# EDGAR Filing Document

**Accession Number:** 0001114925
**File Stem:** 0001683168-25-006532
**Filing Date:** 2025-8
**Character Count:** 483447
**Document Hash:** 9cfe5e41f57e61a0c8863621b069facc
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001683168-25-006532.hdr.sgml**: 20250829

**ACCESSION NUMBER**: 0001683168-25-006532

**CONFORMED SUBMISSION TYPE**: 10-K

**PUBLIC DOCUMENT COUNT**: 107

**CONFORMED PERIOD OF REPORT**: 20250630

**FILED AS OF DATE**: 20250829

**DATE AS OF CHANGE**: 20250829

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** LANTRONIX INC
- **CENTRAL INDEX KEY:** 0001114925
- **STANDARD INDUSTRIAL CLASSIFICATION:** COMPUTER COMMUNICATIONS EQUIPMENT [3576]
- **ORGANIZATION NAME:** 06 Technology
- **EIN:** 330362767
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 0630

**FILING VALUES:**
- **FORM TYPE:** 10-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-16027
- **FILM NUMBER:** 251276214

**BUSINESS ADDRESS:**
- **STREET 1:** 48 DISCOVERY, SUITE 250
- **CITY:** IRVINE
- **STATE:** CA
- **ZIP:** 92618
- **BUSINESS PHONE:** 9494533990

**MAIL ADDRESS:**
- **STREET 1:** 48 DISCOVERY, SUITE 250
- **CITY:** IRVINE
- **STATE:** CA
- **ZIP:** 92618

?xml version='1.0' encoding='ASCII'? LANTRONIX, INC. 10-K

[**Table of Contents**](#k_001)

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 10-K**

**(Mark One)**

**☒ &nbsp;&nbsp;&nbsp;&nbsp; ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the fiscal year ended June 30, 2025**

**☐ &nbsp;&nbsp;&nbsp;&nbsp; TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

**For the transition period from ________ to ________**

**Commission File Number 1-16027**

**LANTRONIX, INC.**

**(Exact name of registrant as specified in its charter)**

---

| | |
|:---|:---|
| **<u>Delaware</u>** | **<u>33-0362767</u>** |
| **(State or other jurisdiction of incorporation or organization)** | **(I.R.S. Employer Identification No.)** |
| **<u>48 Discovery, Suite 250 Irvine, California</u>** | **<u>92618</u>** |
| **(Address of principal executive offices)** | **(Zip Code)** |

---

**<u>(949) 453-3990</u>**

**(Registrant's telephone number, including area code)**

**Securities registered pursuant to Section 12(b) of the Act:**

---

| | | |
|:---|:---|:---|
| **<u>Title of each class</u>** | **<u>Trading Symbol(s)</u>** | **<u>Name of each exchange on which registered</u>** |
| **Common Stock, $0.0001 par value** | **LTRX** | **The Nasdaq Stock Market LLC** |

---

**Securities registered pursuant to Section 12(g) of the Act: None.**

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes **☐** No **☒**

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes **☐** No **☒**

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes **☒** No **☐**

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes **☒** No **☐**

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer", "smaller reporting company", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

---

| | | | |
|:---|:---|:---|:---|
| Large accelerated filer **☐** | Accelerated filer **☒** | Non-accelerated filer **☐** | Smaller reporting company **☒** |
|  |  |  | Emerging growth company **☐** |

---

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. **☐**

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. **☐**

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to § 240.10D-1(b). **☐**

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes **☐** No **☒**

The aggregate market value of the registrant's common stock held by non-affiliates based upon the closing sales price of the common stock as reported by the Nasdaq Capital Market on December 31, 2024, the last trading day of the registrant's second fiscal quarter, was approximately $134,820,000. The determination of affiliate status for this purpose shall not be a conclusive determination for any other purpose.

As of August 22, 2025, there were 39,151,106 shares of the registrant's common stock outstanding.

**DOCUMENTS INCORPORATED BY REFERENCE**

Portions of the registrant's definitive Proxy Statement on Schedule 14A relating to the registrant's 2025 annual meeting of stockholders, which will be filed with the Securities and Exchange Commission within 120 days after the end of the fiscal year covered by this Annual Report on Form 10-K, are incorporated by reference into Part III of this Annual Report on Form 10-K.

**LANTRONIX, INC.**

**ANNUAL REPORT ON FORM 10-K**

**For the Fiscal Year Ended June 30, 2025**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
|  | [Cautionary Note Regarding Forward-Looking Statements](#k_002) | ii |
| [**PART I**](#k_003) | [**PART I**](#k_003) | [**PART I**](#k_003) |
| Item 1. | [Business](#k_004) | 1 |
| Item 1A. | [Risk Factors](#k_005) | 7 |
| Item 1B. | [Unresolved Staff Comments](#k_006) | 23 |
| Item 1C. | [Cybersecurity](#k_007) | 23 |
| Item 2. | [Properties](#k_008) | 24 |
| Item 3. | [Legal Proceedings](#k_009) | 24 |
| Item 4. | [Mine Safety Disclosures](#k_010) | 24 |
| [**PART II**](#k_011) | [**PART II**](#k_011) | [**PART II**](#k_011) |
| Item 5. | [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#k_012) | 25 |
| Item 6. | [Reserved](#k_013) | 25 |
| Item 7. | [Management's Discussion and Analysis of Financial Condition and Results of Operations](#k_014) | 25 |
| Item 7A. | [Quantitative and Qualitative Disclosures About Market Risk](#k_015) | 36 |
| Item 8. | [Financial Statements and Supplementary Data](#k_016) | 36 |
| Item 9. | [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](#k_017) | 36 |
| Item 9A. | [Controls and Procedures](#k_018) | 37 |
| Item 9B. | [Other Information](#k_019) | 38 |
| Item 9C. | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#k_020) | 38 |
| [**PART III**](#k_021) | [**PART III**](#k_021) | [**PART III**](#k_021) |
| Item 10. | [Directors, Executive Officers and Corporate Governance](#k_022) | 39 |
| Item 11. | [Executive Compensation](#k_023) | 39 |
| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#k_024) | 39 |
| Item 13. | [Certain Relationships and Related Transactions and Director Independence](#k_025) | 39 |
| Item 14. | [Principal Accountant Fees and Services](#k_026) | 39 |
| [**PART IV**](#k_027) | [**PART IV**](#k_027) | [**PART IV**](#k_027) |
| Item 15. | [Exhibits and Financial Statement Schedules](#k_028) | 40 |
| Item 16. | [Form 10-K Summary](#k_029) | 44 |

---

i

**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**

This Annual Report on Form 10-K for the fiscal year ended June 30, 2025, or this Report, contains forward-looking statements within the meaning of the federal securities laws, which statements are subject to substantial risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Report, or incorporated by reference into this Report, are forward-looking statements. Throughout this Report, we have attempted to identify forward-looking statements by using words such as "may," "believe," "will," "could," "project," "anticipate," "expect," "estimate," "should," "continue," "potential," "plan," "forecasts," "goal," "seek," "intend," other forms of these words or similar words or expressions or the negative thereof. Additionally, statements concerning future matters such as our expected earnings, revenues, expenses and financial condition, our expectations with respect to the development of new products, and other statements regarding matters that are not historical are forward-looking statements.

We have based our forward-looking statements on management's current expectations and projections about trends affecting our business and industry and other future events. Although we do not make forward-looking statements unless we believe we have a reasonable basis for doing so, we cannot guarantee their accuracy. Forward-looking statements are subject to substantial risks and uncertainties that could cause our future business, financial condition, results of operations or performance to differ materially from our historical results or those expressed or implied in any forward-looking statement contained in this Report. Factors which could have a material adverse effect on our operations and future prospects or which could cause actual results to differ materially from our expectations include, but are not limited to, those set forth under "Risk Factors" in Item 1A of Part I of this Report, as such factors may be updated, amended or superseded from time to time by subsequent quarterly reports on Form 10-Q or current reports on Form 8-K. In addition, actual results may differ as a result of additional risks and uncertainties of which we are currently unaware or which we do not currently view as material to our business.

You should read this Report in its entirety, together with the documents that we file as exhibits to this Report, with the understanding that our future results may be materially different from what we currently expect and should not place undue reliance on the forward-looking statements contained in this Report. The forward-looking statements we make speak only as of the date on which they are made. We expressly disclaim any intent or obligation to update any forward-looking statements after the date hereof to conform such statements to actual results or to changes in our opinions or expectations, except as required by applicable law or the rules of The Nasdaq Stock Market LLC. If we do update or correct any forward-looking statements, investors should not conclude that we will make additional updates or corrections.

We qualify all of our forward-looking statements by these cautionary statements.

ii

**PART I**

---

| | |
|:---|:---|
| **ITEM 1.** | **BUSINESS** |

---

**Overview**

Lantronix Inc. (Nasdaq: LTRX) is a global leader in Edge AI and Industrial Internet of Things ("IoT") solutions, delivering intelligent computing, secure connectivity, and remote management for mission-critical applications. Serving high-growth markets, including smart cities, enterprise information technology ("IT"), and commercial and defense unmanned systems, we enable customers to optimize operations and accelerate digital transformation. Our comprehensive portfolio of hardware, software, and services powers applications from secure video surveillance and intelligent utility infrastructure to resilient out-of-band network management. By bringing intelligence to the network edge, we help organizations achieve efficiency, security, and a competitive edge in today's artificial intelligence ("AI")-driven world.

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").

We organize our portfolio services and products into the following product lines: Embedded IoT Solutions, IoT Systems Solutions, and Software and Engineering Services.

References in this Report to "fiscal 2025" refer to the fiscal year ended June 30, 2025, and references to "fiscal 2024" refer to the fiscal year ended June 30, 2024. In addition, unless the context suggests otherwise, all references in this Report to the "Company," "we," "our" and "us," refer to Lantronix, Inc. together with its subsidiaries.

**Our Strategy**

We focus on three high-potential vertical markets - smart cities, enterprise and unmanned aerial systems ("UAS") (drones). We position ourselves in these markets to deliver complete solutions encompassing our hardware, software, device management, and design services to meet the evolving needs of our customers and address each layer of the IoT stack. Below are customer examples that highlight our impact:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· **Smart Cities:** We are partnering with various Smart Grid customers that deploy their solutions to enhance grid resiliency and flexibility through intelligence at the edge. We supply customers an entire solution that includes our SmartLV compute and connectivity solutions as well as our design services. This engagement underscores the ongoing value and scalability of our solutions within the growing smart city infrastructure market.

· **Enterprise:** In the financial sector, we provide solutions to a Tier 1 banking customer to enhance network resiliency using our Out-of-Band Management offerings. Our hardware and software offerings provide secure alternative pathways for critical infrastructure, including servers, networks, and routers. These solutions not only bolster cybersecurity and tracking but also improve operational efficiency through enhanced automation, uptime, and resiliency.

· **Unmanned Aerial Systems (UAS):** We are advancing the UAS market through our Qualcomm Dragonwing–based system-on-modules ("SoM"), purpose-built for industrial drone applications with particular focus on defense and security. We are working with customers to deliver high-performance compute at the edge for flight control, video processing, and AI-enabled situational awareness. In parallel, we are pursuing opportunities with additional UAS manufacturers in industrial, inspection, and defense segments.

Our growth strategy centers on continuous innovation and strategic acquisitions designed to increase scale, broaden our scope, and enhance our value proposition. This approach allows us to address a broader spectrum of our customers' operational needs, positioning Lantronix as a strategic partner rather than just a vendor. Our acquisitions and innovations have expanded our capabilities in key areas such as critical infrastructure and connected transportation solutions, driving deeper customer engagement and market penetration.

By focusing on these strategic priorities, we continue to strengthen our competitive position and attract new customers across a wide variety of applications. Looking ahead, we plan to capitalize on market opportunities by further enhancing our product offerings, expanding geographically, and pursuing targeted acquisitions that align with our long-term growth objectives.

**Products and Solutions**

*Embedded IoT Solutions*

Our embedded product portfolio includes a broad range of Compute SoM and System-in-Package ("SiP") solutions, together with wired and wireless connectivity products. As semiconductor technology continues to evolve and integrate more functionality, our compute modules now provide not only processing power but also the ability to run advanced AI and machine learning applications. This enables our customers to process and analyze digital inputs such as video, audio, and sensor data, directly at the device level, reducing latency, enhancing security, and enabling real-time decision making.

Our latest SIP devices are designed to process multiple media streams using Computer Vision (CV) technology, enabling sophisticated edge analytics. These modules are remotely managed via Percepxion™, Lantronix's Cloud IoT Edge Solution software, offering seamless control and monitoring. Typically embedded into customer product designs, Lantronix's IoT compute products provide application processing that enables edge solutions for data transformation, computer vision, machine learning, augmented/virtual reality, and custom applications.

Our products are designed with customer needs in mind, offering pre-certified solutions across multiple regions, significantly reducing regulatory certification costs and expediting time-to-market for OEM customers. Additionally, we provide software tools that further accelerate development, empowering customers to quickly bring their products to market while enhancing their overall value proposition.

Our embedded IoT solutions serve a wide range of applications, from industrial automation and transportation systems to smart city infrastructure, positioning us as a leading provider of flexible and scalable solutions in the growing IoT market.

*IoT System Solutions*

Our IoT System Solutions portfolio includes a wide range of fully functional standalone systems that provide routing, switching or gateway functionalities as well as telematics and media conversion. These products include wired and wireless connections that enhance the value and utility of modern electronic systems and equipment by providing secure network connectivity, power for IoT end devices through Power over Ethernet ("PoE"), application hosting, protocol conversion, media conversion, secure access for distributed IoT deployments and many other functions By offering pre-certified products across multiple regions, Lantronix significantly reduces OEM customers' regulatory certification costs and speeds up their time-to-market.

Our PoE products support remote devices such as cameras and wireless access points by passing electrical power along with data on Ethernet cabling, eliminating the need for traditional AC/DC electrical power in hard-to-reach locations. As the adoption of smart city technologies accelerates, our switches provide the critical connectivity, bandwidth, and power needed to support intelligent transportation systems and surveillance networks that safeguard citizens.

Our products also incorporate features to perform advanced levels of fault management and diagnostics to troubleshoot networks and proactively fix problems. Our media converters and other customer premise equipment assist customers in resolving challenges in the areas of bandwidth constraints, security risks and distance limitations as networks extend from local area to wide area networks and adapt to ever-increasing end-user demands.

Our smart tracking devices are designed to deliver robust data logging and positional tracking functionality and reliability for supply chain and logistics solutions. Our Industrial IoT devices are designed to be flexible in the field while offering a variety of connectivity options to suit customers' needs across 4G, 5G and LTE cellular networks. These power-efficient products are designed to support communications across interfaces and industrial protocols for vehicle, fleet and asset tracking and equipment management. Many of the products are offered with software tools intended to further accelerate our customers' time-to-market and increase their value add. Our Industrial IoT products are pre-certified in a number of countries, significantly reducing our OEM customers' regulatory certification costs and accelerating their time-to-market.

As Edge Computing deployment accelerates, Out-of-Band (OOB) Management allows for full comprehension and control of remote information technology ("IT") infrastructure across a range of sensors (e.g., temperature, humidity, light, acceleration, open/close, etc.), providing status and alerting while enabling automation and remote control of devices, servers and end stations. OOB uses a dedicated management network to access critical infrastructure components and ensure production-independent connectivity. Remote Management allows organizations to effectively monitor and control their enterprise IT equipment and facilities (environments), either in or out of band, optimizing their IT support resources.

Our Advanced OOB product line includes console management, power management and IP-connected keyboard-video-mouse (commonly referred to as "IPKVM") products that provide remote access to IT and networking infrastructure deployed in test labs, data centers, branch offices, remote sites and server rooms.

*Software and Engineering Services*

Our Software as a Service ("SaaS") platform offers comprehensive single-pane-of-glass management for OOB and IoT deployments. Our platform enables customers to easily deploy, monitor, manage and automate across their global deployments, all from a single platform login, virtually and seamlessly connected as if located directly on each device. Our platform eliminates the need to have 24/7 personnel on site and makes it easy to observe and address issues quickly, even in large-scale deployments.

For OEMs and System Integrators ("SI") our platform offers multitenancy functionality for supporting a broad customer base while ensuring customer separation and data security. Over the Air ("OTA") updates streamline the process of security patches, firmware upgrades and configuration changes, keeping devices up to date and secure.

We leverage our deep engineering expertise and product development best practices to deliver high-quality, innovative products cost-effectively and on schedule. Our engineering services model is flexible, offering either turnkey product development or team augmentation to accelerate complex product development challenges, such as camera tuning, voice control, machine learning, AI, computer vision, augmented/virtual reality, and more.

In addition to our production-ready edge computing solutions, we offer experienced multidisciplinary engineering services across complete aspects of IoT product development, including hardware, software, mechanical engineering, rapid prototyping, and quality assurance. Our specialized services also extend to camera, audio, and AI/machine learning development, ensuring our customers can bring cutting-edge products to market faster and with greater reliability.

Our engineering design services are a key component of our business model, enabling clients to accelerate product development and market readiness. The services focus on designing and developing high-quality, innovative IoT and embedded solutions. We leverage extensive expertise in hardware and software engineering to provide custom designs for complex applications, helping customers reduce costs and time-to-market while improving performance and reliability.

Our design services are especially valuable in the development of IoT systems, remote management solutions, and edge computing applications. Our engineering teams have experience across a range of technologies, including embedded systems, wireless connectivity, and custom hardware. By integrating these design services, we offer end-to-end support, from concept through to manufacturing, allowing businesses to focus more on core operations while still achieving advanced technological outcomes.

This strategy positions us as a go-to partner for companies needing specialized engineering capabilities for industrial, automotive, medical, and other high-tech applications.

**Net Revenue by Product Line**

We have one operating and reportable business segment. A summary of our net revenue by product line is found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Part II, Item 7 of this Report, which is incorporated herein by reference. A discussion of factors potentially affecting our net revenue and other operating results is set forth in "Risk Factors" included in Part I, Item 1A of this Report, which is incorporated herein by reference.

**Sales Cycle**

Our embedded IoT solutions are typically designed into products by OEMs, original design manufacturers ("ODMs") and contract manufacturers. OEMs design and sell products under their own brand that are either manufactured by the OEM in-house or by third-party contract manufacturers. ODMs design and manufacture products for third parties, which then sell those products under the third parties' brands. The design cycles using our embedded solutions typically range from nine to 24 months and can generate revenue for the entire life cycle of an end user's product.

Our IoT System Solutions are typically sold to end users through value-added resellers ("VARs"), systems integrators, distributors, online retailers and, to a lesser extent, OEMs. The design cycles for these products typically range from three to 18 months and are often project-based.

**Sales Channels**

*Distributors*

A majority of our sales are made through distributors. Distributors resell our products to a wide variety of resellers and end customers including OEMs, ODMs, VARs, systems integrators, consumers, online retailers, IT resellers, corporate customers and government entities.

*Resellers*

Our products are sold by industry-specific system integrators and VARs, who often obtain our products from our distributors. Additionally, our products are sold by direct market resellers such as CDW, ProVantage, and Amazon.com.

*Direct Sales*

We sell products directly to larger OEMs and end users. We also maintain an e-commerce site for direct sales.

**Sales and Marketing**

We sell our products primarily through an internal sales force, which includes regional sales managers, inside sales personnel and field applications engineers in major regions throughout the world. This team manages our relationships with our partners and end users, identifies and develops new sales opportunities and increases penetration at existing accounts. We implement marketing programs, tools, and services, including displaying our products at industry-specific events, to generate sales leads and increase demand for our products.

**Manufacturing**

Our manufacturing operations are currently conducted through third-party contract manufacturers. We currently utilize Hana Microelectronics, primarily located in Thailand and China, Honortone and In-Tech primarily located in China, and Tailyn, Info-Tek and Rubytech in Taiwan as our contract manufacturers for most of our products. In addition, we use Marvell Technology Inc., to manage the manufacture of our large-scale integration chips in Taiwan. We manufacture certain products with final assembly in the U.S. to meet trade compliance requirements.

Our contract manufacturers source raw materials, components and integrated circuits, in accordance with our specifications and forecasts, and perform printed circuit board assembly, final assembly, functional testing and quality control. Our products are manufactured and tested to our specifications with standard and custom components. Many of these components are available from multiple vendors. However, we have several single-sourced supplier relationships, either because alternative sources are not available or because the relationship is advantageous to us.

**Research and Development**

Our research and development efforts are focused on the development of hardware and software technology to differentiate our products and enhance our competitive position in the markets we serve. Product research and development is primarily performed in-house and supplemented with outsourced resources.

**Competition**

Our industry is highly competitive and characterized by rapid technological advances and evolving industry standards. The market can be affected significantly by new product introductions and marketing activities of industry participants. We believe that we compete for customers based on product features, software capabilities, company reputation, brand recognition, technical support, relationships with partners, quality, reliability, product development capabilities, price and availability. A discussion of factors potentially affecting our ability to compete in the markets in which we operate is set forth in "Risk Factors" included in Part I, Item 1A of this Report, which is incorporated herein by reference.

**Intellectual Property Rights**

We believe that a considerable portion of our value resides in our intellectual property. We have developed proprietary methodologies, tools, processes and software in connection with delivering our products and services. We protect our intellectual property through a combination of patents, copyrights, trademarks, trade secrets, licenses, non-disclosure agreements and contractual provisions. We enter into a non-disclosure and confidentiality agreement with each of our employees, consultants and third parties that have access to our proprietary technology. Pursuant to assignment of inventions agreements, all of our employees and consultants assign to us all intellectual property rights for the relevant inventions created in connection with their employment or contract with us. We currently hold U.S. and international patents covering various aspects of our products, with additional patent applications pending.

**U.S. and Foreign Government Regulation**

Many of our products are subject to certain mandatory regulatory approvals in the regions in which our products are deployed. In particular, wireless products must be approved by the relevant government authority prior to these products being offered for sale. In addition, certain jurisdictions have regulations requiring products to use environmentally friendly components. Some of our products employ security technology, which is subject to various U.S. export restrictions.

**Employees**

As of August 19, 2025, we had 352 total employees including 351 full time employees, none of whom is represented by a labor union. We have not experienced any labor problems resulting in a work stoppage and believe we have good relationships with our employees.

**Customer and Geographic Concentrations**

We conduct our business globally and manage our sales teams by three geographic regions: the Americas; EMEA; and APJ. A discussion of sales to our significant customers and sales within geographic regions is set forth in Notes 2 and 11 of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Report, which is incorporated herein by reference. A discussion of factors potentially affecting our customer and geographic concentrations is set forth in "Risk Factors" included in Part I, Item 1A of this Report, which is incorporated herein by reference.

**Available Information**

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, Proxy Statements on Schedule 14A and other reports and information that we file or furnish pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act") are available free of charge on our website at www.lantronix.com as soon as reasonably practicable after filing or furnishing such reports with the Securities and Exchange Commission (the "SEC"). The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers that file electronically. The contents of our website are not incorporated by reference into this Report. References to our website address in this Report are inactive textual references only.

**Information About Our Executive Officers**

Executive officers serve at the discretion of our board of directors (the "Board"). There are no family relationships between any of our directors or executive officers. The following table presents the names, ages, and positions held by our executive officers as of the date of this Report:

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position** |
| Saleel Awsare | 60 | President and Chief Executive Officer |
| Brent Stringham | 47 | Chief Financial Officer |
| Mathi Gurusamy | 54 | Chief Product and Strategy Officer |
| Kurt Hoff | 68 | Chief Revenue Officer |

---

SALEEL AWSARE has served as our President and Chief Executive Officer, and as a member of our Board, since November 2023. Mr. Awsare served as Senior Vice President and General Manager of the Enterprise and Mobile Division of Synaptics Incorporated, a developer of human interface hardware and software, from September to November 2023. Prior to that, Mr. Awsare served as Senior Vice President and General Manager of the PC and Peripherals Unit of Synaptics from August 2020 to September 2023; Senior Vice President and General Manager of Synaptics's IoT Division from April 2019 to July 2020; and Senior Vice President of Corporate Marketing & Investor Relations at Synaptics from October 2018 until April 2019. Prior to joining Synaptics as Corporate Vice President and General Manager of Audio & Imaging Products in August 2017, Mr. Awsare was President of Conexant Systems, LLC, a software developer and fabless semiconductor company, from March 2016 until Conexant's acquisition by Synaptics in August 2017, and Conexant's Senior Vice President & General Manager of Audio & Imaging from April 2012 to March 2016. Prior to joining Conexant, Mr. Awsare served as President of U.S. Operations and General Manager of Audio & Voice Solutions of Nuvoton Technology Corporation, a Taiwan-based semiconductor company, from December 2008 to March 2012.

BRENT STRINGHAM has served as our Chief Financial Officer since January 2025. Mr. Stringham joined Lantronix in 2012 and previously served as the Company's interim Chief Financial Officer and Chief Accounting Officer since September 2024. Prior to that, he served as our Senior Director of Finance and Corporate Controller beginning in February 2012. Previously, Mr. Stringham served as Controller at Iteris, Inc., a provider of software, hardware and services for smart mobility infrastructure management, from January 2009 to February 2012, and Netlist, Inc., a developer and manufacturer of computer memory subsystems, from March 2007 to January 2009. Mr. Stringham was an Audit Manager at Ernst & Young LLP from 2000 to 2007.

MATHI GURUSAMY has served as our Chief Product and Strategy Officer since April 2025. Previously Mr. Gurusamy served as our Chief Strategy Officer since May 2024. Prior to joining Lantronix, Mr. Gurusamy served as Chief Operating Officer at Ikotek USA, Inc., a global provider of original design manufacturing for IoT, from November 2023 to May 2024. Mr. Gurusamy served as President at Telit Cinterion, an end-to-end IoT solutions enabler, from October 2022 to October 2023, and previously served at Telit as Chief Operating Officer from January 2010 to March 2016 and as Global VP – Operations & Supply Chain from June 2008 to December 2009. He also served as President and Chief Operating Officer of Mobilogix, a startup company specializing in custom IoT solutions, from April 2016 to June 2018 and as Chief Executive Officer and President from June 2018 until Mobilogix's acquisition by Telit in September 2022.

KURT HOFF has served as our Chief Revenue Officer since April 2025. Previously Mr. Hoff served as our Vice President of Worldwide Sales since March 2024. Prior to joining Lantronix, Mr. Hoff served as Vice President of Global Sales at MYTHIC AI, a venture-backed AI processor company, from May 2022 to December 2022. Previously, Mr. Hoff served as Senior Vice President of Worldwide Sales at Synaptics Inc., a developer of human interface hardware and software, from July 2017 to July 2020, and at Conexant Systems, Inc., a software developer and fabless semiconductor company, from November 2015 until Conexant's acquisition by Synaptics in July 2017. He served as Senior Vice President of Worldwide Sales at Silicon Laboratories Inc. from July 2007 until November 2015.

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| **ITEM 1A.** | **RISK FACTORS** |

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*We operate in a rapidly changing environment that involves numerous risks and uncertainties. Before deciding to purchase, hold or sell our common stock, you should carefully consider the risks described in this section, as well as other information contained in this Report and in our other filings with the SEC. This section should be read in conjunction with the consolidated financial statements and accompanying notes thereto included in Part II, Item 8 of this Report, and "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Part II, Item 7 of this Report. If any of these risks or uncertainties actually occurs, our business, financial condition, results of operations or prospects could be materially harmed. In that event, the market price for our common stock could decline and you could lose all or part of your investment. In addition, risks and uncertainties not presently known to us or that we currently deem immaterial may also adversely affect our business.*

**<u>Risks Related to Our Operations and Industry</u>**

***We depend upon a relatively small number of distributor and end-user customers for a large portion of our revenue, and a decline in sales to these major customers would materially adversely affect our business, financial condition, and results of operations.***

Historically, we have relied upon a small number of distributors and end-user customers for a significant portion of our net revenue. Our customer concentration could fluctuate, depending on future customer requirements, which will depend on market conditions in the industry segments in which our customers participate. The loss of one or more significant customers or a decline in sales to our significant customers could result in a material loss of sales and possible increase in excess inventories which would adversely affect our business, financial condition, and results of operations.

***We have experienced and may in the future experience constraints in the supply of certain materials and components that could affect our operating results.***

Some of our integrated circuits are only available from a single source and in some cases, are no longer being manufactured. From time to time, integrated circuits, and potentially other components used in our products, will be phased out of production by the manufacturer. When this happens, we attempt to purchase sufficient inventory to meet our needs until a substitute component can be incorporated into our products. Nonetheless, we may be unable to purchase sufficient components to meet our demands, or we may incorrectly forecast our demands, and purchase too many or too few components. In addition, our products use components that have been in the past and may in the future be subject to market shortages and substantial price fluctuations, whether due to a pandemic or epidemic, the war between Ukraine and Russia, conflict in the Middle East, hostilities in the Red Sea, tensions between China and Taiwan, increased tariffs and changes in U.S. trade policies or otherwise. From time to time, we have been unable to meet customer orders because we were unable to purchase necessary components for our products. We do not have long-term supply arrangements with most of our vendors to obtain necessary components, including semiconductor chips, or technology for our products and instead purchase components on a purchase order basis. If we are unable to purchase components from these suppliers, our product shipments could be prevented or delayed, which could result in a loss of sales. If we are unable to meet existing orders or to enter into new orders because of a shortage in components, we will likely lose net revenue, risk losing customers and risk harm to our reputation in the marketplace, which could adversely affect our business, financial condition or results of operations.

***Future operating results depend upon our ability to timely obtain components in sufficient quantities and on acceptable terms.***

We and our contract manufacturers are responsible for procuring raw materials for our products. Our products incorporate some components and technologies that are only available from single or limited sources of supply. Depending on a limited number of suppliers exposes us to risks, including limited control over pricing, availability, quality and delivery schedules. Moreover, due to our limited sales, we may not be able to convince suppliers to continue to make components available to us unless there is demand for these components from their other customers. If any one or more of our suppliers cease to provide us with sufficient quantities of components in a timely manner or on terms acceptable to us, we would have to seek alternative sources of supply and we may have difficulty identifying additional or replacement suppliers for some of our components.

***We outsource substantially all of our manufacturing to contract manufacturers in Asia. If our contract manufacturers are unable or unwilling to manufacture our products at the quality and quantity we request, our business could be harmed.***

We use contract manufacturers based in Asia to manufacture substantially all of our products. Generally, we do not have guaranteed supply agreements with our contract manufacturers or suppliers. If any of these subcontractors or suppliers were to cease doing business with us, we might not be able to obtain alternative sources in a timely or cost-effective manner. Our reliance on third-party manufacturers, especially in countries outside of the U.S., exposes us to a number of significant risks, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· reduced control over delivery schedules, quality assurance, manufacturing yields and production costs;

· lack of guaranteed production capacity or product supply;

· effects of terrorist attacks or geopolitical conflicts abroad;

· reliance on these manufacturers to maintain competitive manufacturing technologies;

· unexpected changes in regulatory requirements, taxes, trade laws and tariffs;

· reduced protection for intellectual property rights in some countries;

· differing labor regulations;

· disruptions to the business, financial stability or operations, including due to strikes, labor disputes or other disruptions to the workforce, of these manufacturers;

· compliance with a wide variety of complex regulatory requirements;

· fluctuations in currency exchange rates;

· changes in a country's or region's political or economic conditions;

· greater difficulty in staffing and managing foreign operations; and

· increased financial accounting and reporting burdens and complexities.

Any problems that we may encounter with the delivery, quality or cost of our products from our contract manufacturers or suppliers could cause us to lose net revenue, damage our customer relationships and harm our reputation in the marketplace, each of which could materially and adversely affect our business, financial condition or results of operations.

From time to time, we may transition the manufacturing of certain products from one contract manufacturer to another. For example, in connection to the recently increased tariffs proposed to be imposed by the U.S. against China, we continue to transition our remaining manufacturing out of China. We have and may in the future incur substantial expenses, risk material delays or encounter other unexpected issues in connection with this transition or future transitions.

***The effect of a pandemic or major public health concern, such as the COVID-19 pandemic, could result in material adverse effects on our business, financial position, results of operations and cash flows.***

Pandemics or similar outbreaks have had, and may in the future have, an adverse impact on the economy, our business and the businesses of our suppliers, and our results of operations and financial condition. For example, the COVID-19 pandemic resulted in industry events, trade shows and business travel being suspended, cancelled and/or significantly curtailed. If these activities are suspended, cancelled and/or significantly curtailed in the future, whether due to a possible pandemic and similar outbreak, our sales may be negatively impacted in the future.

In addition, the impact of possible pandemics subjects us to various risks and uncertainties that could materially adversely affect our business, results of operations and financial condition, including the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· significant volatility or decreases in the demand for our products or extended sales cycles;

· changes in customer behavior and preferences, as customers may experience financial difficulties and/or may delay orders or reduce their spending;

· adverse impacts on our ability to distribute or deliver our products or services, as well as temporary disruptions, restrictions or closures of the facilities of our suppliers or customers and their contract manufacturers;

· further disruptions in our contract manufacturers' ability to manufacture our products, as some contract manufacturers and suppliers of materials used in the production of our products are, or may be, located in areas more severely impacted by a possible pandemic, which has in the past limited and could in the future limit, our ability to obtain sufficient materials to produce and manufacture our products; and

· volatility in the availability of raw materials and components that our
 contract manufacturers purchase and volatility in raw material and other input costs.

The duration and extent of a future pandemics or other similar outbreak's effect on our operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted at this time. The adverse impact of a possible future pandemic or similar outbreak on our business, results of operations and financial condition may be material.

***Certain of our products are sold into mature markets, which could limit our ability to continue to generate revenue from these products. Our ability to sustain and grow our business depends on our ability to develop, market, scale, and sell new products.***

Certain of our products are sold into mature markets that are characterized by a trend of declining demand. As the overall market for these products decreases due to the adoption of new technologies, our revenues from these products have declined, and we expect they will continue to decline in the future. As a result, our future prospects will depend on our ability to develop and successfully market new products that address new and growing markets. Our failure to develop new products or failure to achieve widespread customer acceptance of any new products could cause us to lose market share and cause our revenues to decline. There can be no assurance that we will not experience difficulties that could delay or prevent the successful development, introduction, marketing and sale of new products or product enhancements. Factors that could cause delays include regulatory and/or industry approvals, product design cycle and failure to identify products or features that customers demand. In addition, the introduction and sale of new products often involves a significant technical evaluation, and we often face delays because of our customers' internal procedures for evaluating, approving and deploying new technologies. For these and other reasons, the sales cycle associated with new products is typically lengthy, often lasting six to 24 months and sometimes longer. Therefore, there can be no assurance that our introduction or announcement of new product offerings will achieve any significant or sustainable degree of market acceptance or result in increased revenue in the near term.

***Our software offerings are subject to risks that differ from those facing our hardware products.***

We continue to dedicate engineering resources to our management software platform, applications, and SaaS offerings. These product and service offerings are subject to significant additional risks that are not necessarily related to our hardware products. Our ability to succeed with these offerings will depend in large part on our ability to provide customers with software products and services that offer features and functionality that address their specific needs. We may face challenges and delays in the development of this product line as the marketplace for products and services evolves to meet the needs and desires of customers. We cannot provide assurances that we will be successful in operating and growing this product line.

In light of these risks and uncertainties, we may not be able to establish or maintain market share for our software and SaaS offerings. As we develop new product lines, we must adapt to market conditions that are unfamiliar to us, such as competitors and distribution channels that are different from those we have known in the past. We have and will encounter competition from other solutions providers, many of whom may have more significant resources than us with which to compete. There can be no assurance that we will recover our investments in this segment, or that we will receive meaningful revenue from or realize a profit from this new segment.

***We may experience significant fluctuation in our revenue because the timing of large orders placed by some of our customers is often project-based.***

Our operating results fluctuate because we often receive large orders from customers that coincide with the timing of the customer's project. Sales of our products and services may be delayed if customers delay approval or commencement of projects due to budgetary constraints, internal acceptance review procedures, timing of budget cycles or timing of competitive evaluation processes. In addition, sometimes our customers make significant one-time hardware purchases for projects which are not repeated. We sell primarily on a purchase order basis rather than pursuant to long-term contracts, and we expect fluctuations in our revenues as a result of one-time project-based purchases to continue in the future. In addition, our sales may be subject to significant fluctuations based on the acceleration, delay or cancellation of customer projects, or our failure to complete one or a series of significant potential sales. Because a significant portion of our operating expenses are fixed, even a single order can have a disproportionate effect on our operating results. As a result of the factors discussed above, and due to the complexities of the industry in which we operate, it is difficult for us to forecast demand for our current or future products with any degree of certainty, which means it is difficult for us to forecast our sales. If our quarterly or annual operating results fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially.

***The lengthy sales cycle for our products and services, along with delays in customer completion of projects, make the timing of our revenues difficult to predict.***

We have a lengthy sales cycle for many of our products that generally extends between three and 24 months and sometimes longer due to a lengthy customer evaluation and approval process. The length of this process can be affected by factors over which we have little or no control, including the customer's budgetary constraints, timing of the customer's budget cycles, and concerns by the customer about the introduction of new products by us or by our competitors. As a result, sales cycles for customer orders vary substantially among different customers. The lengthy sales cycle is one of the factors that has caused, and may continue to cause, our revenues and operating results to vary significantly from quarter to quarter. In addition, we may incur substantial expenses and devote significant management effort to develop potential relationships that do not result in agreements or revenues, which may prevent us from pursuing other opportunities. Accordingly, excessive delays in sales could be material and adversely affect our business, financial condition or results of operations.

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***The nature of our products, customer base and sales channels results in lack of visibility into future demand for our products, which makes it difficult for us to forecast our manufacturing and inventory requirements.***

We use forecasts based on anticipated product orders to manage our manufacturing and inventory levels and other aspects of our business. However, several factors contribute to a lack of visibility with respect to future orders, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the lengthy and unpredictable sales cycle for our products that can extend from six to 24 months or longer;

· the project-driven nature of many of our customers' requirements;

· we primarily sell our products indirectly through distributors;

· the uncertainty of the extent and timing of market acceptance of our new products;

· the need to obtain industry certifications or regulatory approval for our products;

· the lack of long-term contracts with our customers;

· the diversity of our product lines and geographic scope of our product distribution;

· we have some customers who make single, non-recurring purchases; and

· a large number of our customers typically purchase in small quantities.

