 2019 $ 9,488 Acquisition of Maestro 2,876 Acquisition of Intrinsyc 3,446 Balance at June 30, 2020 $ 15,810 Warranty Reserve The following table presents details of our warranty reserve: Years Ended June 30, 2020 2019 (In thousands) Beginning balance $ 116 $ 99 Warranty reserve assumed from acquisition of Intrinsyc 118 – Charged to cost of revenues 181 96 Usage (234 ) (79 ) Ending balance $ 181 $ 116 Other Liabilities The following table presents details of our other liabilities: June 30, 2020 2019 (In thousands) Current Accrued variable consideration $ 1,462 $ 1,313 Customer deposits and refunds 628 168 Accrued raw materials purchases 272 1,155 Deferred revenue 658 328 Lease liability 1,273 4 Taxes payable 395 322 Warranty reserve 181 116 Accrued operating expenses 1,439 1,290 Total other current liabilities $ 6,308 $ 4,696 Non-current Lease liability $ 1,796 $ 48 Deferred revenue 166 158 Total other non-current liabilities $ 1,962 $ 206 Computation of Net Loss per Share The following table presents the computation of net loss per share: Years Ended June 30, 2020 2019 (In thousands, except per share data) Numerator: Net loss $ (10,738 ) $ (408 ) Denominator: Weighted-average shares outstanding - basic and diluted 25,281 21,580 Net loss per share - basic and diluted $ (0.42 ) $ (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, 2020 2019 (In thousands) Common stock equivalents 1,675 1,513 Severance and Related Charges Current Fiscal Year During the year ended June 30, 2020, we continued a plan to realign certain personnel resources to better fit our current business needs, which includes identifying cost savings and synergies to be gained from the acquisitions of Maestro and Intrinsyc. Additionally, the current year charges include costs incurred pursuant to change-in-control agreements for certain employees of Intrinsyc. The following table presents details of the liability we recorded related to these activities: Year Ended June 30, 2020 (In thousands) Beginning balance $ 651 Charges 3,844 Payments (3,880 ) Ending balance $ 615 The ending balance is recorded in accrued payroll and related expenses on the accompanying consolidated balance sheet at June 30, 2020. Prior Fiscal Year During the prior fiscal year ended June 30, 2019, we executed several plans to realign certain personnel resources to better meet our business needs. These activities resulted in total charges of approximately $1,417,000, which included $1,146,000 in severance-related costs and $271,000 in share-based compensation expense. The share-based compensation expenses are included in the applicable functional line items within the accompanying consolidated statement of operation for the year ended June 30, 2019. 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, 2020 2019 (In thousands) Share consideration for acquisition of Intrinsyc $ 15,574 $ – Accrued property and equipment paid for in the subsequent period $ 149 $ 9 Accrued stock option exercise proceeds $ – $ 1 |
6. Bank Loan Agreements
6. Bank Loan Agreements | 12 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Bank Loan Agreements | 6. Bank Loan Agreements On November 12, 2019, we entered into a Second Amended and Restated Loan and Security Agreement (“Amended Agreement”) with Silicon Valley Bank (“SVB”), which amended, restated and superseded our previous agreement with SVB in its entirety. Pursuant to the Amended Agreement, SVB made available to us a senior secured revolving line of credit of up to $6,000,000 (“Revolving Facility”) and a senior secured term loan of $6,000,000 (“Term Loan Facility”). Advances under the Revolving Facility may be borrowed from time to time prior to November 12, 2021, subject to the satisfaction of certain conditions, and may be used to fund our working capital and general business requirements. The $6,000,000 proceeds of the Term Loan Facility were drawn in full in November 2019 and were used to fund our acquisition of Intrinsyc, which occurred in January 2020 (refer to Note 2 The interest rate on the Revolving Facility floats at a rate per annum equal to the greater of the prime rate and 5.00 percent. The interest rate on the Term Loan Facility floats at a rate per annum equal to the greater of 1.00 percent above the prime rate and 6.00 percent. We may elect to repay and reborrow the amounts outstanding under the Revolving Facility at any time prior to the maturity date of the Revolving Facility without premium or penalty. We may elect to repay the Term Loan Facility at any time without premium or penalty in minimum amounts equal to at least $1,000,000. A commitment fee in the amount of $60,000 was paid to SVB on the closing date and a $10,000 anniversary fee is payable to SVB on the earliest to occur of the one year anniversary of the effective date, the termination of the Amended Agreement or the Revolving Facility, or the occurrence of an event of default. The following table summarizes our outstanding debt: June 30, 2020 2019 (In thousands) Outstanding borrowings on Term Loan Facility $ 5,250 – Less: Unamortized debt issuance costs (96 ) – Net Carrying amount of debt 5,154 – Less: Current portion (1,472 ) – Non-current portion $ 3,682 – During the year ended June 30, 2020 we recognized $239,000 of interest expense in our consolidated statements of operations related to interest and amortization of debt issuance associated with the outstanding Term Loan Facility. As of June 30, 2020, the aggregate future contractual maturities of the Company's outstanding debt, at face value, were as follows: Years Ending June 30, (In thousands) 2021 $ 1,500 2022 1,500 2023 1,500 2024 750 $ 5,250 The Amended Agreement includes a financial covenant that requires that we maintain a minimum cash balance of $3,000,000 at SVB, as measured at the end of each month. The Amended Agreement also requires that we do not exceed a maximum leverage ratio, calculated as the ratio of funded debt to the consolidated trailing 12 month earnings before interest, taxes, depreciation and amortization, and certain other allowable exclusions of (i) 3.0 to 1.0 for each calendar quarter ending December 31, 2019 through and including December 31, 2020, (ii) 2.5 to 1.0 for each calendar quarter ending March 31, 2021 through and including December 31, 2021, and (iii) 2.0 to 1.0 for each calendar quarter ending after January 1, 2022. We are currently in compliance with all covenants. The following table presents certain information with respect to the line of credit: June 30, 2020 2019 (In thousands) Outstanding borrowings on the line of credit $ – $ – Available borrowing capacity on the line of credit $ 5,602 $ 3,842 Outstanding letters of credit $ 51 $ 51 Our outstanding letters of credit at June 30, 2020 and 2019 were used as security deposits. |
7. Stockholders' Equity
7. Stockholders' Equity | 12 Months Ended |
Jun. 30, 2020 | |
Equity [Abstract] | |
Stockholders' Equity | 7. 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, RSUs and performance shares. New shares are issued to satisfy stock option exercises and share issuances. At June 30, 2020, approximately 1,200,000 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, 2020, no stock appreciation rights or non-vested stock was outstanding. No income tax benefit was realized from activity in the share-based plans during the fiscal years ended June 30, 2020 and 2019. 