Item 9A. Controls and Procedures
ITEM 9A. CONTROLS AND PROCEDURES
This Annual Report on Form 10-K includes the certifications attached as Exhibit 31.A and Exhibit 31.B of our Chief Executive Officer and Chief Financial Officer required by Rule 13a-14 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). This Item 9A includes information concerning the controls and control evaluations referred to in those certifications.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act that are designed to provide reasonable assurance that information required to be disclosed in our reports filed or submitted under the Exchange Act) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.
Management, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated the design and operation of our disclosure controls and procedures as of September 30, 2020. Based on their evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of September 30, 2020, our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d - 15(e) under the Security Exchange Act of 1934, as amended) were effective and provide reasonable assurance on the reliability of our financial reporting and the preparation of Digi's financial statements for external purposes in accordance with generally accepted accounting principles.
Management’s Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of our consolidated financial statements for external purposes in accordance with generally accepted accounting principles. Management, with the participation of our Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of September 30, 2020.
On December 13, 2019, we completed our acquisition of Opengear. As permitted for recently acquired businesses, management has excluded this business from our assessment of internal control over financial reporting. This excluded business represents total assets and revenues constituting 34% and 19%, respectively, of our related consolidated financial statement amounts for the fiscal year ended September 30, 2020. We will be required to include them in our assessment beginning in the first quarter of fiscal 2021.
In making this assessment, management used the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") in Internal Control–Integrated Framework (2013). Based on this assessment, management concluded that Digi's internal control over financial reporting was effective as of September 30, 2020 based on Internal Control–Integrated Framework (2013) issued by the COSO.
The effectiveness of our internal control over financial reporting as of September 30, 2020 has been audited by Grant Thornton LLP, an independent registered public accounting firm, as stated in their report, which is included herein.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting during the quarterly period ended September 30, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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Report of Independent Registered Public Accounting Firm
Board of Directors and Shareholders
Digi International Inc.
Opinion on internal control over financial reporting
We have audited the internal control over financial reporting of Digi International Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of September 30, 2020, based on criteria established in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2020, based on criteria established in the 2013 Internal Control—Integrated Framework issued by COSO.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the consolidated financial statements of the Company as of and for the year ended September 30, 2020, and our report dated November 25, 2020, expressed an unqualified opinion on those financial statements.
Basis for opinion
The Company’s management is responsible 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 Management’s Report on Internal Control Over Financial Reporting (“Management’s Report”). Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Our audit of, and opinion on, the Company’s internal control over financial reporting does not include the internal control over financial reporting of Opengear, Inc., a wholly-owned subsidiary, whose financial statements reflect total assets and revenues constituting 34% and 19%, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2020. As indicated in Management’s Report, Opengear, Inc. was acquired during the year ended September 30, 2020. Management’s assertion on the effectiveness of the Company’s internal control over financial reporting excluded internal control over financial reporting of Opengear, Inc.
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.
/s/ GRANT THORNTON LLP
Minneapolis, Minnesota
November 25, 2020
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ITEM 9B. OTHER INFORMATION
None.
PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Incorporated into this item by reference is the information appearing under the headings "Proposal No. 1 - Election of Directors", "Security Ownership of Principal Stockholders and Management" and, if applicable, "Delinquent Section 16(a) Reports" in our Proxy Statement for our 2021 Annual Meeting of Stockholders we intend to file with the SEC (the "Proxy Statement").
Information about our Executive Officers
As of the date of filing this Form 10-K, the following individuals were executive officers of the Registrant:
Name Age Position
Ronald E. Konezny 52 President and Chief Executive Officer
James J. Loch 48 Senior Vice President, Chief Financial Officer and Treasurer
Kevin C. Riley 59 President, IoT Solutions
Tracy L. Roberts 58 Vice President of Technology Services
David H. Sampsell 52 Vice President of Corporate Development, General Counsel and Corporate Secretary
Terrence G. Schneider 54 Vice President Supply Chain Management
Ronald E. Konezny has served as a member of our Board of Directors and as our President and Chief Executive Officer since December 2014. From 2013 to December 2014, he served as Vice President, Global Transportation and Logistics at Trimble Navigation Limited, a global provider of navigation and range-finding equipment and related solutions. From 2011 to 2013, he served as General Manager of Trimble’s Global Transportation and Logistics division. From 2007 to 2013, he served as Chief Executive Officer of PeopleNet, Inc., a provider of telematics solutions for the transportation industry, which was acquired by Trimble in 2011. Mr. Konezny founded PeopleNet in 1996 and served in various other roles, including Chief Technology Officer, Chief Financial Officer and Chief Operating Officer, before serving as its Chief Executive Officer.