This lack of visibility impacts our ability to forecast our inventory requirements. If we overestimate our customers' future requirements for products, we may have excess inventory, which would increase our costs and potentially require us to write-off inventory that becomes obsolete. Additionally, if we underestimate our customers' future requirements, we may have inadequate inventory, which could interrupt and delay delivery of our products to our customers, harm our reputation, and cause our revenues to decline. If any of these events occur, they could prevent us from achieving or sustaining profitability and the value of our common stock may decline.

***Delays in qualifying revisions of existing products for certain of our customers could result in the delay or loss of sales to those customers, which could negatively impact our business and financial results.***

Our industry is characterized by intense competition, rapidly evolving technology and continually changing customer preferences and requirements. As a result, we frequently develop and introduce new versions of our existing products, which we refer to as revisions.

Prior to purchasing our products, some of our customers require that products undergo a qualification process, which may involve testing of the products in the customer's system. A subsequent revision to a product's hardware or firmware, changes in the manufacturing process or our selection of a new supplier may require a new qualification process, which may result in delays in sales to customers, loss of sales, or us holding excess or obsolete inventory.

After products are qualified, it can take additional time before the customer commences volume production of components or devices that incorporate our products. If we are unsuccessful or delayed in qualifying any new or revised products with a customer, that failure or delay would preclude or delay sales of these products to the customer, and could negatively impact our financial results. In addition, new revisions to our products could cause our customers to alter the timing of their purchases, by either accelerating or delaying purchases, which could result in fluctuations of our net revenue from quarter to quarter.

***We depend on distributors for a majority of our sales and to complete order fulfillment.***

We depend on the resale of products through distributor accounts for a substantial majority of our worldwide net revenue. In addition, sales through our top five distributors accounted for approximately 37% of our net revenue in fiscal 2025. A significant reduction of effort by one or more distributors to sell our products or a material change in our relationship with one or more distributors may reduce our access to certain end customers and adversely affect our ability to sell our products. Furthermore, if a key distributor materially defaults on a contract or otherwise fails to perform, our business and financial results would suffer.

In addition, the financial health of our distributors and our continuing relationships with them are important to our success. Our business could be harmed if the financial health of these distributors impairs their performance and we are unable to secure alternate distributors.

***Our ability to sustain and grow our business depends in part on the success of our distributors and resellers.***

A substantial part of our revenues is generated through sales by distributors and resellers. To the extent they are unsuccessful in selling our products, or if we are unable to obtain and retain a sufficient number of high-quality distributors and resellers, our operating results could be materially and adversely affected. In addition, our distributors and resellers may devote more resources to marketing, selling and supporting products and services that are competitive with ours, than to our products. They also may have incentives to promote our competitors' products over our products, particularly for our competitors with larger volumes of orders, more diverse product offerings and a longer relationship with our distributors and resellers. In these cases, one or more of our important distributors or resellers may stop selling our products completely or may significantly decrease the volume of products they sell on our behalf. This sales structure also could subject us to lawsuits, potential liability and reputational harm if, for example, any of our distributors or resellers misrepresents the functionality of our products or services to customers or violates laws or our corporate policies. If we fail to effectively manage our existing or future distributors and resellers effectively, our business and operating results could be materially and adversely affected.

***Changes to the average selling prices of our products could affect our net revenue and gross margins and adversely affect results of operations.***

In the past, we have experienced reductions in the average selling prices and gross margins of our products. We expect competition to continue to increase, and we anticipate this could result in additional downward pressure on our pricing. Our average selling prices for our products might also decline as a result of other reasons, including promotional programs introduced by us or our competitors and customers who negotiate price concessions. To the extent we are able to increase prices, we may experience a decline in sales volumes if customers decide to purchase competitive products. If any of these were to occur, our gross margins could decline and we might not be able to reduce the cost to manufacture our products enough or at all to keep up with the decline in prices.

***If we are unable to sell our inventory in a timely manner, it could become obsolete, which could require us to write-down or write off obsolete inventory, which could harm our operating results.***

At any time, competitive products may be introduced with more attractive features or at lower prices than ours. If this occurs, and for other reasons, we may not be able to accurately forecast demand for our products and our inventory levels may increase. There is a risk that we may be unable to sell our inventory in a timely manner to avoid it becoming obsolete. If we are required to substantially discount our inventory or are unable to sell our inventory in a timely manner, we would be required to increase our inventory reserves or write off obsolete inventory and our operating results could be substantially harmed.

***Our failure to compete successfully in our highly competitive market could result in reduced prices and loss of market share.***

The market in which we operate is intensely competitive, subject to rapid technological advances and highly sensitive to evolving industry standards. The market can also be affected significantly by new product and technology introductions and marketing and pricing activities of industry participants. Our products compete directly with products produced by a number of our competitors. Many of our competitors and potential competitors have greater financial and human resources for marketing and product development, more experience conducting research and development activities, greater experience obtaining regulatory approval for new products, larger distribution and customer networks, more established relationships with contract manufacturers and suppliers, and more established reputations and name recognition. For these and other reasons, we may not be able to compete successfully against our current or potential future competitors. In addition, the amount of competition we face in the marketplace may change and grow as the market for IoT and machine-to-machine networking solutions grows and new companies enter the marketplace. Present and future competitors may be able to identify new markets, adapt new technologies, develop and commercialize products more quickly and gain market acceptance of products with greater success. As a result of these competitive factors, we may fail to meet our business objectives and our business, financial condition and operating results could be materially and adversely affected.

***Acquisitions, strategic partnerships, joint ventures or investments may impair our capital and equity resources, divert our management's attention or otherwise negatively impact our operating results.***

We have in the past and may in the future pursue acquisitions, strategic partnerships and joint ventures that we believe would allow us to complement our growth strategy, increase market share in our current markets and expand into adjacent markets, broaden our technology and intellectual property and strengthen our relationships with distributors, OEMs and original design manufacturers. For instance, we acquired Maestro, Intrinsyc, the Transition Networks and Net2Edge businesses of Communication Systems, Inc., Uplogix, Inc. ("Uplogix"), and Netcomm Wireless Pty Ltd ("Netcomm") in calendar years 2019, 2020, 2021, 2022 and 2024, respectively. Our previous acquisitions have required, and any future acquisition, partnership, joint venture or investment may also require, that we pay significant cash, issue equity and/or incur substantial debt. Acquisitions, partnerships or joint ventures may also result in the loss of key personnel and the dilution of existing stockholders to the extent we are required to issue equity securities. In addition, acquisitions, partnerships or joint ventures require significant managerial attention, which may be diverted from our other operations. These capital, equity and managerial commitments may impair the operation of our business. Furthermore, acquired businesses may not be effectively integrated, may be unable to maintain key pre-acquisition business relationships, may not result in expected synergies, an increase in revenues or earnings or the delivery of new products, may contribute to increased fixed costs, and may expose us to unanticipated liabilities. If any of these occur, we may fail to meet our business objectives and our business, financial condition and operating results could be materially and adversely affected.

***We may experience difficulties associated with utilizing third-party logistics providers.***

A portion of our physical inventory management process, as well as the shipping and receiving of our inventory, is performed by a third-party logistics provider in Hong Kong. There is a possibility that third-party logistics providers will not perform as expected and we could experience delays in our ability to ship, receive, and process the related data in a timely manner. This could adversely affect our financial position, results of operations, cash flows and the market price of our common stock.

Relying on third-party logistics providers could increase the risk of the following: failing to receive accurate and timely inventory data, theft or poor physical security of our inventory, inventory damage, ineffective internal controls over inventory processes or other similar business risks out of our immediate control.

**<u>Risks Related to Technology, Cybersecurity and Intellectual Property</u>**

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***Cybersecurity breaches and other disruptions could compromise our information and expose us to liability, which could cause our business and reputation to suffer.***

Increased global information technology security threats and more sophisticated and targeted computer crime pose a risk to the security of our systems and networks and the confidentiality, availability and integrity of our data. There have been several highly publicized cases in which organizations of various types and sizes have reported the unauthorized disclosure of customer or other confidential information, as well as cyberattacks involving the dissemination, theft and destruction of corporate information, intellectual property, cash or other valuable assets. There have also been several highly publicized cases in which hackers have requested "ransom" payments in exchange for not disclosing customer or other confidential information or for not disabling the target company's computer or other systems. The secure processing, maintenance and transmission of the information that we collect and store on our systems is critical to our operations and implementing security measures designed to prevent, detect, mitigate or correct these or other cybersecurity threats involve significant costs.

Although we have taken steps to protect the security of our information systems, we have, from time to time, experienced, and we expect to continue experiencing, threats to our data and systems, including malware, phishing and computer virus attacks, and it is possible that in the future our safety and security measures will not prevent the systems' improper functioning or damage, or the improper access or disclosure of personally identifiable information such as in the event of cyber-attacks. In addition, due to the fast pace and unpredictability of cybersecurity threats, including from emerging technologies, such as advanced forms of machine learning, AI and quantum computing, long-term implementation plans designed to address cybersecurity risks become obsolete quickly and, in some cases, it may be difficult to anticipate or immediately detect such incidents and the damage they cause. In addition, such threats could be introduced as a result of our customers and business partners incorporating the output of an AI tool that includes a threat, such as introducing malicious code by incorporating AI generated source code. Any unauthorized access, disclosure or other loss of information could result in legal claims or proceedings, disrupt our operations, damage our reputation, and cause a loss of confidence in our products and services, which could adversely affect our business.

***If unauthorized access is obtained to the personal and/or proprietary data we collect and store, our products become subject to cybersecurity breaches, or if public perception is that they are vulnerable to cyberattacks, our reputation and business could suffer.***

In the ordinary course of our business, we collect and store sensitive data, including intellectual property, our proprietary business information and that of our customers, suppliers and business partners, and personally identifiable information of our employees, on our networks and third-party cloud software providers. If there is unauthorized access to such information, we may incur significant costs or liabilities and lose customer confidence in us, which would harm our reputation and results of operations. In addition, we could be subject to liability or our reputation could be harmed if technologies integrated into our products, or our products, fail to prevent cyberattacks, or if our partners or customers fail to safeguard the systems with security policies that conform to industry best practices. In addition, any cyberattack or security breach that affects a competitor's products could lead to the negative perception that our solutions are or could be subject to similar attacks or breaches.

***Some of our software offerings may be subject to various cybersecurity risks, which are particularly acute in the cloud-based technologies operated by us and other third parties that form a part of our solutions.***

In connection with certain implementations of our management software platform, application, and SaaS offerings, we expect to store, convey and process data produced by devices. This data may include confidential or proprietary information, intellectual property or personally identifiable information of our customers or other third parties with whom they do business. It is important for us to maintain solutions and related infrastructure that are perceived by our customers and other parties with whom we do business to provide a reasonable level of reliability and security. Despite available security measures and other precautions, the infrastructure and transmission methods used by our products and services may be vulnerable to interception, attack or other disruptive problems. Additionally, some of our products include capabilities to support AI which may further increase our products susceptibility or perceived susceptibility of security risks.

If a cyberattack or other security incident were to allow unauthorized access to or modification of our customers' data or our own data, whether due to a failure with our systems or related systems operated by third parties, we could suffer damage to our brand and reputation. The costs we would incur to address and fix these incidents could significantly increase our expenses. These types of security incidents could also lead to lawsuits, regulatory investigations and increased legal liability, including in some cases contractual costs related to customer notification and fraud monitoring.

***Failure to comply with data privacy laws and regulations could have a materially adverse effect on our reputation, results of operations or financial condition, or have other adverse consequences.***

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Certain of our products and services as well as the operations of our business may involve access or exposure to personally identifiable or otherwise confidential information and customer data and systems, the misuse or improper disclosure of which could result in legal liability. The collection, hosting, transfer, disclosure, use, storage and security of personal information is subject to federal, state and foreign data privacy laws. These laws, ("Privacy and Data Protection Requirements") which are not uniform, do one or more of the following: regulate the collection, transfer (including in some cases, the transfer outside the country of collection), processing, storage, use and disclosure of personal information, and require notice to individuals of privacy practices and in some cases consent to collection of personal information; give individuals certain access, correction and deletion rights with respect to their personal information; and prevent the use or disclosure of personal information, or require providing opt-outs for the use and disclosure of personal information, for secondary purposes such as marketing. Under certain circumstances, some of these laws require us to provide notification to affected individuals, data protection authorities and/or other regulators in the event of a data breach. In many cases, these laws apply not only to third-party transactions, but also to transfers of information among us and our subsidiaries.

Laws and regulations in this area are evolving and generally becoming more stringent. For example, the European General Data Protection Regulation (the "GDPR") requires us to meet stringent requirements regarding (i) our access, use, disclosure, transfer, protection, or otherwise processing of personal information; and (ii) the ability of data subjects to exercise their related various rights such as to access, correct or delete or limit the use of their personal data. Under the GDPR and the U.K.'s version of the GDPR, information transfers from the European Union and the U.K. to the U.S. are generally prohibited unless certain measures are followed.

The 2018 California Consumer Privacy Act and California Privacy Rights Act of 2020 provide individuals similar rights with respect to the processing of their personal data. Multiple states in the U.S. have enacted such privacy laws, and data privacy laws are scheduled to become effective in several others in 2026.

There is also the possibility of federal privacy legislation and increased enforcement by the Federal Trade Commission under its power to regulate unfair and deceptive trade practices. Markets in the Asia Pacific region have also recently adopted GDPR-like legislation, including China's new Personal Information Protection Law. Failure to meet Privacy and Data Protection Law requirements could result in significant civil penalties (including fines up to 4% of annual worldwide revenue under the GDPR) as well as criminal penalties. Privacy and data protection law requirements also confer a private right of action in some countries, including under the GDPR.

As these laws continue to evolve, we may be required to make changes to our systems, services, solutions and/or products to enable us and/or our clients to meet the new legal requirements, including by taking on more onerous obligations, limiting our storage, transfer and processing of data and, in some cases, limiting our service and/or solution offerings in certain locations and our ability to market to customers. Changes in these laws, or the interpretation and application thereof, may also increase our potential exposure through significantly higher potential penalties for non-compliance. The costs of compliance with, and other burdens imposed by, such laws and regulations and client demand in this area may limit the use of, or demand for, our services, solutions and/or products, make it more difficult and costly to meet client expectations, or lead to significant fines, penalties or liabilities for noncompliance, any of which could adversely affect our business, financial condition, and results of operations.

***Issues related to the responsible use of AI may result in reputational, competitive and financial harm and liability.***

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We offer products that include capabilities to support AI deployment and we expect this part of our business to grow. As with many new emerging technologies, AI presents risks and challenges and increasing ethical concerns relating to its responsible use that could affect the adoption of AI, and thus our business. Third-party misuse of AI applications, models, or solutions, or ineffective or inadequate AI development or deployment practices by us or our customers or business partners, could cause harm to individuals, our business or impair the public's acceptance of AI. Moreover, we may be subject to competitive harm, regulatory action and legal liability as a result of new proposed legislation regulating AI, new applications of existing data protection, privacy and intellectual property and other laws. Such regulations could cause us to incur greater compliance costs and could also impact our ability to sell or the ability of our customers and users worldwide to acquire, deploy and use systems that include our AI-related products and services, which could thus require us to change our business practices and could adversely affect our business, financial condition and results of operations. If the AI-related products that we offer have unintended consequences or unintended usage or customization by our customers or are otherwise controversial due to their perceived or actual impact on human rights, privacy, employment or other social, economic or political issues the public's acceptance of AI may be impaired and may result in reputational and financial harm and liability to our business.

***If software that we incorporate into our products were to become unavailable or no longer available on commercially reasonable terms, it could adversely affect sales of our products, which could disrupt our business and harm our financial results.***

Certain of our products contain software developed and maintained by third-party software vendors or which are available through the "open source" software community. We also expect that we may incorporate software from third-party vendors and open source software in our future products. Our business would be disrupted if this software, or functional equivalents of this software, were either no longer available to us or no longer offered to us on commercially reasonable terms. In either case, we would be required to either redesign our products to function with alternate third-party software or open source software, or develop these components ourselves, which would result in increased costs and could result in delays in our product shipments. Furthermore, we might be forced to limit the features available in our current or future product offerings.

***Our products may contain undetected software or hardware errors or defects that could lead to an increase in our costs, reduce our net revenue or damage our reputation.***

We currently offer warranties ranging from one to five years on each of our products. Our products could contain undetected software or hardware errors or defects. If there is a product failure, we might have to replace all affected products, or we might have to refund the purchase price for the units. Regardless of the amount of testing we undertake, some errors might be discovered only after a product has been installed and used by customers. Any errors discovered after commercial release could result in financial losses and claims against us. Significant product warranty claims against us could harm our business, reputation and financial results and cause the market price of our common stock to decline.

***We may not be able to adequately protect or enforce our intellectual property rights, which could harm our competitive position or require us to incur significant expenses to enforce our rights.***

We rely primarily on a combination of laws, such as patent, copyright, trademark and trade secret laws, and contractual restrictions, such as confidentiality agreements and licenses, to establish and protect our proprietary rights. Despite any precautions that we have taken:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· laws and contractual restrictions might not be sufficient to prevent misappropriation of our technology or deter others from developing similar technologies;

· other companies might claim intellectual property rights based upon prior use that negatively impacts our ability to enforce our trademarks and patents; and

· policing unauthorized use of our patented technology and trademarks is difficult, expensive and time-consuming, and we might be unable to determine the extent of this unauthorized use.

Also, the laws of some of the countries in which we market and manufacture our products offer little or no effective protection of our proprietary technology. Reverse engineering, unauthorized copying or other misappropriation of our proprietary technology could enable third parties to benefit from our technology without paying us for it. Consequently, we may be unable to prevent our proprietary technology from being exploited by others in the U.S. or abroad, which could require costly efforts to protect our technology. Policing the unauthorized use of our technology, trademarks and other proprietary rights is expensive, difficult and, in some cases, impracticable. Litigation may be necessary in the future to enforce or defend our intellectual property rights, to protect our trade secrets or to determine the validity and scope of the proprietary rights of others. Such litigation could result in substantial costs and diversion of management resources, either of which could harm our business. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating our intellectual property, which may harm our business, financial condition and results of operations.

***The impact of natural disasters and other business interruptions could negatively impact our supply chain and customers resulting in an adverse impact to our revenues and profitability.***

Certain of our components and other materials used in producing our products are from regions susceptible to natural disasters. A natural disaster could damage equipment and inventory at our suppliers' facilities, adversely affecting our supply chain. If we are unable to obtain these materials, we could experience a disruption to our supply chain that would hinder our ability to produce our products in a timely manner, or cause us to seek other sources of supply, which may be more costly or which we may not be able to procure on a timely basis. In addition, our customers may not follow their normal purchasing patterns or temporarily cease purchasing from us due to impacts to their businesses in the region, creating unexpected fluctuations or decreases in our revenues and profitability. Natural disasters in other parts of the world on which our operations are reliant also could have material adverse impacts on our business.

In addition, our operations and those of our suppliers are vulnerable to interruption by fire, earthquake, power loss, telecommunications failure, cybersecurity breaches, IT systems failure, terrorist attacks and other events beyond our control, including the effects of climate change. A substantial portion of our facilities, including our corporate headquarters and other critical business operations, are located near major earthquake faults and, therefore, may be more susceptible to damage if an earthquake occurs. We do not carry earthquake insurance for direct earthquake-related losses. If a business interruption occurs, whether due to a natural disaster or otherwise, our business could be materially and adversely affected.

**<u>Risks Related to Liquidity and Capital Resources</u>**

***We maintain cash deposits in excess of federally insured limits. Adverse developments affecting financial institutions, including bank failures, could adversely affect our liquidity and financial performance.***

 **

We regularly maintain domestic cash deposits in the Federal Deposit Insurance Corporation ("FDIC") insured banks, which exceed the FDIC insurance limits. Bank failures, events involving limited liquidity, defaults, non-performance or other adverse developments that affect financial institutions, or concerns or rumors about such events, may lead to widespread demands for customer withdrawals and liquidity constraints that may result in market-wide liquidity problems. For example, in March 2023, Silicon Valley Bank ("SVB"), Signature Bank Corp. and Silvergate Capital Corp. each failed and were taken into receivership by the FDIC. At that time, we maintained deposits amounting to approximately 85% of our total cash at SVB. While we were able to regain full access to our deposits with SVB and have taken steps to diversify our banking relationships since then, our loan agreement with SVB currently requires us to hold 75% of our US cash balances at SVB. Consequently, any future failure of that bank could simultaneously prevent access to both a substantial portion of our cash holdings and to our credit line for funds needed to meet our working capital requirements and other financial commitments. Our cash balances are concentrated at a small number of financial institutions. In addition, macroeconomic conditions have caused turmoil in the banking sector in the past and may do so again in the future. A failure to timely access our cash on deposit with SVB or other banks could require the scaling back of our operations and production, negatively affect our credit, and prevent us from fulfilling contractual obligations. Moreover, there can be no assurance that our deposits in excess of the FDIC or other comparable insurance limits will be backstopped by the U.S. or any applicable foreign government in the future or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a future failure or liquidity crisis, and such uninsured deposits may ultimately be lost. In addition, if any of the parties with whom we conduct business are unable to access funds due to the status of their financial institution, such parties' ability to pay their obligations to us or to enter into new commercial arrangements requiring additional payments to us could be adversely affected.

***We have a history of losses.***

We have historically incurred net losses. There can be no assurance that we will generate net profits in future periods. Further, there can be no assurance that we will be cash flow positive in future periods. In the event that we fail to achieve profitability in future periods, the value of our common stock may decline. In addition, if we are unable to achieve or maintain positive cash flows, we would be required to seek additional funding, which may not be available on favorable terms, if at all.

***We may need additional capital and it may not be available on acceptable terms, or at all.***

To remain competitive, we must continue to make significant investments to operate our business and develop our products. Our future capital requirements will depend on many factors, including the timing and amount of our net revenue, research and development expenditures, expenses associated with any strategic partnerships or acquisitions and infrastructure investments, and expenses related to litigation, each of which could negatively affect our ability to generate additional cash from operations. If cash generated from operations is insufficient to satisfy our working capital requirements, we may need to raise additional capital. Looking ahead at long-term needs, we may need to raise additional funds for a number of purposes, including, but not limited to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to fund working capital requirements;

· to update, enhance or expand the range of products we offer;

· to refinance existing indebtedness;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· to increase our sales and marketing activities;

· to respond to competitive pressures or perceived opportunities, such as investment, acquisition and international expansion activities; or

· to acquire additional businesses

We may seek additional capital from public or private offerings of our capital stock, borrowings under our existing or future credit lines or other sources. If we issue equity or debt securities to raise additional funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. In addition, if we raise additional funds through collaborations, licensing, joint ventures, or other similar arrangements, it may be necessary to relinquish valuable rights to our potential future products or proprietary technologies, or grant licenses on terms that are not favorable to us. There can be no assurance that we will be able to raise any needed capital on terms acceptable to us, if at all. If we are unable to secure additional financing in sufficient amounts or on favorable terms, we may not be able to develop or enhance our products, take advantage of future opportunities, respond to competition or continue to operate our business.

***The terms of our amended and restated credit facility may restrict our financial and operational flexibility and, in certain cases, our ability to operate.***

The terms of our amended and restated credit facility restrict, among other things, our ability to incur liens or indebtedness, dispose of assets, make investments, make certain restricted payments, merge or consolidate and enter into certain transactions with our affiliates. Further, we are currently and may in the future be required to maintain specified financial ratios, including pursuant to a minimum interest coverage ratio, and to satisfy a minimum liquidity test. Our ability to meet those financial ratios and tests can be affected by events beyond our control, and there can be no assurance that we will meet those tests. Pursuant to our amended credit facility, we have pledged substantially all of our assets to our senior lender, SVB. In addition, our loan agreement with SVB currently requires us to hold 75% of our US cash balances at SVB, which may limit our ability to manage our cash holdings effectively.

**<u>Risks Related to International Operations</u>**

***Rising concern regarding international tariffs could materially and adversely affect our business and results of operations.***

The current political landscape has introduced significant uncertainty with respect to future trade regulations and existing international trade agreements, as shown by the new or increased tariffs imposed by the U.S. on many countries.

We cannot predict whether, and to what extent, there may be changes to international trade agreements or whether additional quotas, duties, tariffs, exchange controls or other restrictions on our products will be changed or imposed. If we are unable to source our products from the countries where we wish to purchase them, either because of regulatory changes or for any other reason, or if the cost of doing so increases, it could have a material adverse effect on our business, financial condition and results of operations. Furthermore, imposition of tariffs or other developments may result in our implementing local or alternative sourcing initiatives that make it more difficult to sell our products in foreign countries, which would negatively impact our business and operating results.

***We face risks associated with our international operations that could impair our ability to grow our revenues abroad as well as our overall financial condition.***

We believe that our future growth is dependent in part upon our ability to increase sales in international markets. These sales are subject to a variety of risks, including geopolitical events, fluctuations in currency exchange rates, tariffs, import restrictions and other trade barriers, unexpected changes in regulatory requirements, longer accounts receivable payment cycles, potentially adverse tax consequences, and export license requirements. In addition, we are subject to the risks inherent in conducting business internationally, including political and economic instability and unexpected changes in diplomatic and trade relationships. In many markets where we operate, business and cultural norms are different than those in the U.S., and practices that may violate laws and regulations applicable to us such as the Foreign Corrupt Practices Act (the "FCPA") unfortunately are more commonplace. Although we have implemented policies and procedures with the intention of ensuring compliance with these laws and regulations, our employees, contractors and agents, as well as distributors and resellers involved in our international sales, may take actions in violation of our policies. Many of our vendors and strategic business allies also have international operations and are subject to the risks described above. Even if we are able to successfully manage the risks of international operations, our business may be adversely affected if one or more of our business partners are not able to successfully manage these risks. There can be no assurance that one or more of these factors will not have a material adverse effect on our business strategy and financial condition.

***Foreign currency exchange rates may adversely affect our results.***

We are exposed to market risk primarily related to foreign currencies and interest rates. In particular, we are exposed to changes in the value of the U.S. dollar versus the local currency in which our products are sold and our services are purchased, including devaluation and revaluation of local currencies. Accordingly, fluctuations in foreign currency rates could adversely affect our revenues and operating results.

**<u>Risks Related to Regulatory Compliance and Legal Matters</u>**

***Our inability to obtain appropriate industry certifications or approvals from governmental regulatory bodies could impede our ability to grow revenues in our wireless products.***

The sale of our wireless products in some geographical markets is sometimes dependent on the ability to gain certifications and/or approvals by relevant governmental bodies. In addition, many of our products are certified as meeting various industry quality and/or compatibility standards. Failure to obtain these certifications or approvals, or delays in receiving any needed certifications or approvals, could impact our ability to compete effectively or at all in these markets and could have an adverse impact on our revenues.

***Our failure to comply effectively with regulatory laws pertaining to our foreign operations could have a material adverse effect on our revenues and profitability.***

We are required to comply with U.S. government export regulations in the sale of our products to foreign customers, including requirements to properly classify and screen our products against a denied parties list prior to shipment. We are also required to comply with the provisions of the FCPA and all other anti-corruption laws, such as the U.K. Anti-Bribery Act, of all other countries in which we do business, directly or indirectly, including compliance with the anti-bribery prohibitions and the accounting and recordkeeping requirements of these laws. Violations of the FCPA or other similar laws could trigger sanctions, including ineligibility for U.S. government insurance and financing, as well as large fines. Failure to comply with the aforementioned regulations could also affect our decision to sell our products in international jurisdictions, which could have a material adverse effect on our revenues and profitability.

***Our failure to comply effectively with the requirements of applicable environmental legislation and regulation could have a material adverse effect on our revenues and profitability.***

Certain states and countries have passed regulations relating to chemical substances in electronic products and requiring electronic products to use environmentally friendly components. For example, the European Union has the Waste Electrical and Electronic Equipment Directive, the Restrictions of Hazardous Substances Directive, and the Regulation on Registration, Evaluation, Authorization and Restriction of Chemicals. In the future, China and other countries including the U.S. may adopt further environmental compliance programs. In order to comply with these regulations, we may need to redesign our products to use different components, which may be more expensive, if they are available at all. If we fail to comply with these regulations, we may not be able to sell our products in jurisdictions where these regulations apply, which could have a material adverse effect on our revenues and profitability.

***Evolving expectations from investors, customers, lawmakers, regulators, and other stakeholders regarding environmental, social and governance practices and disclosures may adversely affect our reputation, adversely impact our ability to attract and retain employees or customers, expose us to increased scrutiny from the investment community or enforcement authorities or otherwise adversely impact our business and results of operations.***

We may become subject to increased scrutiny and evolving expectations from investors, customers, lawmakers, regulators, and other stakeholders on environmental, social and governance ("ESG") practices and disclosures, including those related to environmental stewardship, climate change, diversity, equity and inclusion, forced labor, racial justice, and workplace conduct. Regulators have imposed in the past, and may impose in the future, ESG-related rules and guidance, which may conflict with one another and impose additional costs on us or expose us to new or additional risks. Moreover, certain organizations that provide information to investors have developed ratings for evaluating companies on their approach to different ESG-related matters, and unfavorable ratings of us or our industry may lead to negative investor sentiment and the diversion of investment to other companies or industries. As a smaller company, we may not have resources to meet the evolving ESG-related expectations of the investment community.

***Current or future litigation, including related to intellectual property, could adversely affect us.***

We are subject to a wide range of claims and lawsuits in the course of our business. Any lawsuit may involve complex questions of fact and law and may require the expenditure of significant funds and the diversion of other resources. The results of litigation are inherently uncertain, and adverse outcomes are possible. Adverse outcomes may have a material adverse effect on our business, financial condition or results of operations.

In particular, litigation regarding intellectual property rights occurs frequently in our industry. There is a risk that other third parties could claim that our products, or our customers' products, infringe on their intellectual property rights or that we have misappropriated their intellectual property. In addition, software, business processes and other property rights in our industry might be increasingly subject to third-party infringement claims as the number of competitors grows and the functionality of products in different industry segments overlaps. Other parties might currently have, or might eventually be issued, patents that pertain to the proprietary rights we use. Any of these third parties might make a claim of infringement against us. The results of litigation are inherently uncertain, and adverse outcomes are possible.

Responding to any infringement claim, regardless of its validity, could:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· be time-consuming, costly and/or result in litigation;

· divert management's time and attention from developing our business;

· require us to pay monetary damages, including treble damages if we are held to have willfully infringed;

· require us to enter into royalty and licensing agreements that we would not normally find acceptable;

· require us to stop selling or to redesign certain of our products; or

· require us to satisfy indemnification obligations to our customers.

If any of these occur, our business, financial condition or results of operations could be adversely affected.

**<u>General Risk Factors</u>**

***High interest rates may negatively impact our results of operations and financing costs.***

 ****

Interest rates are highly sensitive to many factors that are beyond our control, including general economic conditions and policies of various governmental and regulatory agencies. In an effort to combat inflation, a number of central banks around the world, including the U.S., raised interest rates and may raise them in the future. Higher interest rates may hinder the economic growth in markets where we do business, and has and may continue to have negative impacts on the global economy. High interest rates may lead customers to decrease or delay spending on products and projects, including on products that we sell, which may have a material adverse effect on our business, financial condition and results of operations. In addition, higher interest rates impact the amount of interest we pay for our debt obligations and leases and continue and sustained increases in interest rates could negatively impact our financing costs or cash flow.

***If we fail to maintain effective internal controls, we may conclude that our internal control over financial reporting is not effective, which could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner.***

We have previously identified and remediated a material weakness in our internal control over financial reporting. If we fail to maintain effective internal controls, we may conclude that our internal control over financial reporting is not effective, which could adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner. Our management is responsible for establishing and maintaining adequate internal control over financial reporting designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. generally accepted accounting principles ("GAAP"). Our management is likewise required, on a quarterly basis, to evaluate the effectiveness of our internal controls and to disclose any changes and material weaknesses identified through such evaluation in those internal controls.

As disclosed in Part II, Item 9A of our Annual Report on Form 10-K for the year ended June 30, 2024, during fiscal 2023, management identified a material weakness related to the design and implementation of information technology general controls related to the Company's information systems that are relevant to the preparation of consolidated financial statements. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company's annual or interim financial statements will not be prevented or detected on a timely basis. We implemented a number of measures that effectively remediated the previously disclosed material weakness and concluded as of June 30, 2025 that our internal control over financial report was effective. However, we cannot provide assurances that a new material weakness will not occur in the future. If we, or our independent registered public accounting firm identify one or more additional material weaknesses, or, if we are otherwise unable to maintain effective internal control over financial reporting or disclosure controls and procedures, our ability to record, process and report financial information accurately, and to prepare financial statements within required time periods, could be adversely affected, which could subject us to litigation or investigations requiring management resources and payment of legal and other expenses, negatively affect investor confidence in our financial statements and adversely impact our stock price. Additionally, if any such material weakness is not remediated effectively or in a timely manner, we could be impacted by a material misstatement of our annual or interim financial statements that was not prevented or detected on a timely basis, which could have a negative effect on our results of operations and/or the trading price of our securities.

***If we are unable to attract, retain or motivate key senior management and technical personnel, it could materially harm our business.***

Our financial performance depends substantially on the performance of our executive officers and of key engineers, marketing and sales employees. We are particularly dependent upon our technical personnel, due to the specialized technical nature of our business. If we were to lose the services of our executive officers or any of our key personnel and were not able to find replacements in a timely manner, our business could be disrupted, other key personnel might decide to leave, and we might incur increased operating expenses associated with finding and compensating replacements.

***Our quarterly operating results may fluctuate, which could cause the market price of our common stock to decline.***

We have experienced, and expect to continue to experience, significant fluctuations in net revenue, expenses and operating results from quarter to quarter. We therefore believe that quarter to quarter comparisons of our operating results are not a good indication of our future performance, and investors should not rely on them to predict our future operating or financial performance or the future performance of the market price of our common stock. A high percentage of our operating expenses are relatively fixed and are based on our forecast of future revenue. If we were to experience an unexpected reduction in net revenue in a quarter, we would likely be unable to adjust our short-term expenditures significantly. If this were to occur, our operating results for that fiscal quarter would be harmed. In addition, if our operating results in future fiscal quarters were to fall below the expectations of equity analysts and investors, the market price of our common stock would likely fall.

***The market price of our common stock may be volatile based on a number of factors, many of which are not under our control.***

The market price of our common stock has been highly volatile. The market price of our common stock could be subject to wide fluctuations in response to a variety of factors, many of which are out of our control, including:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· adverse changes in domestic or global economic, market and other conditions;

· new products or services offered by our competitors;

· our completion of or failure to complete significant one-time sales of our products;

· actual or anticipated variations in quarterly operating results;

· changes in financial estimates by securities analysts;

· announcements of technological innovations;

· our announcement of significant mergers, acquisitions, strategic partnerships, joint ventures or capital commitments;

· conditions or trends in the industry;

· additions or departures of key personnel;

· increased competition from industry consolidation; and

· sales of common stock by our stockholders or us or repurchases of common stock by us.

In addition, the Nasdaq Capital Market often experiences price and volume fluctuations. These fluctuations often have been unrelated or disproportionate to the operating performance of companies listed on the Nasdaq Capital Market.

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|:---|:---|
| **ITEM 1B.** | **UNRESOLVED STAFF COMMENTS** |

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None.

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|:---|:---|
| **ITEM 1C.** | **CYBERSECURITY** |

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**Risk Management and Strategy**

We have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes. We routinely assess material risks from cybersecurity threats, including any potential unauthorized occurrence on or conducted through our information systems that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.

We leverage guidance from the National Institute of Standards and Technology Cybersecurity Framework ("NIST CSF"), which provides an outline of enterprise security processes and controls, to inform the design and assessment of our cybersecurity risk management program. This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.

As part of our risk management process, we may engage third-party experts to help identify and assess risks from cybersecurity threats. Our risk management process also encompasses cybersecurity risks associated with our use of third-party service providers.

Our cybersecurity risk management program includes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· risk assessments designed to help identify material cybersecurity risks to our critical systems, information, products, services and our broader IT environment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· evaluations of our readiness to assess, respond and, as applicable, recover from potential cybersecurity incidents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· periodic tabletop exercises to simulate a response to a cybersecurity incident and use the findings to improve our processes, technologies and incident response plan;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· the use of external service providers, where appropriate, to assess, test, or otherwise assist with the aspects of our security controls;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· cybersecurity training to educate our employees, consultants and other users about their individual responsibilities regarding our IT systems and data;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· weekly briefings on cybersecurity incidents, threats, and related matters;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· a third-party risk management process for service providers, suppliers and vendors who have access to our critical systems and information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· cybersecurity risk insurance that provides protection against certain potential costs and losses arising from a cybersecurity incident.

As of the date of this report, we do not believe that known risks from cybersecurity threats, including as a result of any previous cybersecurity incidents that we are aware of, have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations, or financial condition. However, we can give no assurance that we have detected or protected against all such cybersecurity incidents or threats or that we will not experience such an incident in the future. Further details about the cybersecurity risks we face are described under the heading "*Risks Related to Technology, Cybersecurity and Intellectual Property,*" included as part of our risk factor disclosures in Part I, Item 1A of this Report, which disclosures are incorporated by reference herein.

**Governance**

The Board is responsible for the oversight of risks from cybersecurity threats. Our Board oversees management's implementation of our cybersecurity risk management program. On a quarterly basis, and more frequently as needed, our Board receives updates from our senior management concerning, among other relevant information, the status of our cybersecurity initiatives to strengthen our cybersecurity risk management and are apprised, as necessary, regarding any material cybersecurity incidents, as well as any incidents with lesser impact potential.

While the Board reviews and oversees the Company's information security efforts, our Director of IT, under the oversight of our executive officers, is responsible for the day-to-day management of cybersecurity risk and the design and implementation of policies, processes and procedures to identify and mitigate this risk. Our Director of IT, in coordination with the executive officers, is responsible for assessing and managing material risks from cybersecurity threats, as well as managing and responding to material cybersecurity incidents if any occur. Our Director of IT has over 28 years of experience in various information technology roles, which includes over 10 years of management of cybersecurity matters.

Our Director of IT provides weekly briefings to the Chief Financial Officer, General Counsel and other members of our cross-functional incident response team. The weekly briefings are focused on our cybersecurity risks and activities, including cybersecurity incidents and responses, cybersecurity systems testing, third-party activities and related topics. In the event that threats and incidents are identified as potentially significant, the Chief Financial Officer and General Counsel promptly report to our Board.

