UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): JANUARY 17, 2005
LANTRONIX, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 33-0362767
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation)
1-16027
(Commission File Number)
15353 BARRANCA PARKWAY, IRVINE, CALIFORNIA 92618
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (949) 453-3990
NOT APPLICABLE
(Former Name or Former Address, if Changed since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
|_| Written communications pursuant to Rule 425 under the Securities Act
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act
|_| Pre-commencement communications pursuant to Rule 4d-2(b) under the Exchange
Act
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
ITEM 4.01 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
(a) Dismissal of Ernst & Young LLP
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On January 17, 2005, Lantronix, Inc. (the "Company") notified Ernst & Young LLP
("E&Y") of its decision to dismiss E&Y.
The decision was made in order to reduce the Company's audit fees. The Company
appointed McGladrey & Pullen, LLP as its new independent registered public
accounting firm, to perform auditing services beginning with the second quarter
ended December 31, 2004. The Audit Committee of the Company's Board of Directors
unanimously approved such change.
The reports of E&Y on the Company's financial statements for the years ended
June 30, 2003 and 2004 did not contain any adverse opinion or disclaimer of
opinion, and were not otherwise qualified as to uncertainty, audit scope or
accounting principles. During the Company's two most recent fiscal years and
through January 17, 2005, there have been no disagreements with E&Y on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure, which disagreements if not resolved to the
satisfaction of E&Y would have caused them to make reference thereto in their
reports on the financial statements for such years.
During the Company's most recent two fiscal years and from July 1, 2004 through
January 17, 2005, there were no "reportable events" as such term is described in
Item 304(a)(1)(v) of Regulation S-K under the Securities Exchange Act of 1934,
as amended; however, the Company has been advised by E&Y that there were control
deficiencies related to the Company's financial statement close process which
contributed to the errors in the initial filing of the Company's Annual Report
on Form 10-K for the fiscal year ended June 30, 2004, which errors had been
corrected by the Company in Form 10-K/A amendments. These control deficiencies
included a lack of secondary review within the Company and the failure to
incorporate final changes prior to filing. E&Y further advised that the
Company's processes to document contract manufacturer inventory and purchase
order transactions contributed to significant errors in reconciling records of
the Company. These conditions were determined to be reportable conditions under
the standards established by the American Institute of Certified Public
Accountants.
Management has reported to the Company's Audit Committee that these matters are
not believed to be material weaknesses in the Company's internal controls.
Management is addressing these matters by instituting more formal closing
procedures and revising the delegation of closing and external reporting
activities to provide more thorough review. The processes and accounting for
inventory at contract manufacturers is under review with the intent to simplify
the processes to facilitate reconciliation of balances and reduce the scope of
audit differences.
The Company has provided to E&Y a copy of the disclosures made in this Form 8-K
prior to the filing of this Form 8-K with the Securities and Exchange Commission
and has requested that E&Y furnish it with a letter addressed to the Securities
and Exchange Commission stating whether or not it agrees with the above
statements. A copy of such letter, dated January 21, 2005, is filed as Exhibit
16.1 to this Form 8-K.
(b) Engagement of McGladrey & Pullen LLP
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On January 17, 2005, the Audit Committee of the Board of Directors of the
Company appointed McGladrey & Pullen, LLP ("McGladrey & Company"), subject to
the completion of McGladrey & Company's normal client acceptance procedures, as
the Company's new independent public accountant firm to audit the Company's
financial statements. During the Company's two most recent fiscal years ended
June 30, 2003 and 2004, and through September 30, 2004, neither the Company nor
anyone acting on its behalf has consulted with McGladrey & Company regarding
either: (i) the application of accounting principles to a specified transaction,
either completed or proposed, or the type of audit opinion that might be
rendered on the Company's financial statements; or (ii) any matter that was
either the subject of a disagreement (as that term is defined in paragraph
304(a)(1)(iv) of Regulation S-K and the related instructions to that Item) or a
reportable event (as that term is defined in Item 304(a)(1)(v) of Regulation
S-K).
ITEM 9.01 FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
Exhibits
16.1 Letter from Ernst & Young LLP, dated January 21, 2005, relating to the
statements made in this Form 8-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: January 21, 2005
LANTRONIX, INC.,
a Delaware corporation
By: /S/ JAMES W. KERRIGAN
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James W. Kerrigan
Chief Financial Officer