James J. Loch has served as Senior Vice President, Chief Financial Officer and Treasurer since May 2019. Prior to joining us, Mr. Loch most recently served as Senior Vice President of Finance and Chief Financial officer of Nilfisk, Inc., a Denmark-owned company based in Minneapolis that manufactures professional cleaning equipment, from May 2016 to February 2019. From May 2015 to May 2016, he was an independent consultant focused on projects including due diligence, business planning, back office reorganization and product research. Previously, he served at Honeywell Building Solutions, a division of Honeywell International, as Chief Financial Officer (Americas) from 2008 to 2012 and then as Vice President — Sales from 2012 to May 2015.
Kevin C. Riley has served as President, IoT Solutions since November 2018 and previously served as Senior Vice President and Chief Operating Officer between January 2016 and October 2018 and prior to that he served as Senior Vice President of Global Sales between 2013 and January 2016. Prior to joining us, Mr. Riley served as Senior Vice President - Global Markets for Infor Global Solutions, an enterprise software solutions company, where he led four global business units to profitable growth from 2010 to 2011. He served as Vice President and General Manager at Oracle, an enterprise software company, from 2008 to 2010, and President of Global Knowledge Software from 2002 until Global Knowledge Software's acquisition by Oracle in 2008. He also served as President and Chief Operating Officer for Learn2 Corporation from 1999 to 2002.
Tracy L. Roberts has served as Vice President of Information Technology since 2005 and Vice President of Technology Services since 2013. She also previously served as Vice President of Human Resources from 2005 until May 2016. Prior to joining us, Ms. Roberts served as Director of Human Resources at Novartis Nutrition Corporation where she was responsible for the medical nutritional business unit. Ms. Roberts held various human resource and marketing positions at Cray Research (now known as Silicon Graphics) from 1983 to 1996.
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE (CONTINUED)
David H. Sampsell has served as Vice President of Corporate Development, General Counsel and Corporate Secretary since January 2015. He had previously served as Vice President, General Counsel and Corporate Secretary since 2011. Prior to joining us, Mr. Sampsell worked as corporate counsel at ADC Telecommunications, Inc., a supplier of network infrastructure products and services, from 1999 until 2011. Prior to joining ADC, Mr. Sampsell was an attorney in private practice with Leonard, Street and Deinard, P.A. from 1996 to 1999 and Moore & Van Allen, PLLC from 1993 to 1996.
Terrence G. Schneider has served as Vice President of Supply Chain Management since February 2019. From June 2016 to February 2019, he served as Vice President of Product Management. Prior to joining us, Terry held several senior-level leadership positions at PeopleNet, Inc. from 2009 to 2011 and the transportation and logistics business unit of Trimble Navigation Limited, PeopleNet's parent company from 2012 to June 2016 where he served as Vice President Supply Chain.
Code of Ethics/Code of Conduct
We have in place a "code of ethics" within the meaning of Rule 406 of Regulation S-K, which is applicable to our senior financial management, including specifically our principal executive officer, principal financial officer and controller. A copy of this financial code of ethics is available on our website ( www.digi.com ) under the "Company - Investor Relations - Corporate Governance" caption. We intend to satisfy our disclosure obligations regarding any amendment to, or a waiver from, a provision of this code of ethics by posting such information on the same website. We also have a "code of conduct" that applies to all directors, officers and employees, a copy of which is available through our website ( www.digi.com ) under the "Company - Investor Relations - Corporate Governance" caption.
ITEM 11. EXECUTIVE COMPENSATION
Incorporated into this item by reference is the information appearing under the heading "Compensation of Directors," "Executive Compensation," and the information regarding compensation committee interlocks and insider participation under the heading "Proposal No. 1 - Election of Directors" in our Proxy Statement.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Incorporated into this item by reference is the information appearing under the headings "Security Ownership of Principal Stockholders and Management" and "Equity Compensation Plan Information" in our Proxy Statement.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Incorporated into this item by reference is the information regarding director independence under the heading "Proposal No. 1 - Election of Directors" and the information regarding related person transactions under the heading "Related Person Transaction Approval Policy" on our Proxy Statement.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Incorporated into this item by reference is the information under "Proposal No. 3 - Ratification of Independent Registered Public Accounting Firm" in our Proxy Statement.