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| | |
|:---|:---|
| **ITEM 2.** | **PROPERTIES** |

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The following table presents details regarding our leased facilities:

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| | | |
|:---|:---|:---|
| **Locations** | **Primary Use** | **Approximate Square Footage** |
| Irvine, California, U.S.A. | Corporate headquarters; sales and marketing, research and development, operations and administration | 12000 |
| Plymouth, Minnesota, U.S.A. | Operations; warehouse and administration | 66000 |
| Vancouver, British Columbia, Canada | Engineering, operations and marketing | 8500 |
| Hyderabad, India | Engineering and design | 18000 |
| Taipei City, Taiwan | Engineering, sales and marketing | 5500 |

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We believe our existing facilities are adequate to meet our needs. If additional space is needed in the future, we believe that suitable space will be available on commercially reasonable terms.

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|:---|:---|
| **ITEM 3.** | **LEGAL PROCEEDINGS** |

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Refer to *Note 10* of Notes to Consolidated Financial Statements, included in Part II, Item 8 of this Report, which is incorporated herein by reference, for a discussion of legal proceedings.

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|:---|:---|
| **ITEM 4.** | **MINE SAFETY DISCLOSURES** |

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None.

**PART II**

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|:---|:---|
| **ITEM 5.** | **MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES** |

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**Common Stock**

Our common stock is traded on the Nasdaq Capital Market under the symbol "LTRX." The number of holders of record of our common stock as of August 22, 2025 was approximately 24.

**Dividend Policy**

We have never declared or paid cash dividends on our common stock. We do not anticipate paying any cash dividends on our common stock in the foreseeable future, and we intend to retain any future earnings for use in the expansion of our business and for general corporate purposes. Any future decision to declare or pay dividends will be made by the Board in its sole discretion and will depend upon our financial condition, operating results, capital requirements and other factors that the Board deems appropriate at the time of its decision.

**Issuer Repurchases**

We did not repurchase any shares of our common stock during fiscal 2025.

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|:---|:---|
| **ITEM 6.** | **RESERVED** |

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|:---|:---|
| **ITEM 7.** | **MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |

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*You should read the following discussion and analysis in conjunction with our consolidated financial statements and the accompanying notes thereto included in Part II, Item 8 of this Annual Report on Form 10-K for the fiscal year ended June 30, 2025 (this "Report"). This discussion and analysis contains forward-looking statements that are based on our management's current beliefs and assumptions, which statements are subject to substantial risks and uncertainties. Our actual results may differ materially from those expressed or implied by these forward-looking statements as a result of many factors, including those discussed in "Risk Factors" included in Part I, Item 1A of this Report. Please also see "Cautionary Note Regarding Forward-Looking Statements" at the beginning of this Report.*

**Overview**

Lantronix Inc. (Nasdaq: LTRX) is a global leader in Edge AI and Industrial IoT solutions, delivering intelligent computing, secure connectivity, and remote management for mission-critical applications. Serving high-growth markets, including smart cities, enterprise IT, and commercial and defense unmanned systems, we enable customers to optimize operations and accelerate digital transformation. Our comprehensive portfolio of hardware, software, and services powers applications from secure video surveillance and intelligent utility infrastructure to resilient out-of-band network management. By bringing intelligence to the network edge, we help organizations achieve efficiency, security, and a competitive edge in today's AI-driven world.

We conduct our business globally and manage our sales teams by three geographic regions: the Americas; EMEA; and APJ.

References to "fiscal 2025" refer to the fiscal year ended June 30, 2025 and references to "fiscal 2024" refer to the fiscal year ended June 30, 2024.

**Products and Solutions**

We organize our portfolio services and products into the following product lines: Embedded IoT Solutions, IoT Systems Solutions, and Software and Engineering Services. Refer to "Products and Solutions" included in Part I, Item 1 of this Report, which is incorporated herein by reference, for further discussion.

**Recent Developments**

***Acquisition***

In December 2024, we finalized the acquisition of Netcomm Wireless Pty Ltd ("Netcomm"), a subsidiary of DZS Inc., for $6,458,000 in cash. Netcomm operated an enterprise IoT business. The acquisition complements our focus on Enterprise and Smart City vertical markets and adds products to enhance our connectivity solutions in areas such as critical infrastructure, asset monitoring and telecommunications.

Refer to *Note 3* of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Report, which is incorporated herein by reference, for additional discussion regarding the acquisition.

**Recent Accounting Pronouncements**

Refer to *Note 1* of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Report, which is incorporated herein by reference, for a discussion of recent accounting pronouncements.

**Critical Accounting Policies and Estimates**

The preparation of financial statements and related disclosures in accordance with U.S. generally accepted accounting principles ("GAAP") requires us to make judgments, estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of net revenue and expenses during the reporting period. We regularly evaluate our estimates and assumptions related to revenue recognition, sales returns and allowances, inventory valuation, valuation of deferred income taxes, valuation of goodwill and long-lived and intangible assets. We base our estimates and assumptions on historical experience and on various other factors that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. To the extent there are material differences between our estimates and the actual results, our future results of operations will be affected.

We believe the following critical accounting policies require us to make significant judgments and estimates in the preparation of our consolidated financial statements:

***Revenue Recognition***

 

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.

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. Establishing accruals for product returns and pricing adjustments requires the use of judgment and estimates that impact the amount and timing of revenue recognition. When product revenue is recognized, we establish an estimated allowance for future product returns based primarily on historical returns experience and other known or anticipated returns. We also record reductions of revenue for pricing adjustments, such as competitive pricing programs and rebates, in the same period that the related revenue is recognized, based primarily on approved pricing adjustments and our historical experience. Actual product returns or pricing adjustments that differ from our estimates could result in increases or decreases to our net revenue.

A portion of our revenues are derived from engineering and related consulting service contracts with customers. These contracts generally include performance obligations in which control is transferred over time because the customer either simultaneously receives and consumes the benefits provided or our performance on the contract creates or enhances an asset that the customer controls. These contracts typically provide services on the following basis:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· 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.

&nbsp;&nbsp;&nbsp;&nbsp;

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 an input method based on 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.

From time to time, we may enter into contracts with customers that include promises to transfer multiple performance obligations that may include sales of products, professional engineering services and other product qualification or certification services. Determining whether the promises in these 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 these 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. Additionally, estimating standalone selling prices for separate performance obligations within a contract may require significant judgment and consideration of various factors including market conditions, items contemplated during negotiation of customer arrangements and internally developed pricing models. Changes to performance obligations that we identify, or the estimated selling prices pertaining to a contract, could materially impact the amounts of earned and unearned revenue that we record.

***Inventory Valuation***

We value inventories at the lower of cost (on a first-in, first-out basis) or net realizable value, whereby we make estimates regarding the market value of our inventories, including an assessment of excess and obsolete inventories. We determine excess and obsolete inventories based on an estimate of the future sales demand for our products within a specified time horizon, which is generally 12 to 24 months. In addition, specific reserve estimates are recorded to cover risks for end-of-life products, inventory located at our contract manufacturers and warranty replacement stock. The estimates we use for demand are also used for near-term capacity planning and inventory purchasing. Demand for our products can fluctuate significantly from period to period. A significant decrease in demand could result in an increase in the amount of excess inventory on hand. In addition, our industry is characterized by rapid technological change, frequent new product development and product obsolescence that could result in an increase in the amount of obsolete inventory quantities on hand. Our estimates of future product demand and judgement to determine excess inventory may prove to be inaccurate, in which case we may have understated or overstated the reduction to the total carrying value of our inventory for excess and obsolete inventory. In the future, if our inventory is determined to be overvalued, we would be required to recognize such costs in our cost of goods sold, resulting in a reduction in our gross margins, at the time of such determination. Although we make every effort to ensure the accuracy of our forecasts of future product demand, any significant unanticipated changes in demand or technological developments could have a significant impact on the value of our inventory and our results of operations.

***Valuation of Deferred Income Taxes***

We have recorded a valuation allowance to reduce our net deferred tax assets to zero, primarily due to historical net operating losses ("NOLs") and uncertainty of generating future taxable income. We consider estimated future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance. If we determine that it is more likely than not that we will realize a deferred tax asset that currently has a valuation allowance, we would be required to reverse the valuation allowance, which would be reflected as an income tax benefit in our consolidated statements of operations at that time.

***Business Combinations***

We allocate the fair value of the purchase consideration of a business acquisition to the tangible assets, liabilities, and intangible assets acquired, including in-process research and development ("IPR&D"), if applicable, 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. The valuation of acquired assets and assumed liabilities requires significant judgment and estimates, especially with respect to intangible assets. The valuation of intangible assets, in particular, requires that we use valuation techniques such as the income approach. The income approach includes the use of a discounted cash flow model, which includes discounted cash flow scenarios and requires significant estimates such as future expected revenue, expenses, capital expenditures and other costs, and discount rates. We estimate the fair value based upon assumptions we believe to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from our estimates. Estimates associated with the accounting for acquisitions may change as additional information becomes available regarding the assets acquired and liabilities assumed. Acquisition-related expenses and related restructuring costs are recognized separately from the business combination and are expensed as incurred.

 

***Goodwill Impairment Testing***

We evaluate goodwill for impairment on an annual basis on May 31, 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 our evaluation of goodwill for impairment 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. Some factors that we consider important in the qualitative assessment which could trigger a goodwill impairment review include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· significant underperformance relative to historical or projected future operating results;

· significant changes in the manner of our use of the acquired assets or the strategy for our overall business;

· significant negative industry or economic trends;

· a significant decline in our stock price for a sustained period; and

· a significant change in our market capitalization relative to our book value.

Based on our 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.

Significant management judgment is required in estimating the reporting unit's fair value and in the creation of the forecasts of future operating results that are used in the discounted cash flow method of valuation. These include (i) estimation of future cash flows, which is dependent on internal forecasts, (ii) estimation of the long-term rate of growth of our business, (iii) estimation of the period during which cash flows will be generated and (iv) the determination of our weighted-average cost of capital, which is a factor in determining the discount rate. Our estimate of the reporting unit's fair value would also generally include the consideration of a control premium, which is the amount that a buyer is willing to pay over the current market price of a company as indicated by the traded price per share (i.e., market capitalization) to acquire a controlling interest. If our actual financial results are not consistent with our assumptions and judgments used in estimating the fair value of our reporting unit, we may be exposed to goodwill impairment losses.

We performed our annual goodwill impairment test as of May 31, 2025, using a quantitative assessment for our single reporting unit. The fair value of the reporting unit was estimated using a combination of the income approach (discounted cash flow method) and the market approach (guideline public companies and guideline transactions methods). Key assumptions included revenue growth, EBITDA margins, a long-term growth rate, and a discount rate. These assumptions reflect management's best estimates of future financial performance, current market conditions, and a market participant perspective. The results of the impairment test indicated that the estimated fair value exceeded the carrying amount by approximately 9%. No impairment of goodwill was recognized for the year ended June 30, 2025.

***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 value of such assets may not be recoverable. Circumstances that could trigger a review include, but are not limited to the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· significant decreases in the market price of the asset;

· significant adverse changes in the business climate or legal factors;

· accumulation of costs significantly in excess of the amount originally expected for the acquisition or construction of the asset;

· current period cash flow or operating losses combined with a history of losses or a forecast of continuing losses associated with the use of the asset; or

· current expectation that the asset will more likely than not be sold or disposed of significantly before the end of its estimated useful life.

Whenever events or changes in circumstances suggest that the carrying amount of long-lived assets and intangible assets may not be recoverable, we estimate the future cash flows expected to be generated by the asset from its use or eventual disposition. If the sum of the expected 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. Significant management judgment is required in the forecasts of future operating results that are used in the discounted cash flow method of valuation. These significant judgments may include future expected revenue, expenses, capital expenditures and other costs, discount rates and whether or not alternative uses are available for impacted long-lived assets.

**Results of Operations - Fiscal Years Ended June 30, 2025 and 2024**

***Summary***

For fiscal 2025, our net revenue decreased by $37,404,000, or 23.3%, compared to fiscal 2024. The decrease in net revenue was driven by a 34.2% decrease in net revenue in our IoT System Solutions product line, as well as decreases in net revenue in our Embedded IoT Solutions product line of 1.2% and our Software and Services product line of 12.5%. We had a net loss of $11,373,000 for fiscal 2025, compared to a net loss of $4,516,000 for fiscal 2024. The increase in net loss was primarily driven by the decrease in revenues partially offset by a reduction in operating expenses of $4,516,000 for fiscal 2025 compared to fiscal 2024.

***Net Revenue***

The following tables present our net revenue by product lines and by geographic region:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | |
|  | | | | **% of Net** | **% of Net****Change** | **Change** |
|  | **2025** | **% of Net**<br>**Revenue** | **2024** | **Revenue** | **Revenue** | **%** |
|  | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** |
| Embedded IoT Solutions | $46380 | 37.7% | $46953 |  | 29.3%) | (1.2%) |
| IoT System Solutions | 68735 | 55.9% | 104450 |  | 65.1%) | (34.2%) |
| Software & Services | 7808 | 6.4% | 8924 |  | 5.6%) | (12.5%) |
|  | $122923 | 100.0% | $160327 |  | 100.0%) | (23.3%) |

---

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | |
|  | | | | **% of Net** | **% of Net****Change** | **Change** |
|  | **2025** | **% of Net**<br>**Revenue** | **2024** | **Revenue** | **Revenue** | **%** |
|  | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** |
| Americas | $70126 | 57.0% | $78203 |  | 48.8%) | (10.3%) |
| EMEA | 30898 | 25.1% | 64025 |  | 39.9%) | (51.7%) |
| APJ | 21899 | 17.9% | 18099 |  | 11.3% | 21.0% |
|  | $122923 | 100.0% | $160327 |  | 100.0%) | (23.3%) |

---

*Embedded IoT Solutions*

Net revenue decreased primarily due to lower unit sales in some of our legacy embedded ethernet connectivity products across all regions and lower volume sales of our network interface cards in the Americas and APJ regions. These decreases were largely offset by higher unit sales of our embedded compute product line driven by a video conferencing customer in the APJ region.

 

 

 

 

*IoT System Solutions*

The decrease in net revenue was substantially driven by our custom solution to our European smart energy grid customer. In fiscal 2024, this customer represented just over 25% of our net revenue. By comparison, in fiscal 2025, we recognized approximately $11 million from this customer in the first half of the year. Separately, compared to the prior year, we experienced (i) decreased unit sales of our network switches in the Americas region, and (ii) decreased unit sales of our OOB products across all regions, as revenues from these products can be dependent on project-based capital spending. These decreases were partially offset by higher unit sales of (i) our gateways, routers, and modems products, which was largely driven by contributions from our Netcomm acquisition, and (ii) our telematic gateways in the Americas region.

 

*Software & Services*

Net revenue decreased primarily due to lower engineering services revenue in the EMEA region as two of our large design services projects transitioned in the prior year from the design phase to full production. We also saw a moderate decrease in our extended warranty services in the Americas region, primarily related to lower service volumes in our OOB products.

***Gross Profit***

Gross profit represents net revenue less cost of revenue. Cost of revenue consists primarily of the cost of raw material components, subcontract labor assembly from contract manufacturers, direct and indirect personnel expenses related to professional services, manufacturing overhead, inventory reserves for excess and obsolete products or raw materials, warranty costs, royalties and share-based compensation.

The following table presents our gross profit:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | |
|  | | | | **% of Net** | **% of Net****Change** | **Change** |
|  | **2025** | **% of Net**<br>**Revenue** | **2024** | **Revenue** | **Revenue** | **%** |
|  | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** |
| Gross profit | $51699 | 42.1% | $64354 |  | 40.1%) | (19.7%) |

---

Gross profit as a percentage of revenue (referred to as "gross margin") increased primarily as a result of lower overhead costs and our product sales mix.

We currently expect that gross margin will fluctuate in the future, from period-to-period, based on changes in our product mix, average selling prices, and average manufacturing costs.

 **

***Selling, General and Administrative***

 **

Selling, general and administrative expenses consist of personnel-related expenses including salaries and commissions, share-based compensation, facility expenses, information technology, advertising and marketing expenses and professional legal and accounting fees.

The following table presents our selling, general and administrative expenses:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | |
|  | | | | **% of Net** | **% of Net****Change** | **Change** |
|  | **2025** | **% of Net**<br>**Revenue** | **2024** | **Revenue** | **Revenue** | **%** |
|  | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** |
| Personnel-related expenses | $20387 |  | $21316) |  |  | (4.4%) |
| Professional fees and outside services | 4878 |  | 5037) |  |  | (3.2%) |
| Advertising and marketing | 2239 |  | 2346) |  |  | (4.6%) |
| Facilities and insurance | 1794 |  | 2754) |  |  | (34.9%) |
| Share-based compensation | 4424 |  | 6248) |  |  | (29.2%) |
| Depreciation | 1360 |  | 1393) |  |  | (2.4%) |
| Other | 1164 |  | 1112 |  |  | 4.7% |
| &nbsp;&nbsp;&nbsp;Selling, general and administrative | $36246 | 29.5% | $40206 |  | 25.1%) | (9.8%) |

---

Selling, general and administrative expenses decreased primarily due to (i) reduced share-based compensation costs based on the value of new and outstanding awards, (ii) lower spending on various sales conferences, IT infrastructure and related facilities costs, and (iii) lower personnel-related expenses resulting from less variable compensation and restructuring activities during the current fiscal year.

***Research and Development***

Research and development expenses consists of personnel-related expenses, share-based compensation, and expenditures to third-party vendors for research and development activities and product certification costs. Our costs from period-to-period related to outside services and product certifications vary depending on our level and timing of development activities.

The following table presents our research and development expenses:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | |
|  | | | | **% of Net** | **% of Net****Change** | **Change** |
|  | **2025** | **% of Net**<br>**Revenue** | **2024** | **Revenue** | **Revenue** | **%** |
|  | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** |
| Personnel-related expenses | $12164 |  | $14022) |  |  | (13.3%) |
| Facilities | 2597 |  | 2523 |  |  | 2.9% |
| Outside services | 636 |  | 505 |  |  | 25.9% |
| Product certifications | 499 |  | 462 |  |  | 8.0% |
| Share-based compensation | 1522 |  | 1852) |  |  | (17.8%) |
| Other | 1179 |  | 918 |  |  | 28.4% |
| &nbsp;&nbsp;&nbsp;Research and development | $18597 | 15.1% | $20282 |  | 12.7%) | (8.3%) |

---

Research and development expenses decreased primarily due to (i) lower personnel-related expenses in our engineering groups resulting from restructuring activities during the current fiscal year and (ii) reduced share-based compensation costs based on the value of new and outstanding awards. These decreases were partially offset by (i) higher facilities-related equipment and software costs, (ii) increased costs for third party contract labor, which are included in the "outside services" category in the table above, and (iii) increased spending on certain prototype and materials costs, which are included in the "other" category in the table above.

***Restructuring, Severance and Related Charges***

 

During fiscal 2025 and 2024, we incurred restructuring, severance and related charges of $3,535,000 and $1,423,000, respectively, due to various headcount reduction efforts during these years. The most significant of these actions occurred in January 2025, in which we reduced our headcount by approximately 12% worldwide, primarily in the U.S. and India. The severance and related charges resulting from this action totaled approximately $1,400,000.

In addition, during fiscal 2025 we downsized the usage of certain sites, resulting in a charge of approximately $379,000, which is included in the total restructuring charges above.

We may incur additional restructuring, severance and related charges in future periods as we continue to identify cost savings and efficiencies related to our business.

***Acquisition-Related Costs***

During fiscal 2025 we incurred approximately $371,000 of costs primarily in connection with the acquisition of Netcomm. These costs were mainly comprised of banking, legal and other professional fees.

***Amortization of Intangible Assets***

We acquired certain intangible assets through our recent acquisitions, which we recorded at fair-value as of the acquisition dates. These assets are generally amortized on a straight-line basis over their estimated useful lives and resulted in charges of $3,951,000 and $5,314,000 during fiscal 2025 and 2024, respectively.

***Interest Expense, Net***

For fiscal 2025 and 2024, we incurred net interest expense from interest incurred on borrowings on our credit facilities. ****We also earn interest on our domestic cash balances.

***Other Income (Expense), Net***

Other income (expense), net, is comprised primarily of foreign currency remeasurement and transaction adjustments related to our foreign subsidiaries whose functional currency is the U.S. dollar.

***Provision for Income Taxes***

The following table presents our provision for income taxes:

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| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | **Years Ended June 30,** | |
|  | | | | **% of Net** | **% of Net****Change** | **Change** |
|  | **2025** | **% of Net**<br>**Revenue** | **2024** | **Revenue** | **Revenue** | **%** |
|  | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** | **(In thousands, except percentages)** |
| Provision for (benefit from) income taxes | $(239) | (0.2%) | $745 |  | 0.5%) | (132.1%) |

---

The following table presents our effective tax rate based upon our provision for income taxes:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
| Effective tax rate | 2.1% | (19.8%) |

---

We utilize the liability method of accounting for income taxes. The differences between our effective tax rate and the federal statutory rate in fiscal 2025 and 2024 were also impacted by the effect of our domestic losses recorded without a tax benefit, as well as the effect of certain state and foreign earnings taxed at rates differing from the federal statutory rate. Additionally, in fiscal 2025, we reversed a portion of our liability for uncertain tax positions as a result of the dissolution of one of our foreign subsidiaries.

We record net deferred tax assets to the extent we believe these assets are more likely than not to be realized. Aside from a net deferred tax liability of $172,000 and $179,000 that we recorded as of June 30, 2025 and 2024, respectively, based on our cumulative losses and uncertainty of generating future taxable income, we provided a full valuation allowance against our net deferred tax assets at June 30, 2025 and 2024. Refer to *Note 8* of Notes to Consolidated Financial Statements, included in Part II, Item 8 of this Report, for additional information.

**Liquidity and Capital Resources**

***Liquidity***

 ****

The following table presents our working capital and cash and cash equivalents:

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| | | | |
|:---|:---|:---|:---|
|  | **June 30,** | **June 30,** | |
|  | **2025** | **2024** |<br>**Change** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Working capital | $46971 | $58794 | $(11823) |
| Cash and cash equivalents | $20098 | $26237 | $(6139) |

---

Our principal sources of cash and liquidity include our existing cash and cash equivalents, borrowings and amounts available under our existing bank borrowing agreement, and cash generated from operations. We are subject to a variable amount of interest on the principal balance of our borrowings and could be adversely impacted by rising interest rates in the future. We believe that our current cash holdings, net cash provided by operating activities, and expected availability under our bank borrowing agreement will be sufficient to fund our material requirements for working capital, capital expenditures and other financial commitments for at least the next 12 months and beyond.

We continue to monitor our existing banking relationships and the availability of potential alternate sources of credit based on market conditions and our ongoing capital requirements. There can be no guarantee that we would be able to obtain any needed alternate financing on acceptable terms, or at all, or that such a financing would not result in a default under the current borrowing agreement. Refer to *Note 5* of Notes to Consolidated Financial Statements, including in Part II, Item 8 of this Report, for additional information. We anticipate that the primary factors affecting our cash and liquidity are net revenue, working capital requirements and capital expenditures.

We define cash and cash equivalents as highly liquid deposits with original maturities of 90 days or less when purchased. We maintain cash and cash equivalents balances at certain financial institutions in excess of amounts insured by the Federal Deposit Insurance Corporation ("FDIC"). There can be no assurance that our deposits in excess of the FDIC limits will be backstopped by the U.S., or that any bank or financial institution with which we do business will be able to obtain needed liquidity from other banks, government institutions or by acquisition in the event of a failure or liquidity crisis.

Our future working capital requirements will depend on many factors, including the following: timing and amount of our net revenue; our product mix and the resulting gross margins; research and development expenses; selling, general and administrative expenses; and expenses associated with any strategic partnerships, acquisitions or infrastructure investments.

From time to time, we may seek additional capital from public or private offerings of our capital stock, borrowings under our existing or future credit lines or other sources in order to (i) develop or enhance our products, (ii) take advantage of strategic opportunities, (iii) respond to competition or (iv) continue to operate our business. We currently have a Form S-3 shelf registration statement on file with the SEC. If we issue equity securities to raise additional funds, our existing stockholders may experience dilution, and the new equity securities may have rights, preferences and privileges senior to those of our existing stockholders. If we issue debt securities to raise additional funds, we may incur debt service obligations, become subject to additional restrictions that limit or restrict our ability to operate our business, or be required to further encumber our assets. There can be no assurance that we will be able to raise any such capital on terms acceptable to us, if at all.

 

***Cash Flows***

 ****

The following table presents the major components of the consolidated statements of cash flows:

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| | | | |
|:---|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** | |
|  | **2025** | **2024** |<br>**Decrease** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Net cash provided by operating activities | $7285 | $18623 | $(11338) |
| Net cash used in investing activities | (6963) | (1479) | $(5484) |
| Net cash used in financing activities | (6461) | (4359) | $(2102) |

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*Operating Activities*

Cash provided by operating activities during fiscal 2025 decreased compared to fiscal 2024. Cash from operations increased in the prior fiscal year due to (i) reduction of our inventories and higher net revenues and (ii) the receipt of customer deposits. In the current fiscal year, we made payments against previously accrued variable compensation balances, as discussed further below. For fiscal 2025, our net loss included $12,306,000 of non-cash charges, while the changes in operating assets and liabilities provided net cash of $6,352,000.

Accounts receivable decreased by $6,187,000, or 19.8%, from June 30, 2024 to June 30, 2025. The decrease was primarily due to lower net revenue levels in the current fiscal year, as well as the timing of payments from certain customers.

Accounts payable increased by $2,912,000, or 28.1%, from June 30, 2024 to June 30, 2025 primarily due to the timing of inventory receipts and payments made to our vendors.

Accrued payroll and related expenses decreased by $2,365,000 or 40.5% from June 30, 2024 to June 30, 2025. The decrease was primarily due to accrued variable compensation paid out during the current fiscal year.

*Investing Activities*

Net cash used in investing activities for fiscal 2025 consisted primarily of the acquisition of Netcomm, which used cash of $6,458,000. We also paid for property and equipment totaling $505,000, primarily for tooling at our contract manufacturers as well as certain research and development projects.

Net cash used in investing activities for fiscal 2024 consisted of purchases of equipment amounting to $1,479,000, primarily for research and development and certain business analysis tools.

*Financing Activities*

Net cash used in financing activities during fiscal 2025 resulted primarily from principal payments of $4,512,000 on our term debt, as well as tax withholdings paid on behalf of employees for restricted shares of $2,093,000.

Net cash used in financing activities during fiscal 2024 resulted primarily from $2,853,000 of principal payments on our term debt as well as $1,027,000 tax withholdings paid on behalf of employees for restricted shares. Additionally, we used cash of $1,262,000 to pay the contingent consideration earned related to the Uplogix acquisition.

---

| | |
|:---|:---|
| **ITEM 7A.** | **QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |

---

Not required for a "smaller reporting company."

---

| | |
|:---|:---|
| **ITEM 8.** | **FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA** |

---

All financial statements required by this Item 8, including the report of our independent registered public accounting firm, are included in Part IV, Item 15 of this Report, as set forth beginning on page F-1 of this Report, and are incorporated by reference into this Item 8.

---

| | |
|:---|:---|
| **ITEM 9.** | **CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE** |

---

None.

---

| | |
|:---|:---|
| **ITEM 9A.** | **CONTROLS AND PROCEDURES** |

---

**Evaluation of Disclosure Controls and Procedures**

We maintain disclosure controls and procedures (as defined in Rules 13a-15I and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") that are designed to ensure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and that this information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, we have concluded that our disclosure controls and procedures were effective as of June 30, 2025.

**Management's Report on Internal Control over Financial Reporting**

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Internal control over financial reporting includes policies and procedures that provide reasonable assurance regarding the reliability of financial reporting and the preparation of Consolidated Financial Statements for external reporting purposes in accordance with U.S. GAAP. Our internal control over financial reporting includes those policies and procedures that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· provide reasonable assurance that transactions are recorded properly to allow for the preparation of financial statements in accordance with U.S. GAAP and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· provide reasonable assurance regarding prevention or timely detection of unauthorized acquisitions, use, or disposition of our assets that could have a material effect on the Consolidated Financial Statements.

Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable assurance and may not prevent or detect misstatements. Further, because of changing conditions, effectiveness of internal control over financial reporting may vary over time.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of June 30, 2025 based on the guidelines established in the Internal Control—Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on that evaluation, management concluded that our internal control over financial reporting was effective as of June 30, 2025.

Baker Tilly US, LLP, the independent registered public accounting firm that audited the financial statements included in this Annual Report on Form 10-K, has provided an attestation report on our internal control over financial reporting, which is included herein.

**Changes in Internal Controls over Financial Reporting**

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended June 30, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

---

| | |
|:---|:---|
| **ITEM 9B.** | **OTHER INFORMATION** |

---

**Insider Trading Arrangements** 

During the quarter ended June 30, 2025, no director or officer of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading arrangement," as each term is defined in Item 408(a) of Regulation S-K.

---

| | |
|:---|:---|
| **ITEM 9C.** | **Disclosure Regarding Foreign Jurisdictions that Prevent Inspections** |

---

None.

**PART III**

Portions of our definitive Proxy Statement on Schedule 14A relating to our 2025 annual meeting of stockholders ("Proxy Statement"), which will be filed with the SEC within 120 days after the end of the fiscal year covered by this Report, are incorporated by reference into Part III of this Report, as indicated below.

---

| | |
|:---|:---|
| **ITEM 10.** | **DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE** |

---

The names of our executive officers and their ages, titles and biographies as of the date hereof are set forth in the section entitled "Information About Our Executive Officers" in Part I, Item 1 of this Report, which is incorporated herein by reference.

We have adopted a code of business conduct and ethics that applies to all employees, including employees of our subsidiaries, as well as each member of our board of directors. The code of business conduct and ethics is available at our website at www.lantronix.com under the Investor Relations-Corporate Governance section. We intend to satisfy any disclosure requirement under applicable rules of the SEC or Nasdaq Stock Market regarding an amendment to, or waiver from, a provision of this code of business conduct and ethics by posting such information on our website, at the web address specified above.

The other information required by this Item is incorporated by reference to our Proxy Statement.

---

| | |
|:---|:---|
| **ITEM 11.** | **EXECUTIVE COMPENSATION** |

---

The information required by this Item is incorporated by reference to our Proxy Statement.

---

| | |
|:---|:---|
| **ITEM 12.** | **SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS** |

---

The information required by this Item is incorporated by reference to our Proxy Statement.

---

| | |
|:---|:---|
| **ITEM 13.** | **CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE** |

---

The information required by this Item is incorporated by reference to our Proxy Statement.

---

| | |
|:---|:---|
| **ITEM 14.** | **PRINCIPAL ACCOUNTANT FEES AND SERVICES** |

---

The information required by this Item is incorporated by reference to our Proxy Statement.

**PART IV**

---

| | |
|:---|:---|
| **ITEM 15.** | **EXHIBITS AND FINANCIAL STATEMENT SCHEDULES** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. *Consolidated Financial Statements* 

 

The following consolidated financial statements and related Report of Independent Registered Public Accounting Firm are filed as part of this Report.