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, 2020 2019 Expected term (in years) 4.3 4.8 Expected volatility 65% 67% Risk-free interest rate 1.56% 2.23% 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 oustanding at June 30, 2019 3,147 $ 2.29 Options granted 249 3.34 Options forfeited (181 ) 2.35 Options expired (84 ) 2.18 Options exercised (1,076 ) 1.71 Balance of options outstanding at June 30, 2020 2,055 $ 2.72 4.3 $ 2,209 Options exercisable at June 30, 2020 1,339 $ 2.35 3.7 $ 1,908 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, 2020 2019 (In thousands, except per share data) Weighted-average grant date fair value per share $ 1.90 $ 2.15 Intrinsic value of options exercised $ 1,850 $ 2,400 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 ESPP currently operates with six month offering periods commencing on the first trading day on or after May 16 and November 16 of each year (an “Offering Period”). Common stock may be purchased under the ESPP at the end of each six-month Offering Period unless the participant withdraws or terminates employment earlier. Shares of the Company’s common stock may be purchased under the ESPP at a price not less than 85% of the lesser of the fair market value of our common stock on the first or last trading day of each 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, 2020 2019 Expected term (in years) 0.5 0.5 Expected volatility 61% 79% Risk-free interest rate 1.00% 2.45% Dividend yield 0.00% 0.00% The following table presents a summary of activity under our ESPP during the fiscal year ended June 30, 2020: Year Ended June 30, 2020 (In thousands, except per share data) Shares available for issuance at June 30, 2019 517 Shares issued (113 ) Shares available for issuance at June 30, 2020 404 Weighted-average purchase price per share $ 2.75 Intrinsic value of ESPP shares on purchase date $ 57 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, 2020: Number of Shares Weighted-Average Grant Date Fair Value per Share (In thousands) Balance of RSUs outstanding at June 30, 2019 866 $ 4.24 Granted 517 3.36 Forfeited (111 ) 3.67 Vested (345 ) 3.94 Balance of RSUs outstanding at June 30, 2020 927 $ 3.93 Performance Stock Units In October 2019, we granted 975,000 RSUs with performance-based vesting requirements (“performance stock units” or “PSUs”) to certain executive employees. In February 2020, we granted an additional 70,000 PSUs with performance-based vesting requirements and vesting schedule identical to those granted in October 2019. One third of the PSUs will be eligible to vest in each of the three years beginning in fiscal 2020 if certain earnings per share, revenue targets and market conditions are met. The estimate of the grant date fair value and related share-based compensation expense of these awards included the use of a Monte Carlo simulation. The Monte Carlo simulation incorporates estimates of the potential outcomes of the market condition of these awards, which is based on the relative total shareholder return of the Company as compared to that of the Russell Microcap Index. The following table presents a summary of activity with respect to our PSUs during the fiscal year ended June 30, 2020: Number of Shares (In thousands) Balance of PSUs outstanding at June 30, 2019 – Granted 1,045 Forfeited (60 ) Vested – Balance of PSUs outstanding at June 30, 2020 985 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, 2020 2019 (In thousands) Cost of revenues $ 227 $ 85 Selling, general and administrative 2,959 1,441 Research and development 453 345 Total share-based compensation expense $ 3,639 $ 1,871 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, 2020: Remaining Unrecognized Compensation Expense Remaining Weighted-Average Years to Recognize (In thousands) Stock options $ 1,309 2.3 RSUs 3,135 3.0 PSUs 574 2.0 Common stock purchase rights under ESPP 71 0.4 If there are any modifications or cancellations of the underlying unvested share-based awards, we may be required to accelerate, increase or cancel remaining unearned share-based compensation expense. Future share-based compensation expense and unearned share-based compensation expense will increase to the extent that we grant additional share-based awards. 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 $9,774,000. |
8. Retirement Plan
8. Retirement Plan | 12 Months Ended |
Jun. 30, 2020 | |
Retirement Benefits [Abstract] | |
Retirement Plan | 8. Retirement Plan We have a retirement savings plan (the “Plan”) to which eligible employees may elect to make contributions through salary deferrals up to 100% of their base pay, subject to limitations. We made approximately $219,000 and $155,000 in matching contributions to participants in the Plan during the fiscal years ended June 30, 2020 and 2019, respectively. In addition, we may make discretionary profit-sharing contributions, subject to limitations. During the fiscal years ended June 30, 2020 and 2019, we made no such contributions to the Plan. |
9. Commitments and Contingencie
9. Commitments and Contingencies | 12 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 9. Commitments and Contingencies 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. |
10. Income Taxes
10. Income Taxes | 12 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 10. Income Taxes The provision for income taxes consists of the following components: Years Ended June 30, 2020 2019 (In thousands) Current: Federal $ (2 ) $ – State 4 3 Foreign 142 138 144 141 Deferred: Federal – – State – – Foreign – – Provision for income taxes $ 144 $ 141 The following table presents U.S. and foreign income (loss) before income taxes: Years Ended June 30, 2020 2019 (In thousands) United States $ (7,048 ) $ (623 ) Foreign (3,546 ) 356 Loss before income taxes $ (10,594 ) $ (267 ) The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows: Years Ended June 30, 2020 2019 (In thousands) Deferred tax assets: Tax losses and credits $ 20,640 $ 20,158 Reserves not currently deductible 1,222 1,366 Deferred compensation 986 383 Inventory capitalization 631 481 Acquisition costs – 91 Depreciation and amortization 790 8 Other 130 151 Gross deferred tax assets 24,399 22,638 Valuation allowance (24,056 ) (22,353 ) Deferred tax assets, net 343 285 Deferred tax liabilities: State taxes (343 ) (285 ) Deferred tax liabilities (343 ) (285 ) 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, 2020 2019 (In thousands) Statutory federal provision (benefit) for income taxes $ (2,224 ) $ (56 ) Increase (decrease) resulting from: Officer compensation – 10 Stock options (121 ) (223 ) Other permanent differences 10 15 Change in valuation allowance 1,467 289 Foreign tax credit (67 ) (72 ) Global intangible low-tax income inclusion 86 76 Controlled foreign corporation inclusion 4 – Foreign tax rate variances 886 64 Other 103 38 Provision for income taxes $ 144 $ 141 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, 2020 (In thousands) Federal $ 92,824 State $ 14,560 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. Of our federal NOLs as of June 30, 2020 in the table above, approximately $51,900,000 will expire by June 30, 2023. Pursuant to the Tax Cuts and Jobs Act (the “2017 Act”) enacted by the U.S. federal government in December 2017, 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. For state income tax purposes, our NOLs began to expire in the fiscal year ended June 30, 2013. 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. The 2017 Act created a requirement that certain income earned by foreign subsidiaries, known as global intangible low-tax income (“GILTI”), must be included in the gross income of their U.S. shareholder. The FASB allows an accounting policy election of either recognizing deferred taxes for temporary differences expected to reverse as GILTI in future years or recognizing such taxes as a current-period expense when incurred. During the fiscal years ended June 30, 2020 and 2019, we elected to treat the tax effect of GILTI as a current-period expense when incurred. Unrecognized Tax Benefits The following table summarizes our liability for uncertain tax positions for the fiscal year ended June 30, 2020: Year Ended June 30, 2020 (In thousands) Balance as of June 30, 2019 $ 6,600 Change in balances related to uncertain tax positions – Balance as of June 30, 2020 $ 6,600 At June 30, 2020, we had $6,600,000 of gross unrecognized tax benefits which was recorded as a reduction to deferred tax assets, and 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, 2020 and 2019 we recorded an immaterial expense for interest and penalties related to income tax matters in the provision for income taxes. At June 30, 2020, we had approximately $244,000 of accrued interest and penalties related to uncertain tax positions. At June 30, 2020, our fiscal years ended June 30, 2017 through 2020 remain open to examination by the federal taxing jurisdiction and our fiscal years ended June 30, 2016 through 2020 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, 2013 through 2020 remain open to examination by foreign taxing authorities. We currently do not anticipate that the amount of unrecognized tax benefits as of June 30, 2020 will significantly increase or decrease within the next 12 months. |
11. Significant Geographic, Cus