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PART IV.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Consolidated Financial Statement and Schedules of Digi (filed as part of this Annual Report on Form 10-K)
1. Consolidated Statements of Operations for fiscal years ended September 30, 2020, 2019 and 2018
Consolidated Statements of Comprehensive Income for fiscal years ended September 30, 2020, 2019 and 2018
Consolidated Balance Sheets as of September 30, 2020 and 2019
Consolidated Statements of Cash Flows for fiscal years ended September 30, 2020, 2019 and 2018
Consolidated Statements of Stockholders’ Equity for fiscal years ended September 30, 2020, 2019 and 2018
Notes to Consolidated Financial Statements
2. Schedule of Valuation and Qualifying Accounts
3. Report of Independent Registered Certified Public Accounting Firm
(b) Exhibits
Unless otherwise indicated, all documents incorporated into this Annual Report on Form 10-K by reference to a document filed with the SEC are located under SEC file number 1-34033.
Exhibit Number Description Method of Filing
2 (a) Equity Purchase Agreement with Schechter Tech LLC (d/b/a TempAlert LLC) dated as of October 20, 2017 * (1)
Incorporated by Reference
2 (b) Agreement and Plan of Merger by and among Digi International Inc., Namath Merger Sub. Inc., Opengear, Inc. and Shareholder Representative Services LLC, as representative, dated as of November 7, 2019 * (2)
Incorporated by Reference
3 (a) Restated Certificate of Incorporation, as amended (3) Incorporated by Reference
3 (b) Amended and Restated By-Laws (4)
Incorporated by Reference
4 Description of Securities
Filed Electronically
10 (a) Digi International Inc. Employee Stock Purchase Plan as amended and restated as of December 10, 2019 ** (5)
Incorporated by Reference
10 (b) Digi International Inc. 2000 Omnibus Stock Plan, as amended and restated as of December 4, 2009 ** (6)
Incorporated by Reference
10 (b)(i) Form of Notice of Grant of Stock Options and Option Agreement (for grants under Digi International Inc. 2000 Omnibus Stock Plan before January 26, 2010)** (7)
Incorporated by Reference
10 (b)(ii) Form of Notice of Grant of Stock Options and Option Agreement (amended form for grants under Digi International Inc. 2000 Omnibus Stock Plan on or after January 26, 2010 provided Addendum 1A applies only to certain grants made on and after November 22, 2011)** (8)
Incorporated by Reference
10 (c) Digi International Inc. 2013 Omnibus Incentive Plan ** (9)
Incorporated by Reference
10 (c)(i) Form of Notice of Grant of Stock Options and Option Agreement including Addenda to Option Agreement that may apply to certain grants (for grants under Digi International Inc. 2013 Omnibus Incentive Plan)** (10)
Incorporated by Reference
10 (d) Digi International Inc. 2014 Omnibus Incentive Plan ** (11)
Incorporated by Reference
10 (d)(i) Form of Notice of Grant of Stock Options and Option Agreement including Addenda to Option Agreement that may apply to certain grants (for grants under Digi International Inc. 2014 Omnibus Incentive Plan)** (12)
Incorporated by Reference
10 (d)(ii) Form of (Executive) Restricted Stock Unit Award Agreement (for awards under Digi International Inc. 2014 Omnibus Incentive Plan)** (13)
Incorporated by Reference
10 (e) Digi International Inc. 2016 Omnibus Incentive Plan ** (14)
Incorporated by Reference
10 (e)(i) Form of (Executive) Restricted Stock Unit Award Agreement (for awards under Digi International Inc. 2016 Omnibus Incentive Plan)** (15)
Incorporated by Reference
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED)
Exhibit Number Description Method of Filing
10 (e)(ii) Form of (Employee) Restricted Stock Unit Award Agreement (for awards under Digi International Inc. 2016 Omnibus Incentive Plan)** (16)
Incorporated by Reference
10 (e)(iii) Form of Notice of Grant of Stock Options and Option Agreement (for grants under Digi International Inc. 2016 Omnibus Incentive Plan)** (17)
Incorporated by Reference
10 (f) Digi International Inc. 2017 Omnibus Incentive Plan ** (18)
Incorporated by Reference
10 (f)(i) Form of (Executive) Restricted Stock Unit Award Agreement (for awards under Digi International Inc. 2017 Omnibus Incentive Plan)** (19)
Incorporated by Reference
10 (f)(ii) Form of (Employee) Restricted Stock Unit Award Agreement (for awards under Digi International Inc. 2017 Omnibus Incentive Plan)** (20)
Incorporated by Reference
10 (f)(iii) Form of Notice of Grant of Stock Options and Option Agreement (for grants under Digi International Inc. 2017 Omnibus Incentive Plan)** (21)
Incorporated by Reference
10 (g) Digi International Inc. 2018 Omnibus Incentive Plan ** (22)
Incorporated by Reference
