What changed in this filing

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Item 1. Business

2021-08-27 compared with 2020-09-11 · 286 added, 298 removed, 51 unchanged (92% of the section changed)

Lantronix, Inc.

is a global provider of software as a service

(“SaaS”), engineering services, and hardware for Edge Computing, the Internet of Things (“IoT”), and Remote

Environment Management (“REM”).

Lantronix enables its customers to provide reliable and secure solutions while accelerating

their time to market.

Lantronix’s products and services dramatically simplify operations through the creation, development,

deployment, and management of customer projects at scale while providing quality, reliability and security.

Lantronix’s portfolio of services and products address

each layer of the IoT Stack including Collect, Connect, Compute, Control and Comprehend, enabling its customers to deploy successful

IoT and REM solutions .

Lantronix’s

services and products deliver a holistic approach, addressing its customers’

needs by integrating a SaaS management platform

with custom application development layered on top of external and embedded hardware, enabling intelligent edge computing, secure

communications (wired, Wi-Fi, and cellular), location and positional tracking, and environmental sensing and reporting.

With three decades of proven experience in creating robust

industry and customer specific solutions, Lantronix is an innovator in enabling its customers to build new business models, leverage

greater efficiencies and realize the possibilities of the IoT and REM.

Lantronix’s solutions are deployed inside millions

of machines at data centers, offices, and remote sites serving a wide range of industries, including energy, agriculture, medical,

security, manufacturing, distribution, transportation, retail, financial, environmental, infrastructure and government.

We were incorporated in California in 1989 and reincorporated

in Delaware in 2000.

References in this Report to “fiscal 2020”

to the fiscal year ended June 30, 2020 and references to “fiscal 2019”

refer to the fiscal year ended June 30, 2019.

Today, more and more businesses are seeking to streamline their

operations by connecting their machines and electronic devices to the Internet, manage them remotely, and create new business models.

The growth in the IoT and REM markets are being driven by the growing importance of data, being able to act on that data, and the

rapidly falling cost of sensors, connectivity, compute, and storage.

While the promise is great, designing and deploying these

projects is complex, costly and time-consuming.

Our offerings are designed to help companies increase speed and reduce friction

for their deployments through reduced complexity, decreased development costs, and increased ease of management for web-scale applications

and real-world solutions;

thus, driving customer value and success.

We plan to address the market opportunity by offering our customers

turnkey solutions by leveraging the layers of the IoT Stack, such as Collect, Connect, Compute, Control and Comprehend, through

a combination of services, hardware and software solutions, accessible and manageable through our SaaS platform.

We are executing a growth strategy that includes continuous

innovation complemented by strategic acquisitions to expand our ability to offer complete IoT and REM solutions with the intent

of increasing our scale and broadening our scope so that we can increase our value proposition to our customers.

This strategy

will allow us to address a larger portion of our customers’

operational needs, and engage with customers as a strategic "total

solution"

We believe this will strengthen our position in the market as our customers come to us for a wider variety

of solutions.

For example, on July 5, 2019 we acquired Maestro Wireless Solutions Limited and its subsidiaries (together, “Maestro”).

This acquisition added to our Connect and Collect solutions by providing additional and complementary cellular connectivity, LPWAN,

and telematic technologies and devices to our portfolio.

On January 16, 2020 we acquired Intrinsyc Technologies Corporation (“Intrinsyc”).

This acquisition provided additional and complementary edge computing with embedded product design and application development

capabilities, crucial to the development of intelligent Compute functionality for advanced customer implementations.

acquisitions allow us to offer more value to our customers and substantially increased the markets that we serve.

is a global provider of software as a service (“SaaS”),

engineering services, and hardware for Edge Computing, the Internet of Things (“IoT”), and Remote Environment Management (“REM”).

We enable our customers to provide reliable and secure solutions while accelerating their time to market.

Our products and services dramatically

simplify operations through the creation, development, deployment and management of customer projects at scale while providing quality,

reliability and security.

Our portfolio of services and products address each layer of the IoT

Stack including Collect, Connect, Compute, Control and Comprehend, enabling our customers to deploy successful IoT and REM solutions .