11. Significant Geographic, Customer and Supplier Information | 12 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Significant Geographic, Product Line, Customer and Supplier Information | 11. 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, 2020 2019 Americas 56% 54% Europe, Middle East, and Africa 26% 31% Asia Pacific Japan 18% 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, 2020 2019 U.S. and Canada 48% 54% Germany 18% 22% Hong Kong 6% 1% Japan 5% 8% Customers The following table presents sales to our significant customers as a percentage of net revenue: Years Ended June 30, 2020 2019 Top five customers (1) 36% 57% Ingram Micro 16% 24% Arrow * 13% * Less than 10% (1) Includes Ingram Micro and Arrow for the fiscal years ended June 30, 2020 and 2019. 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, 2020 and 2019. Suppliers We do not own or operate a manufacturing facility. All of our products are manufactured by third-party contract manufacturers and foundries primarily located in Malaysia, Thailand and China. We have several single-sourced supplier relationships, either because alternative sources are not available or because the relationship is advantageous to us. If these suppliers are unable to provide a timely and reliable supply of components, we could experience manufacturing delays that could adversely affect our consolidated results of operations. |
1. Summary of Significant Acc_2
1. Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Jun. 30, 2020 | |
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 software as a service (“SaaS”), engineering services, and hardware for Edge Computing, the Internet of Things (“IoT”), and Remote Environment Management (“REM”). Lantronix enables its customers to provide reliable and secure solutions while accelerating their time to market. Lantronix’s products and services dramatically simplify operations through the creation, development, deployment, and management of customer projects at scale while providing quality, reliability and security. We were incorporated in California in 1989 and re-incorporated in Delaware in 2000. |
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, 2020, approximately $6,426,000 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 warehouse in Canada, (ii) our third-party logistics provider in Hong Kong and (iii) our contract manufacturers in China, Malaysia and Thailand. |
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, revenue recognition, business combinations, inventory valuation, goodwill valuation, deferred income tax asset valuation allowances, share-based compensation, restructuring charges and warranty reserves. To the extent there are material differences between our estimates and actual results, future results of operations will be affected. |
Impact of COVID-19 | Impact of COVID-19 The spread of the COVID-19 virus has caused an economic downturn on a global scale, as well as significant volatility in the financial markets. In March 2020, the World Health Organization declared the spread of the COVID-19 virus a pandemic. Government reactions to the public health crisis with mitigation measures have created significant uncertainties in the U.S. and global economies. The extent to which the COVID-19 pandemic impacts our business, operations and financial results will depend on numerous evolving factors that we may not be able to accurately predict and which may cause the actual results to differ from the estimates and assumptions we are required to make in the preparation of financial statements according to U.S. GAAP. In order to protect our employee population and comply with local directives, most of our employees transitioned to remote working arrangements commencing in March 2020, which are still continuing through the date hereof. To facilitate the increased data traffic associated with remote access, we have upgraded some of our information technology systems. We have also made changes relating to videoconferencing by providing most of our employees with a new videoconferencing and collaboration platform to accommodate better remote collaboration and communication. To date, remote working has not had a significant adverse impact on our financial results or our operations, including, financial reporting and disclosure controls and procedures. |
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 Refer to Note 2 |
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, 2020 and 2019 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, 2020 and 2019. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2020 or 2019. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents consist of cash and short-term investments, with original maturities of 90 days or less. |
Inventories | Inventories Inventories are stated at the lower of cost (on a first-in, first-out basis) or net realizable value. We provide reserves for excess and obsolete inventories determined primarily based upon estimates of future demand for our products. Shipping and handling costs are classified as a component of cost of revenue in the consolidated statements of operations. |
Inventory Sale and Purchase Transactions with Contract Manufacturers | Inventory Sale and Purchase Transactions with Contract Manufacturers Under certain circumstances, we sell raw materials to our contract manufacturers and subsequently repurchase finished goods from the contract manufacturers which contain such raw materials. Net sales of raw materials to the contract manufacturers are recorded on the consolidated balance sheets as contract manufacturers’ receivables and are eliminated from net revenue as we intend to repurchase the raw materials from the contract manufacturers in the form of finished goods. We have contractual arrangements with certain of our contract manufacturers that require us to purchase unused inventory that the contract manufacturer has purchased to fulfill our forecasted manufacturing demand. To the extent that inventory on-hand at one or more of these contract manufacturers exceeds our contractually reported forecasts, we record the amount we may be required to purchase as part of other current liabilities and inventories on the consolidated balance sheets. |
Property and Equipment | Property and Equipment Property and equipment are carried at cost. Depreciation is provided using the straight-line method over the assets’ estimated useful lives, generally ranging from three to five years. Depreciation and amortization of leasehold improvements are computed using the shorter of the remaining lease term or five years. Major renewals and betterments are capitalized, while replacements, maintenance and repairs, which do not improve or extend the estimated useful lives of the respective assets, are expensed as incurred. |
Business Combinations | Business Combinations We allocate the fair value of the purchase consideration of a business acquisitions to the tangible assets, liabilities, and intangible assets acquired, including in-process research and development (“IPR&D”), based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and assessed for impairment thereafter. When an IPR&D project is completed, the IPR&D is reclassified as an amortizable purchased intangible asset and amortized over the asset’s estimated useful life. Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred. |
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, 2020, we performed 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. |
Purchased Intangible Assets | Purchased Intangible Assets Included within "purchased intangible assets, net" at June 30, 2020 are customer lists, developed technology, tradenames, and other intangible assets acquired in connection with various business combinations. Such capitalized costs and intangible assets are being amortized over a period of one to five years. |
Long-Lived Assets and Intangible Assets | Long-Lived Assets and Intangible Assets We assess the impairment of long-lived assets and intangible assets whenever events or changes in circumstances indicate that the carrying amount of long-lived assets may not be recoverable. We estimated the future cash flows, undiscounted and without interest charges, expected to be generated by the assets from its use or eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying amount of those assets, we recognize an impairment loss based on the excess of the carrying amount over the fair value of the assets. |
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. |
Restructuring Charges | Restructuring Charges We recognize costs and related liabilities for restructuring activities when they are incurred. Our restructuring charges are primarily comprised of employee separation costs, asset impairments and contract exit costs. Employee separation costs include one-time termination benefits that are recognized as a liability at estimated fair value, at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Ongoing termination benefits are recognized as a liability at estimated fair value when the amount of such benefits are probable and reasonably estimable. Contract exit costs include contract termination fees and right-of-use asset impairments recognized on the date that we have vacated the premises or ceased use of the leased facilities. A liability for contract termination fees is recognized in the period in which we terminate the contract. |