---

| | |
|:---|:---|
|  | **Page** |
| [Report of Independent Registered Public Accounting Firm](#k_032) (PCAOB ID 23) | F-1 |
| [Consolidated Balance Sheets as of June 30, 2025 and 2024](#k_033) | F-4 |
| [Consolidated Statements of Operations for the fiscal years ended June 30, 2025 and 2024](#k_034) | F-5 |
| [Consolidated Statements of Stockholders' Equity for the fiscal years ended June 30, 2025 and 2024](#k_035) | F-6 |
| [Consolidated Statements of Cash Flows for the fiscal years ended June 30, 2025 and 2024](#k_036) | F-7 |
| [Notes to Consolidated Financial Statements](#k_037) | F-8 – F-35 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*2. Exhibits*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | | **Incorporated by Reference** | **Incorporated by Reference** | **Incorporated by Reference** |
| <br>**Exhibit**<br> **Number** | <br>**Exhibit Description** | <br>**Provided Herewith** | **Form** | **Exhibit** | **Filing** <br> **Date** |
| 3.1 | [Amended and Restated Certificate of Incorporation of Lantronix, Inc., as amended](http://www.sec.gov/Archives/edgar/data/1114925/000101968713003371/lantronix_10k-ex0301.htm) |  | 10-K | 3.1 | 8/29/2013 |
| 3.2 | [Amended and Restated Bylaws of Lantronix, Inc.](http://www.sec.gov/Archives/edgar/data/1114925/000101968712004121/lantronix_8k-ex0302.htm) |  | 8–K | 3.2 | 11/15/2012 |
| 4.1 | [Description of Lantronix Common Stock](http://www.sec.gov/Archives/edgar/data/1114925/000168316819002888/lantronix_ex0401.htm) |  | 10-K | 4.1 | 9/11/2019 |
| 10.1\* | [Lantronix, Inc. Amended and Restated 2010 Stock Incentive Plan, as Amended on November 14, 2017](http://www.sec.gov/Archives/edgar/data/1114925/000101968713001712/lantronix_s8-ex402.htm) |  | 8-K | 99.1 | 11/15/2017 |
| 10.2\* | [Form of Stock Option Agreement under the Lantronix, Inc. Amended and Restated 2010 Stock Incentive Plan](http://www.sec.gov/Archives/edgar/data/1114925/000101968713001712/lantronix_s8-ex403.htm) |  | S-8 | 4.3 | 5/9/2013 |
| 10.3\* | [Form of Restricted Stock Award Agreement under the Lantronix, Inc. Amended and Restated 2010 Stock Incentive Plan](http://www.sec.gov/Archives/edgar/data/1114925/000101968713001712/lantronix_s8-ex404.htm) |  | S-8 | 4.4 | 5/9/2013 |
| 10.4\* | [Lantronix, Inc. 2020 Performance Incentive Plan, as amended and restated](https://www.sec.gov/Archives/edgar/data/1114925/000168316824007683/lantronix_ex1001.htm) |  | 8-K | 10.1 | 11/6/2024 |
| 10.5\* | [Form of Director Stock Option Agreement under the Lantronix, Inc. 2020 Performance Incentive Plan](http://www.sec.gov/Archives/edgar/data/1114925/000168316821003966/lantronix_ex1007.htm) |  | 10-K | 10.7 | 8/27/2021 |
| 10.6\* | [Form of Director Restricted Stock Unit Award Agreement under the Lantronix, Inc. 2020 Performance Incentive Plan](http://www.sec.gov/Archives/edgar/data/1114925/000168316821003966/lantronix_ex1009.htm) |  | 10-K | 10.9 | 8/27/2021 |
| 10.7\* | [Form of Nonqualified Stock Option Agreement under the Lantronix, Inc. 2020 Performance Incentive Plan](http://www.sec.gov/Archives/edgar/data/1114925/000168316821003966/lantronix_ex1010.htm) |  | 10-K | 10.10 | 8/27/2021 |
| 10.8\* | [Form of Incentive Stock Option Agreement under the Lantronix, Inc. 2020 Performance Incentive Plan](http://www.sec.gov/Archives/edgar/data/1114925/000168316821003966/lantronix_ex1011.htm) |  | 10-K | 10.11 | 8/27/2021 |
| 10.9\* | [Form of Fiscal 2025 Restricted Stock Unit Award Agreement under the Lantronix, Inc. 2020 Performance Incentive Plan](https://www.sec.gov/Archives/edgar/data/1114925/000168316824006264/lantronix_ex1035.htm) |  | 10-K | 10.35 | 9/9/2024 |
| 10.10\* | [Form of Fiscal 2025 Performance Stock Unit Award Agreement (Financial Measure) under the Lantronix, Inc. 2020 Performance Incentive Plan](https://www.sec.gov/Archives/edgar/data/1114925/000168316824006264/lantronix_ex1036.htm) |  | 10-K | 10.36 | 9/9/2024 |
| 10.11\* | [Form of Fiscal 2025 Performance Stock Unit Award Agreement (Relative TSR) under the Lantronix, Inc. 2020 Performance Incentive Plan](https://www.sec.gov/Archives/edgar/data/1114925/000168316824006264/lantronix_ex1037.htm) |  | 10-K | 10.37 | 9/9/2024 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| 10.12\* | [Form of Fiscal 2026 Restricted Stock Unit Award Agreement under the Lantronix, Inc. 2020 Performance Incentive Plan](lantronix_ex1012.htm) | X |  |  |  |
| 10.13\* | [Form of Fiscal 2026 Performance Stock Unit Award Agreement (Financial Measure) under the Lantronix, Inc. 2020 Performance Incentive Plan](lantronix_ex1013.htm) | X |  |  |  |
| 10.14\* | [Form of Fiscal 2026 Performance Stock Unit Award Agreement (Relative TSR) under the Lantronix, Inc. 2020 Performance Incentive Plan](lantronix_ex1014.htm) | X |  |  |  |
| 10.15\* | [Form of Inducement Restricted Stock Unit Agreement](https://www.sec.gov/Archives/edgar/data/1114925/000168316824004001/lantronix_ex0401.htm) |  | S-8 | 4.1 | 6/5/2024 |
| 10.16\* | [Form of Inducement Performance Stock Unit Agreement (Relative TSR)](https://www.sec.gov/Archives/edgar/data/1114925/000168316824004001/lantronix_ex0402.htm) |  | S-8 | 4.2 | 6/5/2024 |
| 10.17\* | [Form of Inducement Performance Stock Unit Agreement (Financial Measure)](https://www.sec.gov/Archives/edgar/data/1114925/000168316824004001/lantronix_ex0403.htm) |  | S-8 | 4.3 | 6/5/2024 |
| 10.18\* | [Lantronix, Inc. 2013 Employee Stock Purchase Plan, as amended and restated](https://www.sec.gov/Archives/edgar/data/1114925/000168316822007453/lantronix_ex1002.htm) |  | 8-K | 10.2 | 11/9/2022 |
| 10.19\* | [Intrinsyc Technologies Corporation Amended and Restated Incentive Stock Option Plan](http://www.sec.gov/Archives/edgar/data/1114925/000168316820001579/lantronix_ex1001.htm) |  | 10-Q | 10.1 | 5/15/2020 |
| 10.20\* | [Intrinsyc Technologies Corporation Restricted Share Unit Plan](http://www.sec.gov/Archives/edgar/data/1114925/000168316820001579/lantronix_ex1002.htm) |  | 10-Q | 10.2 | 5/15/2020 |
| 10.21\* | [2020 Non-Employee Director Compensation Policy](https://www.sec.gov/Archives/edgar/data/1114925/000168316821005471/lantronix_ex1001.htm) |  | 10-Q | 10.1 | 11/12/2021 |
| 10.22\* | [Non-Employee Director Compensation Policy, as revised August 8, 2022 to be effective November 8, 2022](https://www.sec.gov/Archives/edgar/data/1114925/000168316822006109/lantronix_ex1032.htm) |  | 10-K | 10.32 | 8/29/2022 |
| 10.23\* | [Form of Indemnification Agreement entered into between Lantronix, Inc. with its directors and certain of its executive officers](http://www.sec.gov/Archives/edgar/data/1114925/000101968716006736/lantronix_8k-1002.htm) |  | 8-K | 10.2 | 6/20/2016 |
| 10.24\* | [Summary of Lantronix, Inc. Annual Bonus Program](http://www.sec.gov/Archives/edgar/data/1114925/000101968715003402/lantronix_8k-ex9901.htm) |  | 8-K | 99.1 | 9/8/2015 |
| 10.25\* | [Form of Executive Officer Retention Letter Agreement](https://www.sec.gov/Archives/edgar/data/1114925/000168316823004667/lantronix_ex1001.htm) |  | 8-K | 10.1 | 7/5/2023 |
| 10.26\* | [Offer Letter dated January 4, 2020, between Lantronix, Inc. and Roger Holliday](http://www.sec.gov/Archives/edgar/data/1114925/000168316820003098/lantronix_ex1022.htm) |  | 10-K | 10.22 | 9/11/2020 |
| 10.27\* | [Offer Letter dated December 12, 2022 between Lantronix, Inc. and Eric Bass](https://www.sec.gov/Archives/edgar/data/1114925/000168316823006386/lantronix_ex1042.htm) |  | 10-K | 10.42 | 9/12/2023 |
| 10.28\* | [Employment agreement dated October 31, 2023 between Lantronix, Inc. and Saleel Awsare](https://www.sec.gov/Archives/edgar/data/1114925/000114036123051481/ef20014088_ex10-1.htm) |  | 8-K | 10.1 | 11/6/2023 |
| 10.29\* | [Letter Agreement dated September 14, 2024 between Lantronix, Inc. and Brent Stringham](https://www.sec.gov/Archives/edgar/data/1114925/000168316824006404/lantronix_ex1001.htm) |  | 8-K | 10.1 | 9/16/2024 |
| 10.30\* | Amendment to Letter Agreement, dated as of January 6, 2025, between Brent Stringham and Lantronix, Inc. |  | 8-K | 10.1 | 1/10/2025 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
| 10.31\* | [Offer Letter dated February 23, 2024 between Lantronix, Inc. and Kurt Hoff](https://www.sec.gov/Archives/edgar/data/1114925/000168316825002267/lantronix_ex1001.htm) | 8-K | 10.1 | 4/3/2025 |
| 10.32\* | [Offer Letter dated April 2, 2024 between Lantronix, Inc. and Mathi Gurusamy](https://www.sec.gov/Archives/edgar/data/1114925/000168316825002267/lantronix_ex1002.htm) | 8-K | 10.2 | 4/3/2025 |
| 10.33 | [Lease dated November 5, 2021 between Lantronix, Inc. and Discovery Business Center LLC](http://www.sec.gov/Archives/edgar/data/1114925/000168316821005315/lantronix_ex1001.htm) | 8-K | 10.1 | 11/8/2021 |
| 10.34 | [Lease dated January 20, 2022 between Lantronix, Inc. and Jet 55 Property Owner LLC](http://www.sec.gov/Archives/edgar/data/1114925/000168316822000503/lantronix_ex1001.htm) | 8-K | 10.1 | 1/26/2022 |
| 10.35 | [Mezzanine Loan and Security Agreement, dated August 2, 2021, by and between Lantronix, Inc. and SVB Innovation Credit Fund VIII, L.P.](http://www.sec.gov/Archives/edgar/data/1114925/000168316821003218/lantronix_ex1002.htm) | 8-K | 10.2 | 8/2/2021 |
| 10.36 | [Warrant to Purchase Common Stock issued to SVB Innovation Credit Fund VIII, L.P.](https://www.sec.gov/Archives/edgar/data/1114925/000168316821005471/lantronix_ex1002.htm) | 10-Q | 10.2 | 11/12/2021 |
| 10.37 | [Warrant to Purchase Common Stock issued to Innovation Credit Fund VIII-A, L.P.](https://www.sec.gov/Archives/edgar/data/1114925/000168316822006109/lantronix_ex1034.htm) | 10-K | 10.34 | 8/29/2022 |
| 10.38 | [Third Amended and Restated Loan and Security Agreement with Silicon Valley Bank, dated August 2, 2021, by and between Lantronix, Inc., Lantronix Holding Company, Lantronix Canada ULC and Lantronix Technologies Canada (Taiwan) Ltd. and Transition Networks, Inc.](http://www.sec.gov/Archives/edgar/data/1114925/000168316821003218/lantronix_ex1001.htm) | 8-K | 10.1 | 8/2/2021 |
| 10.39 | [First Amendment to Third Amended and Restated Loan Security Agreement dated February 15, 2022, among Lantronix, Inc., Lantronix Holding Company, Lantronix Canada, ULC and Lantronix Technologies Canada (Taiwan) Ltd. and Transition Networks, Inc.](http://www.sec.gov/Archives/edgar/data/1114925/000168316822001074/lantronix_ex1001.htm) | 10-Q | 10.3 | 2/11/2022 |
| 10.40 | [Second Amendment to Third Amended and Restated Loan Security Agreement dated February 15, 2022, among Lantronix, Inc., Lantronix Holding Company, Lantronix Canada, ULC and Lantronix Technologies Canada (Taiwan) Ltd. and Transition Networks, Inc.](http://www.sec.gov/Archives/edgar/data/1114925/000168316822001074/lantronix_ex1001.htm) | 8-K | 10.1 | 2/16/2022 |
| 10.41 | [Third Amendment to Third Amended and Restated Loan and Security Agreement dated September 7, 2022 among Lantronix, Inc., Lantronix Holding Company, Lantronix Canada ULC and Lantronix Canada (Taiwan) Ltd., Transition Networks, Inc. and Silicon Valley Bank](http://www.sec.gov/Archives/edgar/data/1114925/000168316822001074/lantronix_ex1001.htm) | 8-K | 10.1 | 9/12/2022 |
| 10.42 | [Fourth Amendment to Third Amended and Restated Loan and Security Agreement dated September 3, 2024 among Lantronix, Inc., Lantronix Holding Company, Lantronix Canada, ULC and Lantronix Technologies Canada (Taiwan) Ltd., Transition Networks, Inc., Uplogix, Inc. and Silicon Valley Bank](https://www.sec.gov/Archives/edgar/data/1114925/000168316824006264/lantronix_ex1042.htm) | 10-K | 10.42 | 9/9/2024 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| 10.43 | [Fourth Amended and Restated Loan and Security Agreement with Silicon Valley Bank, dated August 15, 2025, by and between Lantronix, Inc., Lantronix Holding Company, Lantronix Canada, ULC, Lantronix Technologies Canada (Taiwan) Ltd., Transition Networks, Inc., and Uplogix, Inc.](https://www.sec.gov/Archives/edgar/data/1114925/000168316825006370/lantronix_ex1001.htm) |  | 8-K | 10.1 | 8/21/2025 |
| 10.44 | [Letter Agreement dated April 3, 2023, by and between Silicon Valley Bank, a Division of First-Citizens Bank & Trust Company (successor by purchase to the Federal Deposit Insurance Corporation as receiver for Silicon Valley Bank, N.A. (as successor to Silicon Valley Bank), Lantronix, Inc., Lantronix Holding Company, Lantronix Technologies Canada (Taiwan) Ltd., Lantronix Canada ULC, Transition Networks, Inc. and Uplogix, Inc.](https://www.sec.gov/Archives/edgar/data/1114925/000168316823002200/lantronix_ex1001.htm) |  | 8-K | 10.1 | 4/6/2023 |
| 10.45 | [Cooperation Agreement, dated August 9, 2024, between Lantronix, Inc. and 180 Degree Capital Corp](https://www.sec.gov/Archives/edgar/data/1114925/000168316824005436/lantronix_ex1001.htm). |  | 8-K | 10.1 | 8/12/2024 |
| 10.46 | Cooperation Agreement dated June 24, 2025, by and among Lantronix, Inc. and Chain of Lakes Investment Fund, LLC, Haluk L. Bayraktar and Emre Aciksoz |  | 8-K | 10.1 | 6/30/2025 |
| 19.1 | [Lantronix, Inc. Insider Trading Policy](lantronix_ex1901.htm) | X |  |  |  |
| 21.1+ | [Subsidiaries of Lantronix, Inc.](lantronix_ex2101.htm) | X |  |  |  |
| 23.1+ | [Consent of Independent Registered Public Accounting Firm, Baker Tilly US, LLP](lantronix_ex2301.htm) | X |  |  |  |
| 24.1+ | [Power of Attorney](#k_031) (included on the signature page) | X |  |  |  |
| 31.1+ | [Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](lantronix_ex3101.htm) | X |  |  |  |
| 31.2+ | [Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002](lantronix_ex3102.htm) | X |  |  |  |
| 32.1++ | [Certification of Chief Executive Officer and Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002](lantronix_ex3201.htm) | X |  |  |  |
| 97.1\* | [Lantronix, Inc. Policy Regarding the Recoupment of Certain Compensation Payments](lantronix_ex9701.htm) | X |  |  |  |
| 101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |  |  |  |  |
| 101.SCH | XBRL Taxonomy Extension Schema Document |  |  |  |  |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document |  |  |  |  |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document |  |  |  |  |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document |  |  |  |  |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document |  |  |  |  |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |  |  |  |  |

---

__________

\* Indicates management contract or compensatory plan, contract or arrangement. <br> + Filed herewith <br> ++ Furnished herewith.

---

| | |
|:---|:---|
| **ITEM 16.** | **FORM 10-K SUMMARY** |

---

None.

**SIGNATURES**

Pursuant to the requirements of Section 13 or 15(d) 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, thereunto duly authorized.

---

| | | |
|:---|:---|:---|
|  | **LANTRONIX, INC.** | **LANTRONIX, INC.** |
|  | By: | /s/ SALEEL AWSARE |
|  |  | Saleel Awsare |
|  |  | President and Chief Executive Officer |
| Date: August 29, 2025 |  |  |

---

**POWER OF ATTORNEY**

KNOW ALL PERSONS BY THESE PRESENTS, that each individual whose signature appears below hereby constitutes and appoints Saleel Awsare and Brent Stringham, acting individually, as his or her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Report, and to file the same, with all exhibits thereto and other documents in connection therewith, with the SEC, granting unto said attorney-in-fact and agent, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in connection therewith, as fully for all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or their or his or her substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated:

---

| | | |
|:---|:---|:---|
| Signature | Title | Date |
| <br> /s/ SALEEL AWSARE | <br> President, Chief Executive Officer and Director | <br> August 29, 2025 |
| Saleel Awsare | (Principal Executive Officer) |  |
| /s/ BRENT STRINGHAM | Chief Financial Officer | August 29, 2025 |
| Brent Stringham | (Principal Financial and Accounting Officer) |  |
| /s/ HOSHI PRINTER | Director, Chairman of the Board | August 29, 2025 |
| Hoshi Printer |  |  |
| /s/ JAMES AUKER | Director | August 29, 2025 |
| James Auker |  |  |
| /s/ Sailesh Chittipeddi | Director | August 29, 2025 |
| Sailesh Chittipeddi |  |  |
| /s/ Narbeh Derhacobian | Director | August 29, 2025 |
| Narbeh Derhacobian |  |  |
| /s/ Kevin Palatnik | Director | August 29, 2025 |
| Kevin Palatnik |  |  |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the shareholders and the board of directors of Lantronix, Inc.:

**Opinions on the Financial Statements and Internal Control over Financial Reporting**

We have audited the accompanying consolidated balance sheets of Lantronix, Inc. (the "Company") as of June 30, 2025 and 2004, the related consolidated statements of operations, stockholders' equity and cash flows, for the years then ended, and the related notes (collectively referred to as the "consolidated financial statements"). We also have audited the Company's internal control over financial reporting as of June 30, 2025, based on criteria established in *Internal Control – Integrated Framework: (2013)* issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of June 30, 2025 and 2024, and the results of its operations and its cash flows for each of the two years in the period ended June 30, 2025, in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2025, based on criteria established in *Internal Control – Integrated Framework: (2013)* issued by COSO.

**Basis for Opinions**

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A of this Annual Report on Form 10-K. Our responsibility is to express an opinion on the Company's consolidated financial statements and an opinion on the Company's internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such ' necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

**Definition and Limitations of Internal Control Over Financial Reporting**

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance

with the policies or procedures may deteriorate.

**Critical Audit Matters**

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

INVENTORIES – EXCESS AND OBSOLETE RESERVE

*Critical Audit Matter Description*

As described in Note 1 to the consolidated financial statements, inventories are stated at the lower of cost or net realizable value and the Company's consolidated inventories balance was approximately $26.3 million at June 30, 2025, net of reserves. The Company excess and obsolete inventories is based on an estimate of the future sales demand for their products within a specified time horizon, which is generally 12 to 24 months. In addition, specific reserve estimates are recorded to cover risks for end-of-life products, inventory located at their contract manufacturers and warranty replacement stock.

We identified the auditing of management's lower of cost or net realizable value determination for excess or obsolete inventories as a critical audit matter. The procedures to audit management's lower of cost or net realizable value determination for excess or obsolete inventories was especially challenging and highly judgmental because of (i) inherent estimation uncertainty relating to assumptions used by management in the inventory reserve model which involved a high degree of subjectivity, (ii) the uncertainties in determining demand for aging inventory and (iii) future market conditions.

*How We Addressed the Matter in Our Audit*

The primary procedures we performed to address this critical audit matter included:

---

| |
|:---|
| Obtaining an understanding, evaluating the design and testing the effectiveness of controls relating to the controls over the determination of the lower of cost or net realizable value for excess and obsolete inventories. |
| Testing the completeness and accuracy of the underlying data used in management's reserve calculation. |
| Evaluating the reasonableness of management's assumptions relating to future demand of products by performing a retrospective review of the prior year assumptions to actual activity. |
| Evaluating the appropriateness and consistency of management's methods and assumptions used in developing estimates around forecasted sales and expected stock rotation privileges. |

---

ACQUISTION OF NETCOMM – VALUATION OF CUSTOMER RELATIONSHIPS

*Critical Audit Matter Description*

 

As described in Note 3 to the consolidated financial statements, on December 23, 2024, the Company completed the acquisition of Netcomm Wireless Pty Ltd (NetComm) for total consideration transferred of $6,458,000. The Company accounted for the NetComm acquisition as a business combination and, accordingly, allocated the purchase price to the assets acquired and liabilities assumed based on their respective estimated fair values as of the date of acquisition. Of the identifiable intangible assets acquired, $1,587,600 was allocated to customer relationships. The excess of the purchase consideration over the fair value of identifiable assets acquired and liabilities assumed was recorded as goodwill.

We identified an input into the fair value determination of the customer relationships for the business combination as a critical audit matter due to the significant judgment required in estimating base revenue of the acquired entity. There was a high degree of auditor judgment, effort and subjectivity in applying audit procedures in evaluating the significant assumption relating to the forecasted base revenue.

 

*How We Addressed the Matter in Our Audit*

The primary procedures we performed to address this critical audit matter included:

---

| |
|:---|
| Obtaining an understanding, evaluating the design and testing the effectiveness of controls relating to the acquisition accounting, specifically controls over management's base revenue assumption used in the valuation of customer relationships. |
| When assessing the reasonableness of assumption related to forecasted base revenue, we evaluated whether the assumption used was appropriate from a market participant's standpoint. This included evaluation against industry forecasts and the current performance of the NetComm business. |

---

/s/ Baker Tilly US, LLP

We have served as the Company's auditor since 2011.

Chicago, Illinois

August 29, 2025

**LANTRONIX, INC.**

**CONSOLIDATED BALANCE SHEETS**

**(In thousands, except share and par value data)**

---

| | | |
|:---|:---|:---|
|  | **June 30,**<br>**2025** | **June 30,**<br>**2024** |
| **Assets** |  |  |
| Current Assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $20098 | $26237 |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | 25092 | 31279 |
| &nbsp;&nbsp;&nbsp;Inventories, net | 26371 | 27698 |
| &nbsp;&nbsp;&nbsp;Contract manufacturers' receivable | 3071 | 1401 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 2761 | 2335 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 77393 | 88950 |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 2456 | 4016 |
| &nbsp;&nbsp;&nbsp;Goodwill | 31089 | 27824 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | 3738 | 5251 |
| &nbsp;&nbsp;&nbsp;Lease right-of-use assets | 8422 | 9567 |
| &nbsp;&nbsp;&nbsp;Other assets | 624 | 600 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total assets | $123722 | $136208 |
| **Liabilities and stockholders' equity** |  |  |
| Current Liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Accounts payable | $13259 | $10347 |
| &nbsp;&nbsp;&nbsp;Accrued payroll and related expenses | 3471 | 5836 |
| &nbsp;&nbsp;&nbsp;Current portion of long-term debt, net | 3070 | 3002 |
| &nbsp;&nbsp;&nbsp;Other current liabilities | 10622 | 10971 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 30422 | 30156 |
| Long-term debt, net | 8684 | 13219 |
| Other non-current liabilities | 10238 | 11478 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities | 49344 | 54853 |
| Commitments and contingencies (Note 10) | **–** | **–** |
| Stockholders' equity: |  |  |
| &nbsp;&nbsp;&nbsp;Preferred stock, $0.0001 par value; 5,000,000 shares authorized; none issued and outstanding |  |  |
| &nbsp;&nbsp;&nbsp;Common stock, $0.0001 par value; 100,000,000 shares authorized; 39,102,563 and 37,872,883 shares issued and outstanding at June 30, 2025 and 2024, respectively | 4 | 4 |
| &nbsp;&nbsp;&nbsp;Additional paid-in capital | 308397 | 304001 |
| &nbsp;&nbsp;&nbsp;Accumulated deficit | (234394) | (223021) |
| &nbsp;&nbsp;&nbsp;Accumulated other comprehensive income | 371 | 371 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total stockholders' equity | 74378 | 81355 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total liabilities and stockholders' equity | $123722 | $136208 |

---

See accompanying notes to consolidated financial statements.

**LANTRONIX, INC.**

**CONSOLIDATED STATEMENTS OF OPERATIONS**

**(In thousands, except per share data)**

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
| Net revenue | $122923 | $160327 |
| Cost of revenue | 71224 | 95973 |
| Gross profit | 51699 | 64354 |
| Operating expenses: |  |  |
| &nbsp;&nbsp;&nbsp;Selling, general and administrative | 36246 | 40206 |
| &nbsp;&nbsp;&nbsp;Research and development | 18597 | 20282 |
| &nbsp;&nbsp;&nbsp;Restructuring, severance and related charges | 3535 | 1423 |
| &nbsp;&nbsp;&nbsp;Acquisition-related costs | 371 |  |
| &nbsp;&nbsp;&nbsp;Fair value remeasurement of earnout consideration |  | (9) |
| &nbsp;&nbsp;&nbsp;Amortization of intangible assets | 3951 | 5314 |
| Total operating expenses | 62700 | 67216 |
| Loss from operations | (11001) | (2862) |
| Interest expense, net | (511) | (916) |
| Other income (expense), net | (100) | 7 |
| Loss before income taxes | (11612) | (3771) |
| Provision for (benefit from) income taxes | (239) | 745 |
| Net loss and comprehensive loss | $(11373) | $(4516) |
| Net loss per share - basic and diluted | $(0.29) | $(0.12) |
| Weighted-average common shares - basic and diluted | 38613 | 37386 |

---

See accompanying notes to consolidated financial statements.

**LANTRONIX, INC.**

**CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY**

**(In thousands)**

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Common Stock** | **Common Stock** | | | | |
|  | **Shares** | **Amount** |<br>**Additional**<br>**Paid-In**<br>**Capital** |<br>**Accumulated**<br>**Deficit** | **Accumulated**<br>**Other**<br>**Comprehensive**<br>**Income** |<br>**Total**<br>**Stockholders'**<br>**Equity** |
| Balance at June 30, 2023 | 36875 | $4 | $295686 | $(218505) | $371 | $77556 |
| &nbsp;&nbsp;&nbsp;Shares issued pursuant to stock awards, net | 997 |  | 1005 |  |  | 1005 |
| &nbsp;&nbsp;&nbsp;Tax withholding paid on behalf of employees for restricted shares |  |  | (1027) |  |  | (1027) |
| &nbsp;&nbsp;&nbsp;Share-based compensation |  |  | 8337 |  |  | 8337 |
| &nbsp;&nbsp;&nbsp;Net loss | – | – | – | (4516) | – | (4516) |
| Balance at June 30, 2024 | 37872 | $4 | $304001 | $(223021) | $371 | $81355 |
| &nbsp;&nbsp;&nbsp;Shares issued pursuant to stock awards, net | 1230 |  | 357 |  |  | 357 |
| &nbsp;&nbsp;&nbsp;Tax withholding paid on behalf of employees for restricted shares |  |  | (2093) |  |  | (2093) |
| &nbsp;&nbsp;&nbsp;Share-based compensation |  |  | 6132 |  |  | 6132 |
| &nbsp;&nbsp;&nbsp;Net loss | – | – | – | (11373) | – | (11373) |
| Balance at June 30, 2025 | 39102 | $4 | $308397 | $(234394) | $371 | $74378 |

---

See accompanying notes to consolidated financial statements.

**LANTRONIX, INC.**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

**(In thousands)**

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
| **Operating activities** |  |  |
| Net loss | $(11373) | $(4516) |
| Adjustments to reconcile net loss to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;Share-based compensation | 6132 | 8337 |
| &nbsp;&nbsp;&nbsp;Amortization of intangible assets | 3951 | 5314 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 2084 | 2163 |
| &nbsp;&nbsp;&nbsp;Amortization of manufacturing profit in acquired inventory associated with acquisitions | 88 | 822 |
| &nbsp;&nbsp;&nbsp;Loss on disposal of property and equipment | 6 | 3 |
| &nbsp;&nbsp;&nbsp;Amortization of deferred debt issuance costs | 45 | 110 |
| &nbsp;&nbsp;&nbsp;Fair value remeasurement of earnout consideration |  | (9) |
| &nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities, net of assets and liabilities acquired: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable, net | 6187 | (3597) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories, net | 2036 | 21216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Contract manufacturers' receivable | (1670) | 1618 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | (426) | 327 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Lease right-of-use assets | 2172 | 2016 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | (24) | (128) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable | 2886 | (2128) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accrued payroll and related expenses | (2406) | 3405 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other liabilities | (2403) | (16330) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 7285 | 18623 |
| **Investing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Purchases of property and equipment | (505) | (1479) |
| &nbsp;&nbsp;&nbsp;Cash payment for acquisitions, net of cash and cash equivalents acquired | (6458) | – |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in investing activities | (6963) | (1479) |
| **Financing activities** |  |  |
| &nbsp;&nbsp;&nbsp;Net proceeds from issuances of common stock | 357 | 1005 |
| &nbsp;&nbsp;&nbsp;Tax withholding paid on behalf of employees for restricted shares | (2093) | (1027) |
| &nbsp;&nbsp;&nbsp;Earnout consideration paid |  | (1262) |
| &nbsp;&nbsp;&nbsp;Payment of borrowings on term loan | (4512) | (2853) |
| &nbsp;&nbsp;&nbsp;Payment of lease liabilities | (213) | (222) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used in financing activities | (6461) | (4359) |
| Increase (decrease) in cash and cash equivalents | (6139) | 12785 |
| Cash and cash equivalents at beginning of year | 26237 | 13452 |
| Cash and cash equivalents at end of year | $20098 | $26237 |
| **Supplemental disclosure of cash flow information** |  |  |
| &nbsp;&nbsp;&nbsp;Interest paid | $1325 | $1915 |
| &nbsp;&nbsp;&nbsp;Income taxes paid | $636 | $631 |

---

See accompanying notes to consolidated financial statements.

**LANTRONIX, INC.**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**JUNE 30, 2025**

&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Company and Significant Accounting Policies** 

**Company**

Lantronix, Inc., which we refer to herein as the Company, Lantronix, we, our, or us, is a global leader in Edge AI and Industrial IoT solutions, delivering intelligent computing, secure connectivity, and remote management for mission-critical applications. Serving high-growth markets, including smart cities, enterprise IT, and commercial and defense unmanned systems, we enable customers to optimize operations and accelerate digital transformation. Our comprehensive portfolio of hardware, software, and services powers applications from secure video surveillance and intelligent utility infrastructure to resilient out-of-band network management. By bringing intelligence to the network edge, we help organizations achieve efficiency, security, and a competitive edge in today's AI-driven world.

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.

**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 revenue recognition, the allowance for doubtful accounts, business combinations, inventory valuation, goodwill valuation, deferred income tax asset valuation allowances, 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.

**Revenue Recognition**

Refer to *Note 2* below for a discussion of our significant accounting policy over revenue recognition.

**Accounts Receivable and Allowance for Credit Losses**

Accounts receivable are stated at the amount we expect to collect, which is net of an allowance for credit losses 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. In cases where we are aware of circumstances that may impair a specific customer's ability to meet its financial obligations subsequent to the original sale, we record an allowance against amounts due based on those particular circumstances. For all other customers, we estimate an allowance for credit losses based on various considerations, including the length of time the receivables are past due and our historical bad debt collection experience. We also consider our understanding of current economic and industry conditions, as well as reasonable and supportable forecasts of future economic conditions that may affect the collectability of customer receivables. Accounts that are deemed uncollectible are written off against the allowance for credit losses.

**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:*&nbsp;&nbsp;&nbsp;&nbsp; Inputs are based on quoted market prices for identical assets and liabilities in active markets at the measurement date.

*Level 2:*&nbsp;&nbsp;&nbsp;&nbsp; Inputs include quoted prices for similar assets or liabilities in active markets and/or quoted prices for identical or similar assets or liabilities in markets that are not active near the measurement date.

*Level 3:*&nbsp;&nbsp;&nbsp;&nbsp; Inputs include management's best estimate of what market participants would use in pricing the asset or liability at the measurement date. The inputs are unobservable in the market and significant to the instrument's valuation.

During the fiscal years ended June 30, 2025 and 2024 we did not have any assets or liabilities that were measured at fair value on a recurring basis. As of June 30, 2025 we do 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, 2025 and 2024. We did not have any other comprehensive income or losses during the fiscal years ended June 30, 2025 or 2024.

**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 or net realizable value, cost being determined on a weighted-average cost basis that approximates the first-in, first-out method. We provide reserves for excess and obsolete inventories determined primarily based upon estimates of future demand for our products.

**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 acquisition 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 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 as of May 31, 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.

We performed our annual goodwill impairment test as of May 31, 2025, using a quantitative assessment for our single reporting unit. The fair value of the reporting unit was estimated using a combination of the income approach (discounted cash flow method) and the market approach (guideline public companies and guideline transactions methods). Key assumptions included revenue growth, EBITDA margins, a long-term growth rate, and a discount rate. These assumptions reflect management's best estimates of future financial performance, current market conditions, and a market participant perspective. The results of the impairment test indicated that the estimated fair value exceeded the carrying amount and therefore no impairment of goodwill was recognized for the year ended June 30, 2025.

**Intangible Assets**

Included within "intangible assets, net" at June 30, 2025 are customer relationships, developed technology, trademarks and trade names, 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 fourteen years.

**Impairment of Long-Lived Assets** 

We assess the impairment of long-lived assets, including intangible assets, whenever events or changes in circumstances indicate that the carrying amount of long-lived assets within an asset group may not be recoverable. We estimate the future cash flows, undiscounted and without interest charges, expected to be generated by the assets from its use over its remaining useful life and eventual disposition. If the sum of the expected undiscounted future cash flows is less than the carrying amount of those assets, we estimate the fair value of the asset group and 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.

The fair value of our restricted stock units is based on the closing market price of our common stock on the date of grant.

The fair value of our performance stock units is estimated as of the grant date based upon the expected achievement of the performance metrics specified in the grant and the closing market price of our common stock on the date of grant. To the extent a grant of performance stock units contains a market condition, the grant date fair value is estimated using a Monte Carlo simulation, which incorporates estimates of the potential outcomes of the market condition on the grant date fair value of each award.

We recognize the impact of forfeitures on our share-based compensation expense as such forfeitures occur. Previously recognized expense is reversed for the portion of awards forfeited prior to vesting.

**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. If actual return rates and/or replacement costs differ significantly from our estimates, adjustments to recognize additional warranty expense in cost of revenue may be required in future periods.

**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.

**Leases**

We determine if an arrangement is a lease, or contains a lease, at the inception of the arrangement and evaluate whether the lease is an operating lease or a finance lease at the commencement date. We recognize right-of-use ("ROU") assets and lease liabilities for operating and finance leases with terms greater than 12 months. ROU assets represent our right to use an asset for the lease term, while lease liabilities represent our obligation to make lease payments. To the extent a lease includes a renewal option, we include such options in the calculation of the ROU asset and lease liability if it is reasonably assured that we will exercise the option. Operating and finance lease ROU assets and liabilities are recognized based on the present value of lease payments over the lease term at the lease commencement date. We do not separate lease and nonlease components of contracts. To determine the present value of lease payments, we use the implicit interest rate, if it is readily determinable or estimable. To the extent that we are unable to utilize an interest rate implicit in the lease, we generally 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. Operating and finance lease ROU assets are recognized net of any lease prepayments and incentives. Operating lease expense is recognized on a straight-line basis over the lease term. Finance lease expense is recognized based on the effective-interest method over the lease term.

For leases that we acquire in acquisition transactions, we generally elect not to recognize assets or liabilities at the acquisition date for leases that, at the acquisition date, have a remaining lease term of 12 months or less.

Refer to *Note 9* below for additional information regarding our leases.

**Advertising Expenses**

Advertising expenses are recorded in the period incurred and totaled $224,000 and $237,000 for the fiscal years ended June 30, 2025 and 2024, respectively. The costs are included in selling, general and administrative expenses in the consolidated statements of operations.

**Segment Information**

Operating segments are defined as components of an enterprise for which separate financial information is evaluated regularly by the chief operating decision maker ("CODM"), who is our Chief Executive Officer, in deciding how to allocate resources and assess our financial and operational performance. Our CODM evaluates our financial information, such as revenue, gross profit and net income (loss), and resources, and assesses the performance of these resources on a consolidated and aggregated basis. As a result, we have determined that our business operates in a single operating segment: the development, marketing, and sale of industrial and enterprise IoT products and services.

**Recent Accounting Pronouncements**

 

***Credit Losses***

In July 2025, the Financial Accounting Standards Board ("FASB") issued a final Accounting Standards Update ("ASU") amending Accounting Standards Codification ("ASC") 326, Financial Instruments – Credit Losses, to allow all entities to elect a practical expedient when determining the expected credit losses on trade accounts receivable. The practical expedient allows companies to assume that the current conditions as of the balance sheet date will remain unchanged through the remaining life of the asset. The standard will be effective for Lantronix beginning with our interim financial statements for the fiscal year ending June 30, 2027. The impact of adopting this guidance is not expected to have a material effect on our consolidated financial statements.

***Income Tax Disclosures***

In December 2023, the FASB issued a final standard on improvements to income tax disclosures. The new standard requires disaggregated information about a company's effective tax rate reconciliation and information on income taxes paid. The standard will be effective for Lantronix beginning with our annual financial statements for the fiscal year ending June 30, 2026. The impact of adopting this guidance is not expected to be material to our consolidated financial position and results of operations, since it requires only enhancements to existing income tax disclosures in the footnotes to our consolidated financial statements.

***Segment Disclosures***

In November 2023, the FASB issued an ASU requiring incremental disclosures related to a public company's reportable segments. The new guidance was issued primarily to provide financial statement users with more disaggregated expense information about a company's reportable segments. The guidance does not change the definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments. The guidance became effective for Lantronix on a retrospective basis beginning with our annual financial statements for the fiscal year ended June 30, 2025. The adoption of this guidance did not have a material effect on our consolidated financial statements.

***Disaggregation of Income Statement Expenses***

In November 2024, the FASB issued ASU 2024-03, which will require disclosure, in the notes to financial statements, of specified information about certain costs and expenses, including disclosure of amounts for (i) purchases of inventory, (ii) employee compensation, (iii) depreciation and (iv) intangible asset amortization, included in each relevant expense caption. In January 2025, the FASB issued ASU 2025-01, which clarified the effective date of ASU 2024-03. The standard will be effective for our annual financial statements beginning in the fiscal year ending June 30, 2028. We are currently evaluating the impact of this accounting standard on our financial statement presentation and its related disclosures.

&nbsp;&nbsp;&nbsp;&nbsp;**2.** **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 obligations are 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 exclusive of (i) any taxes collected from customers, which are subsequently remitted to governmental authorities and (ii) shipping and handling costs collected from customers.

***Products***

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, technical support, and maintenance services are generally recognized ratably over the applicable service period. Although not significant to date, revenues from sales of our software-as-a-service ("SaaS") solutions are recognized ratably over the applicable service period as well.

We prepay sales commissions related to certain of these contracts, which are incremental costs of obtaining the contract. We capitalize these costs and expense them ratably on a straight-line basis over the life of the contract. At June 30, 2025, prepaid sales commissions included in prepaid expenses and other current assets totaled $404,000 and included in other assets totaled $134,000. At June 30, 2024, prepaid sales commissions included in prepaid expenses and other current assets totaled $194,000 and included in other assets totaled $190,000.

*Engineering Services*

We derive a portion of our revenues from engineering and related consulting service contracts with customers. Revenues from professional engineering services are generally recognized as services are performed. These contracts generally include performance obligations in which control is transferred over time because the customer either simultaneously receives and consumes the benefits provided or our performance on the contract creates or enhances an asset that the customer controls. These contracts typically provide services on the following basis:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· 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 have 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 an input method based on the proportion of our actual costs incurred (generally labor hours expended) to the total costs expected to complete the contract performance obligation. We have 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***

We organize our products and solutions into three product lines: Embedded IoT Solutions, IoT System Solutions, and Software & Services. Our Embedded IoT products are normally embedded into new designs. These products include application processing that delivers compute to meet customer needs for data transformation, computer vision, machine learning, augmented / virtual reality, audio / video aggregation and distribution, and custom applications at the edge. Our IoT System products include wired and wireless connections that enhance the value and utility of modern electronic systems and equipment by providing secure network connectivity, power for IoT end devices through Power over Ethernet ("PoE"), application hosting, protocol conversion, media conversion, secure access for distributed IoT deployments and many other functions. Our Software & Services products can be classified as either (i) our SaaS platform, which enables customers to easily deploy, monitor, manage, and automate across their global deployments, all from a single platform login, virtually connected as though directly on each device, (ii) engineering services, which is a flexible business model that allows customers to select from turnkey product development or team augmentation for accelerating complex areas of product development or (iii) extended warranty, support and maintenance.

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. We present net revenues by geographic region generally based on the "ship-to" location of our customers for product sales and the "bill-to" location for services:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Embedded IoT Solutions | $46380 | $46953 |
| IoT System Solutions | 68735 | 104450 |
| Software & Services | 7808 | 8924 |
|  | $122923 | $160327 |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Americas | $70126 | $78203 |
| EMEA | 30898 | 64025 |
| APJ | 21899 | 18099 |
|  | $122923 | $160327 |

---

The following table presents product revenues and service revenues as a percentage of our total net revenue:

---

| | | |
|:---|:---|:---|
|  | **Year Ended June 30,** | **Year Ended June 30,** |
|  | **2025** | **2024** |
| Product revenues | 94% | 94% |
| Service revenues | 6% | 6% |

---

Service revenues are 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, support and maintenance 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:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Beginning balance | $5753 | $3381 |
| &nbsp;&nbsp;&nbsp;New performance obligations | 4292 | 6973 |
| &nbsp;&nbsp;&nbsp;Recognition of revenue as a result of satisfying performance obligations | (4489) | (4601) |
| Ending Balance | $5556 | $5753 |
| &nbsp;&nbsp;&nbsp;Less: non-current portion of deferred revenue | (2255) | (2736) |
| Current portion | $3301 | $3017 |

---

During the years ended June 30, 2025 and 2024, approximately $3,000,000 and $2,400,000, respectively, of the revenue recognized as a result of satisfying performance obligations was included in the contract liability balance at the beginning of the period.

We currently expect to recognize substantially all of the non-current portion of deferred revenue over the next 2 to 5 years.

&nbsp;&nbsp;&nbsp;&nbsp;**3.** **Acquisition** 

On December 23, 2024 (the "Closing Date"), we finalized the acquisition of Netcomm Wireless Pty Ltd ("Netcomm"), a subsidiary of DZS Inc., for $6,458,000 in cash. Netcomm operates an enterprise IoT business. The acquisition complements our focus on Enterprise and Smart City vertical markets and adds products to enhance our connectivity solutions in areas such as critical infrastructure, asset monitoring and telecommunications.

A summary of the purchase consideration for the Netcomm acquisition is as follows (in thousands):

---

| | |
|:---|:---|
| Cash paid, including initial working capital adjustments | $6458 |
| Total purchase consideration | $6458 |

---

We recorded the tangible and intangible assets and liabilities acquired 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. Updates to the valuation of certain assets acquired and liabilities assumed may result in changes to the recorded amounts of assets and liabilities, with corresponding adjustments to goodwill in subsequent periods.

Subsequent to the acquisition, based on additional analysis and refinements to our estimates, we adjusted the preliminary purchase price allocation as of the Closing Date to (i) increase the estimated fair value of intangible assets acquired by $279,000, (ii) decrease the fair value of accounts receivable, net by $904,000, (iii) decrease the fair value of accounts payable and other accrued liabilities by $202,000 and (iv) decrease the fair value of inventory by $175,000. These adjustments resulted in an increase to goodwill of $598,000. In March 2025, DZS, Inc. commenced a liquidation proceeding under Chapter 7 of the U.S. Bankruptcy Code. At that time, we had yet to settle the accounts receivable and accounts payable balances agreed to in the Netcomm acquisition agreement. As such, we updated our estimates of the acquisition date fair value of these balances as described above.

The final purchase price allocation is as follows (in thousands):

---

| | |
|:---|:---|
| Inventories | $797 |
| Amortizable intangible assets | 2437 |
| Goodwill | 3265 |
| Accounts payable and other accrued liabilities | (41) |
| Total consideration | $6458 |

---

The factors that contributed to a purchase price resulting in the recognition of goodwill include our belief that this 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.

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 for tax purposes.