Our services and products deliver a holistic approach, addressing our customers’ needs by integrating a SaaS management platform

with custom application development layered on top of external and embedded hardware, enabling intelligent edge computing, secure communications

(wired, Wi-Fi, and cellular), location and positional tracking, and environmental sensing and reporting.

With three decades of proven experience in creating robust industry

and customer specific solutions, we are an innovator in enabling our customers to build new business models, leverage greater efficiencies

and realize the possibilities of the IoT and REM.

Lantronix’s solutions are deployed inside millions of machines at data centers,

offices, and remote sites serving a wide range of industries, including energy, agriculture, medical, security, manufacturing, distribution,

transportation, retail, financial, environmental, infrastructure and government.

We were incorporated in California in 1989 and reincorporated in Delaware

References in this Report to “fiscal 2021” refer to the

fiscal year ended June 30, 2021 and references to “fiscal 2020” refer to the fiscal year ended June 30, 2020.

unless the context suggests otherwise, all reference in this Report to the “Company,” “we,” and “us,”

refer to Lantronix, Inc.

together with its subsidiaries.

Today, more businesses are seeking to streamline their operations by

connecting their machines and electronic devices to the Internet, manage them remotely, and create new business models.

The growth in

the IoT and REM markets are being driven by the growing importance of data, being able to act on that data, and the rapidly falling cost

of sensors, connectivity, compute, and storage.

While the promise is great, designing and deploying these projects is complex, costly

and time-consuming.

Our offerings are designed to help companies increase speed and reduce friction for their deployments through reduced

complexity, decreased development costs, and increased ease of management for web-scale applications and real-world solutions;

thus, driving

customer value and success.

We plan to address the market opportunity by offering our customers turnkey solutions by leveraging the layers

of the IoT Stack, such as Collect, Connect, Compute, Control and Comprehend, through a combination of services, hardware and software

solutions, accessible and manageable through our SaaS platform.

We are executing a growth strategy that includes continuous innovation

complemented by strategic acquisitions to expand our ability to offer complete IoT and REM solutions with the intent of increasing our

scale and broadening our scope so that we can increase our value proposition to our customers.

We believe this strategy will allow us

to address a larger portion of our customers’ operational needs and engage with customers as a strategic "total solution"

We believe this will strengthen our position in the market as our customers come to us for a wider variety of solutions.

Recent Acquisitions

On July 5, 2019 we acquired Maestro Wireless Solutions Limited and

its subsidiaries (together, “Maestro”).

This acquisition added to our Connect and Collect solutions by providing additional

and complementary cellular connectivity, LPWAN, and telematic technologies and devices to our portfolio.

On January 16, 2020 we acquired Intrinsyc Technologies Corporation

(“Intrinsyc”).

This acquisition provided additional and complementary edge computing with embedded product design and application

development capabilities, crucial to the development of intelligent Compute functionality for advanced customer implementations.

On August 2, 2021 we acquired the Transition Networks and Net2 Edge

businesses (the “TN Companies”) from Communication Systems, Inc.

The TN Companies provide us with complementary IoT connectivity

products and capabilities, including switching, power over ethernet and media conversion and adapter products.

The above three acquisitions allow us to offer more value to our customers

and substantially increase the markets that we serve.

Products and Solutions

We organize our products and solutions into three product lines:

IoT, REM and Other.

REM and Other.

IoT Connectivity

Our IoT connectivity products typically connect to one or more

existing machines or are built into new industrial devices to provide network connectivity.

Our products are designed to enhance

the value and utility of machines by making the data from the machines available to users, systems and processes or by controlling

their properties and features over the network.

Our IoT connectivity products may be embedded into new designs or attached to existing

These products include wired and wireless connections that enhance the value and utility of modern electronic systems

and equipment by providing secure network connectivity, application hosting, protocol conversion, secure access for distributed

IoT deployments and many other functions.

Many of the products are offered with software tools intended to further accelerate our

customer’s time-to-market and increase their value add.

Most of our IoT connectivity products are pre-certified in a number

of countries thereby significantly reducing our original equipment manufacturer (“OEM”) customers’

certification costs and accelerating their time to market.

Our IoT compute products typically are embedded into a customer

product, enabling advanced application functionality at the edge.

Our products are designed to deliver advanced functionality

and reduce time to market by leveraging our engineering expertise, engineering services, manufacturing experience, and strategic

System on Chip (“SoC”) partners.