Advertising Expenses | Advertising Expenses Advertising expenses are recorded in the period incurred and totaled $185,000 and $118,000 for the fiscal years ended June 30, 2020 and 2019, respectively. |
Segment Information | Segment Information We have one operating and reportable business segment. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Shared-Based Compensation On July 1, 2019, Lantronix adopted Accounting Standard Update (“ASU”) No. 2018-07 that expands the scope of existing share-based compensation guidance for employees. The standard includes 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 adoption of the standard did not have a material impact on our financial statements. Leases In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-02 (“ASU 2016-02” or “Topic 842”) 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 based on the present value of lease payments over the lease term by lessees for those leases classified as operating leases under the existing guidance. We adopted Topic 842 on July 1, 2019 using the modified retrospective approach by applying the new standard to leases existing at the date of adoption and not restating comparative prior periods. The adoption did not have a material impact on our results of operations or cash flows. Refer to Note 4 Current Expected Credit Losses In June 2016, the FASB issued a new standard requiring financial assets measured at amortized cost be presented at the net amount expected to be collected, through an allowance for credit losses that is deducted from the amortized cost basis. The standard eliminates the threshold for initial recognition in current GAAP and reflects an entity’s current estimate of all expected credit losses. The measurement of expected credit losses is based on historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the financial assets. The standard is effective beginning in the first quarter of our fiscal year 2024. The adoption of this guidance is not expected to have a material effect on our consolidated financial statements. |
2. Business Combinations (Table
2. Business Combinations (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Supplemental Pro Forma Information | Supplemental pro forma data is as follows: Years Ended June 30, 2020 2019 (In thousands, except per share amounts) Pro forma net revenue $ 73,883 $ 82,395 Pro forma net loss (5,643 ) (11,115 ) Pro forma net loss per share Basic and Diluted $ (0.22 ) $ (0.43 ) |
Maestro Wireless Solutions [Member] | |
Purchase price allocation | The purchase price allocation is as follows (in thousands): Cash and cash equivalents $ 282 Accounts receivable 1,338 Inventories, net 1,643 Other assets 529 Purchased intangible assets 1,910 Goodwill 2,876 Accounts payable (1,545 ) Other liabilities (1,678 ) Total consideration $ 5,355 |
Valuation of identifiable intangible assets | The valuation of identifiable intangible assets and their estimated useful lives are as follows: Asset Fair Value Weighted Average Useful Life (years) (In thousands) Developed technology $ 1,530 5.0 Customer relationship 100 2.0 Order backlog 110 1.0 Non-compete agreements 30 2.0 Trade name 140 1.0 |
Intrinsyc [Member] | |
Purchase price allocation | A summary of the purchase consideration for Intrinsyc is as follows (in thousands): Cash consideration to selling shareholders $ 11,022 Cash consideration for vested equity awards 497 Share consideration 15,574 Total purchase consideration $ 27,093 The purchase price allocation is as follows (in thousands): Cash and cash equivalents $ 3,190 Accounts receivable 5,524 Inventories, net 5,281 Other assets 2,606 Purchased intangible assets 12,576 Goodwill 3,446 Accounts payable (1,552 ) Other liabilities (3,978 ) Total consideration $ 27,093 |
Valuation of identifiable intangible assets | The valuation of identifiable intangible assets and their estimated useful lives are as follows: Asset Fair Value Weighted Average Useful Life (years) (In thousands) Developed technology $ 2,311 5.0 Customer relationship 8,930 6.0 Order backlog 730 1.2 Non-compete agreements 370 1.0 Trademarks and trade names 235 1.0 |
3. Revenue (Tables)
3. Revenue (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Net revenue by product lines | Net revenues by geographic region are based on the “bill-to” location of our customers: Years Ended June 30, 2020 2019 (In thousands) IoT $ 49,911 $ 35,299 REM 9,228 10,845 Other 739 746 $ 59,878 $ 46,890 |
Net revenue by geographic region | Years Ended June 30, 2020 2019 (In thousands) Americas $ 33,279 $ 25,179 EMEA 15,588 14,586 APJ 11,011 7,125 $ 59,878 $ 46,890 |
Schedule of percentage total net revenue | The following table presents product revenues and service revenues as a percentage of our total net revenue: Year Ended June 30, 2020 2019 Product revenues 96% 99% Service revenues 4% 1% |
Changes in deferred revenue | The following table presents the changes in our deferred revenue balance for the year ended June 30, 2020 (in thousands): Balance, July 1, 2019 $ 486 New performance obligations 392 Performance obligations assumed from acquisitions 738 Recognition of revenue as a result of satisfying performance obligations (792 ) Balance, June 30, 2020 $ 824 Less: non-current portion of deferred revenue (166 ) Current portion, June 30, 2020 $ 658 |
4. Leases (Tables)
4. Leases (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Lessee Disclosure [Abstract] | |
Components of lease expense | Components of lease expense and supplemental cash flow information: Year Ended June 30, 2020 Components of lease expense (In thousands) Operating lease cost $ 1,579 Financing lease cost $ 14 Supplemental cash flow information Cash paid for amounts included in the measurement of operating lease liabilities $ 1,131 Cash paid for amounts included in the measurement of financing lease liabilities $ 11 Right-of-use assets obtained in exchange for lease obligation $ 1,857 |
Maturities of lease liabilities | Maturities of lease liabilities as of June 30, 2020 were as follows: Years ending June 30, Operating Financing (In thousands) 2021 $ 1,472 $ 9 2022 1,106 9 2023 376 9 2024 274 3 2025 72 – Total remaining lease payments 3,300 30 less: imputed interest (261 ) – Lease liability $ 3,039 $ 30 Reported as: Current liabilities $ 1,264 $ 9 Non-current liabilities $ 1,775 $ 21 |
5. Supplemental Financial Inf_2
5. Supplemental Financial Information (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Supplemental Financial Information | |
Schedule of Inventory | The following table presents details of our inventories: June 30, 2020 2019 (In thousands) Finished goods $ 7,522 $ 6,084 Raw materials 6,259 4,425 Inventories, net $ 13,781 $ 10,509 |
Schedule of Property and Equipment | The following table presents details of property and equipment: June 30, 2020 2019 (In thousands) Computer, software and office equipment $ 3,992 $ 3,839 Furniture and fixtures 511 450 Production, development and warehouse equipment 4,777 4,229 Construction-in-progress – 201 Property and equipment, gross 9,280 8,719 Less accumulated depreciation (7,693 ) (7,520 ) Property and equipment, net $ 1,587 $ 1,199 |
Schedule of purchased intangible assets | The following table presents details of purchased intangible assets: June 30, 2020 June 30, 2019 Gross Carrying Amount Accumulated Amortization Net Book Value Gross Carrying Amount Accumulated Amortization Net Book Value (In thousands) Developed technology $ 3,841 $ (497 ) $ 3,344 $ – $ – $ – Customer relationship 9,030 (726 ) 8,304 – – – Order backlog 840 (384 ) 456 – – – Non-compete agreements 400 (184 ) 216 – – – Trademark and trade name 375 (246 ) 129 – – – $ 14,486 $ (2,037 ) $ 12,449 $ – $ – $ – |
Intangible Assets Amortization Expense | As of June 30, 2020, future estimated amortization expense is as follows: Years Ending June 30, (In thousands) 2021 $ 3,094 2022 2,240 2023 2,240 2024 2,240 2025 1,784 Thereafter 851 $ 12,449 |
Schedule of Goodwill | The following table presents details of our goodwill balance: Year Ended June 30, 2020 (In thousands) Balance at June 30, 2019 $ 9,488 Acquisition of Maestro 2,876 Acquisition of Intrinsyc 3,446 Balance at June 30, 2020 $ 15,810 |
Schedule of Warranty Reserve | The following table presents details of our warranty reserve: Years Ended June 30, 2020 2019 (In thousands) Beginning balance $ 116 $ 99 Warranty reserve assumed from acquisition of Intrinsyc 118 – Charged to cost of revenues 181 96 Usage (234 ) (79 ) Ending balance $ 181 $ 116 |