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** |
|  | **(In thousands)** | **(In years)** |
| Customer relationships | $1587 | 14 |
| Developed technology | 462 | 6 |
| Trademarks and trade names | 91 | 2 |
| Customer backlog | 297 | 1 |

---

The intangible assets are amortized on a straight-line basis over the estimated weighted-average useful lives.

***Valuation Methodology***

The customer relationships were valued using the multi-period excess earnings method, which estimates revenues and cash flows derived from this asset and also considers portions of the cash flows that can be attributed to the use of other supporting assets so that these cash flows can be excluded. The useful lives of customer relationships are estimated based primarily upon the probability of loss associated with two major customers and customer turnover data for the other customers. Order backlog was estimated to be substantially fulfilled within a year of the Closing Date.

Developed technology and trades names 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:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Historical performance including sales and profitability

· Business prospects and industry expectations

· Estimated economic life of the 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 acquisition as of the first day of our fiscal 2024. The supplemental pro forma data reports actual operating results adjusted to include the pro forma effect and timing of the impact of amortization expense of identified intangible assets, the purchase accounting effect on inventories acquired, and transaction costs. In accordance with the pro forma acquisition date, we recorded in fiscal 2024 supplemental pro forma data acquisition-related costs of $371,000, with a corresponding reduction in the fiscal 2025 supplemental pro forma data. Additionally, we recorded (i) additional amortization expense of $20,000, and (ii) $88,000 reduction in cost of goods sold from manufacturing profit in acquired inventory in the fiscal 2025 supplemental pro forma data, and (i) additional amortization expense of $634,000 and (ii) cost of goods sold from manufacturing profit in acquired inventory of $106,000 in fiscal 2024 supplemental pro forma data.

Supplemental pro forma data is as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands, except per share amounts)** | **(In thousands, except per share amounts)** |
| Pro forma net revenue | $124784 | $168103 |
| Pro forma net loss | $(10702) | $(3876) |
| Pro forma net loss per share: |  |  |
| &nbsp;&nbsp;&nbsp;Basic and Diluted | $(0.28) | $(0.10) |

---

Net revenue related to products and services from the acquisition of Netcomm contributed approximately 3% of our total net revenue for the year ended June 30, 2025. As of the Closing Date, we began to immediately integrate the acquisition into existing operations, engineering groups, sales distribution networks and management structure, making it generally impracticable to determine the post-acquisition earnings on a standalone basis.

&nbsp;&nbsp;&nbsp;&nbsp;**4.** **Supplemental Financial Information** 

**Accounts Receivable**

The following table presents details of our accounts receivable:

---

| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Accounts receivable | $25231 | $31526 |
| Allowance for credit losses | (139) | (247) |
| &nbsp;&nbsp;&nbsp;Accounts receivable, net | $25092 | $31279 |

---

**Inventories**

The following table presents details of our inventories:

---

| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Finished goods | $15603 | $14167 |
| Raw materials | 10768 | 13531 |
| &nbsp;&nbsp;&nbsp;Inventories, net | $26371 | $27698 |

---

**Property and Equipment**

The following table presents details of our property and equipment:

---

| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Computer, software and office equipment | $4886 | $4531 |
| Furniture and fixtures | 2698 | 2748 |
| Production, development and warehouse equipment | 3946 | 4033 |
| Construction-in-progress | – | 16 |
| &nbsp;&nbsp;&nbsp;Property and equipment, gross | 11530 | 11328 |
| Less accumulated depreciation | (9074) | (7312) |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | $2456 | $4016 |

---

**Goodwill**

The following table presents details of our goodwill balance:

---

| | |
|:---|:---|
|  | **Year Ended**<br>**June 30, 2025** |
|  | **(In thousands)** |
| Balance at June 30, 2024 | $27824 |
| &nbsp;&nbsp;&nbsp;Acquisition of NetComm | 3265 |
| Balance at June 30, 2025 | $31089 |

---

**Intangible Assets**

The following table presents details of our intangible assets:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **June 30, 2025** | **June 30, 2025** | **June 30, 2025** | **June 30, 2024** | **June 30, 2024** | **June 30, 2024** |
|  | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Book Value** | **Gross Carrying Amount** | **Accumulated Amortization** | **Net Book Value** |
|  | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** | **(In thousands)** |
| Developed technology | $6793 | $(6066) | 727 | $6331 | $(5293) | $1038 |
| Customer relationships | 19116 | (16321) | 2795 | 17528 | (13315) | 4213 |
| Order backlog | 297 | (149) | 148 |  |  |  |
| Trademark and trade name | 1516 | (1448) | 68 | 1425 | (1425) | – |
|  | $27722 | $(23984) | 3738 | $25284 | $(20033) | $5251 |

---

We do not currently have any intangible assets with indefinite useful lives.

As of June 30, 2025, future estimated amortization expense is as follows:

---

| | |
|:---|:---|
| **Years Ending June 30,** | |
| **(In thousands)** | |
| 2026 | $1562 |
| 2027 | 539 |
| 2028 | 256 |
| 2029 | 191 |
| 2030 | 191 |
| Thereafter | 999 |
| **Total future amortization** | $3738 |

---

**Warranty Reserve**

The following table presents details of our warranty reserve:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Beginning balance | $840 | $788 |
| &nbsp;&nbsp;&nbsp;Charged to cost of revenues | 220 | 376 |
| &nbsp;&nbsp;&nbsp;Usage | (397) | (324) |
| Ending balance | $663 | $840 |

---

**Other Liabilities**

The following table presents details of our other liabilities:

---

| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| **Current** |  |  |
| Accrued variable consideration | $2557 | $1796 |
| Customer deposits and refunds | 321 | 436 |
| Accrued raw materials purchases | 204 | 126 |
| Deferred revenue | 3301 | 3017 |
| Lease liability | 1594 | 1767 |
| Taxes payable | 103 | 772 |
| Warranty reserve | 663 | 840 |
| Accrued operating expenses | 1879 | 2217 |
| &nbsp;&nbsp;&nbsp;Total other current liabilities | $10622 | $10971 |
| **Non-current** |  |  |
| Lease liability | $7811 | $8563 |
| Deferred tax liability | 172 | 179 |
| Deferred revenue | 2255 | 2736 |
| &nbsp;&nbsp;&nbsp;Total other non-current liabilities | $10238 | $11478 |

---

**Computation of Net Loss per Share**

The following table presents the computation of net loss per share:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands, except per share data)** | **(In thousands, except per share data)** |
| Numerator: |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(11373) | $(4516) |
| Denominator: |  |  |
| &nbsp;&nbsp;&nbsp;Weighted-average shares outstanding - basic and diluted | 38613 | 37386 |
| Net loss per share - basic and diluted | $(0.29) | $(0.12) |

---

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,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Common stock equivalents | 528 | 847 |

---

**Restructuring, Severance and Related Charges**

In January 2025 we undertook a headcount reduction totaling approximately 12% of our worldwide headcount primarily in the U.S. and India locations. We may incur additional charges in future periods as we identify additional cost saving opportunities related to our business. The following table presents details of the liability we recorded related to restructuring, severance and related activities during the current fiscal year:

---

| | |
|:---|:---|
|  | **Year Ended**<br>**June 30,**<br>**2025** |
|  | **(In thousands)** |
| Beginning balance | $253 |
| &nbsp;&nbsp;&nbsp;Employee-related charges | 3156 |
| &nbsp;&nbsp;&nbsp;Lease restructuring charges | 379 |
| &nbsp;&nbsp;&nbsp;Payments | (3309) |
| Ending balance | $479 |

---

The ending balance is recorded in accrued payroll and related expenses on the accompanying consolidated balance sheet at June 30, 2025.

**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,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Acquisition of property through operating leases | $1027 | $– |
| Accrued property and equipment paid for in the subsequent period | $27 | $74 |

---

&nbsp;&nbsp;&nbsp;&nbsp;**5.** **Senior Credit Facilities** 

In September 2024 we entered into a Fourth Amendment to the Third Amended and Restated Loan and Security Agreement (the "Amendment") with Silicon Valley Bank ("SVB"), pertaining to our then-existing term loan and revolving credit facility (together, the "Senior Credit Facilities"), which amended that certain Third Amended and Restated Loan and Security Agreement, dated as of August 2, 2021, as amended by the First Amendment to Third Amended and Restated Loan and Security Agreement, dated as of October 21, 2021, as amended by the Second Amendment to Third Amended and Restated Loan and Security Agreement, dated as of February 15, 2022, as amended by the Third Amendment to Third Amended and Restated Loan and Security Agreement, dated as of September 7, 2022, by and among Lantronix and SVB (collectively with the Amendment, the "Third Amended and Restated Loan Agreement").

The Amendment, among other things, extended the maturity date of our Senior Credit Facilities from August 2, 2025 to August 2, 2026. The Senior Credit Facilities bore interest at the Term Secured Overnight Financing Rate ("SOFR") or the Prime Rate, at the option of Lantronix, plus a margin that ranged from 3.10% to 4.10% in the case of Term SOFR and 1.50% to 2.50% in the case of the Prime Rate, depending on our total leverage with a Term SOFR floor of 1.50% and a Prime Rate floor of 3.25%. The minimum liquidity requirement under the Senior Credit Facilities was $4,000,000. The Senior Credit Facilities were secured by substantially all of our assets.

In April 2023, we entered into a Letter Agreement (the "Letter Agreement") with SVB, which, among other matters, amended the Third Amended and Restated Loan Agreement to reduce the former requirement to hold 85% of our company-wide cash balances at SVB to 50%, and provided a waiver of any event of default under the Third Amended and Restated Loan Agreement for any failure to comply with this covenant prior to the date of the Letter Agreement.

The following table summarizes our outstanding debt under the Senior Credit Facilities:

---

| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Outstanding borrowings on Senior Credit Facilities | $11829 | $16341 |
| &nbsp;&nbsp;&nbsp;Less: Unamortized debt issuance costs | (75) | (120) |
| Net Carrying amount of debt | 11754 | 16221 |
| &nbsp;&nbsp;&nbsp;Less: Current portion | (3070) | (3002) |
| Non-current portion | $8684 | $13219 |

---

During the year ended June 30, 2025, we recognized $1,238,000 of interest expense in the accompanying consolidated statement of operations related to interest and amortization of debt issuance associated with the borrowings under the Senior Credit Facilities.

The Senior Credit Facilities required Lantronix to comply with a minimum liquidity test, a maximum leverage ratio and a minimum fixed charge coverage ratio. We were in compliance with all financial covenants as of June 30, 2025.

*Liquidity*

The Senior Credit Facilities require that we maintain a minimum liquidity of $4,000,000 at SVB, as measured at the end of each month.

*Maximum leverage ratio*

 

The Senior Credit Facilities required that we maintain 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 2.00 to 1.00 as measured at the end of each calendar quarter.

*Minimum fixed charge coverage ratio*

The Senior Credit Facilities required that we maintain a minimum fixed charge coverage ratio, calculated as the ratio of consolidated trailing 12-month earnings before interest, taxes, depreciation and amortization, and certain other allowable exclusions, less capital expenditures and taxes paid, to the trailing twelve month principal and interest payments on all funded debt of 1.25 to 1.00 as measured at the end of each calendar quarter.

In addition, the Senior Credit Facilities contained customary representations and warranties, affirmative and negative covenants, including covenants that limit or restrict Lantronix and its subsidiaries' ability to incur liens, incur indebtedness, dispose of assets, make investments, make certain restricted payments, merge or consolidate and enter into certain speculative hedging arrangements. The Senior Credit Facilities included a number of events of default, including, among other things, non-payment defaults, covenant defaults, cross-defaults to other materials indebtedness, bankruptcy and insolvency defaults and material judgment defaults. If any event of default were to occur (subject, in certain instances, to specified grace periods), the principal, premium, if any, interest and any other monetary obligations on all the then outstanding amounts under the Senior Credit Facilities could become due and payable immediately.

***New Financing Arrangements***

 ****

On August 15, 2025, we entered into a Fourth Amended and Restated Loan and Security Agreement with SVB (the "Loan Agreement"), which effectively refinanced our outstanding term loan with an asset-backed revolving line of credit secured by our accounts receivable. The new line provides us with a revolving credit facility of up to $15,000,000, subject to customary borrowing base limitations. The revolving credit facility is scheduled to mature on August 1, 2028. Borrowings under the revolving credit facility will bear interest on the outstanding principal equal to the greater of (i) 5.0% and (ii) the Prime Rate plus a margin of 0.0% to 0.5%, with the applicable margin depending on our liquidity.

The Loan Agreement requires us to comply with a minimum liquidity test. The Loan Agreement also includes customary representations and warranties and affirmative and negative covenants, including covenants that limit or restrict our ability to incur liens or indebtedness, dispose of assets, make investments, make restricted payments, merge or consolidate, and enter into certain transactions with our affiliates. The Loan Agreement includes customary events of default, including, among other things, non-payment defaults, covenant defaults, bankruptcy and insolvency defaults, and material judgment defaults. If any event of default under the Loan Agreement occurs (subject, in certain instances, to specified grace or cure periods), the principal, interest and any other monetary obligations on all the then outstanding amounts may become due and payable immediately.

&nbsp;&nbsp;&nbsp;&nbsp;**6.** **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. In November 2020, our stockholders voted to approve the 2020 Performance Incentive Plan (the "2020 Plan"), replacing our Amended and Restated 2010 Stock Incentive Plan (the "2010 Plan"), which expired in September 2020. At the 2010 Plan's expiration date, approximately 1,097,000 shares of our common stock that remained available for award grants under the 2010 Plan became available for award grants under the 2020 Plan. An additional 2,500,000 shares our common stock were also made available at that time for award grants under the 2020 Plan, and shares of common stock subject to outstanding awards under the 2010 Plan that expired, were cancelled, or otherwise terminate after the expiration date of the 2010 Plan became available for award grant purposes under the 2020 Plan. In both November 2022 and November 2024, our stockholders voted to approve amendments to the 2020 Plan that, among other things, increased the aggregate number of shares of our common stock available for award grants under the plan in each case by 1,800,000 shares, for a total increase of 3,600,000 shares. The 2020 Plan authorizes awards of stock options (both non-qualified and incentive), stock appreciation rights, non-vested shares, restricted stock units ("RSUs") and performance shares ("PSUs"). New shares are issued to satisfy stock option exercises and share issuances. At June 30, 2025, approximately 1,758,000 shares remain available for issuance under the 2020 Plan. We have also granted stock options, RSUs and PSUs 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, 2025, 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, 2025 and 2024.

***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:

---

| | | |
|:---|:---|:---|
|  | **Number of Shares** | **Weighted-Average Grant Date Fair Value per Share** |
|  | **(In thousands)** | |
| Balance of RSUs outstanding at June 30, 2024 | 1881 | $4.89 |
| &nbsp;&nbsp;&nbsp;Granted | 1625 | 3.23 |
| &nbsp;&nbsp;&nbsp;Forfeited | (486) | 4.09 |
| &nbsp;&nbsp;&nbsp;Vested | (913) | 4.95 |
| Balance of RSUs outstanding at June 30, 2025 | 2107 | $3.76 |

---

***Performance Shares***

 

The fair value of our PSUs is estimated as of the grant date based upon the expected achievement of the performance metrics specified in the grant and the closing market price of our common stock on the date of grant. To the extent a grant of PSUs contains a market condition, the grant date fair value is estimated using a Monte Carlo simulation with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
| Volatility of Common Stock | 65.99% | 62.00% |
| Average correlation coefficient of peer companies | 0.36 | 0.34 |
| Risk-free interest rate | 4.52% | 4.55% |
| Dividend yield | 0.00% | 0.00% |
| Contract Term | 2.99 | 2.92 |

---

The following table presents a summary of activity with respect to our PSUs:

---

| | | |
|:---|:---|:---|
|  | **Number of Shares** | **Weighted Average Grant Date Fair Value per Share** |
|  | **(In thousands)** | |
| Balance of PSUs outstanding at June 30, 2024 | 1669 | $5.82 |
| &nbsp;&nbsp;&nbsp;Granted | 583 | 4.73 |
| &nbsp;&nbsp;&nbsp;Forfeited | (588) | 5.09 |
| &nbsp;&nbsp;&nbsp;Vested | (669) | 5.24 |
| Balance of PSUs outstanding at June 30, 2025 | 995 | $6.06 |

---

***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. The expected term of stock options granted is based on our recent historical exercise data. Expected volatilities are based on the historical volatility of our stock price. 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 table presents a summary of activity for all of our stock options:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Weighted-Average** | **Weighted-Average** | |
|  |<br>**Number of**<br>**Shares** | **Exercise**<br>**Price**<br>**Per Share** | **Remaining**<br>**Contractual**<br>**Term** |<br>**Aggregate**<br>**Intrinsic**<br>**Value** |
|  | **(In thousands)** | | **(In years)** | **(In thousands)** |
| Balance of options outstanding at June 30, 2024 | 567 | $4.13 |  |  |
| &nbsp;&nbsp;&nbsp;Forfeited | (15) | 5.46 |  |  |
| &nbsp;&nbsp;&nbsp;Expired | (108) | 4.84 |  |  |
| &nbsp;&nbsp;&nbsp;Exercised | (230) | 3.36 |  |  |
| Balance of options outstanding at June 30, 2025 | 214 | $4.51 | 3.5 | $2 |
| Options exercisable at June 30, 2025 | 173 | $4.41 | 3.5 | $2 |

---

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,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Intrinsic value of options exercised | $203 | $568 |

---

**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.

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. The ESPP limits the number of shares of common stock that may be issued under the plan to 1,800,000 shares.

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,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
| Expected term (in years) | 0.5 | 0.5 |
| Expected volatility | 69% | 72% |
| Risk-free interest rate | 4.44% | 5.39% |
| Dividend yield | 0.00% | 0.00% |

---

The following table presents a summary of activity under our ESPP:

---

| | |
|:---|:---|
|  | **Year Ended**<br>**June 30, 2025** |
|  | **(In thousands, except per share data)** |
| Shares available for issuance at June 30, 2024 | 181 |
| &nbsp;&nbsp;&nbsp;Shares issued | (155) |
| Shares available for issuance at June 30, 2025 | 26 |
| Weighted-average purchase price per share | $2.19 |
| Intrinsic value of ESPP shares on purchase date | $60 |

---

After the purchase and issuance of shares that occurred in May 2025, the ESPP has been suspended until further notice.

**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,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Cost of revenues | $186 | $237 |
| Selling, general and administrative | 4424 | 6248 |
| Research and development | 1522 | 1852 |
| &nbsp;&nbsp;&nbsp;Total share-based compensation expense | $6132 | $8337 |

---

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, 2025:

---

| | | |
|:---|:---|:---|
|  | **Remaining Unrecognized Compensation Expense** | **Remaining Weighted-Average Years to Recognize** |
|  | **(In thousands)** | |
| Stock options | $91 | 1.6 |
| RSUs | 6373 | 2.1 |
| PSUs | 2181 | 1.7 |
|  | $8645 |  |

---

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.

&nbsp;&nbsp;&nbsp;&nbsp;**7.** **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 $364,000 and $376,000 in matching contributions to participants in the Plan during the fiscal years ended June 30, 2025 and 2024, respectively.

In addition, we may make discretionary profit-sharing contributions, subject to limitations. During the fiscal years ended June 30, 2025 and 2024, we made no such contributions to the Plan.

&nbsp;&nbsp;&nbsp;&nbsp;**8.** **Income Taxes** 

The provision (benefit) for income taxes consists of the following components:

The following table presents U.S. and foreign income (loss) before income taxes:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Current: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | $– | $– |
| &nbsp;&nbsp;&nbsp;State | 28 | 380 |
| &nbsp;&nbsp;&nbsp;Foreign | (260) | 332 |
| **Total Current taxes** | $(232) | $712 |
| Deferred: |  |  |
| &nbsp;&nbsp;&nbsp;Federal | (7) | 33 |
| &nbsp;&nbsp;&nbsp;State |  |  |
| &nbsp;&nbsp;&nbsp;Foreign | – | – |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for (benefit from) income taxes | $(239) | $745 |

---

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| United States | $(12786) | $(4655) |
| Foreign | 1174 | 884 |
| &nbsp;&nbsp;&nbsp;Loss before income taxes | $(11612) | $(3771) |

---

The tax effects of temporary differences that give rise to deferred tax assets and liabilities are as follows:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Deferred tax assets: |  |  |
| &nbsp;&nbsp;&nbsp;Tax losses and credits | $9492 | $8984 |
| &nbsp;&nbsp;&nbsp;Reserves not currently deductible | 2673 | 2738 |
| &nbsp;&nbsp;&nbsp;Capitalized research and development expenses | 8987 | 7511 |
| &nbsp;&nbsp;&nbsp;State taxes | 33 |  |
| &nbsp;&nbsp;&nbsp;Deferred compensation | 356 | 1509 |
| &nbsp;&nbsp;&nbsp;Inventory capitalization | 2235 | 2570 |
| &nbsp;&nbsp;&nbsp;Lease liabilities | 2060 | 2299 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 108 | 172 |
| &nbsp;&nbsp;&nbsp;Identified intangibles | 1572 | 1172 |
| &nbsp;&nbsp;&nbsp;Other | 120 | 98 |
| Gross deferred tax assets | 27636 | 27053 |
| Valuation allowance | (26002) | (24731) |
| Deferred tax assets, net | 1634 | 2322 |
| Deferred tax liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;State taxes |  | (395) |
| &nbsp;&nbsp;&nbsp;Right-of-use assets | (1806) | (2106) |
| Deferred tax liabilities | (1806) | (2501) |
| Net deferred tax assets (liabilities) | $(172) | $(179) |

---

Our net deferred tax liability of $172,000 and $179,000 at June 30, 2025 and 2024, respectively, represents the excess of our indefinite-lived deferred tax liabilities over our indefinite-lived deferred tax assets, and are recorded in other non-current liabilities on the accompanying consolidated balance sheets at June 30, 2025 and 2024. Realization of deferred tax assets is dependent upon the generation of future taxable income. As required by ASC 740, we have evaluated the positive and negative evidence bearing upon our ability to realize the deferred tax assets as of June 30, 2025 and 2024. We have determined that it was more likely than not that Lantronix would not realize the deferred tax assets due to our cumulative losses and uncertainty of generating future taxable income.

The following table presents a reconciliation of the provision (benefit) for income taxes to taxes computed at the U.S. federal statutory rate:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Statutory federal provision (benefit) for income taxes | $(2439) | $(792) |
| Increase (decrease) resulting from: |  |  |
| &nbsp;&nbsp;&nbsp;State taxes | 28 | 176 |
| &nbsp;&nbsp;&nbsp;Stock options | 568 | 431 |
| &nbsp;&nbsp;&nbsp;Other permanent differences | 218 |  |
| &nbsp;&nbsp;&nbsp;Expiration of R&D Credits | 839 | 673 |
| &nbsp;&nbsp;&nbsp;Uncertain tax position | (1211) | (523) |
| &nbsp;&nbsp;&nbsp;Change in valuation allowance | 1271 | 349 |
| &nbsp;&nbsp;&nbsp;Change in state tax rate | 308 | 261 |
| &nbsp;&nbsp;&nbsp;Global intangible low-tax income inclusion | 143 |  |
| &nbsp;&nbsp;&nbsp;Foreign tax rate variances | (72) | 120 |
| &nbsp;&nbsp;&nbsp;Other | 108 | 50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provision for (benefit from) income taxes | $(239) | $745 |

---

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, 2025 and 2024, 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, 2025:

---

| | |
|:---|:---|
|  | **Year Ended**<br>**June 30, 2025** |
|  | **(In thousands)** |
| Balance as of June 30, 2024 | $4289 |
| &nbsp;&nbsp;&nbsp;Change in balances related to uncertain tax positions | (1211) |
| Balance as of June 30, 2025 | $3078 |

---

At June 30, 2025, we had $3,078,000 of gross unrecognized tax benefits which was recorded as a reduction to deferred tax assets, and a corresponding reduction in our valuation allowance of $3,078,000. The balance decreased from the prior year due to the expiration of certain federal research and development tax credit carryforwards as well as the reversal of liabilities in connection with the dissolution of one of our foreign subsidiaries by a gross amount of $1,280,000. 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, 2025 and 2024, we recorded an immaterial expense for interest and penalties related to income tax matters in the provision for income taxes. At June 30, 2025, we had approximately $39,000 of accrued interest and penalties related to uncertain tax positions.

At June 30, 2025, our fiscal years ended June 30, 2022 through 2025 remain open to examination by the federal taxing jurisdiction and our fiscal years ended June 30, 2021 through 2025 remain open to examination by the state taxing jurisdictions. However, we have NOLs beginning in the fiscal year ended June 30, 2005 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, 2017 through 2025 remain open to examination by foreign taxing authorities. We currently do not anticipate that the amount of unrecognized tax benefits as of June 30, 2025 will significantly increase or decrease within the next 12 months.

***New Tax Legislation***

In July 2025, the U.S. government enacted comprehensive legislation commonly referred to as the One Big Beautiful Bill Act of 2025 (the "OBBB Act"). The OBBB Act, which includes a broad range of tax reform provisions, including extending and modifying certain key Tax Cuts and Jobs Act provisions (both domestic and international). It includes reinstating the option to claim 100% accelerated deprecations deductions on qualified property and immediate expensing of domestic research and development costs. Income tax accounting guidance requires the effects of tax law changes to be recognized in the period of enactment. Since the legislation was signed into law after June 30, 2025, it had no impact on our operating results for the fiscal year ended June 30, 2025. We are currently assessing the impact on our financial statements in future periods.

&nbsp;&nbsp;&nbsp;&nbsp;**9.** **Leases** 

In general, our leases include office buildings for various facilities worldwide which are all classified as operating leases. We also have financing leases related to some office equipment in the U.S.

The following presents components of lease expense and supplemental cash flow information:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
| **Components of lease expense** | **(In thousands)** | **(In thousands)** |
| &nbsp;&nbsp;&nbsp;Operating lease cost | $2369 | $2465 |
| &nbsp;&nbsp;&nbsp;Financing lease cost | 107 | 110 |
| &nbsp;&nbsp;&nbsp;Financing lease interest expense | 25 | 39 |
| **Supplemental cash flow information** |  |  |
| &nbsp;&nbsp;&nbsp;Cash paid for amounts included in the measurement of operating lease liabilities | $1765 | $1772 |
| &nbsp;&nbsp;&nbsp;Cash paid for amounts included in the measurement of financing lease liabilities | $213 | $222 |
| &nbsp;&nbsp;&nbsp;Right-of-use assets obtained in exchange for lease obligation | $1027 | $– |

---

As of June 30, 2025 and 2024, the weighted average discount rate for leases was 4.8% and 4.6%, respectively, and the weighted average remaining lease term for leases was 2.9 years and 3.4 years, respectively.

Maturities of lease liabilities as of June 30, 2025 were as follows:

---

| | | |
|:---|:---|:---|
| **Years ending June 30,** | **Operating** | **Financing** |
|  | **(In thousands)** | **(In thousands)** |
| 2026 | $1959 | $117 |
| 2027 | 1906 | 22 |
| 2028 | 1968 | 20 |
| 2029 | 1741 |  |
| 2030 | 976 |  |
| Thereafter | 2025 | – |
| Total remaining lease payments | 10575 | 159 |
| &nbsp;&nbsp;&nbsp;less: imputed interest | (1310) | (19) |
| Lease liability | $9265 | $140 |
| Reported as: |  |  |
| &nbsp;&nbsp;&nbsp;Current liabilities | $1489 | $105 |
| &nbsp;&nbsp;&nbsp;Non-current liabilities | $7776 | $35 |

---

&nbsp;&nbsp;&nbsp;&nbsp;**10.** **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. We maintain insurance policies for settlements and judgments, as well as legal defense costs, although the amount of insurance coverage that we maintain may not be adequate to cover all claims or liabilities that may arise. In addition, provisions of the Company's Certificate of Incorporation, Bylaws and indemnification agreements entered into with current and former directors and officers require us, among other things, to indemnify these directors and officers against certain liabilities that may arise by reason of their status or service as directors or officers and to advance expenses to such directors or officers in connection therewith.

&nbsp;&nbsp;&nbsp;&nbsp;**11.** **Significant Geographic, Customer and Supplier Information** 

Long-lived assets, which consists of property and equipment, net, lease right-of-use assets, intangible assets, net, and goodwill by geographic area are as follows:

---

| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| U.S. | $40065 | $38650 |
| Canada | 5415 | 7564 |
| Rest of world | 225 | 444 |
|  | $45705 | $46658 |

---

**Customers**

The following table presents sales to our significant customers as a percentage of net revenue:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
| Top five customers (1) | 44% | 54% |
| Customer A | 15% | 13% |
| Customer B | \* | 25% |

---

(1) Includes Customer A and Customer B in the fiscal year ended June 30, 2025 and in the fiscal year ended June 30, 2024.

\* Less than 10%

The following table shows customers that had an outstanding receivable balance that represented at least 10% of our total net accounts receivable:

---

| | | |
|:---|:---|:---|
|  | **June 30,** | **June 30,** |
|  | **2025** | **2024** |
| Customer A | 18% | 15% |
| Customer B | \* | 26% |
| Customer C | 13% | \* |

---

\* Less than 10%

**Related Party Transactions**

We had no net revenue from related parties for the fiscal years ended June 30, 2025 and 2024.

**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 Thailand, Taiwan 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.

**12. Segment Reporting**

The following table presents segment revenue, gross profit, and net income (loss) for the periods presented:

---

| | | |
|:---|:---|:---|
|  | **Years Ended June 30,** | **Years Ended June 30,** |
|  | **2025** | **2024** |
|  | **(In thousands)** | **(In thousands)** |
| Net revenue | $122923 | $160327 |
| Less cost of revenue: |  |  |
| &nbsp;&nbsp;&nbsp;Other costs of revenue | 70515 | 94452 |
| &nbsp;&nbsp;&nbsp;Share-based compensation | 186 | 237 |
| &nbsp;&nbsp;&nbsp;Amortization of manufacturing profit in acquired inventory | 88 | 822 |
| &nbsp;&nbsp;&nbsp;Depreciation and amortization | 435 | 462 |
| Total cost of revenue | 71224 | 95973 |
| Gross profit | 51699 | 64354 |
| Less: |  |  |
| &nbsp;&nbsp;&nbsp;Personnel-related expenses | 32551 | 35338 |
| &nbsp;&nbsp;&nbsp;Professional fees and outside services | 4878 | 5037 |
| &nbsp;&nbsp;&nbsp;Advertising and marketing | 2239 | 2346 |
| &nbsp;&nbsp;&nbsp;Facilities and insurance | 4391 | 5277 |
| &nbsp;&nbsp;&nbsp;Share-based compensation | 5946 | 8100 |
| &nbsp;&nbsp;&nbsp;Depreciation | 1649 | 1701 |
| &nbsp;&nbsp;&nbsp;Outside services | 636 | 505 |
| &nbsp;&nbsp;&nbsp;Product certifications | 499 | 462 |
| &nbsp;&nbsp;&nbsp;Other operating expenses | 2054 | 1722 |
| &nbsp;&nbsp;&nbsp;Restructuring, severance and related charges | 3535 | 1423 |
| &nbsp;&nbsp;&nbsp;Acquisition-related costs | 371 |  |
| &nbsp;&nbsp;&nbsp;Fair value remeasurement of earnout consideration |  | (9) |
| &nbsp;&nbsp;&nbsp;Amortization of intangible assets | 3951 | 5314 |
| &nbsp;&nbsp;&nbsp;Interest expense, net | 511 | 916 |
| &nbsp;&nbsp;&nbsp;Other expense (income) | 100 | (7) |
| &nbsp;&nbsp;&nbsp;Provision for (benefit from) income taxes | (239) | 745 |
| Total segment expenses | 63072 | 68870 |
| Segment net loss | $(11373) | $(4516) |

---

## Exhibit 10.12

**Exhibit 10.12**

**NOTICE OF GRANT OF RESTRICTED STOCK UNIT AWARD**

**2020 PERFORMANCE INCENTIVE PLAN**

---

| | |
|:---|:---|
| **Name of Grantee:** | [________] |
| **Total Number of Stock Units Subject to this Grant<sup>1</sup>:** | [_____] |
| **Date of Grant:** | [______], 2025 |

---

This Notice evidences that you have been granted an award of restricted stock units (the "**Stock Units**") of Lantronix, Inc. (the "**Company**") as to the number of Stock Units set forth above. The Stock Units will become vested (i) as to one-third (1/3) of the total number of Stock Units subject to the award on the first anniversary of the Date of Grant, and (ii) as to the remaining two-thirds of the total number of Stock Units subject to the award in eight (8) equal installments, with one installment vesting on the first day of the last month of each calendar quarter following the calendar quarter in which the first anniversary of the Date of Grant occurs (so the first such installment will vest on September 1, 2026 and the last such installment will vest on June 1, 2028).

By your acceptance of the award, you agree that the award of Stock Units is granted under and governed by the terms and conditions of the Company's 2020 Performance Incentive Plan (as amended from time to time, the "**Plan**") and the Terms and Conditions of Restricted Stock Unit Award (the "**Terms**"), which are attached and incorporated herein by this reference. This Notice of Grant of Restricted Stock Unit Award, together with the Terms, is referred to as the "**Agreement**" applicable to your award. The award has been granted to you in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to you. Capitalized terms are defined in the Plan if not defined herein or in the Terms. The Plan, the Terms, and the Prospectus for the Plan are available by calling the Company at (949) 453-3990.

By accepting this award, you agree to execute any documents and take such further actions that the Company may reasonably request in order to establish and/or maintain a brokerage account to hold the shares subject to this grant.

---

| | |
|:---|:---|
| **LANTRONIX, INC.** | **ACCEPTED AND AGREED BY GRANTEE** |
| By: | By: |
| Name: | Name: |
| Title: |  |

---

______________________________

<sup>1</sup> Subject to adjustment under Section 7.1 of the Plan.

**LANTRONIX, INC.**

**2020 PERFORMANCE INCENTIVE PLAN**

**TERMS AND CONDITIONS OF RESTRICTED STOCK UNIT AWARD** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. <u>General</u>**.

These Terms and Conditions of Restricted Stock Unit Award (these "**Terms**") apply to a particular grant of stock units (the "**Award**") under the Plan if incorporated by reference in the Notice of Grant of Restricted Stock Unit Award (the "**Grant Notice**") corresponding to that particular grant. The recipient of the Award identified in the Grant Notice is referred to as the "**Grantee**." The effective date of grant of the Award as set forth in the Grant Notice is referred to as the "**Award Date**." The number of stock units covered by the Award is subject to adjustment under Section 7.1 of the Plan.

The Award was granted under and subject to the Lantronix, Inc. 2020 Performance Incentive Plan (the "**Plan**"). Capitalized terms are defined in the Plan if not defined herein. The Award has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. The Grant Notice and these Terms are collectively referred to as the "**Agreement**" applicable to the Award.

As used in this Agreement, the term "**stock unit**" means a non-voting unit of measurement which is deemed for bookkeeping purposes to be the equivalent to one outstanding share of the Company's Common Stock solely for purposes of the Plan and this Agreement. The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Grantee if such Stock Units vest pursuant to this Agreement. The Stock Units shall not be treated as property or as a trust fund of any kind.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. <u>Vesting</u>**.

The Award is subject to the vesting schedule set forth in the Grant Notice (the "**Vesting Schedule**") and the terms and conditions set forth herein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. <u>Effect of Termination of Employment or Services</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1 In General.** Except as otherwise expressly provided below in this Section 3, if the Grantee ceases to be employed by or ceases to provide services to the Company or any of its Subsidiaries (the last day that the Grantee is employed by or provides services as a consultant or director to the Company or one of its Subsidiaries prior to a period in which the Grantee is not employed by, and does not have any such service relationship with, any such entity is referred to as the Grantee's "**Severance Date**"), the Grantee's Stock Units shall terminate to the extent such units have not become vested pursuant to Section 2 or this Section 3 as of the Severance Date (regardless of the reason for such termination of employment or services, whether with or without cause, voluntarily or involuntarily).

If any unvested Stock Units are terminated pursuant to this Agreement, such Stock Units shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Company and without any other action by the Grantee, or the Grantee's beneficiary or personal representative, as the case may be.

In the event of any conflict or inconsistency between this Agreement, on the one hand, and any employment, severance or similar agreement between the Grantee and the Company entered into before the Award Date, on the other hand, regarding the treatment of the Award in connection with a termination of the Grantee's employment or services or a change in control or similar event (including, without limitation, whether and the extent to which there is any accelerated vesting of the Award in any such circumstances), this Agreement shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2 Termination Due to Death or Disability.** Subject to Section 3.3, if the Grantee's Severance Date occurs as a result of a termination of the Grantee's employment due to the Grantee's death or Disability, and (other than in the case of a termination due to the Grantee's death) if the Grantee satisfies the Release Requirement set forth below, any portion of the Award that is then outstanding and scheduled to vest pursuant to the Vesting Schedule during the period of twelve (12) months following the Severance Date shall be fully vested as of the Severance Date. Any remaining Stock Units that are not vested after giving effect to the foregoing sentence shall terminate as of the Grantee's Severance Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3 Termination In Connection with a Change in Control.** If the Grantee's Severance Date occurs within sixty (60) days prior to, or upon or after, a Change in Control, as a result of a termination of the Grantee's employment by the Company without Cause or a termination by the Grantee for Good Reason, or due to the Grantee's death or Disability upon or after a Change in Control, and (other than in the case of a termination due to the Grantee's death) if the Grantee satisfies the Release Requirement set forth below, any portion of the Award that is then outstanding and unvested shall be fully vested as of the Severance Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4 Defined Terms; Release Requirement.** For the purposes of the Award, the following definitions will apply:

"**Cause**" shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the Grantee and the Company in effect on the Grantee's Severance Date or, if there is no such agreement or such agreement does not include a definition of such term, shall mean: (i) gross negligence or willful misconduct in the performance of the Grantee's duties to the Company; (ii) intentional and continual failure to substantially perform the Grantee's reasonably assigned duties for the Company; (iii) the Grantee's intentional conduct that is demonstrably and materially injurious to the Company, including but not limited to committing or cooperating in an act of fraud, theft, or dishonesty against the Company; (iv) the Grantee's breach of a fiduciary duty to the Company or its shareholders; (v) the Grantee's conviction for, or plea of guilty or nolo contendere to, the commission of any felony or any crime involving deceit, material dishonesty, fraud, embezzlement, theft, any crime that results in or is intended to result in personal enrichment at the expense of the Company, any crime that involves the use or sale of a controlled substance, or any other offense that will adversely affect in any material respect the Company's reputation or the Grantee's ability to perform the Grantee's obligations or duties to the Company; or (vi) the Grantee's violation of a material written policy of the Company or breach of a written agreement with Company, including but not limited to a breach of any written employment, confidentiality or similar agreement between the Grantee and the Company. Notwithstanding the foregoing, Cause shall not exist under (i), (ii), (iii), (iv) or (vi) unless the Company provides the Grantee with written notice of the existence of one or more of the actions, conditions or events set forth above in such definition of Cause, and if such action, event or condition is curable, the Grantee fails to cure such action, event or condition within thirty (30) days after receipt of such notice.