Our IoT connectivity products typically connect to one or more existing

machines or are built into new industrial devices to provide network connectivity.

Our products are designed to enhance the value and

utility of machines by making the data from the machines available to users, systems and processes or by controlling their properties

and features over the network.

Our IoT connectivity products may be embedded into new designs or attached to existing machines.

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.

Many of our products allow network operators to transmit

voice and data across networks as well as provide connectivity and power in security and surveillance, smart building, smart city and

intelligent transportation applications.

Many of the products are offered with software tools intended to further accelerate our customer’s

time-to-market and increase their value add.

Most of our IoT connectivity products are pre-certified in a number of countries thereby

significantly reducing our original equipment manufacturer (“OEM”) customers’ regulatory certification costs and accelerating

their time to market.

Our growing 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.

media converters and other customer premise equipment (“CPE”) 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.

As more cities move to implement smart city technology, a major component will be solutions designed to protect and

provide services to citizens, such as intelligent transportation and surveillance networks.

Our switches deliver the necessary connectivity,

bandwidth and power to enable these solutions.

Many of our products incorporate features to perform advanced levels of fault management

and diagnostics to troubleshoot networks and proactively fix problems.

Our IoT compute products typically are embedded into a customer product,

enabling advanced application functionality at the edge.

Our products are designed to deliver advanced functionality and reduce time to

market by leveraging our engineering expertise, engineering services, manufacturing experience, and strategic System on Chip (“SoC”)

Our compute 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, custom applications at the edge.

Many of the products

are offered with software tools intended to further accelerate our customer’s time-to-market and increase their value add.

Most of our IoT compute products are pre-certified in a number of countries thereby significantly reducing our OEM customers’

regulatory certification costs and accelerating their time to market.

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.

Many of the products are offered with software tools intended to further accelerate

our customers’ time-to-market and increase their value add.

Most of our IoT compute products are pre-certified in a number of countries

thereby significantly reducing our OEM customers’ regulatory certification costs and accelerating their time to market.

IoT Telematics

Our IoT telematics products are typically integrated into an

OEM’s or System Integrator’s (“SI”) products.

Our smart tracking devices are designed to deliver robust

data logging and positional tracking functionality and reliability for supply chain and logistics solutions.

Our telematics devices

are designed to be flexible in the field and offer a variety of connectivity options to suit the customers’

2G, 3G, 4G, 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 management.

Many of the products are offered with software

tools intended to further accelerate our customer’s time-to-market and increase their value add.

Most of our IoT Telematics

products are pre-certified in a number of countries thereby significantly reducing our OEM customers’

regulatory certification

costs and accelerating their time to market.

Our IoT telematics products are typically integrated into an OEM’s

or System Integrator’s (“SI”) products.

Our smart tracking devices are designed to deliver robust data logging and positional

tracking functionality and reliability for supply chain and logistics solutions.

Our telematics devices are designed to be flexible in

the field and offer a variety of connectivity options to suit the customers’ needs across 2G, 3G, 4G, 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 management.

Many of the products are offered with software tools intended to further accelerate our customers’

time-to-market and increase their value add.

Most of our IoT Telematics products are pre-certified in a number of countries thereby significantly

reducing our OEM customers’ regulatory certification costs and accelerating their time to market.

Engineering Services

We leverage our unparalleled engineering

expertise and product development best practices to deliver high quality, innovative products, cost-effectively and on time.

over 1,400 projects successfully delivered to leading global brand companies, customers trust Lantronix to deliver timely and quality

results, accelerating time to market.

We leverage our engineering expertise and

product development best practices to deliver high quality, innovative products, cost-effectively and on time.

Our engineering services flexible business

model allows for choosing turnkey product development or team augmentation for accelerating complex areas of product development

camera development and tuning, voice control, machine learning, artificial intelligence, computer vision, augmented /

virtual reality, mechanical and radio-frequency design, thermal and power optimization, or in any specific area a customer needs

In addition to our production-ready

edge computing solutions, we offer experienced multidisciplinary engineering services across complete aspects of IoT product development,

hardware engineering, software engineering, mechanical engineering, rapid prototyping, and quality assurance.

model allows for choosing turnkey product development or team augmentation for accelerating complex areas of product development such

camera development and tuning, voice control, machine learning, artificial intelligence, computer vision, augmented / virtual reality,

mechanical and radio-frequency design, thermal and power optimization, or in any specific area a customer needs assistance.