Schedule of Other Liabilities | The following table presents details of our other liabilities: June 30, 2020 2019 (In thousands) Current Accrued variable consideration $ 1,462 $ 1,313 Customer deposits and refunds 628 168 Accrued raw materials purchases 272 1,155 Deferred revenue 658 328 Lease liability 1,273 4 Taxes payable 395 322 Warranty reserve 181 116 Accrued operating expenses 1,439 1,290 Total other current liabilities $ 6,308 $ 4,696 Non-current Lease liability $ 1,796 $ 48 Deferred revenue 166 158 Total other non-current liabilities $ 1,962 $ 206 |
Schedule of Computation of Net Income (Loss) per Share | The following table presents the computation of net loss per share: Years Ended June 30, 2020 2019 (In thousands, except per share data) Numerator: Net loss $ (10,738 ) $ (408 ) Denominator: Weighted-average shares outstanding - basic and diluted 25,281 21,580 Net loss per share - basic and diluted $ (0.42 ) $ (0.02 ) |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | These excluded common stock equivalents could be dilutive in the future. Years Ended June 30, 2020 2019 (In thousands) Common stock equivalents 1,675 1,513 |
Schedule of severance and related charges | The following table presents details of the liability we recorded related to these activities: Year Ended June 30, 2020 (In thousands) Beginning balance $ 651 Charges 3,844 Payments (3,880 ) Ending balance $ 615 |
Schedule of Supplemental Cash Flow Information | Years Ended June 30, 2020 2019 (In thousands) Share consideration for acquisition of Intrinsyc $ 15,574 $ – Accrued property and equipment paid for in the subsequent period $ 149 $ 9 Accrued stock option exercise proceeds $ – $ 1 |
6. Bank Loan Agreements (Tables
6. Bank Loan Agreements (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Summary of outstanding debt | The following table summarizes our outstanding debt: June 30, 2020 2019 (In thousands) Outstanding borrowings on Term Loan Facility $ 5,250 – Less: Unamortized debt issuance costs (96 ) – Net Carrying amount of debt 5,154 – Less: Current portion (1,472 ) – Non-current portion $ 3,682 – |
Schedule of Maturities of Long-term Debt | As of June 30, 2020, the aggregate future contractual maturities of the Company's outstanding debt, at face value, were as follows: Years Ending June 30, (In thousands) 2021 $ 1,500 2022 1,500 2023 1,500 2024 750 $ 5,250 |
Availability under the Line of Credit | The following table presents certain information with respect to the line of credit: June 30, 2020 2019 (In thousands) Outstanding borrowings on the line of credit $ – $ – Available borrowing capacity on the line of credit $ 5,602 $ 3,842 Outstanding letters of credit $ 51 $ 51 |
7. Stockholders' Equity (Tables
7. Stockholders' Equity (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Schedule of share-based compensation expense by functional line item | 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, 2020 2019 (In thousands) Cost of revenues $ 227 $ 85 Selling, general and administrative 2,959 1,441 Research and development 453 345 Total share-based compensation expense $ 3,639 $ 1,871 |
Schedule of unrecognized share-based compensation expense | 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, 2020: Remaining Unrecognized Compensation Expense Remaining Weighted-Average Years to Recognize (In thousands) Stock options $ 1,309 2.3 RSUs 3,135 3.0 PSUs 574 2.0 Common stock purchase rights under ESPP 71 0.4 |
Stock Options [Member] | |
Schedule of Valuation Assumptions | The following weighted-average assumptions were used to estimate the fair value of all of our stock option grants: Years Ended June 30, 2020 2019 Expected term (in years) 4.3 4.8 Expected volatility 65% 67% Risk-free interest rate 1.56% 2.23% Dividend yield 0.00% 0.00% |
Summary of stock option activity | 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 oustanding at June 30, 2019 3,147 $ 2.29 Options granted 249 3.34 Options forfeited (181 ) 2.35 Options expired (84 ) 2.18 Options exercised (1,076 ) 1.71 Balance of options outstanding at June 30, 2020 2,055 $ 2.72 4.3 $ 2,209 Options exercisable at June 30, 2020 1,339 $ 2.35 3.7 $ 1,908 |
Summary of option grant-date fair value and intrinsic value information | 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, 2020 2019 (In thousands, except per share data) Weighted-average grant date fair value per share $ 1.90 $ 2.15 Intrinsic value of options exercised $ 1,850 $ 2,400 |
ESPP [Member] | |
Schedule of Valuation Assumptions | 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, 2020 2019 Expected term (in years) 0.5 0.5 Expected volatility 61% 79% Risk-free interest rate 1.00% 2.45% Dividend yield 0.00% 0.00% |
Summary of other-than-option activity | The following table presents a summary of activity under our ESPP during the fiscal year ended June 30, 2020: Year Ended June 30, 2020 (In thousands, except per share data) Shares available for issuance at June 30, 2019 517 Shares issued (113 ) Shares available for issuance at June 30, 2020 404 Weighted-average purchase price per share $ 2.75 Intrinsic value of ESPP shares on purchase date $ 57 |
Restricted Stock Units (RSUs) [Member] | |
Summary of other-than-option activity | The following table presents a summary of activity with respect to our RSUs during the fiscal year ended June 30, 2020: Number of Shares Weighted-Average Grant Date Fair Value per Share (In thousands) Balance of RSUs outstanding at June 30, 2019 866 $ 4.24 Granted 517 3.36 Forfeited (111 ) 3.67 Vested (345 ) 3.94 Balance of RSUs outstanding at June 30, 2020 927 $ 3.93 |
Performance Stock Units (PSUs) [Member] | |
Summary of other-than-option activity | The following table presents a summary of activity with respect to our PSUs during the fiscal year ended June 30, 2020: Number of Shares (In thousands) Balance of PSUs outstanding at June 30, 2019 – Granted 1,045 Forfeited (60 ) Vested – Balance of PSUs outstanding at June 30, 2020 985 |
10. Income Taxes (Tables)
10. Income Taxes (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Schedule of Components of Income Tax Expense | The provision for income taxes consists of the following components: Years Ended June 30, 2020 2019 (In thousands) Current: Federal $ (2 ) $ – State 4 3 Foreign 142 138 144 141 Deferred: Federal – – State – – Foreign – – Provision for income taxes $ 144 $ 141 |
Schedule of Income before Income Tax, Domestic and Foreign | The following table presents U.S. and foreign income (loss) before income taxes: Years Ended June 30, 2020 2019 (In thousands) United States $ (7,048 ) $ (623 ) Foreign (3,546 ) 356 Loss before income taxes $ (10,594 ) $ (267 ) |
Schedule of Deferred Tax Assets and Liabilities | The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows: Years Ended June 30, 2020 2019 (In thousands) Deferred tax assets: Tax losses and credits $ 20,640 $ 20,158 Reserves not currently deductible 1,222 1,366 Deferred compensation 986 383 Inventory capitalization 631 481 Acquisition costs – 91 Depreciation and amortization 790 8 Other 130 151 Gross deferred tax assets 24,399 22,638 Valuation allowance (24,056 ) (22,353 ) Deferred tax assets, net 343 285 Deferred tax liabilities: State taxes (343 ) (285 ) Deferred tax liabilities (343 ) (285 ) Net deferred tax assets (liabilities) $ – $ – |
Schedule of Effective Income Tax Reconciliation | 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, 2020 2019 (In thousands) Statutory federal provision (benefit) for income taxes $ (2,224 ) $ (56 ) Increase (decrease) resulting from: Officer compensation – 10 Stock options (121 ) (223 ) Other permanent differences 10 15 Change in valuation allowance 1,467 289 Foreign tax credit (67 ) (72 ) Global intangible low-tax income inclusion 86 76 Controlled foreign corporation inclusion 4 – Foreign tax rate variances 886 64 Other 103 38 Provision for income taxes $ 144 $ 141 |
Summary of Operating Income (Loss) Carryforwards | The following table presents our NOLs: June 30, 2020 (In thousands) Federal $ 92,824 State $ 14,560 |
Summary of uncertain tax position | The following table summarizes our liability for uncertain tax positions for the fiscal year ended June 30, 2020: Year Ended June 30, 2020 (In thousands) Balance as of June 30, 2019 $ 6,600 Change in balances related to uncertain tax positions – Balance as of June 30, 2020 $ 6,600 |
11. Significant Geographic, Pro
11. Significant Geographic, Product Line, Customer and Supplier Information (Tables) | 12 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of Revenue by Geographic Area | 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, 2020 2019 Americas 56% 54% Europe, Middle East, and Africa 26% 31% Asia Pacific Japan 18% 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, 2020 2019 U.S. and Canada 48% 54% Germany 18% 22% Hong Kong 6% 1% Japan 5% 8% |