"**Change in Control**" means the occurrence of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group, ("**Person**") acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection (i), the acquisition of additional stock by any one Person, who is considered to own more than 50% of the total voting power of the stock of the Company will not be considered a Change in Control; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to effectively control the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) A change in the ownership of a substantial portion of the Company's assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company's assets: (A) a transfer to an entity that is controlled by the Company's stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company's stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

For purposes of this definition of Change in Control, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, a transaction shall not be deemed a Change in Control unless the transaction qualifies as a change in the ownership of the Company, change in the effective control of the Company or a change in the ownership of a substantial portion of the Company's assets, each within the meaning of Section 409A of the Code and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time ("**Section 409A**").

"**Disability**" means total and permanent disability of the Grantee as defined in Section 22(e)(3) of the Code.

"**Good Reason**" shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the Grantee and the Company in effect on the Grantee's Severance Date or, if there is no such agreement or such agreement does not include a definition of such term, shall mean the Grantee's resignation within one hundred and twenty (120) days after the Company has taken any of the following actions without the Grantee's express written consent: (i) a material reduction in the Grantee's base salary, the Grantee's target annual bonus opportunity or benefits (unless, outside of a Change in Control context, such reduction is in connection with a salary or benefit reduction program of general application at the senior level executives of the Company); (ii) a material breach by the Company of any written agreement with the Grantee, including the Company's failure to obtain an agreement from any successor to the Company to assume and agree to perform the obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform, except where such assumption occurs by operation of law; (iii) a material adverse change in the Grantee's title, duties or responsibilities (other than temporarily while the Grantee is disabled or as otherwise permitted by applicable law); or (iv) relocation of the Grantee's principal workplace by more than forty-five (45) miles, which change results in a material increase in the Grantee's one-way commute. Notwithstanding the foregoing, Good Reason shall not exist unless the Grantee provides the Company written notice of the existence of the one or more of the actions, conditions or events set forth above in this definition of Good Reason within ninety (90) days after the initial existence or occurrence of such action, condition or event, and if such action, event or condition is curable, the Company fails to cure such action, event or condition within thirty (30) days after its receipt of such notice.

The "**Release Requirement**" means that the Grantee timely executes and delivers to the Company a release of claims in a form acceptable to the Company (a "**Release**") and the Grantee does not revoke such Release within any revocation period provided by applicable law. In any circumstances where the Release Requirement is applicable pursuant to this Agreement, the Company shall provide the final form of Release to the Grantee not later than seven (7) days following the Grantee's Severance Date, and the Grantee shall be required to execute and return the Release to the Company within twenty-one (21) days (or forty-five (45) days if such longer period of time is required to make the Release maximally enforceable under applicable law) after the Company provides the form of Release to the Grantee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. <u>Continuance of Employment/Service Required; No Employment Commitment</u>**.

Except as expressly provided in Section 3 above, the Vesting Schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement. Except as expressly provided in Section 3 above, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 3 above or under the Plan.

Nothing contained in this Agreement constitutes an employment or service commitment by the Company, affects the Grantee's status as an employee at will who is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Company or any of its Subsidiaries, interferes in any way with the right of the Company or any of its Subsidiaries at any time to terminate such employment or services, or affects the right of the Company or any of its Subsidiaries to increase or decrease the Grantee's other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Grantee without his consent thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5. <u>Timing and Manner of Payment of Stock Units</u>**.

On or as soon as administratively practical (and in all events not later than two and one-half months) following the date on which any Stock Units vest pursuant to any provision of this Agreement or Section 7.2 of the Plan, the Company shall deliver to the Grantee a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Company in its discretion) equal (subject to adjustment pursuant to Section 7.1 of the Plan) to the number of Stock Units subject to this Award that vested on such date. The Company's obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Stock Units is subject to the condition precedent that the Grantee or other person entitled under the Plan to receive any shares with respect to the vested Stock Units deliver to the Company any representations or other documents or assurances required pursuant to Section 8.1 of the Plan. The Grantee shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6. <u>Dividend and Voting Rights</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.1 <u>Limitations on Rights Associated with Units</u>**. The Grantee shall have no rights as a stockholder of the Company, no dividend rights (except as expressly provided in Section 6.2 with respect to dividend equivalent rights) and no voting rights, with respect to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common Stock are actually issued to and held of record by the Grantee. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.2 <u>Dividend Equivalent Rights Distributions</u>**. As of any date that the Company pays an ordinary cash dividend on its Common Stock, the Company shall credit the Grantee with an additional number of Stock Units equal to (i) the per share cash dividend paid by the Company on its Common Stock on such date, multiplied by (ii) the total number of Stock Units (including any dividend equivalents previously credited hereunder) (with such number of Stock Units adjusted pursuant to Section 7.1 of the Plan) outstanding and subject to the Award as of the related dividend payment record date, divided by (iii) the fair market value of a share of Common Stock (as determined under Section 5.5 of the Plan) on the date of payment of such dividend. Any Stock Units credited pursuant to the foregoing provisions of this Section 6.2 shall be subject to the same vesting, payment and other terms, conditions and restrictions as the original Stock Units to which they relate. No crediting of Stock Units shall be made pursuant to this Section 6.2 with respect to any Stock Units which, as of such record date, have either been paid pursuant to Section 5 or terminated pursuant to the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7. <u>Non-Transferability</u>**.

Neither the Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Company, or (b) transfers by will or the laws of descent and distribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8. <u>Adjustments</u>**.

Upon the occurrence of certain events relating to the Company's stock contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section in the number of Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are credited pursuant to Section 6.2.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9. <u>Tax Withholding</u>**.

The Company shall reasonably determine the amount of any federal, state, local or other income, employment, or other taxes which the Company or any of its Subsidiaries may reasonably be obligated to withhold with respect to the grant, vesting or other event with respect to the Stock Units. The Grantee shall be solely responsible for the satisfaction of such withholding requirements. If such withholding event occurs in connection with the distribution of shares of Common Stock in respect of the Stock Units and subject to compliance with all applicable laws, the Company shall automatically withhold and reacquire the appropriate number of whole shares, valued at their then Fair Market Value, to satisfy any withholding obligations of the Company or its Subsidiaries with respect to such distribution. If, however, any withholding event occurs with respect to the Stock Units other than in connection with the distribution of shares of Common Stock in respect of the Stock Units, or if the Company cannot legally satisfy such withholding obligations by such withholding and reacquisition of shares as described above, the Company shall be entitled to require a cash payment by or on behalf of the Grantee and/or to deduct from other compensation payable to the Grantee the amount of any such withholding obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10. <u>Notices</u>**.

Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Company at its principal office to the attention of the Secretary, and to the Grantee at the Grantee's last address reflected on the Company's employment records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government or a courier of internationally recognized prominence. Any such notice shall be given only when received, but if the Grantee is no longer a Service Provider, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 10.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11. <u>Plan</u>**.

The Award and all rights of the Grantee under this Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference. The Grantee agrees to be bound by the terms of the Plan and this Agreement (including the Grant Notice). The Grantee acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Agreement (including the Grant Notice). Unless otherwise expressly provided in other sections of this Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be deemed to) create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan <u>after</u> the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12. <u>Entire Agreement</u>**.

This Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof.

The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan. Any such amendment must be in writing and signed by the Company. The Company may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

The Administrator will have the exclusive discretion and authority to establish administrative rules, forms and procedures for the administration of the Plan, to construe and interpret the Plan and awards granted pursuant to the Plan (including the Award and this Agreement) and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount of benefits paid under the Plan. The rules, interpretations, computations and other actions of the Administrator will be binding and conclusive on all persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13. <u>Limitation on Grantee's Rights</u>.** 

Participation in the Plan confers no rights or interests other than as herein provided. This Agreement (including the Grant Notice) creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Grantee shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14. <u>Counterparts</u>**.

This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15. <u>Section Headings</u>**.

The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16. <u>Governing Law</u>**.

This Agreement (including the Grant Notice) shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**17. <u>Construction</u>**.

It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Agreement (including the Grant Notice) shall be construed and interpreted consistent with that intent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18. <u>Clawback Policy</u>**.

The Stock Units are subject to the terms of the Company's recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or any shares of Common Stock or other cash or property received with respect to the Stock Units (including any value received from a disposition of the shares acquired upon payment of the Stock Units). The Grantee hereby agrees to promptly repay to the Company any amounts that are required to be repaid pursuant to such policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**19. <u>Section 280G</u>**.

Notwithstanding anything contained in this Agreement to the contrary, to the extent that any payments and benefits provided under this Agreement to or for the benefit of the Grantee, together with any payments and benefits provided to or for the benefit of the Grantee under any other plan or agreement of the Company or any of its Subsidiaries or affiliates (such payments or benefits are collectively referred to as the "**Benefits**"), would be subject to the excise tax (the "**Excise Tax**") imposed under Section 4999 of the Code, the Grantee's Benefits shall be reduced (but not below zero) if and to the extent that a reduction in the Benefits would result in the Grantee retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Grantee received all of the Benefits (such reduced amount is referred to hereinafter as the "**Limited Benefit Amount**"). If a reduction in the Grantee's Benefits is required pursuant to the preceding sentence, in order to effectuate the Limited Benefit Amount, the Company shall reduce or eliminate (if and to the extent necessary) the Grantee's Benefits by first reducing or eliminating amounts which are payable from any cash severance, then from any payment or benefit in respect of any equity award that is treated as contingent on the change in ownership or control but is not covered by Treas. Reg. Section 1.280G-1 Q/A 24(b) or (c), then from any payment or benefit in respect of an equity award that is covered by Treas. Reg. Section 1.280G-1 Q/A 24(c), in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). A determination as to whether a reduction in the Grantee's Benefits to the Limited Benefit Amount pursuant to this Section 19, and the amount of such Limited Benefit Amount (the "**Determination**"), shall be made by the Company's independent public accountants or another certified public accounting firm or executive compensation consulting firm of national reputation designated by the Company at the Company's expense.

\* \* \*

## Exhibit 10.13

**Exhibit 10.13**

**NOTICE OF GRANT OF PERFORMANCE STOCK UNIT AWARD**

**(FINANCIAL PERFORMANCE)**

**2020 PERFORMANCE INCENTIVE PLAN**

---

| | |
|:---|:---|
| **Name of Grantee:** | **[________]** |
| **Total Target Number of Stock Units Subject to this Grant<sup>1</sup>:** | **________________________________** |
| **Date of Grant:** | **___________________________, 2025** |

---

This Notice evidences that you have been granted an award of performance stock units (the "**Stock Units**") of Lantronix, Inc. (the "**Company**") as to the "total target" number of Stock Units set forth above. Between zero percent (0%) and two hundred percent (200%) of the "total target" number of Stock Units will become vested in accordance with the performance-based vesting requirements set forth in the Terms (as defined below).

By your acceptance of the award, you agree that the award of Stock Units is granted under and governed by the terms and conditions of the Company's 2020 Performance Incentive Plan (as amended from time to time, the "**Plan**") and the Terms and Conditions of Performance Stock Unit Award (the "**Terms**"), which are attached and incorporated herein by this reference. This Notice of Grant of Performance Stock Unit Award, together with the Terms, is referred to as the "**Agreement**" applicable to your award. The award has been granted to you in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to you. Capitalized terms are defined in the Plan if not defined herein or in the Terms. The Plan, the Terms, and the Prospectus for the Plan are available by calling the Company at (949) 453-3990.

By accepting this award, you agree to execute any documents and take such further actions that the Company may reasonably request in order to establish and/or maintain a brokerage account to hold the shares subject to this grant.

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| | |
|:---|:---|
| **LANTRONIX, INC.** | **ACCEPTED AND AGREED BY GRANTEE** |
| By: | By: |
| Name: | Name: |
| Title: |  |

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______________________________

<sup>1</sup> Subject to adjustment under Section 7.1 of the Plan.

**LANTRONIX, INC.**

**2020 PERFORMANCE INCENTIVE PLAN**

**TERMS AND CONDITIONS OF PERFORMANCE STOCK UNIT AWARD** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. <u>General</u>**.

These Terms and Conditions of Performance Stock Unit Award (these "**Terms**") apply to a particular grant of stock units (the "**Award**") under the Plan if incorporated by reference in the Notice of Grant of Performance Stock Unit Award (the "**Grant Notice**") corresponding to that particular grant. The recipient of the Award identified in the Grant Notice is referred to as the "**Grantee**." The effective date of grant of the Award as set forth in the Grant Notice is referred to as the "**Award Date**." The number of stock units covered by the Award is subject to adjustment under Section 7.1 of the Plan.

The Award was granted under and subject to the Lantronix, Inc. 2020 Performance Incentive Plan (the "**Plan**"). Capitalized terms are defined in the Plan if not defined herein. The Award has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. The Grant Notice and these Terms are collectively referred to as the "**Agreement**" applicable to the Award.

As used in this Agreement, the term "**stock unit**" means a non-voting unit of measurement which is deemed for bookkeeping purposes to be the equivalent to one outstanding share of the Company's Common Stock solely for purposes of the Plan and this Agreement. The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Grantee if such Stock Units vest pursuant to this Agreement. The Stock Units shall not be treated as property or as a trust fund of any kind.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. <u>Vesting</u>**.

The Award is subject to the performance-based vesting terms and conditions set forth in <u>Exhibit A</u> hereto, incorporated herein by this reference. References to this Section 2 include <u>Exhibit A</u>. The number of Stock Units that are eligible to vest pursuant to <u>Exhibit A</u> will become vested (i) as to one-third (1/3) of the total number of such eligible Stock Units on the date on which the Administrator determines the number of Stock Units that are eligible to vest in accordance with Exhibit A (the "**Determination Date**") and (ii) as to the remaining two-thirds of the total number of such eligible Stock Units that the Administrator determines are eligible to vest in eight (8) equal installments, with one installment vesting on the first day of the last month of each calendar quarter following the calendar quarter in which the Performance Period ends (so the first such installment will vest on September 1, 2026 and the last such installment will vest on June 1, 2028). .

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. <u>Effect of Termination of Employment or Services</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1 In General.** Except as otherwise expressly provided below in this Section 3, if the Grantee ceases to be employed by or ceases to provide services to the Company or any of its Subsidiaries (the last day that the Grantee is employed by or provides services as a consultant or director to the Company or one of its Subsidiaries prior to a period in which the Grantee is not employed by, and does not have any such service relationship with, any such entity is referred to as the Grantee's "**Severance Date**"), the Grantee's Stock Units shall terminate to the extent such units have not become vested pursuant to Section 2 or Section 8.2 hereof as of the Severance Date (regardless of the reason for such termination of employment or services, whether with or without cause, voluntarily or involuntarily).

If any unvested Stock Units are terminated pursuant to this Agreement, such Stock Units shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Company and without any other action by the Grantee, or the Grantee's beneficiary or personal representative, as the case may be.

In the event of any conflict or inconsistency between this Agreement, on the one hand, and any employment, severance or similar agreement between the Grantee and the Company entered into before the Award Date, on the other hand, regarding the treatment of the Award in connection with a termination of the Grantee's employment or services or a change in control or similar event (including, without limitation, whether and the extent to which there is any accelerated vesting of the Award in any such circumstances), this Agreement shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2 Termination Due to Death or Disability.** If the Grantee's Severance Date occurs prior to the last vesting date of the Award provided in Section 2 as a result of the Grantee's death or Disability, and (other than in the case of a termination due to the Grantee's death) provided the Grantee satisfies the Release Requirement set forth below, any portion of the Award that is then outstanding and scheduled to vest pursuant to the vesting schedule set forth in Section 2 during the period of twelve (12) months following the Severance Date shall be fully vested as of the Severance Date (or, if later, the Determination Date); provided, however, that if the Grantee's Severance Date occurs prior to the last day of the Performance Period, the Award shall be held open until the Determination Date, and the number of Stock Units that are eligible to vest pursuant to this Section 3.2 shall give effect to the performance determination in accordance with <u>Exhibit A</u> hereto . Any such Stock Units that vest in connection with the Grantee's death or Disability will be paid within two and one-half months after the end of the Performance Period. Any remaining Stock Units that are not vested after giving effect to the foregoing provisions shall terminate as of the Grantee's Severance Date (or, if later, the Determination Date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3 Termination In Connection with a Change in Control**. If the Grantee's Severance Date occurs within sixty (60) days prior to, or upon or after, a Change in Control, as a result of a termination of the Grantee's employment by the Company without Cause or a termination by the Grantee for Good Reason, or due to the Grantee's death or Disability upon or after a Change in Control, and in any such case (other than in the case of a termination due to the Grantee's death) if the Grantee satisfies the Release Requirement set forth below, any Stock Units that remain outstanding and eligible to vest following a Change in Control pursuant to Section 8.2 (to the extent not theretofore vested or terminated and, if applicable, after giving effect to the Change in Control Vesting Percentage determined under Section 8.2) shall accelerate and vest as of the Grantee's Severance Date (or, if later, the date of the Change in Control) If both this Section 3.3 and Section 3.2 would apply in the circumstances, this Section 3.3 controls. In addition, if the Grantee's Severance Date occurs within sixty (60) days prior to a Change in Control as a result of a termination of the Grantee's employment by the Company without Cause or a termination by the Grantee for Good Reason, (x) the number of Stock Units that vest pursuant to this Section 3.3 will be determined as though the Grantee's termination of employment had occurred immediately after the Change in Control, and (y) the timing requirements set forth in the Release Requirement shall be measured from the date of the Change in Control and not from the Severance Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4 Defined Terms; Release Requirement.** For the purposes of the Award, the following definitions will apply:

"**Cause**" shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the Grantee and the Company in effect on the Grantee's Severance Date or, if there is no such agreement or such agreement does not include a definition of such term, shall mean: (i) gross negligence or willful misconduct in the performance of the Grantee's duties to the Company; (ii) intentional and continual failure to substantially perform the Grantee's reasonably assigned duties for the Company; (iii) the Grantee's intentional conduct that is demonstrably and materially injurious to the Company, including but not limited to committing or cooperating in an act of fraud, theft, or dishonesty against the Company; (iv) the Grantee's breach of a fiduciary duty to the Company or its shareholders; (v) the Grantee's conviction for, or plea of guilty or nolo contendere to, the commission of any felony or any crime involving deceit, material dishonesty, fraud, embezzlement, theft, any crime that results in or is intended to result in personal enrichment at the expense of the Company, any crime that involves the use or sale of a controlled substance, or any other offense that will adversely affect in any material respect the Company's reputation or the Grantee's ability to perform the Grantee's obligations or duties to the Company; or (vi) the Grantee's violation of a material written policy of the Company or breach of a written agreement with Company, including but not limited to a breach of any written employment, confidentiality or similar agreement between the Grantee and the Company. Notwithstanding the foregoing, Cause shall not exist under (i), (ii), (iii), (iv) or (vi) unless the Company provides the Grantee with written notice of the existence of one or more of the actions, conditions or events set forth above in such definition of Cause, and if such action, event or condition is curable, the Grantee fails to cure such action, event or condition within thirty (30) days after receipt of such notice.

"**Change in Control**" means the occurrence of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group, ("**Person**") acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection (i), the acquisition of additional stock by any one Person, who is considered to own more than 50% of the total voting power of the stock of the Company will not be considered a Change in Control; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to effectively control the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) A change in the ownership of a substantial portion of the Company's assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company's assets: (A) a transfer to an entity that is controlled by the Company's stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company's stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

For purposes of this definition of Change in Control, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, a transaction shall not be deemed a Change in Control unless the transaction qualifies as a change in the ownership of the Company, change in the effective control of the Company or a change in the ownership of a substantial portion of the Company's assets, each within the meaning of Section 409A of the Code and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time ("**Section 409A**").

"**Disability**" means total and permanent disability of the Grantee as defined in Section 22(e)(3) of the Code.

"**Good Reason**" shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the Grantee and the Company in effect on the Grantee's Severance Date or, if there is no such agreement or such agreement does not include a definition of such term, shall mean the Grantee's resignation within one hundred and twenty (120) days after the Company has taken any of the following actions without the Grantee's express written consent: (i) a material reduction in the Grantee's base salary, the Grantee's target annual bonus opportunity or benefits (unless, outside of a Change in Control context, such reduction is in connection with a salary or benefit reduction program of general application at the senior level executives of the Company); (ii) a material breach by the Company of any written agreement with the Grantee, including the Company's failure to obtain an agreement from any successor to the Company to assume and agree to perform the obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform, except where such assumption occurs by operation of law; (iii) a material adverse change in the Grantee's title, duties or responsibilities (other than temporarily while the Grantee is disabled or as otherwise permitted by applicable law); or (iv) relocation of the Grantee's principal workplace by more than forty-five (45) miles, which change results in a material increase in the Grantee's one-way commute. Notwithstanding the foregoing, Good Reason shall not exist unless the Grantee provides the Company written notice of the existence of the one or more of the actions, conditions or events set forth above in this definition of Good Reason within ninety (90) days after the initial existence or occurrence of such action, condition or event, and if such action, event or condition is curable, the Company fails to cure such action, event or condition within thirty (30) days after its receipt of such notice.

The "**Release Requirement**" means that the Grantee timely executes and delivers to the Company a release of claims in a form acceptable to the Company (a "**Release**") and the Grantee does not revoke such Release within any revocation period provided by applicable law. In any circumstances where the Release Requirement is applicable pursuant to this Agreement, the Company shall provide the final form of Release to the Grantee not later than seven (7) days following the Grantee's Severance Date, and the Grantee shall be required to execute and return the Release to the Company within twenty-one (21) days (or forty-five (45) days if such longer period of time is required to make the Release maximally enforceable under applicable law) after the Company provides the form of Release to the Grantee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. <u>Continuance of Employment/Service Required; No Employment Commitment</u>**.

Except as expressly provided in Section 3 above, the vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement. Except as expressly provided in Section 3 above, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 3 above or under the Plan.

Nothing contained in this Agreement constitutes an employment or service commitment by the Company, affects the Grantee's status as an employee at will who is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Company or any of its Subsidiaries, interferes in any way with the right of the Company or any of its Subsidiaries at any time to terminate such employment or services, or affects the right of the Company or any of its Subsidiaries to increase or decrease the Grantee's other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Grantee without his consent thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5. <u>Timing and Manner of Payment of Stock Units</u>**.

On or as soon as administratively practical (and in all events not later than two and one-half months) following the date on which any Stock Units vest pursuant to any provision of this Agreement, the Company shall deliver to the Grantee a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Company in its discretion) equal (subject to adjustment pursuant to Section 7.1 of the Plan) to the number of Stock Units subject to this Award that vested on such date. The Company's obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Stock Units is subject to the condition precedent that the Grantee or other person entitled under the Plan to receive any shares with respect to the vested Stock Units deliver to the Company any representations or other documents or assurances required pursuant to Section 8.1 of the Plan. The Grantee shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6. <u>Dividend and Voting Rights</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.1 <u>Limitations on Rights Associated with Units</u>**. The Grantee shall have no rights as a stockholder of the Company, no dividend rights (except as expressly provided in Section 6.2 with respect to dividend equivalent rights) and no voting rights, with respect to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common Stock are actually issued to and held of record by the Grantee. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.2 <u>Dividend Equivalent Rights Distributions</u>**. As of any date that the Company pays an ordinary cash dividend on its Common Stock, the Company shall credit the Grantee with an additional number of Stock Units equal to (i) the per share cash dividend paid by the Company on its Common Stock on such date, multiplied by (ii) the Total Target Number of Stock Units (including any dividend equivalents previously credited hereunder) (with such Target Number adjusted pursuant to Section 7.1 of the Plan) outstanding and subject to the Award as of the related dividend payment record date, divided by (iii) the fair market value of a share of Common Stock (as determined under Section 5.5 of the Plan) on the date of payment of such dividend. Any Stock Units credited pursuant to the foregoing provisions of this Section 6.2 shall be subject to the same vesting, payment and other terms, conditions and restrictions as the original Stock Units to which they relate. No crediting of Stock Units shall be made pursuant to this Section 6.2 with respect to any Stock Units which, as of such record date, have either been paid pursuant to Section 5 or terminated pursuant to the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7. <u>Non-Transferability</u>**.

Neither the Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Company, or (b) transfers by will or the laws of descent and distribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8. <u>Adjustments; Change in Control</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.1 <u>Adjustments</u>**. Upon the occurrence of certain events relating to the Company's stock contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section in the number of Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are credited pursuant to Section 6.2. For purposes of clarity, <u>Exhibit A</u> controls as to any adjustment of the performance goals, criteria or metrics.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.2 <u>Change in Control</u>**. If, at any time after the Award Date and before the last day of the Performance Period, a Change in Control occurs, the performance-based vesting terms and conditions set forth in <u>Exhibit A</u> hereto shall no longer apply and the following rules shall apply to determine the vesting of the Award:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The Award shall remain outstanding following
the Change in Control with respect to a percentage of the Total Target Number of Stock Units subject to the Award (as provided in the
Grant Notice), such percentage referred to as the "**Change in Control Vesting Percentage**." The Change in Control Vesting
Percentage shall equal the greater of (i) one hundred percent (100%) and (ii) the percentage determined in accordance with <u>Exhibit A</u> hereto as though the Performance Period ended as of the last day of the fiscal quarter of the Company coinciding with or last preceding
the date on which such Change in Control occurs (the "**Short Period End Date**") and with the performance measurement
in accordance with <u>Exhibit A</u> hereto to be determined on a pro-rated basis for the portion of the Performance Period occurring through
the Short Period End Date (for example, if the Change in Control occurred during the second fiscal quarter during the Performance Period
and before the last day of that quarter, the Change in Control Vesting Percentage would be determined based on actual performance during
the first fiscal quarter of the Performance Period measured against 25% of the performance targets set forth on Exhibit A; provided that
if the Change in Control occurs in the first quarter of the Performance Period, the vesting percentage pursuant to this clause shall be
deemed to be one hundred percent (100%).

The number of Stock Units that remain outstanding after the Change in Control, determined as set forth above in this clause, shall vest in accordance with the vesting schedule set forth in Section 2, subject to (except as otherwise expressly provided below) the Grantee's continued employment or service with the Company or any of its Subsidiaries through the applicable vesting date and provided that the first vesting installment referred to in clause (i) of Section 2 shall vest on the last day of the Performance Period (as opposed to the Determination Date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· In the event that Section 7.2(a) of the Plan applies, and the Administrator
has not made a provision for the substitution, assumption, exchange or other continuation or settlement of the Award, the Award shall
vest on the Change in Control as to the number of Stock Units provided above in this Section 8.2. The second sentence of Section 7.2(a)
of the Plan is hereby superseded by the provisions hereof and shall not apply to the Award.

For purposes of clarity, the provisions of this Section 8.2 shall not apply as to any Change in Control that occurs after the last day of the Performance Period or any Stock Units that have terminated or were accelerated pursuant to Section 3 (except as otherwise expressly provided in Section 3.3) prior to the occurrence of such Change in Control.

As to a Change in Control that occurs after the last day of the Performance Period and before the last scheduled vesting day applicable to the Award pursuant to Section 2, in the event that Section 7.2(a) of the Plan applies and the Administrator has not made a provision for the substitution, assumption, exchange or other continuation or settlement of the Award, the then outstanding and unvested portion of the Award shall vest on the Change in Control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9. <u>Tax Withholding</u>**.

The Company shall reasonably determine the amount of any federal, state, local or other income, employment, or other taxes which the Company or any of its Subsidiaries may reasonably be obligated to withhold with respect to the grant, vesting or other event with respect to the Stock Units. The Grantee shall be solely responsible for the satisfaction of such withholding requirements. If such withholding event occurs in connection with the distribution of shares of Common Stock in respect of the Stock Units and subject to compliance with all applicable laws, the Company shall automatically withhold and reacquire the appropriate number of whole shares, valued at their then Fair Market Value, to satisfy any withholding obligations of the Company or its Subsidiaries with respect to such distribution. If, however, any withholding event occurs with respect to the Stock Units other than in connection with the distribution of shares of Common Stock in respect of the Stock Units, or if the Company cannot legally satisfy such withholding obligations by such withholding and reacquisition of shares as described above, the Company shall be entitled to require a cash payment by or on behalf of the Grantee and/or to deduct from other compensation payable to the Grantee the amount of any such withholding obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10. <u>Notices</u>**.

Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Company at its principal office to the attention of the Secretary, and to the Grantee at the Grantee's last address reflected on the Company's employment records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government or a courier of internationally recognized prominence. Any such notice shall be given only when received, but if the Grantee is no longer a Service Provider, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 10.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11. <u>Plan</u>**.

The Award and all rights of the Grantee under this Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference. The Grantee agrees to be bound by the terms of the Plan and this Agreement (including the Grant Notice). The Grantee acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Agreement (including the Grant Notice). Unless otherwise expressly provided in other sections of this Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be deemed to) create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan <u>after</u> the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12. <u>Entire Agreement</u>**.

This Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof.

The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan. Any such amendment must be in writing and signed by the Company. The Company may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

The Administrator will have the exclusive discretion and authority to establish administrative rules, forms and procedures for the administration of the Plan, to construe and interpret the Plan and awards granted pursuant to the Plan (including the Award and this Agreement) and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount of benefits paid under the Plan. The rules, interpretations, computations and other actions of the Administrator will be binding and conclusive on all persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13. <u>Limitation on Grantee's Rights</u>.** 

Participation in the Plan confers no rights or interests other than as herein provided. This Agreement (including the Grant Notice) creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Grantee shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14. <u>Counterparts</u>**.

This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15. <u>Section Headings</u>**.

The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16. <u>Governing Law</u>**.

This Agreement (including the Grant Notice) shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**17. <u>Construction</u>**.

It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Agreement (including the Grant Notice) shall be construed and interpreted consistent with that intent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18. <u>Clawback Policy</u>**.

The Stock Units are subject to the terms of the Company's recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or any shares of Common Stock or other cash or property received with respect to the Stock Units (including any value received from a disposition of the shares acquired upon payment of the Stock Units). The Grantee hereby agrees to promptly repay to the Company any amounts that are required to be repaid pursuant to such policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**19. <u>Section 280G</u>**.

Notwithstanding anything contained in this Agreement to the contrary, to the extent that any payments and benefits provided under this Agreement to or for the benefit of the Grantee, together with any payments and benefits provided to or for the benefit of the Grantee under any other plan or agreement of the Company or any of its Subsidiaries or affiliates (such payments or benefits are collectively referred to as the "**Benefits**"), would be subject to the excise tax (the "**Excise Tax**") imposed under Section 4999 of the Code, the Grantee's Benefits shall be reduced (but not below zero) if and to the extent that a reduction in the Benefits would result in the Grantee retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Grantee received all of the Benefits (such reduced amount is referred to hereinafter as the "**Limited Benefit Amount**"). If a reduction in the Grantee's Benefits is required pursuant to the preceding sentence, in order to effectuate the Limited Benefit Amount, the Company shall reduce or eliminate (if and to the extent necessary) the Grantee's Benefits by first reducing or eliminating amounts which are payable from any cash severance, then from any payment or benefit in respect of any equity award that is treated as contingent on the change in ownership or control but is not covered by Treas. Reg. Section 1.280G-1 Q/A 24(b) or (c), then from any payment or benefit in respect of an equity award that is covered by Treas. Reg. Section 1.280G-1 Q/A 24(c), in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). A determination as to whether a reduction in the Grantee's Benefits to the Limited Benefit Amount pursuant to this Section 19, and the amount of such Limited Benefit Amount (the "**Determination**"), shall be made by the Company's independent public accountants or another certified public accounting firm or executive compensation consulting firm of national reputation designated by the Company at the Company's expense.

**EXHIBIT A**

**VESTING TERMS AND CONDITIONS**

 ****

***[To be determined at the time of grant]***

## Exhibit 10.14

**Exhibit 10.14**

**NOTICE OF GRANT OF PERFORMANCE STOCK UNIT AWARD**

**(RELATIVE TSR)**

**2020 PERFORMANCE INCENTIVE PLAN**

---

| | |
|:---|:---|
| **Name of Grantee:** | **[________]** |
| **Total Target Number of Stock Units Subject to this Grant<sup>1</sup>:** | **[_____]** |
| **Date of Grant:** | **___________________________, 2025** |

---

This Notice evidences that you have been granted an award of performance stock units (the "**Stock Units**") of Lantronix, Inc. (the "**Company**") as to the "total target" number of Stock Units set forth above. Between zero percent (0%) and two hundred percent (200%) of the "total target" number of Stock Units will become vested in accordance with the performance-based vesting requirements set forth in the Terms (as defined below).

By your acceptance of the award, you agree that the award of Stock Units is granted under and governed by the terms and conditions of the Company's 2020 Performance Incentive Plan (as amended from time to time, the "**Plan**") and the Terms and Conditions of Performance Stock Unit Award (the "**Terms**"), which are attached and incorporated herein by this reference. This Notice of Grant of Performance Stock Unit Award, together with the Terms, is referred to as the "**Agreement**" applicable to your award. The award has been granted to you in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to you. Capitalized terms are defined in the Plan if not defined herein or in the Terms. The Plan, the Terms, and the Prospectus for the Plan are available by calling the Company at (949) 453-3990.

By accepting this award, you agree to execute any documents and take such further actions that the Company may reasonably request in order to establish and/or maintain a brokerage account to hold the shares subject to this grant.

---

| | |
|:---|:---|
| **LANTRONIX, INC.** | **ACCEPTED AND AGREED BY GRANTEE** |
| By: | By: |
| Name: | Name: |
| Title: |  |

---

______________________________

<sup>1</sup> Subject to adjustment under Section 7.1 of the Plan.

**LANTRONIX, INC.**

**2020 PERFORMANCE INCENTIVE PLAN**

**TERMS AND CONDITIONS OF PERFORMANCE STOCK UNIT AWARD** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. <u>General</u>**.

These Terms and Conditions of Performance Stock Unit Award (these "**Terms**") apply to a particular grant of stock units (the "**Award**") under the Plan if incorporated by reference in the Notice of Grant of Performance Stock Unit Award (the "**Grant Notice**") corresponding to that particular grant. The recipient of the Award identified in the Grant Notice is referred to as the "**Grantee**." The effective date of grant of the Award as set forth in the Grant Notice is referred to as the "**Award Date**." The number of stock units covered by the Award is subject to adjustment under Section 7.1 of the Plan.

The Award was granted under and subject to the Lantronix, Inc. 2020 Performance Incentive Plan (the "**Plan**"). Capitalized terms are defined in the Plan if not defined herein. The Award has been granted to the Grantee in addition to, and not in lieu of, any other form of compensation otherwise payable or to be paid to the Grantee. The Grant Notice and these Terms are collectively referred to as the "**Agreement**" applicable to the Award.

As used in this Agreement, the term "**stock unit**" means a non-voting unit of measurement which is deemed for bookkeeping purposes to be the equivalent to one outstanding share of the Company's Common Stock solely for purposes of the Plan and this Agreement. The Stock Units shall be used solely as a device for the determination of the payment to eventually be made to the Grantee if such Stock Units vest pursuant to this Agreement. The Stock Units shall not be treated as property or as a trust fund of any kind.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. <u>Vesting</u>**.

The Award is subject to the vesting terms and conditions set forth in <u>Exhibit A</u> hereto, incorporated herein by this reference. References to this Section 2 include <u>Exhibit A</u>. For clarity, except as expressly provided herein, the vesting date for the Stock Units shall be the date on which the Administrator determines the vesting of such Stock Units in accordance with <u>Exhibit A</u>.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. <u>Effect of Termination of Employment or Services</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.1 In General.** Except as otherwise expressly provided below in this Section 3, if the Grantee ceases to be employed by or ceases to provide services to the Company or any of its Subsidiaries (the last day that the Grantee is employed by or provides services as a consultant or director to the Company or one of its Subsidiaries prior to a period in which the Grantee is not employed by, and does not have any such service relationship with, any such entity is referred to as the Grantee's "**Severance Date**"), the Grantee's Stock Units shall terminate to the extent such units have not become vested pursuant to Section 2 or Section 8.2 hereof as of the Severance Date (regardless of the reason for such termination of employment or services, whether with or without cause, voluntarily or involuntarily).

If any unvested Stock Units are terminated pursuant to this Agreement, such Stock Units shall automatically terminate and be cancelled as of the applicable termination date without payment of any consideration by the Company and without any other action by the Grantee, or the Grantee's beneficiary or personal representative, as the case may be.