In addition to our production-ready edge computing

solutions, we offer experienced multidisciplinary engineering services across complete aspects of IoT product development, including hardware

engineering, software engineering, mechanical engineering, rapid prototyping, and quality assurance.

Software as a Service

Our SaaS platform provides single pane of glass management

for IoT deployments.

Our platform enables customers to easily deploy, monitor, manage, and automate across their global deployments,

all from a single platform login.

OEMs and SIs can leverage its multitenancy functionality for supporting a wide customer base

while ensuring customer separation.

Over the Air (“OTA”) updates make it easy to ensure the latest security patches,

firmware, and configurations are deployed and functional.

The following product families are included in our IoT product

EDS, EDS-MD, PremierWave®

EN, PremierWave®

XC, SGX™, UDS, WiPort®, xDirect®, xPico®, xPico®

Wi-Fi, xPress™, XPort®, XPort®

Pro, MicroM110, E210, E220, Bolero45, FOX3-2G, FOX3-3G, FOX3-4G, S40, and D2Sphere.

In addition, we offer System on Module (“SoM”), Single Board Computer (“SBC”),

and Development Kits.

We also offer services for mechanical, hardware, and software engineering for camera, audio, and

artificial intelligence / machine learning development.

Today, organizations are managing an ever-increasing number

of devices and data on enterprise networks where 24/7 reliability is mission critical.

Remote environment management allows for

full comprehension and control of an IT deployment, across a range of sensors data (temperature, humidity, light, acceleration,

open / close, etc.) providing status and alerting, automation, and remote control of devices and end stations.

REM designs may

be part of an out of band (“OOB”) or in band network design.

OOB is a technique that uses a dedicated management network

to access critical infrastructure components to ensure production independent management connectivity.

REM allows organizations

to effectively monitor, manage, and control their enterprise IT equipment and facilities (environments), either in or out of band,

optimizing their IT support resources.

Our SaaS platform provides single pane of glass management for

REM (and IoT) deployments.

Our SaaS platform provides single pane of glass management for IoT

Our platform enables customers to easily deploy, monitor, manage, and automate across their global deployments, all from

a single platform login.

OEMs and SIs can leverage our platform multitenancy functionality for supporting a wide customer base while ensuring

customer separation.

Over the Air (“OTA”) updates make it easy to ensure the latest security patches, firmware, and configurations

are deployed and functional.

The following product families are included in our IoT product line:

EDS, EDS-MD, PremierWave® EN, PremierWave® XC, SGX™, UDS, WiPort®, xDirect®, xPico®, xPico® Wi-Fi,

xPress™, XPort®, XPort® Pro, MicroM110, E210, E220, Bolero45, FOX3-2G, FOX3-3G, FOX3-4G, S40, and D2Sphere.

we offer Network Switches, Media Converters.

Power over Ethernet, NICS and Optical SFPs, System on Module (“SoM”), Single

Board Computer (“SBC”), and Development Kits.

We also offer services for mechanical, hardware, and software engineering for

camera, audio, and artificial intelligence / machine learning development.

Today, organizations are managing an ever-increasing number of devices

and data on enterprise networks where 24/7 reliability is mission critical.

REM allows for full comprehension and control of an IT deployment,

across a range of sensors data (temperature, humidity, light, acceleration, open / close, etc.) providing status and alerting, automation,

and remote control of devices and end stations.

REM designs may be part of an out of band (“OOB”) or in band network design.

OOB is a technique that uses a dedicated management network to access critical infrastructure components to ensure production independent

management connectivity.

REM allows organizations to effectively monitor, manage, and control their enterprise IT equipment and facilities

(environments), either in or out of band, optimizing their IT support resources.

Our SaaS platform provides single pane of glass management for REM

(and IoT) deployments.

Our platform enables customers to easily deploy, monitor, manage, and automate across their global deployments,

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personnel on site, and makes it easy to see and drill into an issue quickly, even in large scale deployments.