10 (g)(i) Form of (Director) Restricted Stock Unit Award Agreement (for grants under Digi International Inc. 2018 Omnibus Incentive Plan)** (23)
Incorporated by Reference
10 (g)(ii) Form of (Executive) Restricted Stock Unit Award Agreement (for grants under Digi International Inc. 2018 Omnibus Incentive Plan)** (24)
Incorporated by Reference
10 (g)(iii) Form of (Employee) Restricted Stock Unit Award Agreement (for grants under Digi International Inc. 2018 Omnibus Incentive Plan)** (25)
Incorporated by Reference
10 (g)(iv) Form of Notice of Grant of Stock Options and Option Agreement (for grants under Digi International Inc. 2018 Omnibus Incentive Plan)** (26)
Incorporated by Reference
10 (h) Digi International Inc. 2019 Omnibus Incentive Plan ** (27)
Incorporated by Reference
10 (h)(i) Form of (Director) Restricted Stock Unit Award Agreement (for grants under Digi International Inc. 2019 Omnibus Incentive Plan)** (28)
Incorporated by Reference
10 (h)(ii) Form of (Executive) Restricted Stock Unit Award Agreement (for grants under Digi International Inc. 2019 Omnibus Incentive Plan)** (29)
Incorporated by Reference
10 (h)(iii) Form of (Employee) Restricted Stock Unit Award Agreement (for grants under Digi International Inc. 2019 Omnibus Incentive Plan)** (30)
Incorporated by Reference
10 (h)(iv) Form of Notice of Grant of Stock Options and Option Agreement (for grants under Digi International Inc. 2019 Omnibus Incentive Plan)** (31)
Incorporated by Reference
10 (i) Digi International Inc. 2020 Omnibus Incentive Plan ** (32)
Incorporated by Reference
10 (i)(i) Form of (Director) Restricted Stock Unit Award Agreement (for grants under Digi International Inc. 2020 Omnibus Incentive Plan)** (33)
Incorporated by Reference
10 (i)(ii) Form of (Executive) Restricted Stock Unit Award Agreement (for grants under Digi International Inc. 2020 Omnibus Incentive Plan)** (34)
Incorporated by Reference
10 (i)(iii) Form of (Employee) Restricted Stock Unit Award Agreement (for grants under Digi International Inc. 2020 Omnibus Incentive Plan)** (35)
Incorporated by Reference
10 (i)(iv) Form of (Executive) Notice of Grant of Stock Options and Option Agreement (for grants under Digi International Inc. 2020 Omnibus Incentive Plan)** (36)
Incorporated by Reference
10 (i)(v) Form of (Employee) Notice of Grant of Stock Options and Option Agreement (for grants under Digi International Inc. 2020 Omnibus Incentive Plan)** (37)
Incorporated by Reference
10 (j) Form of indemnification agreement with directors and officers of the Company ** (38)
Incorporated by Reference
10 (k) Employment Agreement between the Company and Ronald E. Konezny dated November 26, 2014 ** (39)
Incorporated by Reference
10 (l) Offer letter with David H. Sampsell dated as of April 8, 2011 ** (40)
Incorporated by Reference
10 (m) Employment Agreement with Kevin C. Riley dated January 23, 2013 ** (41)
Incorporated by Reference
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED)
Exhibit Number Description Method of Filing
10 (n) Offer letter with Michael A. Ueland dated September 27, 2016 ** (42)
Incorporated by Reference
10 (o) Offer letter with Michael A. Ueland dated October 29, 2018 ** (43)
Incorporated by Reference
10 (p) Offer letter with James J. Loch dated May 1, 2019 ** (44)
Incorporated by Reference
10 (q) Credit Agreement dated as of December 13, 2019, with BMO Harris Bank N.A., as administrative agent and collateral agent, BMO Capital Markets Corp., as joint lead arranger and sole book runner and Silicon Valley Bank, as joint lead arranger, other lenders from time to time party hereto (45)
Incorporated by Reference
10 (r) First Amendment to Credit Agreement dated as of April 14, 2020 by and among Digi International, Inc. the other loan parties signatory thereto, each Lender under the Credit Agreement party thereto and BMO Harris Bank, N.A., as administrative agent (46)
Incorporated by Reference
21 Subsidiaries of the Company
Filed Electronically
23 Consent of Grant Thornton LLP
Filed Electronically
24 Powers of Attorney
Filed Electronically
31 (a) Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
Filed Electronically
31 (b) Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
Filed Electronically
32 Section 1350 Certification
Filed Electronically
101 The following financial statements from the Annual Report on Form 10-K for the year ended September 30, 2020, as filed with the Security and Exchange Commission, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations, (ii) Consolidated Statements of Comprehensive Income, (iii) Consolidated Balance Sheets, (iv) Consolidated Statements of Cash Flows, (v) Consolidated Statements of Stockholders' Equity, and (vi) Notes to Consolidated Financial Statements.