In the event of any conflict or inconsistency between this Agreement, on the one hand, and any employment, severance or similar agreement between the Grantee and the Company entered into before the Award Date, on the other hand, regarding the treatment of the Award in connection with a termination of the Grantee's employment or services or a change in control or similar event (including, without limitation, whether and the extent to which there is any accelerated vesting of the Award in any such circumstances), this Agreement shall control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.2 Termination Due to Death or Disability.** If the Grantee's Severance Date occurs prior to the last day of the TSR Measurement Period as a result of the Grantee's death or Disability, and (other than in the case of a termination due to the Grantee's death) if the Grantee satisfies the Release Requirement set forth below, the TSR Measurement Period shall end on the Severance Date, the Ending Price for the TSR Measurement Period shall be the closing price (in regular trading) for a share of Common Stock on the principal exchange on which such stock is traded on the last trading day before the Severance Date, and the Award shall vest on the Severance Date as to a number of Stock Units determined in accordance with <u>Exhibit A</u> hereto. Any remaining Stock Units shall terminate as of the Grantee's Severance Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.3 Termination In Connection with a Change in Control.** If the Grantee's Severance Date occurs within sixty (60) days prior to, or upon or after, a Change in Control, as a result of a termination of the Grantee's employment by the Company without Cause or a termination by the Grantee for Good Reason, or due to the Grantee's death or Disability upon or after a Change in Control, and in any such case both (i) the Severance Date occurs before the last day of the TSR Measurement Period and (ii) (other than in the case of a termination due to the Grantee's death) the Grantee satisfies the Release Requirement set forth below, any Stock Units that remain outstanding and eligible to vest following a Change in Control pursuant to Section 8.2 (to the extent not theretofore vested or terminated and after giving effect to the crediting of the Stock Units provided under Section 8.2) shall accelerate and vest as of the Grantee's Severance Date (or, if later, the date of the Change in Control). If both this Section 3.3 and Section 3.2 would apply in the circumstances, this Section 3.3 controls. In addition, if the Grantee's Severance Date occurs within sixty (60) days prior to a Change in Control as a result of a termination of the Grantee's employment by the Company without Cause or a termination by the Grantee for Good Reason, (x) the number of Stock Units that vest pursuant to this Section 3.3 will be determined as though the Grantee's termination of employment had occurred immediately after the Change in Control, and (y) the timing requirements set forth in the Release Requirement shall be measured from the date of the Change in Control and not from the Severance Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3.4 Defined Terms; Release Requirement.** For the purposes of the Award, the following definitions will apply:

"**Cause**" shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the Grantee and the Company in effect on the Grantee's Severance Date or, if there is no such agreement or such agreement does not include a definition of such term, shall mean: (i) gross negligence or willful misconduct in the performance of the Grantee's duties to the Company; (ii) intentional and continual failure to substantially perform the Grantee's reasonably assigned duties for the Company; (iii) the Grantee's intentional conduct that is demonstrably and materially injurious to the Company, including but not limited to committing or cooperating in an act of fraud, theft, or dishonesty against the Company; (iv) the Grantee's breach of a fiduciary duty to the Company or its shareholders; (v) the Grantee's conviction for, or plea of guilty or nolo contendere to, the commission of any felony or any crime involving deceit, material dishonesty, fraud, embezzlement, theft, any crime that results in or is intended to result in personal enrichment at the expense of the Company, any crime that involves the use or sale of a controlled substance, or any other offense that will adversely affect in any material respect the Company's reputation or the Grantee's ability to perform the Grantee's obligations or duties to the Company; or (vi) the Grantee's violation of a material written policy of the Company or breach of a written agreement with Company, including but not limited to a breach of any written employment, confidentiality or similar agreement between the Grantee and the Company. Notwithstanding the foregoing, Cause shall not exist under (i), (ii), (iii), (iv) or (vi) unless the Company provides the Grantee with written notice of the existence of one or more of the actions, conditions or events set forth above in such definition of Cause, and if such action, event or condition is curable, the Grantee fails to cure such action, event or condition within thirty (30) days after receipt of such notice.

"**Change in Control**" means the occurrence of any of the following events:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group, ("**Person**") acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company; provided, however, that for purposes of this subsection (i), the acquisition of additional stock by any one Person, who is considered to own more than 50% of the total voting power of the stock of the Company will not be considered a Change in Control; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to effectively control the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) A change in the ownership of a substantial portion of the Company's assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions; provided, however, that for purposes of this subsection (iii), the following will not constitute a change in the ownership of a substantial portion of the Company's assets: (A) a transfer to an entity that is controlled by the Company's stockholders immediately after the transfer, or (B) a transfer of assets by the Company to: (1) a stockholder of the Company (immediately before the asset transfer) in exchange for or with respect to the Company's stock, (2) an entity, 50% or more of the total value or voting power of which is owned, directly or indirectly, by the Company, (3) a Person, that owns, directly or indirectly, 50% or more of the total value or voting power of all the outstanding stock of the Company, or (4) an entity, at least 50% of the total value or voting power of which is owned, directly or indirectly, by a Person described in this subsection (iii)(B)(3). For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.

For purposes of this definition of Change in Control, persons will be considered to be acting as a group if they are owners of a corporation that enters into a merger, consolidation, purchase or acquisition of stock, or similar business transaction with the Company. Notwithstanding the foregoing, a transaction shall not be deemed a Change in Control unless the transaction qualifies as a change in the ownership of the Company, change in the effective control of the Company or a change in the ownership of a substantial portion of the Company's assets, each within the meaning of Section 409A of the Code and any proposed or final Treasury Regulations and Internal Revenue Service guidance that has been promulgated or may be promulgated thereunder from time to time ("**Section 409A**").

"**Disability**" means total and permanent disability of the Grantee as defined in Section 22(e)(3) of the Code.

"**Good Reason**" shall have the meaning ascribed to such term (or a similar term) in any written employment, severance or similar agreement between the Grantee and the Company in effect on the Grantee's Severance Date or, if there is no such agreement or such agreement does not include a definition of such term, shall mean the Grantee's resignation within one hundred and twenty (120) days after the Company has taken any of the following actions without the Grantee's express written consent: (i) a material reduction in the Grantee's base salary, the Grantee's target annual bonus opportunity or benefits (unless, outside of a Change in Control context, such reduction is in connection with a salary or benefit reduction program of general application at the senior level executives of the Company); (ii) a material breach by the Company of any written agreement with the Grantee, including the Company's failure to obtain an agreement from any successor to the Company to assume and agree to perform the obligations under this Agreement in the same manner and to the same extent that the Company would be required to perform, except where such assumption occurs by operation of law; (iii) a material adverse change in the Grantee's title, duties or responsibilities (other than temporarily while the Grantee is disabled or as otherwise permitted by applicable law); or (iv) relocation of the Grantee's principal workplace by more than forty-five (45) miles, which change results in a material increase in the Grantee's one-way commute. Notwithstanding the foregoing, Good Reason shall not exist unless the Grantee provides the Company written notice of the existence of the one or more of the actions, conditions or events set forth above in this definition of Good Reason within ninety (90) days after the initial existence or occurrence of such action, condition or event, and if such action, event or condition is curable, the Company fails to cure such action, event or condition within thirty (30) days after its receipt of such notice.

The "**Release Requirement**" means that the Grantee timely executes and delivers to the Company a release of claims in a form acceptable to the Company (a "**Release**") and the Grantee does not revoke such Release within any revocation period provided by applicable law. In any circumstances where the Release Requirement is applicable pursuant to this Agreement, the Company shall provide the final form of Release to the Grantee not later than seven (7) days following the Grantee's Severance Date, and the Grantee shall be required to execute and return the Release to the Company within twenty-one (21) days (or forty-five (45) days if such longer period of time is required to make the Release maximally enforceable under applicable law) after the Company provides the form of Release to the Grantee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**4. <u>Continuance of Employment/Service Required; No Employment Commitment</u>**.

Except as expressly provided in Section 3 above, the vesting schedule requires continued employment or service through each applicable vesting date as a condition to the vesting of the applicable installment of the Award and the rights and benefits under this Agreement. Except as expressly provided in Section 3 above, employment or service for only a portion of the vesting period, even if a substantial portion, will not entitle the Grantee to any proportionate vesting or avoid or mitigate a termination of rights and benefits upon or following a termination of employment or services as provided in Section 3 above or under the Plan.

Nothing contained in this Agreement constitutes an employment or service commitment by the Company, affects the Grantee's status as an employee at will who is subject to termination without cause, confers upon the Grantee any right to remain employed by or in service to the Company or any of its Subsidiaries, interferes in any way with the right of the Company or any of its Subsidiaries at any time to terminate such employment or services, or affects the right of the Company or any of its Subsidiaries to increase or decrease the Grantee's other compensation or benefits. Nothing in this paragraph, however, is intended to adversely affect any independent contractual right of the Grantee without his consent thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**5. <u>Timing and Manner of Payment of Stock Units</u>**.

On or as soon as administratively practical (and in all events not later than two and one-half months) following the date on which any Stock Units vest pursuant to any provision of this Agreement, the Company shall deliver to the Grantee a number of shares of Common Stock (either by delivering one or more certificates for such shares or by entering such shares in book entry form, as determined by the Company in its discretion) equal (subject to adjustment pursuant to Section 7.1 of the Plan) to the number of Stock Units subject to this Award that vested on such date. The Company's obligation to deliver shares of Common Stock or otherwise make payment with respect to vested Stock Units is subject to the condition precedent that the Grantee or other person entitled under the Plan to receive any shares with respect to the vested Stock Units deliver to the Company any representations or other documents or assurances required pursuant to Section 8.1 of the Plan. The Grantee shall have no further rights with respect to any Stock Units that are paid or that terminate pursuant to the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6. <u>Dividend and Voting Rights</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.1 <u>Limitations on Rights Associated with Units</u>**. The Grantee shall have no rights as a stockholder of the Company, no dividend rights (except as expressly provided in Section 6.2 with respect to dividend equivalent rights) and no voting rights, with respect to the Stock Units and any shares of Common Stock underlying or issuable in respect of such Stock Units until such shares of Common Stock are actually issued to and held of record by the Grantee. No adjustments will be made for dividends or other rights of a holder for which the record date is prior to the date of issuance of the stock certificate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**6.2 <u>Dividend Equivalent Rights Distributions</u>**. As of any date that the Company pays an ordinary cash dividend on its Common Stock, the Company shall credit the Grantee with an additional number of Stock Units equal to (i) the per share cash dividend paid by the Company on its Common Stock on such date, multiplied by (ii) the Total Target Number of Stock Units (including any dividend equivalents previously credited hereunder) (with such Target Number adjusted pursuant to Section 7.1 of the Plan) outstanding and subject to the Award as of the related dividend payment record date, divided by (iii) the fair market value of a share of Common Stock (as determined under Section 5.5 of the Plan) on the date of payment of such dividend. Any Stock Units credited pursuant to the foregoing provisions of this Section 6.2 shall be subject to the same vesting, payment and other terms, conditions and restrictions as the original Stock Units to which they relate. No crediting of Stock Units shall be made pursuant to this Section 6.2 with respect to any Stock Units which, as of such record date, have either been paid pursuant to Section 5 or terminated pursuant to the terms hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**7. <u>Non-Transferability</u>**.

Neither the Award, nor any interest therein or amount or shares payable in respect thereof may be sold, assigned, transferred, pledged or otherwise disposed of, alienated or encumbered, either voluntarily or involuntarily. The transfer restrictions in the preceding sentence shall not apply to (a) transfers to the Company, or (b) transfers by will or the laws of descent and distribution.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8. <u>Adjustments; Change in Control</u>**.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.1 <u>Adjustments</u>**. Upon the occurrence of certain events relating to the Company's stock contemplated by Section 7.1 of the Plan (including, without limitation, an extraordinary cash dividend on such stock), the Administrator shall make adjustments in accordance with such section in the number of Stock Units then outstanding and the number and kind of securities that may be issued in respect of the Award. No such adjustment shall be made with respect to any ordinary cash dividend for which dividend equivalents are credited pursuant to Section 6.2. For purposes of clarity, <u>Exhibit A</u> controls as to any adjustment of the performance goals, criteria or metrics.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**8.2 <u>Change in Control</u>**. If, at any time after the Award Date and before the last day of the TSR Measurement Period, a Change in Control occurs, the following rules shall apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The TSR Measurement Period shall end on the date of the Change in Control,
the Ending Price for the TSR Measurement Period shall be the fair market value (as of the closing of the Change in Control transaction)
of the consideration payable per share of Common Stock in connection with such Change in Control transaction (or if none, the closing
price (in regular trading) for a share of Common Stock on the last trading day before the Change in Control), and the Award shall be eligible
to vest as to a number of Stock Units determined in accordance with <u>Exhibit A</u> hereto (the "**Credited Stock Units** ").
Any remaining Stock Units shall terminate as of the Change in Control date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The Credited Stock Units shall remain outstanding and shall vest on the last
day of the TSR Measurement Period, subject to (except as otherwise expressly provided in Section 3) the Grantee's continued employment
or service with the Company or any of its Subsidiaries through such vesting date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· In the event that Section 7.2(a) of the Plan applies and the Administrator
has not made a provision for the substitution, assumption, substitution, exchange or other continuation or settlement of the Award, the
Award shall vest on the Change of Control as to the number of Stock Units provided above in this Section 8.2. The second sentence of Section
7.2(a) of the Plan is hereby superseded by this provision and shall not apply to the Award.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**9. <u>Tax Withholding</u>**.

The Company shall reasonably determine the amount of any federal, state, local or other income, employment, or other taxes which the Company or any of its Subsidiaries may reasonably be obligated to withhold with respect to the grant, vesting or other event with respect to the Stock Units. The Grantee shall be solely responsible for the satisfaction of such withholding requirements. If such withholding event occurs in connection with the distribution of shares of Common Stock in respect of the Stock Units and subject to compliance with all applicable laws, the Company shall automatically withhold and reacquire the appropriate number of whole shares, valued at their then Fair Market Value, to satisfy any withholding obligations of the Company or its Subsidiaries with respect to such distribution. If, however, any withholding event occurs with respect to the Stock Units other than in connection with the distribution of shares of Common Stock in respect of the Stock Units, or if the Company cannot legally satisfy such withholding obligations by such withholding and reacquisition of shares as described above, the Company shall be entitled to require a cash payment by or on behalf of the Grantee and/or to deduct from other compensation payable to the Grantee the amount of any such withholding obligations.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**10. <u>Notices</u>**.

Any notice to be given under the terms of this Agreement shall be in writing and addressed to the Company at its principal office to the attention of the Secretary, and to the Grantee at the Grantee's last address reflected on the Company's employment records. Any notice shall be delivered in person or shall be enclosed in a properly sealed envelope, addressed as aforesaid, registered or certified, and deposited (postage and registry or certification fee prepaid) in a post office or branch post office regularly maintained by the United States Government or a courier of internationally recognized prominence. Any such notice shall be given only when received, but if the Grantee is no longer a Service Provider, shall be deemed to have been duly given five business days after the date mailed in accordance with the foregoing provisions of this Section 10.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**11. <u>Plan</u>**.

The Award and all rights of the Grantee under this Agreement are subject to the terms and conditions of the provisions of the Plan, incorporated herein by reference. The Grantee agrees to be bound by the terms of the Plan and this Agreement (including the Grant Notice). The Grantee acknowledges having read and understanding the Plan, the Prospectus for the Plan, and this Agreement (including the Grant Notice). Unless otherwise expressly provided in other sections of this Agreement, provisions of the Plan that confer discretionary authority on the Board or the Administrator do not (and shall not be deemed to) create any rights in the Grantee unless such rights are expressly set forth herein or are otherwise in the sole discretion of the Board or the Administrator so conferred by appropriate action of the Board or the Administrator under the Plan <u>after</u> the date hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**12. <u>Entire Agreement</u>**.

This Agreement and the Plan together constitute the entire agreement and supersede all prior understandings and agreements, written or oral, of the parties hereto with respect to the subject matter hereof.

The Plan and this Agreement may be amended pursuant to Section 8.6 of the Plan. Any such amendment must be in writing and signed by the Company. The Company may, however, unilaterally waive any provision hereof in writing to the extent such waiver does not adversely affect the interests of the Grantee hereunder, but no such waiver shall operate as or be construed to be a subsequent waiver of the same provision or a waiver of any other provision hereof.

The Administrator will have the exclusive discretion and authority to establish administrative rules, forms and procedures for the administration of the Plan, to construe and interpret the Plan and awards granted pursuant to the Plan (including the Award and this Agreement) and to decide any and all questions of fact, interpretation, definition, computation or administration arising in connection with the operation of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount of benefits paid under the Plan. The rules, interpretations, computations and other actions of the Administrator will be binding and conclusive on all persons.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**13. <u>Limitation on Grantee's Rights</u>.** 

Participation in the Plan confers no rights or interests other than as herein provided. This Agreement (including the Grant Notice) creates only a contractual obligation on the part of the Company as to amounts payable and shall not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The Grantee shall have only the rights of a general unsecured creditor of the Company with respect to amounts credited and benefits payable, if any, with respect to the Stock Units, and rights no greater than the right to receive the Common Stock as a general unsecured creditor with respect to Stock Units, as and when payable hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**14. <u>Counterparts</u>**.

This Agreement may be executed simultaneously in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**15. <u>Section Headings</u>**.

The section headings of this Agreement are for convenience of reference only and shall not be deemed to alter or affect any provision hereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**16. <u>Governing Law</u>**.

This Agreement (including the Grant Notice) shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to conflict of law principles thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**17. <u>Construction</u>**.

It is intended that the terms of the Award will not result in the imposition of any tax liability pursuant to Section 409A of the Code. This Agreement (including the Grant Notice) shall be construed and interpreted consistent with that intent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**18. <u>Clawback Policy</u>**.

The Stock Units are subject to the terms of the Company's recoupment, clawback or similar policy as it may be in effect from time to time, as well as any similar provisions of applicable law, any of which could in certain circumstances require repayment or forfeiture of the Stock Units or any shares of Common Stock or other cash or property received with respect to the Stock Units (including any value received from a disposition of the shares acquired upon payment of the Stock Units). The Grantee hereby agrees to promptly repay to the Company any amounts that are required to be repaid pursuant to such policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**19. <u>Section 280G</u>**.

Notwithstanding anything contained in this Agreement to the contrary, to the extent that any payments and benefits provided under this Agreement to or for the benefit of the Grantee, together with any payments and benefits provided to or for the benefit of the Grantee under any other plan or agreement of the Company or any of its Subsidiaries or affiliates (such payments or benefits are collectively referred to as the "**Benefits**"), would be subject to the excise tax (the "**Excise Tax**") imposed under Section 4999 of the Code, the Grantee's Benefits shall be reduced (but not below zero) if and to the extent that a reduction in the Benefits would result in the Grantee retaining a larger amount, on an after-tax basis (taking into account federal, state and local income taxes and the Excise Tax), than if the Grantee received all of the Benefits (such reduced amount is referred to hereinafter as the "**Limited Benefit Amount**"). If a reduction in the Grantee's Benefits is required pursuant to the preceding sentence, in order to effectuate the Limited Benefit Amount, the Company shall reduce or eliminate (if and to the extent necessary) the Grantee's Benefits by first reducing or eliminating amounts which are payable from any cash severance, then from any payment or benefit in respect of any equity award that is treated as contingent on the change in ownership or control but is not covered by Treas. Reg. Section 1.280G-1 Q/A 24(b) or (c), then from any payment or benefit in respect of an equity award that is covered by Treas. Reg. Section 1.280G-1 Q/A 24(c), in each case in reverse order beginning with payments or benefits which are to be paid the farthest in time from the Determination (as hereinafter defined). A determination as to whether a reduction in the Grantee's Benefits to the Limited Benefit Amount pursuant to this Section 19, and the amount of such Limited Benefit Amount (the "**Determination**"), shall be made by the Company's independent public accountants or another certified public accounting firm or executive compensation consulting firm of national reputation designated by the Company at the Company's expense.

**EXHIBIT A**

**VESTING TERMS AND CONDITIONS**

***[To be determined at the time of grant]***

## Exhibit 19.1

**Exhibit 19.1**

![](lantronixlogo.jpg)

**LANTRONIX, INC.**

**INSIDER TRADING POLICY**

**and**

**Guidelines with Respect to Certain Transactions in Securities**

Amended and Restated effective as of August 29, 2023

**TABLE OF CONTENTS**

---

| | |
|:---|:---|
|  | **Page** |
| INTRODUCTION | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Legal prohibitions on insider trading | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Detection and prosecution of insider trading | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Penalties for violation of insider trading laws and this Policy | 1 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Insider Trading Compliance Officer | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reporting violations | 2 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personal responsibility | 2 |
| PERSONS AND TRANSACTIONS COVERED BY THIS POLICY | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Persons covered by this Policy | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Types of transactions covered by this Policy | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Responsibilities regarding the nonpublic information of other companies | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Applicability of this Policy after your departure | 3 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No exceptions based on personal circumstances | 3 |
| MATERIAL NONPUBLIC INFORMATION | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Material" information | 4 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;"Nonpublic" information | 5 |
| POLICIES REGARDING MATERIAL NONPUBLIC INFORMATION | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Confidentiality of nonpublic information | 5 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No trading on material nonpublic information | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No disclosing material nonpublic information for the benefit of others | 6 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Responding to outside inquiries for information | 6 |
| TRADING BLACKOUT PERIODS AND PRECLEARANCE PROCEDURES | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Quarterly blackout periods | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special blackout periods | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Regulation BTR blackouts | 7 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Preclearance requirements | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No "safe harbors" | 8 |
| ADDITIONAL RESTRICTIONS AND GUIDANCE | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Short sales | 8 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Derivative securities and hedging transactions | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Using Company securities as collateral for loans | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holding Company securities in margin accounts | 9 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Placing open orders with brokers | 9 |
| LIMITED EXCEPTIONS | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receipt and vesting of stock options, restricted stock units, restricted stock and stock appreciation rights | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Exercise of stock options for cash | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases from the employee stock purchase plan | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain 401(k) plan transactions | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock splits, stock dividends and similar transactions | 10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*Bona fide* gifts or charitable contributions | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Change in form of ownership | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Transactions under approved 10b5-1 trading plans | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other exceptions | 11 |
| COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Obligations under Section 16 | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Notification requirements to facilitate Section 16 reporting | 11 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Personal responsibility | 11 |
| ADDITIONAL INFORMATION | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Availability of Policy | 12 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amendments | 12 |
| APPENDIX A | A-1 |

---

i

**INTRODUCTION**

Lantronix, Inc. (together with its subsidiaries, the "**Company**") prohibits the unauthorized disclosure of any nonpublic information acquired in the course of your service with the Company and the misuse of material nonpublic information in securities trading. Any such actions will be deemed violations of this Insider Trading Policy (this "**Policy**") and may also be violations of federal and state securities laws.

**Legal prohibitions on insider trading**

The antifraud provisions of U.S. federal securities laws prohibit directors, officers, employees and other individuals who possess material nonpublic information from trading on the basis of that information. Transactions will be considered "on the basis of" material nonpublic information if the person engaged in the transaction was aware of the material nonpublic information at the time of the transaction. It is not a defense that the person did not "use" the information for purposes of the transaction.

Disclosing material nonpublic information directly or indirectly to others who then trade based on that information or making recommendations or expressing opinions as to transactions in securities while aware of material nonpublic information (which is sometime referred to as "**tipping**") is also illegal. Both the person who provides the information, recommendation or opinion and the person who trades based on it may be subject to civil and criminal liability.

These illegal activities are commonly referred to as "**insider trading**." State securities laws and securities laws of other jurisdictions also impose restrictions on insider trading.

In addition, a company, as well as individual directors, officers and other supervisory personnel, may be subject to liability as "controlling persons" for failure to take appropriate steps to prevent insider trading by those under their supervision, influence or control.

**Detection and prosecution of insider trading**

The U.S. Securities and Exchange Commission (the "**SEC**"), the Financial Industry Regulatory Authority and state regulators (as well as the New York and California Attorneys General and the Department of Justice) use sophisticated electronic surveillance techniques to investigate and detect insider trading, and the SEC and the U.S. Department of Justice pursue insider trading violations vigorously. Cases involving trading through foreign accounts, trading by family members and friends and trading involving only a small number of shares have been successfully prosecuted.

**Penalties for violation of insider trading laws and this Policy**

*Civil and criminal penalties*. As of the effective date of this Policy, potential penalties for insider trading violations under U.S. federal securities laws include:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· damages in a private lawsuit;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· disgorging any profits made or losses avoided;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· imprisonment;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· substantial criminal fines;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· substantial civil fines based on the profit gained or loss avoided;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· a bar against serving as an officer or director of a public company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· an injunction against future violations.

Civil and criminal penalties also apply to tipping. The SEC has imposed large penalties in tipping cases even when the disclosing person did not trade or gain any benefit from another person's trading.

*Controlling person liability*. As of the effective date of this Policy, the penalty for "controlling person" liability includes civil fines, as well as potential criminal fines and imprisonment.

*Company disciplinary actions*. If the Company has a reasonable basis to conclude that you have failed to comply with this Policy, you may be subject to disciplinary action by the Company, up to and including dismissal for cause, regardless of whether or not your failure to comply with this Policy results in a violation of law. It is not necessary for the Company to wait for the filing or conclusion of any civil or criminal action against an alleged violator before taking disciplinary action. In addition, the Company may give stop transfer and other instructions to the Company's transfer agent to enforce compliance with this Policy.

**Insider Trading Compliance Officer**

Please direct any questions, requests or reports as to any of the matters discussed in this Policy to the Company's Insider Trading Compliance Officer (the "**Insider Trading Compliance Officer**"), who is the Company's Chief Financial Officer. The Insider Trading Compliance Officer is generally responsible for the administration of this Policy. The Insider Trading Compliance Officer may select others to assist with the execution of his or her duties.

**Reporting violations**

It is your responsibility to help enforce this Policy. You should be alert to possible violations and promptly report violations or suspected violations of this Policy to the Insider Trading Compliance Officer. If your situation requires that your identity be kept secret, your anonymity will be preserved to the greatest extent reasonably possible. If you wish to remain anonymous, you may send a letter addressed to the Insider Trading Compliance Officer at 48 Discovery, Suite 250, Irvine, CA 92618. If you make an anonymous report, please provide as much detail as possible, including any evidence that you believe may be relevant to the issue.

**Personal responsibility**

The ultimate responsibility for complying with this Policy and applicable laws and regulations rests with you. You should use your best judgment at all times and consult with your personal legal and financial advisors, as needed. We advise you to seek assistance if you have any questions at all. The rules relating to insider trading can be complex, and a violation of insider trading laws can carry severe consequences.

**PERSONS AND TRANSACTIONS COVERED BY THIS POLICY**

**Persons covered by this Policy**

This Policy applies to all directors, officers, employees and agents (such as consultants and independent contractors) of the Company. References in this Policy to "you" (as well as general references to directors, officers, employees and agents of the Company) should also be understood to include members of your immediate family, persons with whom you share a household, persons that are your economic dependents, any corporations, partnerships or other business entities controlled or managed by you, any trusts for which you are the trustee or have a beneficial pecuniary interest, and any other individuals or entities whose transactions in securities you influence, direct or control. You are responsible for making sure that these other individuals and entities comply with this Policy.

**Types of transactions covered by this Policy**

Except as discussed in the section entitled "**Limited Exceptions**," this Policy applies to *all* transactions involving the securities of the Company or the securities of other companies as to which you possess material nonpublic information obtained in the course of your service with the Company. This Policy therefore applies to purchases, sales, gifts, charitable contributions and other transfers of common stock, options, warrants, preferred stock, debt securities (such as debentures, bonds and notes) and other securities. This Policy also applies to any arrangements that affect economic exposure to changes in the prices of these securities. These arrangements may include, among other things, transactions in derivative securities (such as exchange-traded put or call options), hedging transactions, short sales and certain decisions with respect to participation in benefit plans. This Policy also applies to any offers with respect to the transactions discussed above. You should note that there are no exceptions from insider trading laws or this Policy based on the size of the transaction.

**Responsibilities regarding the nonpublic information of other companies**

This Policy prohibits the unauthorized disclosure or other misuse of any nonpublic information of other companies, such as the Company's distributors, vendors, customers, collaborators, suppliers and competitors. This Policy also prohibits insider trading and tipping based on the material nonpublic information of other companies.

**Applicability of this Policy after your departure**

You are expected to comply with this Policy until such time as you are no longer affiliated with the Company *and* you no longer possess any material nonpublic information subject to this Policy. In addition, if you are subject to a trading blackout under this Policy at the time you cease to be affiliated with the Company, you are expected to abide by the applicable trading restrictions until at least the end of the relevant blackout period.

**No exceptions based on personal circumstances**

There may be instances where you suffer financial harm or other hardship or are otherwise required to forego a planned transaction because of the restrictions imposed by this Policy. Personal financial emergency or other personal circumstances are not mitigating factors under securities laws and will not excuse a failure to comply with this Policy.

**MATERIAL NONPUBLIC INFORMATION**

**"Material" information**

Information should be regarded as material if there is a substantial likelihood that a reasonable investor would consider it important in deciding whether to buy, hold or sell securities or would view the information as significantly altering the total mix of information in the marketplace about the issuer of the security. In general, any information that could reasonably be expected to affect the market price of a security is likely to be material. Either positive or negative information may be material.

It is not possible to define all categories of "material" information. However, some examples of information that could be regarded as material include information with respect to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Financial results, financial condition, earnings pre-announcements, guidance, projections or forecasts,
particularly if inconsistent with the Company's guidance or the expectations of the investment community;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Restatements of financial results, or material impairments, write-offs or restructurings;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Changes in independent auditors, or notification that the Company may no longer rely on an audit report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Business plans or budgets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Creation of significant financial obligations, or any significant default under or acceleration of any
financial obligation;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Impending bankruptcy or financial liquidity problems;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Significant developments involving business relationships, including execution, modification or termination
of significant agreements or orders with customers, suppliers, distributors, manufacturers or other business partners;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Product introductions, modifications, defects or recalls or significant pricing changes or other product
announcements of a significant nature;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Significant developments in research and development or relating to intellectual property;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Significant legal or regulatory developments, whether actual or threatened;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Major events involving a company's securities, including calls of securities for redemption, adoption
of stock repurchase programs, option repricings, stock splits, changes in dividend policies, public or private securities offerings, modification
to the rights of security holders or notice of delisting;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Significant cybersecurity incidents, such as a data breach, or any other significant disruption in a company's
operations or loss, potential loss, breach or unauthorized access of its property or assets, whether at its facilities or through its
information technology infrastructure;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Significant corporate events, such as a pending or proposed merger, joint venture or tender offer, a significant
investment, the acquisition or disposition of a significant business or asset or a change in control of the company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· The existence of a special blackout period; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· Major personnel changes, such as changes in senior management or lay-offs.

If you have any questions as to whether information should be considered "material," you should consult with the Insider Trading Compliance Officer. In general, it is advisable to resolve any close questions as to the materiality of any information by assuming that the information is material.

**"Nonpublic" information**

Information is considered nonpublic if the information has not been broadly disseminated to the public for a sufficient period to be reflected in the price of the security. Information can be broadly disseminated to the public in a press release, a public filing with the SEC, a pre-announced public webcast or another broad, non-exclusionary form of public communication. Any questions as to whether information is nonpublic should be directed to the Insider Trading Compliance Officer.

Although there is no fixed period for how long it takes the market to absorb information, out of prudence a person in possession of material nonpublic information should refrain from any trading activity until the close of business on the second full trading day following the date of public disclosure of the information. The term "**trading day**" means a day on which national stock exchanges are open for trading. A "**full**" trading day has elapsed when, after the public disclosure, trading in the relevant security has opened and then closed.

**POLICIES REGARDING MATERIAL NONPUBLIC INFORMATION**

**Confidentiality of nonpublic information**

The unauthorized use or disclosure of nonpublic information relating to the Company or other companies is prohibited. All nonpublic information you acquire in the course of your service with the Company may only be used for legitimate Company business purposes. In addition, nonpublic information of others should be handled in accordance with the terms of any relevant nondisclosure agreements, and the use of any such nonpublic information should be limited to the purpose for which it was disclosed.

You must use all reasonable efforts to safeguard nonpublic information in the Company's possession. You may not disclose nonpublic information about the Company or any other company, unless required by law, or unless (i) disclosure is required for legitimate Company business purposes,

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) you are authorized to disclose the information and (iii) appropriate steps have been taken to prevent misuse of that information (for example, entering into an appropriate nondisclosure agreement that restricts the disclosure and use of the information, if applicable). This restriction also applies to internal communications within the Company and to communications with agents of the Company. In cases where disclosing nonpublic information to third parties is required, you should coordinate with the Legal Department.

In addition, all officers, employees and agents of the Company are required to comply with any confidential information or invention assignment agreement with the Company to which they are subject.

**No trading on material nonpublic information**

Except as discussed in the section entitled "**Limited Exceptions**" below, you may not, directly or indirectly through others, engage in any transaction involving the Company's securities *while aware of* material nonpublic information relating to the Company. It is not an excuse that you did not "use" the information in your transaction.

Similarly, you may not engage in transactions involving the securities of any other company if you are aware of material nonpublic information about that company (except to the extent the transactions are analogous to those presented in the section entitled "**Limited Exceptions**"). For example, you may be involved in a proposed transaction involving a prospective business relationship or transaction with another company. If information about that transaction constitutes material nonpublic information for that other company, you would be prohibited from engaging in transactions involving the securities of that other company (as well as transactions involving Company securities, if that information is material to the Company). It is important to note that "materiality" is different for different companies. Information that is not material to the Company may be material to another company.

**No disclosing material nonpublic information for the benefit of others**

You may not disclose material nonpublic information concerning the Company or any other company to friends, family members or any other person or entity not authorized to receive such information where such person or entity may benefit by trading on the basis of such information. In addition, you may not make recommendations or express opinions on the basis of material nonpublic information as to trading in the securities of companies to which such information relates. You are prohibited from engaging in these actions whether or not you derive any profit or personal benefit from doing so. This prohibition against disclosure of material nonpublic information includes disclosure (even anonymous disclosure) via the internet, blogs, investor forums or chat rooms where companies and their prospects are discussed.

**Responding to outside inquiries for information**

In the event you receive an inquiry from someone outside of the Company, such as a stock analyst, for information, you should refer the inquiry to the Company's Chief Financial Officer. The Company is required under Regulation FD (Fair Disclosure) of the U.S. federal securities laws to avoid the selective disclosure of material nonpublic information. In general, the regulation provides that when a public company discloses material nonpublic information, it must provide broad, non-exclusionary access to the information. Violations of this regulation can subject the company to SEC enforcement actions, which may result in injunctions and severe monetary penalties. The Company has established procedures for releasing material information in a manner that is designed to achieve broad public dissemination of the information immediately upon its release in compliance with applicable law. Please contact the Chief Financial Officer for specific questions.

In the event that you inadvertently disclose any material nonpublic information, you must immediately contact the Insider Trading Compliance Officer so that the required corrective action may be taken.

**TRADING BLACKOUT PERIODS AND PRECLEARANCE PROCEDURES**

To limit the likelihood of trading at times when there is a significant risk of insider trading exposure, the Company has instituted quarterly trading blackout periods and may institute special trading blackout periods from time to time. In addition, to comply with applicable legal requirements, the Company may also institute blackout periods that prevent directors and officers from trading in Company securities at a time when employees are prevented from trading Company securities in the Company's 401(k) plan.

It is important to note that whether or not you are subject to blackout periods, you remain subject to the prohibitions on trading on the basis of material nonpublic information and any other applicable restrictions in this Policy.

**Quarterly blackout periods**

Except as discussed in the section entitled "**Limited Exceptions**" below, all employees, directors, executive officers and any agents or other individuals designated by the Insider Trading Compliance Officer must refrain from conducting transactions involving the Company's securities during quarterly blackout periods. Even if you are not specifically identified as being subject to quarterly blackout periods, you should exercise caution when engaging in transactions during quarterly blackout periods because of the heightened risk of insider trading exposure.

Quarterly blackout periods begin at the end of the first trading day following the fifteenth day of the last month of each fiscal quarter and end at the close of business on the second full trading day following the date of public disclosure of the financial results for that fiscal quarter. This period is a particularly sensitive time for transactions involving the Company's securities from the perspective of compliance with applicable securities laws due to the fact that, during this period, individuals may often possess or have access to material nonpublic information relevant to the expected financial results for the quarter.

**Special blackout periods**

From time to time, the Company may also prohibit directors, officers, employees and agents from engaging in transactions involving the Company's securities when, in the judgment of the Insider Trading Compliance Officer, a trading blackout is warranted. The Company will generally impose special blackout periods when there are material developments known to the Company that have not yet been disclosed to the public. For example, the Company may impose a special blackout period in anticipation of announcing interim earnings guidance or a significant transaction or business development. However, special blackout periods may be declared for any reason.

The Company will notify those persons subject to a special blackout period, but is not required to explain the reason for the special blackout period. Each person who has been so identified and notified by the Company may not engage in any transaction involving the Company's securities and should not disclose to others the fact of such suspension of trading until instructed otherwise by the Insider Trading Compliance Officer.

**Regulation BTR blackouts**

Directors and executive officers may also be subject to trading blackouts pursuant to Regulation Blackout Trading Restriction, or Regulation BTR, under U.S. federal securities laws. In general, Regulation BTR prohibits any director or executive officer from engaging in certain transactions involving Company securities during periods when 401(k) plan participants are prevented from purchasing, selling or otherwise acquiring or transferring an interest in certain securities held in individual account plans. Any profits realized from a transaction that violates Regulation BTR are recoverable by the Company, regardless of the intentions of the director or officer effecting the transaction. In addition, individuals who engage in such transactions are subject to sanction by the SEC as well as potential criminal liability. The Company has provided, or will provide, separate memoranda and other appropriate materials to its directors and executive officers regarding compliance with Regulation BTR.

The Company will notify directors and officers if they are subject to a blackout trading restriction under Regulation BTR. Failure to comply with an applicable trading blackout in accordance with Regulation BTR is a violation of law and this Policy.

**Preclearance requirements**

Because the Company's directors, executive officers, Corporate Controller, and direct reports to the Chief Executive Officer ("**Covered Insiders**") are likely to obtain material nonpublic information on a regular basis, the Company requires all such persons to refrain from trading, even during an open trading window, without first pre-clearing all transactions in the Company's securities. These procedures also apply to transactions by members of such person's immediate family and others with whom such person shares a household, such person's economic dependents, any corporations, partnerships or other business entities controlled or managed by such person, any trusts for which such person is the trustee or has a beneficial pecuniary interest, and any other individuals or entities whose transactions in securities such person influences, directs or controls. The Company may find it necessary, from time to time, to require compliance with the pre-clearance process from certain employees, consultants and contractors other than and in addition to Covered Insiders. The Company will notify Covered Insiders and any other covered individuals if they are subject to the pre-clearance requirement.

Except as discussed in the section entitled "**Limited Exceptions**" below, no Covered Insider may, directly or indirectly, purchase or sell (or otherwise make any transfer, gift, charitable contribution, pledge or loan of) any Company security at any time without first obtaining prior approval from the Insider Trading Compliance Officer and the Company's Chief Legal Officer. A request for preclearance should be submitted at least three business days in advance of the proposed transaction. The Insider Trading Compliance Officer is under no obligation to approve a transaction submitted for pre-clearance, and may determine not to permit the transaction. Transactions by the Insider Trading Compliance Officer must be pre-cleared by the Company's Chief Executive Officer and Chief Legal Officer.

The Insider Trading Compliance Officer may revoke pre-clearance of a trade at any time before a transaction is executed. Unless revoked, a grant of permission will normally remain valid until the beginning of the next blackout period. If a transaction (or any portion of a transaction) is not executed before the beginning of the next blackout period, a new request for pre-clearance of the transaction will be required.