Our REM product line includes out-of-band management, 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.

The following product families are included in our REM product

, SLC ™

8000, Spider ™

, ConsoleFlow, and EMG ™

We categorize products that are non-focus or end-of-life as

Our Other product line includes non-focus products such as the xPrintServer ®

In addition, this product line

includes end-of-life versions of our MatchPort ®

, SLC ™

, SLP ™

, xPress Pro, xSenso ®

PremierWave ®

XN, and WiBox product families.

Our REM product line includes out-of-band management, 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.

The following product families are included in our REM product line:

SLB ™ , SLC ™ 8000, Spider ™ , ConsoleFlow, and EMG ™ .

We categorize products that are non-focus or end-of-life as Other.

Our Other product category includes non-focus products such as the xPrintServer ® .

In addition, this product category includes

end-of-life versions of our MatchPort ® , SLC ™ , SLP ™ , xPress Pro, xSenso ® ,

PremierWave ® XN, and WiBox product families.

Net Revenue by Product Line

We have one operating and reportable business segment.

of our net revenue by product line is found in “Management’s Discussion and Analysis of Financial Condition and Results

of Operations”

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.

Our embedded IoT solutions are typically used 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’

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 REM product line and external IoT 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 generally ranges from three to 18 months and are often project-based.

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.

Our embedded IoT solutions are typically used 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 REM product line and external IoT solutions are typically sold

to end users through value added resellers (“VARs”) systems integrators, distributors, online retailers and, to a lesser extent,

The design cycles for these products typically range from three to 18 months and are often project-based.

Sales Channels

A majority of our sales are made through 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.

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.

To a lesser extent, we sell products directly to larger OEMs

and end users.

resell our products to a wide variety of resellers and end customers including OEMs, ODMs, value-added resellers (“VARs”),

systems integrators, consumers, online retailers, IT resellers, corporate customers and government entities.

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.

To a lesser extent, we sell products directly to larger OEMs and end

We also maintain an ecommerce 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

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.

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.

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 primarily conducted through

three third-party contract manufacturers.

We currently utilize Plexus, primarily located

in Malaysia, Hana Microelectronics, primarily located in Thailand, and Honortone, primarily located in China, as our contract

manufacturers for most of our products.

In addition, we use eSilicon Corporation to manage

Taiwan Semiconductor Manufacturing Company, Ltd., a third-party foundry located in Taiwan, which manufactures our large-scale integration

Our manufacturing operations are primarily conducted through two third-party

contract manufacturers.

We currently utilize Hana Microelectronics, primarily located in

Thailand and China, and Honortone, primarily located in China, as our contract manufacturers for most of our products.

addition, we use Inphi Corporation to manage Taiwan Semiconductor Manufacturing Company, Ltd., a third-party foundry located in Taiwan,

which manufactures our large-scale integration chips.

We manufacture certain products with final assembly in the U.S.

to meet trade compliance requirements.

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.

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.

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

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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.

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.

research and development is primarily performed in-house and supplemented with outsourced resources.

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 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.

and international patents covering various aspects of our products, with additional

patent applications pending.

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.

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.

As of August 12, 2020, we had 242 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.

As of August 16, 2021, we had 312 total employees and 299 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:

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”).

A discussion of sales to our significant customers and related parties, sales within geographic regions as a percentage of net

revenue and sales to significant countries as a percentage of net revenue is set forth in Note 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.

Europe, Middle East, and Africa (“EMEA”);

and Asia Pacific Japan (“APJ”).

discussion of sales to our significant customers and related parties, sales within geographic regions as a percentage of net revenue and

sales to significant countries as a percentage of net revenue is set forth in Note 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 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.

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 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

1 unchanged sentence

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:

The following table presents the names, ages, and

positions held by our executive officers as of the date of this Report:

President and Chief Executive Officer

6 unchanged sentences

Most recently, Mr.

Pickle served as President and Chief Operating

Officer of Microsemi Corporation, a leading provider of semiconductor and system solutions, from November 2013 until Microsemi

was acquired by Microchip Technology Inc.

Prior to his position as President and Chief Operating Officer, he served

at Microsemi as Executive Vice President, leading business operations of the company’s Integrated Circuits group, where he

played an integral role in the planning, developing, and execution of Microsemi’s leading edge IC solutions for communications,

industrial, aerospace, and defense/security markets.