Schedule of Revenue by Major Customers | The following table presents sales to our significant customers as a percentage of net revenue: Years Ended June 30, 2020 2019 Top five customers (1) 36% 57% Ingram Micro 16% 24% Arrow * 13% * Less than 10% (1) Includes Ingram Micro and Arrow for the fiscal years ended June 30, 2020 and 2019. |
1. Summary of Significant Acc_3
1. Summary of Significant Accounting Policies (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Advertising expense | $ 185 | $ 118 |
Outside the U.S. [Member] | ||
Tangible assets | $ 6,426 |
2. Business Combinations (Detai
2. Business Combinations (Details - Purchase price allocation) - USD ($) $ in Thousands | 7 Months Ended | 12 Months Ended | ||
Jan. 16, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | Jul. 05, 2019 | |
Payments to acquire business | $ 13,402 | $ 0 | ||
Goodwill | $ 15,810 | $ 9,488 | ||
Maestro Wireless Solutions [Member] | ||||
Cash and cash equivalents | $ 282 | |||
Accounts receivable | 1,338 | |||
Inventories, net | 1,643 | |||
Purchased intangible assets | 529 | |||
Other non-current assets | 1,910 | |||
Goodwill | 2,876 | |||
Accounts payable | (1,545) | |||
Other liabilities | (1,678) | |||
Total consideration | $ 5,355 | |||
Intrinsyc [Member] | ||||
Total purchase consideration | $ 27,093 | |||
Cash and cash equivalents | 3,190 | |||
Accounts receivable | 5,524 | |||
Inventories, net | 5,281 | |||
Purchased intangible assets | 2,606 | |||
Other non-current assets | 12,576 | |||
Goodwill | 3,446 | |||
Accounts payable | (1,552) | |||
Other liabilities | (3,978) | |||
Total consideration | 27,093 | |||
Intrinsyc [Member] | Vested Equity Awards [Member] | ||||
Payments to acquire business | 497 | |||
Intrinsyc [Member] | Share Consideration [Member] | ||||
Payments to acquire business | 15,574 | |||
Intrinsyc [Member] | Selling Shareholders [Member] | ||||
Payments to acquire business | $ 11,022 |
2. Business Combinations (Det_2
2. Business Combinations (Details - Intangible asset valuation) - USD ($) $ in Thousands | Jul. 05, 2019 | Jan. 16, 2020 |
Maestro Wireless Solutions [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 529 | |
Maestro Wireless Solutions [Member] | Developed Technology [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 1,530 | |
Weighted Average Useful Life (years) | 5 years | |
Maestro Wireless Solutions [Member] | Customer Relationships [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 100 | |
Weighted Average Useful Life (years) | 2 years | |
Maestro Wireless Solutions [Member] | Order Backlog [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 110 | |
Weighted Average Useful Life (years) | 1 year | |
Maestro Wireless Solutions [Member] | Noncompete Agreements [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 30 | |
Weighted Average Useful Life (years) | 2 years | |
Maestro Wireless Solutions [Member] | Trade Names [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 140 | |
Weighted Average Useful Life (years) | 1 year | |
Intrinsyc [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 2,606 | |
Intrinsyc [Member] | Developed Technology [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 2,311 | |
Weighted Average Useful Life (years) | 5 years | |
Intrinsyc [Member] | Customer Relationships [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 8,930 | |
Weighted Average Useful Life (years) | 6 years | |
Intrinsyc [Member] | Order Backlog [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 730 | |
Weighted Average Useful Life (years) | 1 year 2 months 12 days | |
Intrinsyc [Member] | Noncompete Agreements [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 370 | |
Weighted Average Useful Life (years) | 1 year | |
Intrinsyc [Member] | Trademarks and Trade Names [Member] | ||
Fair value of intangible assets assumed in acquisition | $ 235 | |
Weighted Average Useful Life (years) | 1 year |
2. Business Combinations (Det_3
2. Business Combinations (Details - Pro forma data) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Business Combinations [Abstract] | ||
Pro forma net revenue | $ 73,883 | $ 82,395 |
Pro forma net loss | $ (5,643) | $ (11,115) |
Pro forma net loss per share - basic and diluted | $ (0.22) | $ (0.43) |
2. Business Combinations (Det_4
2. Business Combinations (Details Narrative) - USD ($) shares in Thousands, $ in Thousands | 7 Months Ended | 12 Months Ended | |
Jan. 16, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues [Member] | |||
Concentration percent | 100.00% | 100.00% | |
Intrinsyc [Member] | |||
Cash paid for acquisition | $ 11,519 | ||
Stock issued for acquisition | 4,279 | ||
Intrinsyc [Member] | Revenues [Member] | |||
Concentration percent | 38.00% | ||
Maestro Wireless Solutions [Member] | Revenues [Member] | |||
Concentration percent | 33.00% | ||
Manufacturing profit [Member] | |||
Proforma expenses | $ 262 | ||
Restructuring Costs [Member] | |||
Proforma expenses | 2,845 | ||
Acquisition Related Costs [Member] | |||
Proforma expenses | 2,284 | ||
Amortization Expense [Member] | |||
Proforma expenses | $ 414 | $ 3,754 |
3. Revenue (Details - Revenues
3. Revenue (Details - Revenues by product line) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues | $ 59,878 | $ 46,890 |
IoT [Member] | ||
Revenues | 49,911 | 35,299 |
REM [Member] | ||
Revenues | 9,228 | 10,845 |
Other [Member] | ||
Revenues | $ 739 | $ 746 |
3. Revenue (Details - Revenue b
3. Revenue (Details - Revenue by Geography) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Revenues | $ 59,878 | $ 46,890 |
Americas [Member] | ||
Revenues | 33,279 | 25,179 |
Europe, Middle East, Africa [Member] | ||
Revenues | 15,588 | 14,586 |
APJ [Member] | ||
Revenues | $ 11,011 | $ 7,125 |
3. Revenue (Details - Percentag
3. Revenue (Details - Percentage of total net revenue) | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Product [Member] | ||
Concentration Risk, Percentage | 96.00% | 99.00% |
Service [Member] | ||
Concentration Risk, Percentage | 4.00% | 1.00% |
3. Revenue (Details - Changes i
3. Revenue (Details - Changes in Deferred Revenue) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Revenue from Contract with Customer [Abstract] | ||
Deferred revenue, beginning balance | $ 486 | |
New performance obligations | 392 | |
Performance obligations assumed from acquisitions | 738 | |
Recognition of revenue as a result of satisying performance obligations | (792) | |
Deferred revenue, ending balance | 824 | |
Less: non-current portion of deferred revenue | (166) | $ (158) |
Current portion ending balance | $ 658 | $ 328 |
4. Leases (Details - Components
4. Leases (Details - Components of lease expense) $ in Thousands | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Components of lease expense | |
Operating lease cost | $ 1,579 |
Financing lease cost | 14 |
Supplemental cash flow information | |
Cash paid for amounts included in the measurement of operating lease liabilities | 1,131 |
Cash paid for amounts included in the measurement of financing lease liabilities | 11 |
Right-of-use assets obtained in exchange for lease obligation | $ 1,857 |
4. Leases (Details - Maturities
4. Leases (Details - Maturities of lease liabilities) $ in Thousands | Jun. 30, 2020USD ($) |
Operating lease maturities | |
2021 | $ 1,472 |
2022 | 1,106 |
2023 | 376 |
2024 | 274 |
2025 | 72 |
Total remaining lease payments | 3,300 |
less: imputed interest | (261) |
Lease liability | 3,039 |
Current liabilities | 1,264 |
Long-term liabilities | 1,775 |
Financing lease maturities | |
2021 | 9 |
2022 | 9 |
2023 | 9 |
2024 | 3 |
2025 | 0 |
Total remaining lease payments | 30 |
less: imputed interest | 0 |
Lease liability | 30 |
Current liabilities | 9 |
Long-term liabilities | $ 21 |
4. Leases (Details Narrative)
4. Leases (Details Narrative) - USD ($) $ in Thousands | Jun. 30, 2020 | Jul. 02, 2019 | Jun. 30, 2019 |
Weighted average remaining lease term | 1 year 3 months 19 days | ||
Weighted average discount rate | 6.14% | ||
Operating and finance lease asset | $ 984 | ||
Operating And Finance Lease Liability | $ 1,273 | $ 1,114 | $ 4 |
Other Assets [Member] | Acquisitions [Member] | |||
Operating and finance lease asset | $ 3,345 |
5. Supplemental Financial Inf_3
5. Supplemental Financial Information (Details - Inventories) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Supplemental Financial Information | ||
Finished goods | $ 7,522 | $ 6,084 |
Raw materials | 6,259 | 4,425 |
Inventories, net | $ 13,781 | $ 10,509 |
5. Supplemental Financial Inf_4