Filed Electronically
104 The cover page from Digi International Inc.'s Annual Report on Form 10-K for the year ended September 30, 2020 is formatted in iXBRL (included in Exhibit 101).
Filed Electronically
____________________________
* Certain schedules and exhibits have been omitted in accordance with Item 601(b)(2) of Regulation S-K. A copy of any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon request.
** Management compensatory contract or arrangement required to be included as an exhibit to this Annual Report on Form 10-K.
(1) Incorporated by reference to Exhibit 2.1 to Form 8-K filed October 25, 2017.
(2) Incorporated by reference to Exhibit 2.1 to Form 8-K filed November 8, 2019.
(3) Incorporated by reference to Exhibit 3(a) to Form 10‑K for the year ended September 30, 1993 (File no. 0‑17972).
(4) Incorporated by reference to Exhibit 3.1 to Form 8-K filed April 30, 2020.
(5) Incorporated by reference to Exhibit 10.a to Form 10-Q filed for the quarter ended March 31, 2020.
(6) Incorporated by reference to Exhibit 10(a) to Form 8-K filed January 29, 2010.
(7) Incorporated by reference to Exhibit 10(o) to Form 10-K for the year ended September 30, 2008.
(8) Incorporated by reference to Exhibit 10(e)(ii) to Form 10-K for the year ended September 30, 2011.
(9) Incorporated by reference to Exhibit 99 to Registration Statement on Form S-8 filed on April 16, 2013.
(10) Incorporated by reference to Exhibit 10(a)(i) to Form 10-Q for the quarter ended March 31, 2013.
(11) Incorporated by reference to Exhibit 99 to Registration Statement on Form S-8 filed on March 12, 2014.
(12) Incorporated by reference to Exhibit 10(b)(i) to Form 10-Q for the quarter ended March 31, 2014.
(13) Incorporated by reference to Exhibit 10(a) to Form 10-Q for the quarter ended June 30, 2014.
(14) Incorporated by reference to Appendix A to definitive proxy statement on Schedule 14A filed December 11, 2015.
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (CONTINUED)
(15) Incorporated by reference to Exhibit 10(a)(ii) to Form 10-Q for the quarter ended March 31, 2016.
(16) Incorporated by reference to Exhibit 10(a)(iii) to Form 10-Q for the quarter ended March 31, 2016.
(17) Incorporated by reference to Exhibit 10(a)(iv) to Form 10-Q for the quarter ended March 31, 2016.
(18) Incorporated by reference to Appendix A to definitive proxy statement on Schedule 14A filed December 16, 2016.
(19) Incorporated by reference to Exhibit 10(b)(ii) to Form 10-Q for the quarter ended March 31, 2017.
(20) Incorporated by reference to Exhibit 10(b)(iii) to Form 10-Q for the quarter ended March 31, 2017.
(21) Incorporated by reference to Exhibit 10(b)(iv) to Form 10-Q for the quarter ended March 31, 2017.
(22) Incorporated by reference to Appendix A to definitive proxy statement on Schedule 14A filed December 8, 2017.
(23) Incorporated by reference to Exhibit 10(a)(i) to Form 10-Q for the quarter ended March 31, 2018.
(24) Incorporated by reference to Exhibit 10(a)(ii) to Form 10-Q for the quarter ended March 31, 2018.
(25) Incorporated by reference to Exhibit 10(a)(iii) to Form 10-Q for the quarter ended March 31, 2018.
(26) Incorporated by reference to Exhibit 10(a)(iv) to Form 10-Q for the quarter ended March 31, 2018.
(27) Incorporated by reference to Appendix A to definitive proxy statement on Schedule 14A filed December 14, 2018.
(28) Incorporated by reference to Exhibit 10(a)(i) to Form 10-Q for the quarter ended March 31, 2019.