**Notwithstanding receipt of pre-clearance, if the person requesting pre-clearance becomes aware of material nonpublic information or becomes subject to a blackout period before the transaction is effected, the transaction may not be completed.**

**No "safe harbors"**

There are no unconditional "safe harbors" for trades made at particular times, and all persons subject to this Policy should exercise good judgment at all times. Even when a quarterly blackout period is not in effect, you may be prohibited from engaging in transactions involving the Company's securities because you possess material nonpublic information, are subject to a special blackout period or are otherwise restricted under this Policy.

**ADDITIONAL RESTRICTIONS AND GUIDANCE**

This section addresses certain types of transactions that may expose you and the Company to significant risks. You should understand that, even though a transaction may not be expressly prohibited by this section, you are responsible for ensuring that the transaction otherwise complies with other provisions in this Policy that may apply to the transaction, such as the general prohibition against insider trading as well as blackout periods, to the extent applicable.

**Short sales**

Short sales (*i.e.*, the sale of a security that must be borrowed to make delivery) and "selling short against the box" (*i.e.*, a sale with a delayed delivery) with respect to Company securities are prohibited under this Policy. Short sales may signal to the market possible bad news about the Company or a general lack of confidence in the Company's prospects, and an expectation that the value of the Company's securities will decline. In addition, short sales are effectively a bet against the Company's success and may reduce the seller's incentive to improve the Company's performance. Short sales may also create a suspicion that the seller is engaged in insider trading.

**Derivative securities and hedging transactions**

You are prohibited from engaging in transactions in publicly-traded options, such as puts and calls, and other derivative securities with respect to the Company's securities. You and any person acting on your behalf are moreover specifically prohibited from purchasing financial instruments (including prepaid variable forward contracts, equity swaps, collars and exchange funds), or otherwise engaging in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of the Company's securities. Stock options, stock appreciation rights, and other securities issued pursuant to Company benefit plans or other compensatory arrangements with the Company are not subject to these prohibitions.

Transactions in derivative securities may reflect a short-term and speculative interest in the Company's securities and may create the appearance of impropriety, even where a transaction does not involve trading on inside information. Trading in derivatives may also focus attention on short-term performance at the expense of the Company's long-term objectives. In addition, the application of securities laws to derivatives transactions can be complex, and persons engaging in derivatives transactions run an increased risk of violating securities laws.

**Using Company securities as collateral for loans**

If you are required to comply with Section 16 ("**Section 16**") under the Securities Exchange Act of 1934, as amended (the "**Exchange Act**") or the blackout periods under this Policy, you may not pledge Company securities as collateral for loans. If you default on the loan, the lender may sell the pledged securities as collateral in a foreclosure sale. The sale, even though not initiated at your request, is still considered a sale for your benefit and, if made at a time when you are aware of material nonpublic information or otherwise are not permitted to trade in Company securities, may result in inadvertent insider trading violations, Section 16 and Regulation BTR violations (for officers and directors), violations of this Policy and unfavorable publicity for you and the Company. For these same reasons, even if you are not prohibited from pledging Company securities as collateral for loans, you should exercise caution when doing so.

**Holding Company securities in margin accounts**

If you are required to comply with Section 16 or the blackout periods under this Policy, you may not hold Company securities in margin accounts. Under typical margin arrangements, if you fail to meet a margin call, the broker may be entitled to sell securities held in the margin account without your consent. The sale, even though not initiated at your request, is still considered a sale for your benefit and, if made at a time when you are aware of material nonpublic information or are otherwise not permitted to trade, may result in inadvertent insider trading violations, Section 16 violations (for officers and directors), violations of this Policy and unfavorable publicity for you and the Company. For these same reasons, even if you are not prohibited from holding Company securities in margin accounts, you should exercise caution when doing so.

**Placing open orders with brokers**

You should exercise caution when placing open orders, such as limit orders or stop orders, with brokers, particularly where the order is likely to remain outstanding for an extended period of time. Open orders may result in the execution of a trade at a time when you are aware of material nonpublic information or otherwise are not permitted to trade in Company securities, which may result in inadvertent insider trading violations, Section 16 and Regulation BTR violations (for officers and directors), violations of this Policy and unfavorable publicity for you and the Company. If you are subject to blackout periods, you should so inform any broker with whom you place any open order at the time it is placed.

**LIMITED EXCEPTIONS**

The following are certain limited exceptions to the restrictions imposed by the Company under this Policy. Please be aware that even if a transaction is subject to an exception to this Policy, you will need to separately assess whether the transaction complies with applicable law. For example, even if a transaction is indicated as exempt from this Policy, you may need to comply with the "short-swing" trading restrictions under Section 16, to the extent applicable. You are responsible for complying with applicable law at all times.

**Receipt and vesting of stock options, restricted stock units, restricted stock and stock appreciation rights**

The trading restrictions and preclearance requirements in this Policy do not apply to the grant or award to you of stock options, restricted stock units, restricted stock or stock appreciation rights by the Company. The trading restrictions under this Policy also do not apply to the vesting, cancellation or forfeiture of stock options, restricted stock units, restricted stock or stock appreciation rights in accordance with applicable plans and agreements. However, the trading restrictions and preclearance requirements do apply to any subsequent sales of any such securities.

**Exercise of stock options for cash**

The trading restrictions in this Policy do not apply to the exercise of stock options for cash under the Company's stock option plans. Likewise, the trading restrictions under this Policy do not apply to the exercise of stock options in a stock-for-stock exercise with the Company or an election to have the Company withhold securities to cover tax obligations in connection with an option exercise. However, the trading restrictions under this Policy do apply to (i) the sale of any securities issued upon the exercise of a stock option, (ii) a cashless exercise of a stock option through a broker, since this involves selling a portion of the underlying shares to cover the costs of exercise, and (iii) any other market sale for the purpose of generating the cash needed to pay the exercise price of an option.

**Purchases from the employee stock purchase plan**

The trading restrictions and preclearance requirements in this Policy do not apply to elections with respect to participation in the Company's employee stock purchase plan or to purchases of securities under the plan. However, the trading restrictions and preclearance requirements do apply to any subsequent sales of any such securities.

**Certain 401(k) plan transactions**

The trading restrictions and preclearance requirements in this Policy do not apply to purchases of Company stock in the 401(k) plan resulting from periodic contributions to the plan based on your payroll contribution election. The trading restrictions and preclearance requirements do apply, however, to elections you make under the 401(k) plan to (i) increase or decrease the percentage of your contributions that will be allocated to a Company stock fund, (ii) move balances into or out of a Company stock fund, (iii) borrow money against your 401(k) plan account if the loan will result in liquidation of some or all of your Company stock fund balance, and (iv) pre-pay a plan loan if the pre- payment will result in the allocation of loan proceeds to a Company stock fund.

**Stock splits, stock dividends and similar transactions**

The trading restrictions and preclearance requirements in this Policy do not apply to a change in the number of securities held as a result of a stock split or stock dividend applying equally to all securities of a class, or similar transactions.

***Bona fide* gifts or charitable contributions**

Bona fide gifts or charitable contributions of securities generally are not considered a "sale" under insider trading laws but are subject to limitations under this Policy. As a general rule, no gift or charitable contribution of the Company's securities may be made by you during a blackout period or at any time when you are aware of material nonpublic information. Bona fide gifts and charitable contributions of equity securities must be reported to the SEC on Form 4 within two (2) business days after such gift or contribution is made, in accordance with Rule 16a-3 promulgated under the Exchange Act, and as with all other transactions in equity securities, it is your responsibility to promptly inform the Company of the consummation of any gift or charitable contribution of securities.

**Change in form of ownership**

Transactions that involve merely a change in the form in which you own securities are not subject to the trading restrictions or preclearance requirements under this Policy. For example, you may transfer shares to an *inter vivos* trust of which you are the sole beneficiary during your lifetime.

**Transactions under approved 10b5-1 trading plans**

The trading restrictions and preclearance requirements in this Policy do not apply to transactions effected under a Pre-Approved Trading Plan as defined in, and approved and adopted in compliance with the requirements of, the Company's Rule 10b5-1 Trading Plan Policy, which is attached hereto as <u>Appendix A</u> and incorporated in this Policy.

**Other exceptions**

Any other exception from this Policy must be approved by the Insider Trading Compliance Officer, in consultation with the Board of Directors or an independent committee of the Board of Directors.

**COMPLIANCE WITH SECTION 16 OF THE SECURITIES EXCHANGE ACT**

**Obligations under Section 16**

Section 16, and the related rules and regulations, set forth (i) reporting obligations, (ii) limitations on "short-swing" transactions and (iii) limitations on short sales and other transactions applicable to directors, officers, large shareholders and certain other persons. Each of the Corporation's directors and each officer subject to Section 16 (a "**Section 16 Officer**") is required to comply with Section 16, and the related rules and regulations, because of his or her position with the Company.

**Notification requirements to facilitate Section 16 reporting**

To facilitate timely reporting of transactions pursuant to Section 16 requirements, each person subject to Section 16 reporting requirements must provide, or must ensure that his or her broker provides, the Company with detailed information (*e.g.*, trade date, number of shares, exact price, etc.) regarding his or her transactions involving the Company's securities, including gifts, charitable contributions, transfers, and pledges, promptly following execution.

**Personal responsibility**

The obligation to file Section 16 reports, and to otherwise comply with Section 16, is personal. The Company is not responsible for the failure to comply with Section 16 requirements.

**ADDITIONAL INFORMATION**

**Availability of Policy**

This Policy will be made available to all directors, officers, employees and agents of the Company when they commence service with the Company. Each director, officer, employee and agent of the Company is required to acknowledge that he or she understands, and agrees to comply with, this Policy.

**Amendments**

We are committed to continuously reviewing and updating our policies and procedures. The Company therefore reserves the right to amend, alter or terminate this Policy at any time and for any reason, subject to applicable law. A current copy of the Company's policies regarding insider trading may be obtained by contacting the Insider Trading Compliance Officer.

**\* \* \***

*Nothing in this Insider Trading Policy creates or implies an employment contract or term of employment.*

 

*The policies in this Insider Trading Policy do not constitute a complete list of Company policies or a complete list of the types of conduct that can result in discipline, up to and including discharge.*

**<u>APPENDIX A</u>**

**RULE 10B5-1 TRADING PLAN POLICY**

Rule 10b5-1 under the Exchange Act provides an affirmative defense to insider trading that is available to a person making a purchase or sale of securities who demonstrates that the purchase or sale was effected pursuant to a pre-arranged "trading plan" that meets certain conditions.

The Company has adopted an insider trading policy (the "**Policy**") that provides that the trading restrictions and preclearance requirements set forth in the Policy do not apply to transactions under a pre-existing written plan, contract, instruction or arrangement under Rule 10b5-1. This <u>Appendix A</u> to the Policy (referred to below as the "**Trading Plan Policy**") is intended to provide additional information regarding the Company's policy toward Rule 10b5-1 trading plans. All defined terms used in this <u>Appendix A</u> without definition have the definitions provided in the Policy.

The Company's policy is to permit employees, officers, and directors to enter into trading plans, but only if those plans are pre-approved by the Company's Insider Trading Compliance Officer (or in the case of plans to be entered into by the Insider Trading Compliance Officer, pre-approved by the Company's Vice President, Human Resources, Legal and Business Affairs). In the event the Insider Trading Compliance Officer is unavailable, he or she may delegate pre-approval authority under this paragraph to the Vice President, Human Resources, Legal and Business Affairs, provided that such delegation shall be set forth in writing (including by email); and provided further that the Insider Trading Compliance Officer may not delegate pre-approval authority to the Vice President, Human Resources, Legal and Business Affairs for proposed plans of the Vice President, Human Resources, Legal and Business Affairs. In the discussion below, we use the term "**Pre-Approved Trading Plan**" to refer to a Rule 10b5-1 trading plan that has been pre-approved by Company management as described in this paragraph.

The Insider Trading Compliance Officer is assigned the job of approving Pre-Approved Trading Plans as to form only, not as to substance. You have wide latitude in creating the terms of a Pre-Approved Trading Plan. You may create your own Pre-Approved Trading Plan, or you may want to hire an expert to assist you in considering the financial, legal, and tax consequences to you of doing so.

The following questions and answers provide general background regarding Rule 10b5-1 trading plans and information regarding the Company's policy toward Rule 10b5-1 trading plans.

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***What is a Rule 10b5-1 trading plan?***

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A Rule 10b5-1 trading plan is a binding contract, instruction, or written plan that allows an employee, officer, or director to sell a designated number of securities at preset times and prices. If a plan is established in accordance with the requirements of Rule 10b5-1, it can act as an affirmative defense to insider trading liability with respect to any trades made pursuant to the plan.

***What are the requirements of the Rule 10b5-1 affirmative defense?***

A trading plan must meet the following requirements if it is to be used as an affirmative defense under Rule 10b5-1:

&nbsp;&nbsp;&nbsp;&nbsp;· The plan must be adopted at the time the officer, director or employee is not aware of material non-public
information;

&nbsp;&nbsp;&nbsp;&nbsp;· The plan must be in the form of:

- a binding contract to purchase or sell the security;

an instruction to another person to buy or sell the security for the instructing person's account; or

- a written plan for trading securities;

&nbsp;&nbsp;&nbsp;&nbsp;· The plan must either:

specify the amounts of securities, prices and dates for the transactions;

include a written formula or algorithm or computer program for determining the amounts of securities to be purchased or sold and the prices and dates for the transactions; or

- not permit the person adopting the plan (or anyone else with access to material non-public information) to "exercise any subsequent influence over how, when, or whether to effect purchases or sales";

&nbsp;&nbsp;&nbsp;&nbsp;· After a plan is adopted, the purchases or sales must be made in compliance with the plan – the person
adopting the plan cannot alter the plan, cause the plan to be deviated from, or enter into a corresponding or hedging securities position
with respect to the securities to be purchased or sold under the plan; and

&nbsp;&nbsp;&nbsp;&nbsp;· The plan must be "entered into in good faith, and not as part of a plan or scheme to evade"
the general prohibition against trading on the basis of material non-public information contained in Rule 10b-5, and the person who entered
into the plan must act in good faith with respect to the plan for the duration of the plan.

Because a Rule 10b5-1 trading plan is a potential affirmative defense, and not an absolute protection, the person who is buying or selling securities under a plan must, when faced with a claim of insider trading, demonstrate that these requirements were met in order to rely on this defense.

It is your responsibility to establish the plan in good faith, meaning that you are not aware of any material non-public information at the time you adopt the plan. Once your plan is established, you should not deviate from the selling parameters (we discuss modifications to plans below) or exercise any subsequent influence over how, when, or whether to effect purchases or sales under the plan, as any attempt to alter or deviate from the plan may jeopardize the affirmative defense for any trades made under the plan.

If a Pre-Approved Trading Plan is modified, altered or not abided by, any protections of the rule may be lost for trades after the time of that event, although a new Rule 10b5-1 trading plan can be adopted while the person is not aware of any material non-public information. Also, entering into a corresponding or hedging transaction will disqualify trading from protection.

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***What are the advantages of these plans?***

Rule 10b5-1 trading plans can provide an affirmative defense to insider trading liability with respect to trades made pursuant to the plan. Specifically, your trades pursuant to a Rule 10b5-1 trading plan that complies with the legal requirements will not be viewed as having been made on the basis of material non-public information if you can demonstrate that the transactions in question were effected according to a written contract that was established in good faith when you were not aware of any material, non-public information and moreover that the written contract was not as part of a plan or scheme to evade the general prohibitions against trading on the basis of material non-public information and that you acted in good faith with respect to the plan for the duration of the plan.

***What are the disadvantages of these plans?***

Rule 10b5-1 trading plans require you to determine in advance the specific parameters under which the plan will be buying or selling stock. As such, you will have no ability to impact transactions under the plan until the plan expires or a modification to the plan is completed. Further, the times during which you may modify the plan will be limited and each such modification will be treated as a termination of your original plan and the adoption of a new plan and will be subject to the same legal requirements at the time of modification as a newly adopted Rule 10b5-1 trading plan. Finally, hedging is not permitted.

***Should my Rule 10b5-1 trading plan be disclosed to the Company?***

Yes. It is required that all Rule 10b5-1 trading plans be disclosed to and pre-approved as set forth above. This is to ensure that the arrangement complies with the Company's policies when the trading plan is first adopted. Trading plans are to be submitted to the Company's management for review a sufficient time in advance of implementation.

***Will the Company publicly disclose that I adopted a Rule 10b5-1 trading plan?***

Yes. Pursuant to the requirements of applicable federal securities laws or as otherwise deemed appropriate by the Company's management, the Company will disclose material details of any Rule 10b5-1 plans or other similar plans adopted, terminated or modified by any director or officer during the relevant quarter in its quarterly and annual reports, including the identity of the director or officer, the date of adoption, termination or modification, the duration of the plan and the aggregate number of securities covered by the plan (but, as a rule, not pricing terms). In addition, if a director or a Section 16 Officer makes a purchase or sale of the Company's securities pursuant to a Pre-Approved Trading Plan, the Company will disclose that fact and the date the relevant plan was adopted in the required Form 4 or Form 5 filed with the SEC.

***Should a trading plan be on paper?***

 

Yes. While Rule 10b5-1 provides flexibility as to the structure of a plan or instruction, in the event the transactions are questioned it is essential that you be able to produce written evidence of the trading plan. Therefore, this Trading Plan Policy requires that all Pre-Approved Trading Plans be in writing.

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***When can I enter into a plan?***

You may enter into a plan only when the trading window is open and only when you are not aware of any material non-public information about the Company or its securities. Please refer to the Policy for a discussion of the Company's quarterly blackout periods.

***Can my plan provide for transactions on the date I adopt it?***

No. To provide greater assurance that you will be able to demonstrate that you were not aware of any material non-public information at the time you adopted your plan, this Trading Plan Policy requires that all Pre-Approved Trading Plans provide that there will not be any possible transactions under the plan until the ***later*** of (a) 90 days after the date on which the relevant plan is signed by you, or (b) two business days following the filing of the relevant periodic report (on Form 10-K or Form 10-Q) for the fiscal quarter in which the plan was adopted or modified, but in no event to exceed 120 days. This waiting period of between 90 and 120 days, as applicable, between the signing of the relevant plan by you and the earliest possible transaction date under that plan is referred to in this Trading Plan Policy as a "**Cooling-Off Period**" and supports the position that trades made under the Pre-Approved Trading Plan were not made on the basis of material non-public information.

Should you modify your Pre-Approved Trading Plan after it has been signed by you (including a change to the amount, price, or timing of the purchase or sale of securities or the substitution or removal of a broker thereunder), your modified Pre-Approved Trading Plan will be treated as the termination of your original plan and the adoption of a new plan, and must provide that there will not be any possible transactions under the modified plan until the expiration of a new Cooling-Off Period following the date on which the modified plan is signed by you.

***What details should I include in my plan?***

 

In general, you must specify a sales period, share amount, and limit price for all transactions to be executed under your plan. Your plan should clearly provide that no sales under the plan may occur until the expiration of the applicable Cooling-Off Period following the date on which the plan (or modified plan) is signed by you.

***What securities can I include in my plan?***

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You may include shares of the Company's common stock that you hold outright and/or shares underlying your stock options or other equity awards, such as restricted stock units, in your Rule 10b5-1 trading plan. However, you should note that if you include shares underlying your stock options or restricted stock units, those shares may not be sold under the plan unless and until your options or restricted stock units, as applicable, have become ***vested*** with respect to those shares.

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***Can I use a Pre-Approved Trading Plan to pay the exercise price and taxes in connection the exercise of stock options or vesting of restricted stock units, as applicable?***

 **

Yes. A Rule 10b5-1 trading plan can include the sale of shares to cover tax withholding obligations upon on the exercise of stock options or the vesting of restricted stock units. It also is possible to implement a plan solely for the exercise of options. However, if you intend to exercise options and effect any corresponding sales of those option shares, the exercise and the sale should both be provided for in the Rule 10b5-1 trading plan. In certain instances, such plans will constitute a "Sell-to-Cover Plan" and will be excepted from certain requirements set forth in this Policy as further described below.

***Can I use a Pre-Approved Trading Plan to make a gift?***

 

Yes. The SEC has stated that a donor of securities could be subject to insider trading liability, if the donor gifts a security of an issuer in fraudulent breach of a duty of trust and confidence because at the time of the gift the donor had material nonpublic information and knew – or should have known – that the recipient would sell the securities before that information was publicly disclosed. The SEC has also clarified, however, that the affirmative defense of Rule 10b5-1 is available for any gift that might otherwise subject the donor to insider trading liability. This Trading Plan Policy permits you to use a Pre-Approved Trading Plan when making a future gift to be effected outside of the Company's trading windows (such as at the end of the calendar year), provided the plan meets the same requirements applicable to Pre-Approved Trading Plans for sales of securities, including the relevant Cooling-Off Period. If you are a Section 16 Officer or a director, bona fide gifts and charitable contributions of equity securities must be reported to the SEC on Form 4 within two (2) business days after such gift or contribution is made, and as with all other transactions in equity securities, it is your responsibility to promptly inform the Company of any gift or charitable contribution of securities.

***Am I required to certify that I was not aware of any material non-public information when I adopted the Pre-Approved Trading Plan?***

Yes. You must include a written representation in the Pre-Approved Trading Plan that (i) you are not aware of any material non-public information at that time and (ii) you are adopting (or modifying) the Pre-Approved Trading Plan in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 or 10b5-1.

***How do I decide how many shares to sell and at what price?***

The terms of your plan will depend on your financial plan, investment objectives, and liquidity needs. The Company does not make recommendations regarding the purchase or sale of the Company's securities or any other investment transaction by its employees.

***Can a Rule 10b5-1 trading plan involve a limit order?***

Yes. Rule 10b5-1 specifically contemplates the use of limit orders and contemplates all other standard kinds of brokerage orders.

***Is there a required term for a Rule 10b5-1 trading plan?***

 

Rule 10b5-1 does not impose a minimum duration for plans. A trading plan with a very short term may, however, raise issues as to your satisfaction of the "good faith" and "no scheme to evade" requirements of Rule 10b5-1. This Trading Plan Policy requires Pre-Approved Trading Plans to have a minimum term of six months. Subject to this minimum term, you can determine the end date for your plan.

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***Can I enter into more than one Pre-Approved Trading Plan at a time?***

 

The affirmative defense under Rule 10b5-1 is not available for persons entering into multiple or overlapping 10b5-1 plans for purchases or sales of Company securities on the open market, with limited exceptions. Except as otherwise provided in Rule 10b5-1 under the Exchange Act, this Trading Plan Policy permits no more than one (1) Pre-Approved Trading Plan to be in effect at any time with respect to the purchase or sale on the open market of the Company's securities beneficially owned by you, with the exception of one later-commencing Pre-Approved Trading Plan under which trading is not authorized to begin until after all trades under an existing, earlier-commencing Pre-Approved Trading Plan are completed or expired without execution. Such later-commencing Pre-Approved Trading Plan is subject to the applicable Cooling-Off Period; provided, however, that if the earlier-commencing plan is terminated before its originally scheduled completion date, then the Cooling-Off Period for the later-commencing plan shall run from the date of such earlier termination (and not from the date the later-commencing plan was adopted). Moreover, a contract, instruction, or plan providing for an eligible sell-to-cover transaction that authorizes an agent to sell only such securities as are necessary to satisfy tax withholding obligations arising exclusively from the vesting of a compensatory award, such as restricted stock or restricted stock units, and for which you may not otherwise exercise control over the timing of such sales (a "**Sell-to-Cover Plan**"), is not covered by the prohibitions on multiple plans described in this paragraph.

***Can I enter into a Pre-Approved Trading Plan covering a single trade?***

Other than Sell-to-Cover Plans, no more than one (1) Pre-Approved Trading Plan that is designed to effect the open-market purchase or sale of the total amount of securities as a single transaction may be in effect within any twelve (12) month period.

***If I enter into a Pre-Approved Trading Plan, can I sell shares outside that plan?***

 

If you are in an open-window period, you can trade shares in addition to those covered by your Pre-Approved Trading Plan. Shares identified to be sold under the Pre-Approved Trading Plan and shares underlying options or restricted stock units that are identified to be sold under the Pre-Approved Trading Plan cannot be sold outside of the plan. Please keep in mind the Company's mandatory pre-clearance requirements for trades by directors, executive officers and certain other employees as discussed in the Policy. Moreover, shares traded outside the Pre-Approved Trading Plan will not have the affirmative defense of Rule 10b5-1(c) even if those trades were pre-cleared under the Policy.

***Can I terminate my Pre-Approved Trading Plan?***

 

Rule 10b5-1 does not prohibit you from terminating your plan. There may, however, be limitations or conditions on termination in your plan. Further, you should note that the SEC has stated that the termination of a plan or the cancellation of one or more plan transactions could affect the availability of the Rule 10b5-1(c) defense for prior plan transactions if it calls into question whether the plan was entered into in good faith. Your plan will expire according to its terms, based on, for example, a termination date, the sale of all identified shares, or death. The reasons a plan may be terminated should be specified in your plan.

***Can I terminate my Pre-Approved Trading Plan while I am aware of any material non-public information?***

You may terminate your Pre-Approved Trading Plan at any time, except during a quarterly or special blackout period or when you are aware of any material non-public information about the Company or its securities. Please refer to the Policy for additional information regarding blackout periods. Further, please note that the use of non-public information to terminate a Pre-Approved Trading Plan could affect the availability of the Rule 10b5-1(c) defense for prior plan transactions if it calls into question whether the plan was entered into in good faith and, therefore, this Trading Plan Policy does not permit termination of a Pre-Approved Trading Plan while you are aware of any material non-public information about the Company or its securities.

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***If I terminate my Pre-Approved Trading Plan, may I then enter into a new plan?***

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Yes. You should note, however, that the prompt entry into a new plan may call into question whether the terminated plan or the new plan was entered into "good faith." This Trading Plan Policy permits the adoption of a new Pre-Approved Trading Plan following the termination of a prior plan only if the new plan provides for a new Cooling-Off Period between the date the prior Pre-Approved Trading Plan was terminated and the date that trades may be made under the new Pre-Approved Trading Plan.

***Can I modify my Pre-Approved Trading Plan?***

 

Yes. However, once you have adopted a Pre-Approved Trading Plan, you should stick to the plan and try to refrain from making any modifications to the plan. <u>As a general rule, you should not make more than one modification to a Pre-Approved Trading Plan in any twelve (12) month period.</u>

Any proposed modification to your Pre-Approved Trading Plan must be pre-approved following the same procedures that apply to the pre-approval of a new plan. This means that any proposed modification: (1) must be provided to the Insider Trading Compliance Officer and pre-approved pursuant to this Trading Plan Policy prior to its adoption; (2) may be adopted only during an open trading window; (3) must be entered into in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 or 10b5-1; and (4) may not be adopted at a time when you are aware of any material non-public information about the Company or its securities. When you request review and pre-clearance of the modification to your Pre-Approved Trading Plan by the Company, you will be asked to certify that you are not currently aware of any such material non-public information.

When your original Pre-Approved Trading Plan undergoes any modifications, alterations, or amendments, it will be treated as a new Rule 10b5-1 trading plan under this Trading Plan Policy and will require the same formalities as the original adoption of such a plan requires. Among other such requirements, your modified plan must provide that there will not be any possible sales under the modified plan until the expiration of the Cooling-Off Period following the date on which the modified plan is signed by you.

***Can the Company cause my Pre-Approved Trading Plan to be suspended or terminated?***

Yes, if the Company determines that suspension or termination of the Pre-Approved Trading Plan is in the best interests of the Company.

***Can I trade during a Company-prescribed blackout pursuant to a Pre-Approved Trading Plan that I adopted before the blackout period?***

Yes, but only pursuant to the Pre-Approved Trading Plan itself. The Policy allows Rule 10b5-1 trading plans that may provide for future sales during or outside blackout periods. However, under this Trading Plan Policy you cannot do the following during a blackout period: (1) adopt a Rule 10b5-1 trading plan; (2) modify a Pre-Approved Trading Plan; (3) terminate a Pre-Approved Trading Plan; or (4) communicate any material non-public information to any person handling the Pre-Approved Trading Plan.

***After a Pre-Approved Trading Plan is in place can I talk to my broker about the plan?***

It is a requirement of the affirmative defense provided by Rule 10b5-1 that you act in good faith with respect to a Pre-Approved Trading Plan adopted by you for the duration of the plan. Sometimes you cannot or should not communicate with the broker. If you are aware of any material non-public information, you may not modify, alter, amend, or terminate any Pre-Approved Trading Plan or exercise any subsequent influence over how, when, or whether to effect purchases or sales and, therefore, you should not have any communication with the broker about the trading plan. If you have established a trading account where the broker has discretion to trade, you must never give the broker any material non-public information. If the broker were to have such information, the broker could not make any discretionary sales or otherwise change the trading plan.

However, if you are not aware of any material non-public information and you are not affected by a blackout period, it is permissible for you to modify your Pre-Approved Trading Plan, as discussed above.

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***What else do I need to consider when setting up a plan?***

Rule 10b5-1 is not the only rule you need to take into consideration. For example, officers and directors have filing requirements that are not dealt with in this document, including the required filings under Rule 144 of the Securities Act of 1933, as amended, and Section 16. You should consult an attorney as appropriate. Further, you also should consult your financial and tax advisors about the financial, tax, and estate planning implications of your plan.

 **

***Please understand that none of the Company, the Company's management, nor any other employee, officer, director, or representative of the Company is making or will make any representation or warranty as to whether a trading plan you adopt complies with the requirements of Rule 10b5-1 or any other applicable securities laws, nor will they make any determination regarding whether the timing of entry into such a trading plan or of any modification to such plan is appropriate. Compliance with those requirements is solely your responsibility, notwithstanding the fact that a representative of the Company has pre-cleared your trading plan. Further, the pre-clearance of your trading plan relates to the form of that trading plan only and not the substance of the trading plan. We strongly encourage you to consult with your legal, financial, and tax advisors before adopting, modifying, altering, or amending a Rule 10b5-1 trading plan.***

 

**\* \* \***

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 ****

## Exhibit 21.1

**Exhibit 21.1**

**Subsidiaries of Registrant**

---

| | |
|:---|:---|
| **<u>Subsidiary</u>** | **<u>Jurisdiction of Formation</u>** |
| Lantronix Holding Company | Delaware, U.S.A. |
| Lantronix India Private Limited | India |
| Lantronix Hong Kong Limited | Hong Kong |
| Lantronix Japan K.K. | Japan |
| Lantronix UK Ltd. | United Kingdom |

---

**Subsidiaries of Lantronix Holding Company**

---

| | |
|:---|:---|
| **<u>Subsidiary</u>** | **<u>Jurisdiction of Formation</u>** |
| Lantronix Canada, ULC | Canada |
| Lantronix IoT GmbH | Germany |

---

## Exhibit 23.1

**Exhibit 23.1**

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

We hereby consent to the incorporation by reference in the Registration Statements on S-8 (Nos. 333-172117, 333-188490, 333-210982, 333-227128, 333-228399, 333-231040, 333-236392, 333-248630, 333-256291, 333-268743, 333-274486, 333-279979 and 333-284750) and Form S-3 (Nos. 333-227127, 333-228398, 333-259454 and 333-284749) of Lantronix, Inc. of our report dated August 29, 2025, relating to the consolidated financial statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K for the year ended June 30, 2025.

/s/ BAKER TILLY US, LLP

Chicago, Illinois

August 29, 2025

## Exhibit 31.1

**Exhibit 31.1**

**CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER**

**PURSUANT TO** 

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Saleel Awsare, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 10-K of Lantronix, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | August 29, 2025 | /s/ SALEEL AWSARE |
|  |  | Saleel Awsare<br> President and Chief Executive Officer<br> *(Principal Executive Officer)* |

---

## Exhibit 31.2

**Exhibit 31.2**

**CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER**

**PURSUANT TO** 

**SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002**

I, Brent Stringham, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 10-K of Lantronix, Inc.;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

---

| | | |
|:---|:---|:---|
| Date: | August 29, 2025 | /s/ BRENT STRINGHAM |
|  |  | Brent Stringham<br> Chief Financial Officer<br> *(Principal Financial and Accounting Officer)* |

---

## Exhibit 32.1

**Exhibit 32.1**

**CERTIFICATION OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER**

**PURSUANT TO**

**18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

The following certifications are being furnished solely to accompany the Annual Report on Form 10-K for the year ended June 30, 2025 (the "Report") pursuant to U.S.C. Section 1350, and pursuant to SEC Release No. 33-8238 are being "furnished" to the SEC rather than "filed" either as part of the Report or as a separate disclosure statement, and are not to be incorporated by reference into the Report or any other filing of Lantronix, Inc. (the "Company"), whether made before or after the date hereof, regardless of any general incorporation language in such filing. The following certifications shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section.

**Certification of the Chief Executive Officer**

**(**i) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in such Report.

---

| | | | |
|:---|:---|:---|:---|
| Date: | August 29, 2025 | By: | /s/ SALEEL AWSARE |
|  |  |  | Name: Saleel Awsare<br> Title: President and Chief Executive Officer<br> *(Principal Executive Officer)* |

---

**Certification of the Chief Financial Officer**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of, and for, the periods presented in such Report.

---

| | | | |
|:---|:---|:---|:---|
| Date: | August 29, 2025 | By: | /s/ BRENT STRINGHAM |
|  |  |  | Name: Brent Stringham<br> Title: Chief Financial Officer<br> *(Principal Financial and Accounting Officer)* |

---

## Exhibit 97.1

**Exhibit 97.1**

**Policy Regarding the Recoupment of Certain Compensation Payments**

Adopted by the Board of Directors on August 29, 2023

In the event Lantronix, Inc. (the "<u>Company</u>") is required to prepare an accounting restatement due to the material noncompliance of the Company with any financial reporting requirement under the securities laws (including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period), the Company shall recover reasonably promptly the amount of any erroneously awarded Incentive-Based Compensation from each Covered Individual unless an exception (set forth below) applies.

Incentive-Based Compensation shall be considered "erroneously awarded" under this policy to the extent such Incentive-Based Compensation (1) is received by the Covered Individual on or after the effective date of Rule 5608 of The Nasdaq Stock Market LLC ("Nasdaq") Rules and while the Company has a class of securities listed on a national securities exchange or a national securities association, (2) is received by the Covered Individual during the three completed fiscal years immediately preceding the date that the Company is required to prepare the accounting restatement (and any transition period applicable to a change in the Company's fiscal year as required by Nasdaq listing rules), and (3) the amount of such received Incentive-Based Compensation exceeds the amount of the Incentive-Based Compensation that would have been received by the Covered Individual had it been determined based on the restated financial results (with such Incentive-Based Compensation computed in each case without regard to any taxes paid). For purposes of this policy, the date that the Company is required to prepare the accounting restatement is the earlier to occur of (A) the date the Company's Board of Directors (the "<u>Board</u>"), or a committee of the Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have concluded, that the Company is required to prepare such accounting restatement, or (B) the date a court, regulator, or other legally authorized body directs the Company to prepare such accounting restatement.

For purposes of this policy, Incentive-Based Compensation is considered "received" by a Covered Individual in the Company's fiscal period during which the Financial Reporting Measure applicable to the Incentive-Based Compensation is attained, even if the payment or grant of the Incentive-Based Compensation occurs after the end of that fiscal period. For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of erroneously awarded compensation is not subject to mathematical recalculation directly from the information in an accounting restatement, the amount of erroneously awarded compensation will be determined by the Compensation Committee of the Board (the "<u>Committee</u>") based on a reasonable estimate of the effect of the accounting restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was received. The Company must maintain documentation of the determination of that reasonable estimate and provide such documentation to Nasdaq as required by Nasdaq listing rules. If the erroneously awarded Incentive-Based Compensation consists of shares (including share-denominated equity awards) or options that are still held by the Covered Individual at the time of recovery, the recoverable amount is the number of shares or options received in excess of the number of shares or options that would have been received based on the accounting restatement (or the value of that excess number). If the options have been exercised but the underlying shares have not been sold, the recoverable amount is the number of shares underlying the excess options based on the restatement (or the value thereof). If the shares have been sold, the recoverable amount is the proceeds that were received in connection with the sale of the excess number of shares. Amounts credited under plans (other than tax-qualified plans for which the exception set forth below applies) based on erroneously awarded Incentive-Based Compensation and any accrued earnings thereon are also recoverable under this policy.

The Company shall not be required under this policy to recover erroneously awarded Incentive-Based Compensation if the Committee has made a determination that recovery would be impracticable and either of the following conditions are met: (1) after making a reasonable attempt to recover such erroneously awarded Incentive-Based Compensation, the Committee determines that the direct expense paid to a third party to assist in enforcing this policy would exceed the amount to be recovered (documentation evidencing the reasonable attempt to recover the erroneously awarded Incentive-Based Compensation must be maintained and provided to Nasdaq as required by Nasdaq listing rules), or (2) the recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of Internal Revenue Code Section 401(a)(13) or Internal Revenue Code Section 411(a) and the regulations thereunder.

For purposes of this policy, the following definitions will apply:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· " <u>Covered Individual</u> " means
any current or former officer of the Company who is or was subject to Section 16 of the Securities Exchange Act of 1934, as amended, at
any time during the applicable performance period for the relevant Incentive-Based Compensation, regardless of whether such individual
continues to hold such position or continues to be employed by the Company or any of its subsidiaries.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· " <u>Incentive-Based Compensation</u> "
means any compensation that is granted, earned, or vested based wholly or in part upon the attainment of a Financial Reporting Measure.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;· " <u>Financial Reporting Measures</u> "
means measures that are determined and presented in accordance with the accounting principles used in preparing the Company's financial
statements, and any measures that are derived wholly or in part from such measures (including, for purposes of this policy, stock price
and total shareholder return). A Financial Reporting Measure need not be presented within the Company's financial statements or
included in a filing with the Securities and Exchange Commission.

This policy is intended to comply with the requirements of Rule 10D-1 promulgated by the Securities and Exchange Commission and the related listing rules of Nasdaq, and the terms hereof shall be construed consistent with that intent. This policy does not limit any other remedies the Company may have available to it in the circumstances, which may include, without limitation, dismissing an employee or initiating other disciplinary procedures. The provisions of this policy are in addition to (and not in lieu of) any rights to repayment the Company may have under Section 304 of the Sarbanes-Oxley Act of 2002 (applicable to the Chief Executive Officer and Chief Financial Officer only) and other applicable laws. The Company shall not indemnify any Covered Individual against the loss of erroneously-awarded Incentive-Based Compensation that is recovered by the Company pursuant to this policy.

The Committee shall have the sole authority to construe and interpret this policy and to make all determinations required to be made pursuant to this policy. Any such construction, interpretation or determination by the Committee shall be final and binding.

The Committee may revise this policy from time to time.