5. Supplemental Financial Information (Details - Property and Equipment) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Property and equipment, gross | $ 9,280 | $ 8,719 |
Less accumulated depreciation | (7,693) | (7,520) |
Property and equipment, net | 1,587 | 1,199 |
Computer, software and office equipment [Member] | ||
Property and equipment, gross | 3,992 | 3,839 |
Furniture and Fixtures [Member] | ||
Property and equipment, gross | 511 | 450 |
Production, development and warehouse equipment [Member] | ||
Property and equipment, gross | 4,777 | 4,229 |
Construction in Progress [Member] | ||
Property and equipment, gross | $ 0 | $ 201 |
5. Supplemental Financial Inf_5
5. Supplemental Financial Information (Details - Purchased intangible assets) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Net Book Value | $ 12,449 | |
Capital lease obligations [Member] | ||
Gross Carrying Amount | 14,486 | $ 0 |
Accumulated Amortization | (2,037) | 0 |
Net Book Value | 12,449 | 0 |
Developed Technology [Member] | ||
Gross Carrying Amount | 3,841 | 0 |
Accumulated Amortization | (497) | 0 |
Net Book Value | 3,344 | 0 |
Customer relationship [Member] | ||
Gross Carrying Amount | 9,030 | 0 |
Accumulated Amortization | (726) | 0 |
Net Book Value | 8,304 | 0 |
Order backlog [Member] | ||
Gross Carrying Amount | 840 | 0 |
Accumulated Amortization | (384) | 0 |
Net Book Value | 456 | 0 |
Noncompete Agreements [Member] | ||
Gross Carrying Amount | 400 | 0 |
Accumulated Amortization | (184) | 0 |
Net Book Value | 216 | 0 |
Trademark and trade name [Member] | ||
Gross Carrying Amount | 375 | 0 |
Accumulated Amortization | (246) | 0 |
Net Book Value | $ 129 | $ 0 |
5. Supplemental Financial Inf_6
5. Supplemental Financial Information (Details - Amortization expense) $ in Thousands | Jun. 30, 2020USD ($) |
Supplemental Financial Information Details Amortization Expense Abstract | |
2021 | $ 3,094 |
2022 | 2,240 |
2023 | 2,240 |
2024 | 2,240 |
2025 | 1,784 |
Thereafter | 851 |
Total amortization expense | $ 12,449 |
5. Supplemental Financial Inf_7
5. Supplemental Financial Information (Details - Goodwill) $ in Thousands | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Goodwill at beginning | $ 9,488 |
Goodwill at ending | 15,810 |
Maestro Wireless Solutions [Member] | |
From2019-07-01to2020-06-30 | 2,876 |
Intrinsyc [Member] | |
From2019-07-01to2020-06-30 | $ 3,446 |
5. Supplemental Financial Inf_8
5. Supplemental Financial Information (Details - Warranty reserve) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Supplemental Financial Information | ||
Beginning balance | $ 116 | $ 99 |
Warranty reserve assumed from acquisition of Intrinsyc | 118 | 0 |
Charged to cost of revenues | 181 | 96 |
Usage | (234) | (79) |
Ending balance | $ 181 | $ 116 |
5. Supplemental Financial Inf_9
5. Supplemental Financial Information (Details - Other liabilities) - USD ($) $ in Thousands | Jun. 30, 2020 | Jul. 02, 2019 | Jun. 30, 2019 |
Current | |||
Accrued variable consideration | $ 1,462 | $ 1,313 | |
Customer deposits and refunds | 628 | 168 | |
Accrued raw materials purchases | 272 | 1,155 | |
Deferred revenue | 658 | 328 | |
Lease liability | 1,273 | $ 1,114 | 4 |
Taxes payable | 395 | 322 | |
Warranty reserve | 181 | 116 | |
Other accrued liabilities | 1,439 | 1,290 | |
Total other current liabilities | 6,308 | 4,696 | |
Non-current | |||
Lease liability | 1,796 | 48 | |
Deferred revenue | 166 | 158 | |
Total other non-current liabilities | $ 1,962 | $ 206 |
5. Supplemental Financial In_10
5. Supplemental Financial Information (Details - Net Loss per Share) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Numerator: | ||
Net loss | $ (10,738) | $ (408) |
Denominator: | ||
Weighted-average shares outstanding - basic and diluted | 25,281 | 21,580 |
Net loss per share - basic and diluted | $ (0.42) | $ (0.02) |
5. Supplemental Financial In_11
5. Supplemental Financial Information (Details - Equivalents) - shares shares in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Supplemental Financial Information | ||
Common stock equivalents | 1,675 | 1,513 |
5. Supplemental Financial In_12
5. Supplemental Financial Information (Details - Severance of Related Charges) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Supplemental Financial Information | ||
Severance payable, beginning balance | $ 651 | |
Charges | 3,844 | $ 1,146 |
Payments | (3,880) | |
Severance payable, ending balance | $ 615 | $ 651 |
5. Supplemental Financial In_13
5. Supplemental Financial Information (Details - Non-cash acquisition) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Supplemental Cash Flow Information | ||
Share consideration for acquisition of Intrinsyc | $ 15,574 | $ 0 |
Accrued property and equipment paid for in the subsequent period | 149 | 9 |
Accrued stock option exercise proceeds | $ 0 | $ 1 |
5. Supplemental Financial In_14
5. Supplemental Financial Information (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Impairment of long-lived asset | $ 0 | $ 275 |
Restructuring charges | 1,417 | |
Severance Related Costs [Member] | ||
Restructuring charges | 1,146 | |
Share-based Compensation [Member] | ||
Restructuring charges | $ 271 |
6. Bank Loan Agreements (Detail
6. Bank Loan Agreements (Details - Summarizes our outstanding debt) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Debt Disclosure [Abstract] | ||
Outstanding borrowings on Term Loan Facility | $ 5,250 | $ 0 |
Less: Unamortized debt issuance costs | (96) | 0 |
Net Carrying amount of debt | 5,154 | 0 |
Less: Current portion | (1,472) | 0 |
Non-current portion | $ 3,682 | $ 0 |
6. Bank Loan Agreements (Deta_2
6. Bank Loan Agreements (Details - Maturities of Company's outstanding debt at face value) $ in Thousands | Jun. 30, 2020USD ($) |
Bank Loan Agreements Details Maturities Of Companys Outstanding Debt At Face Value Abstract | |
2021 | $ 1,500 |
2022 | 1,500 |
2023 | 1,500 |
2024 | 750 |
Total outstanding debt | $ 5,250 |
6. Bank Loan Agreements (Deta_3
6. Bank Loan Agreements (Details - Credit Line) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Debt Disclosure [Abstract] | ||
Outstanding borrowings on the line of credit | $ 0 | $ 0 |
Available borrowing capacity | 5,602 | 3,842 |
Outstanding letters of credit | $ 51 | $ 51 |
6. Bank Loan Agreements (Deta_4
6. Bank Loan Agreements (Details Narrative) $ in Thousands | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Interest expense | $ 239 |
Amended Agreement SVB [Member] | Revolving Facility [Member] | |
Credit line maximum borrowing amount | $ 6,000 |
Maturity date | Nov. 12, 2021 |
Interest rate description | The interest rate on the Revolving Facility floats at a rate per annum equal to the greater of the prime rate and 5.00 percent. |
Amended Agreement SVB [Member] | Term Loan Facility [Member] | |
Maturity date | Jan. 1, 2020 |
Interest rate description | The interest rate on the Term Loan Facility floats at a rate per annum equal to the greater of 1.00 percent above the prime rate and 6.00 percent. |
7. Stockholders Equity (Details
7. Stockholders Equity (Details - Option assumptions) - Stock Options [Member] | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Expected term (in years) | 4 years 3 months 19 days | 4 years 9 months 18 days |
Expected volatility | 65.00% | 67.00% |
Risk-free interest rate | 1.56% | 2.23% |
Dividend yield | 0.00% | 0.00% |
7. Stockholders Equity (Detai_2
7. Stockholders Equity (Details - Option activity) - Stock Options [Member] $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Number of shares | |
Number of Shares Options Outstanding, Beginning | shares | 3,147 |
Number of Shares Options Granted | shares | 249 |
Number of Shares Options Forfeited | shares | (181) |
Number of Shares Options Expired | shares | (84) |
Number of Shares Options Exercised | shares | (1,076) |
Number of Shares Options Outstanding, Ending | shares | 2,055 |
Number of Shares Options Options exercisable at end of period | shares | 1,339 |
Weighted Average Exercise Price per share | |
Exercise Price Outstanding, Beginning | $ / shares | $ 2.29 |
Exercise Price Granted | $ / shares | 3.34 |
Exercise Price Forfeited | $ / shares | 2.35 |
Exercise Price Expired | $ / shares | 2.18 |
Exercise Price Exercised | $ / shares | 1.71 |
Exercise Price Outstanding, Ending | $ / shares | 2.72 |
Exercise Price Options exercisable at end of period | $ / shares | $ 2.35 |
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 8 months 12 days |
Aggregate Intrinsic Value Outstanding, Ending | $ | $ 2,209 |
Aggregate Intrinsic Value Exercisable | $ | $ 1,908 |
7. Stockholders Equity (Detai_3