(29) Incorporated by reference to Exhibit 10(a)(ii) to Form 10-Q for the quarter ended March 31, 2019.
(30) Incorporated by reference to Exhibit 10(a)(iii) to Form 10-Q for the quarter ended March 31, 2019.
(31) Incorporated by reference to Exhibit 10(a)(iv) to Form 10-Q for the quarter ended March 31, 2019.
(32) Incorporated by reference to Exhibit 10(b) to Form 10-Q for the quarter ended March 31, 2020.
(33) Incorporated by reference to Exhibit 10(b)(i) to Form 10-Q for the quarter ended March 31, 2020.
(34) Incorporated by reference to Exhibit 10(b)(ii) to Form 10-Q for the quarter ended March 31, 2020.
(35) Incorporated by reference to Exhibit 10(b)(iii) to Form 10-Q for the quarter ended March 31, 2020.
(36) Incorporated by reference to Exhibit 10(b)(iv) to Form 10-Q for the quarter ended March 31, 2020.
(37) Incorporated by reference to Exhibit 10(b)(v) to Form 10-Q for the quarter ended March 31, 2020.
(38) Incorporated by reference to Exhibit 10 to Form 10‑Q for the quarter ended June 30, 2010.
(39) Incorporated by reference to Exhibit 10.1 to Form 8-K filed December 5, 2014.
(40) Incorporated by reference to Exhibit 10(m) to Form 10-K for the year ended September 30, 2013.
(41) Incorporated by reference to Exhibit 10(a) to Form 10-Q for the quarter ended March 31, 2017.
(42) Incorporated by reference to Exhibit 10(o) to Form 10-K for the year ended September 30, 2019.
(43) Incorporated by reference to Exhibit 10.O to Form 10-K for the year ended September 30, 2018.
(44) Incorporated by reference to Exhibit 10.1 to Form 8-K filed May 10, 2019.
(45) Incorporated by reference to Exhibit 10.1 to Form 8-K filed December 16, 2019.
(46) Incorporated by reference to Exhibit 10(c) to Form 10-Q for the quarter ended March 31, 2020.
ITEM 16. FORM 10-K SUMMARY
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on November 25, 2020.
DIGI INTERNATIONAL INC.
By: /s/ Ronald E. Konezny
Ronald E. Konezny
President, Chief Executive Officer and Director
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on November 25, 2020.
By: /s/ Ronald E. Konezny
Ronald E. Konezny
President, Chief Executive Officer and Director
(Principal Executive Officer)
By: /s/ James J. Loch
James J. Loch
Senior Vice President, Chief Financial Officer and Treasurer
(Principal Financial Officer and Principal Accounting Officer)
By: *
Satbir Khanuja
Director
By: *
Christopher D. Heim
Director
By: *
Hatem H. Naguib
Director
By: *
Sally J. Smith
Director
By: *
Spiro C. Lazarakis
Director
* Ronald E. Konezny, by signing his name hereto, does hereby sign this document on behalf of each of the above named directors of the Registrant pursuant to Powers of Attorney duly executed by such persons.
By: /s/ Ronald E. Konezny
Ronald E. Konezny
Attorney-in-fact
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SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
DIGI INTERNATIONAL INC.
(in thousands)
Additions
Description Balance at beginning of period Charged to costs and expenses Charged to Other Accounts Deductions Balance at end of period
Valuation allowance - deferred tax assets
September 30, 2020 $ 3,810 $ 670 $ — $ 108 $ 4,372
September 30, 2019 $ 3,291 $ 529 $ — $ 10 $ 3,810
September 30, 2018 $ 5,952 $ 521 $ — $ 3,182 $ 3,291
Valuation account - doubtful accounts
September 30, 2020 $ 968 $ 2,534 $ — $ ( 276 ) (2) $ 3,778
September 30, 2019 $ 785 $ 635 $ — $ 452 (2) $ 968
September 30, 2018 $ 341 $ 729 $ 40 (1) $ 325 (2) $ 785
Reserve for future credit returns and pricing adjustments
September 30, 2020 $ 2,677 $ 17,816 $ — $ 19,017 $ 1,476
September 30, 2019 $ 2,560 $ 12,640 $ — $ 12,523 $ 2,677
September 30, 2018 $ 2,169 $ 10,715 $ — $ 10,324 $ 2,560
(1) Established through purchase accounting relating to the acquisition of TempAlert
(2) Uncollectible accounts charged against allowance, net of recoveries
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