7. Stockholders Equity (Details - Other option information) - Stock Options [Member] - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Weighted-average grant-date fair value per share | $ 1.9 | $ 2.15 |
Intrinsic value of options exercised | $ 1,850 | $ 2,400 |
7. Stockholders Equity (Detai_4
7. Stockholders Equity (Details - ESPP Assumptions) - ESPP [Member] | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Expected term (in years) | 6 months | 6 months |
Expected volatility | 61.00% | 79.00% |
Risk-free interest rate | 1.00% | 2.45% |
Dividend yield | 0.00% | 0.00% |
7. Stockholders Equity (Detai_5
7. Stockholders Equity (Details - ESPP activity) - ESPP [Member] $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | |
Shares available for issuance, beginning balance | 517 |
Shares issued | (113) |
Shares available for future issuance, ending balance | 404 |
Weighted average purchase price per share | $ / shares | $ 2.75 |
Intrinsic value of ESPP shares on purchase date | $ | $ 57 |
7. Stockholders Equity (Detai_6
7. Stockholders Equity (Details - RSU activity) - Restricted Stock Units (RSUs) [Member] shares in Thousands | 12 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Number of RSU's Shares | |
Balance at beginning | shares | 866 |
Granted | shares | 517 |
Forfeited | shares | (111) |
Vested | shares | (345) |
Balance at ending | shares | 927 |
Weighted Average Grant Date Fair Value per share | |
RSU Shares Weighted-Average Grant-Date Fair Value per Share, beginning | $ / shares | $ 4.24 |
RSU Shares Granted, Weighted-Average Grant-Date Fair Value per Share | $ / shares | 3.36 |
RSU Shares Forfeited, Weighed-Average Grant Date Fair Value per Share | $ / shares | 3.67 |
RSU Shares Vested, Weighted-Average Grant-Date Fair Value per Share | $ / shares | 3.94 |
RSU Shares Weighted-Average Grant-Date Fair Value per Share, ending | $ / shares | $ 3.93 |
7. Stockholders Equity (Detai_7
7. Stockholders Equity (Details - PSU activity) - Performance Stock Units (PSUs) [Member] shares in Thousands | 12 Months Ended |
Jun. 30, 2020shares | |
Number of PSU's Shares | |
Balance at beginning | 0 |
Granted | 1,045 |
Forfeited | (60) |
Vested | 0 |
Balance at ending | 985 |
7. Stockholders Equity (Detai_8
7. Stockholders Equity (Details - Share based compensation) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Total share-based compensation | $ 3,639 | $ 1,871 |
Cost of revenues [Member] | ||
Total share-based compensation | 227 | 85 |
Selling, general and administrative [Member] | ||
Total share-based compensation | 2,959 | 1,441 |
Research and development [Member] | ||
Total share-based compensation | $ 453 | $ 345 |
7. Stockholders Equity (Detai_9
7. Stockholders Equity (Details - Unrecognized expense) $ in Thousands | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Stock Options [Member] | |
Unrecognized share-based compensation expense | $ 1,309 |
Weighted average years to recognize | 2 years 3 months 19 days |
Restricted Stock Units (RSUs) [Member] | |
Unrecognized share-based compensation expense | $ 3,135 |
Weighted average years to recognize | 3 years |
Performance Stock Units (PSUs) [Member] | |
Unrecognized share-based compensation expense | $ 574 |
Weighted average years to recognize | 2 years |
ESPP [Member] | |
Unrecognized share-based compensation expense | $ 71 |
Weighted average years to recognize | 4 months 24 days |
7. Stockholders' Equity (Detail
7. Stockholders' Equity (Details Narrative) - USD ($) shares in Thousands, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Feb. 28, 2020 | Oct. 31, 2019 | Sep. 18, 2019 | Jun. 30, 2020 | |
Performance Stock Units (PSUs) [Member] | ||||
Stock options granted | 70 | 975 | ||
Public Offering [Member] | ||||
Stock issued new, shares | 2,700 | |||
Proceeds from sale of stock | $ 9,774 | |||
Stock options granted | 200 | |||
2010 SIP [Member] | ||||
Shares available for issuance under stock incentive plans | 1,200 |
8. Retirement Plan (Details Nar
8. Retirement Plan (Details Narrative) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Retirement Benefits [Abstract] | ||
Contributions made by Company | $ 219 | $ 155 |
10. Income Taxes (Details - Inc
10. Income Taxes (Details - Income tax provision) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Current: | ||
Federal | $ (2) | $ 0 |
State | 4 | 3 |
Foreign | 142 | 138 |
Total Current taxes | 144 | 141 |
Deferred: | ||
Federal | 0 | 0 |
State | 0 | 0 |
Foreign | 0 | 0 |
Total Deferred Taxes | 0 | 0 |
Provision for income taxes | $ 144 | $ 141 |
10. Income Taxes (Details - US
10. Income Taxes (Details - US and foreign income) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
United States | $ (7,048) | $ (623) |
Foreign | (3,546) | 356 |
Loss before income taxes | $ (10,594) | $ (267) |
10. Income Taxes (Details - Def
10. Income Taxes (Details - Deferred tax assets) - USD ($) $ in Thousands | Jun. 30, 2020 | Jun. 30, 2019 |
Deferred tax assets: | ||
Tax losses and credits | $ 20,640 | $ 20,158 |
Reserves not currently deductible | 1,222 | 1,366 |
Deferred compensation | 986 | 383 |
Inventory capitalization | 631 | 481 |
Acquisition costs | 0 | 91 |
Depreciation and amortization | 790 | 8 |
Other | 130 | 151 |
Gross deferred tax assets | 24,399 | 22,638 |
Valuation allowance | (24,056) | (22,353) |
Deferred tax assets, net | 343 | 285 |
Deferred tax liabilities: | ||
State taxes | (343) | (285) |
Deferred tax liabilities | (343) | (285) |
Net deferred tax assets (liabilities) | $ 0 | $ 0 |
10. Income Taxes (Details - Rec
10. Income Taxes (Details - Reconciliation) - USD ($) $ in Thousands | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Income Tax Disclosure [Abstract] | ||
Statutory federal provision (benefit) for income taxes | $ (2,224) | $ (56) |
Increase (decrease) resulting from: | ||
Officer compensation | 0 | 10 |
Stock options | (121) | (223) |
Other permanent differences | 10 | 15 |
Change in valuation allowance | 1,467 | 289 |
Foreign tax credit | (67) | (72) |
Global intangible low-tax income inclusion | 86 | 76 |
Controlled foreign corporation inclusion | 4 | 0 |
Foreign tax rate variances | 886 | 64 |
Other | 103 | 38 |
Provision for income taxes | $ 144 | $ 141 |
10. Income Taxes (Details - NOL
10. Income Taxes (Details - NOL's) $ in Thousands | Jun. 30, 2020USD ($) |
Income Tax Disclosure [Abstract] | |
Federal | $ 92,824 |
State | $ 14,560 |
10. Income Taxes (Details - Unr
10. Income Taxes (Details - Unrecognized tax positions) $ in Thousands | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Income Tax Disclosure [Abstract] | |
Balance, beginning | $ 6,600 |
Change in balances related to uncertain tax positions | 0 |
Balance, ending | $ 6,600 |
10. Income Taxes (Details Narra
10. Income Taxes (Details Narrative) $ in Thousands | 12 Months Ended |
Jun. 30, 2020USD ($) | |
Income Tax Disclosure [Abstract] | |
Accrued interest and penalties related to uncertain tax positions | $ 244 |
Decrease in deferred tax assets | (6,600) |
Net operating loss carryover | $ 51,900 |
NOL carryover expiration date | Jun. 30, 2021 |
11. Significant Geographic, C_2
11. Significant Geographic, Customer and Supplier Information (Details - Geographic) - Sales Revenue, Net [Member] | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Concentration Risk, Percentage | 100.00% | 100.00% |
America [Member] | ||
Concentration Risk, Percentage | 56.00% | 54.00% |
Europe, Middle East, Africa [Member] | ||
Concentration Risk, Percentage | 26.00% | 31.00% |
Asia Pacific Japan [Member] | ||
Concentration Risk, Percentage | 18.00% | 15.00% |
11. Significant Geographic, C_3
11. Significant Geographic, Customer and Supplier Information (Details - by country) - Sales Revenue, Net [Member] | 12 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Significant countries, net revenue percentage | 100.00% | 100.00% |
U.S. and Canada [Member] | ||
Significant countries, net revenue percentage | 48.00% | 54.00% |
GERMANY [Member] | ||
Significant countries, net revenue percentage | 18.00% | 22.00% |
HONG KONG [Member] | ||
Significant countries, net revenue percentage | 6.00% | 1.00% |
JAPAN [Member] | ||
Significant countries, net revenue percentage | 5.00% | 8.00% |
11. Significant Geographic, C_4
11. Significant Geographic, Customer and Supplier Information (Details - Significant customers) - Sales Revenue, Net [Member] | 12 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | ||
Concentration Risk, Percentage | 100.00% | 100.00% | |
Top five customers [Member] | |||
Concentration Risk, Percentage | 36.00% | 57.00% | |
Ingram Micro [Member] | |||
Concentration Risk, Percentage | 16.00% | 24.00% | |
Arrow [Member] | |||
Concentration Risk, Percentage | [1] | 13.00% | |
[1] | Less than 10% |