WHITAKER has served as our Chief Financial Officer

since September 2011.

Whitaker returned to Lantronix after serving as Vice President, Corporate Controller at Mindspeed from

January 2011 to September 2011.

Whitaker previously served as our Vice President of Finance and Accounting from September 2010

to January 2011, where he was responsible for managing all worldwide finance and accounting functions.

Whitaker also served

as our Senior Director of Finance and Accounting from February 2006 to September 2010 and our Director of Finance and Accounting

from August 2005 to February 2006.

Pickle served as President and Chief Operating Officer

of Microsemi Corporation, a leading provider of semiconductor and system solutions, from November 2013 until Microsemi was acquired by

Microchip Technology Inc.

Prior to his position as President and Chief Operating Officer, he served at Microsemi as Executive

Vice President, leading business operations of the company’s Integrated Circuits group, where he played an integral role in the

planning, developing, and execution of Microsemi’s leading edge IC solutions for communications, industrial, aerospace, and defense/security

WHITAKER has served as our Chief Financial Officer since

September 2011.

Whitaker returned to Lantronix after serving as Vice President, Corporate Controller at Mindspeed from January 2011

to September 2011.

Whitaker previously served as our Vice President of Finance and Accounting from September 2010 to January 2011,

where he was responsible for managing all worldwide finance and accounting functions.

Whitaker also served as our Senior Director

of Finance and Accounting from February 2006 to September 2010 and our Director of Finance and Accounting from August 2005 to February

Prior to August 2005, Mr.

Whitaker held vice president and director level finance and accounting

positions with two publicly-traded companies and worked in the assurance practice at Ernst & Young LLP for six years.

HAKAM joined Lantronix in August of 2018 and serves

as our Vice President of Engineering.

Whitaker held vice president and director level finance and accounting positions with two publicly-traded

companies and worked in the assurance practice at Ernst & Young LLP for six years.

HAKAM joined Lantronix in August of 2018 and serves as

our Vice President of Engineering.

Prior to joining Lantronix, Mr.

1 unchanged sentence

Operations at Viewstream, Inc., a provider of videos and marketing content to technology companies, from September 2016 to July 2018,

2018, where he was instrumental in planning and expanding the company’s global media strategy.

Before joining Viewstream,

Hakam was founder and Senior Vice President of Engineering and Product Management of SwitchRay Inc., a global provider of communication

service platforms for global telecom carriers, from 2012 until its acquisition by 46 Labs in September 2016.

He previously spent

20+ years at a number of large companies such as Motorola and Kyocera Wireless in various engineering leadership roles, and has

also been the founder of two technology companies (including SwitchRay Inc.) in the networking and telecom segment.

been a professor at National University in San Diego, instructing undergraduate and graduate courses in program and project management,

international management, six sigma and statistical process control.

ROGER HOLLIDAY joined Lantronix in January 2020 and serves as

our Vice President of Worldwide Sales.

where he was instrumental in planning and expanding the company’s global media strategy.

Before joining Viewstream, Mr.

founder and Senior Vice President of Engineering and Product Management of SwitchRay Inc., a global provider of communication service

platforms for global telecom carriers, from 2012 until its acquisition by 46 Labs in September 2016.

He previously spent 20+ years at

a number of large companies such as Motorola and Kyocera Wireless in various engineering leadership roles, and has also been the founder

of two technology companies (including SwitchRay Inc.) in the networking and telecom segment.

Hakam has been a professor at National

University in San Diego, teaching undergraduate and graduate courses in program and project management, international management, six

sigma and statistical process control.

ROGER HOLLIDAY joined Lantronix in January 2020 and serves as our Vice

President of Worldwide Sales.

Prior to joining Lantronix, Mr.

Holliday served in various positions at Microsemi Corporation

since 1999, serving most recently as Executive Vice President and General Manager from 2013 until Microsemi was acquired by Microchip

Technology Inc.

Holliday served in various positions at Microsemi Corporation since 1999,

serving most recently as Executive Vice President and General Manager from 2013 until Microsemi was acquired by Microchip Technology Inc.

Prior to his time at Microsemi, Mr.

Holliday served in various product marketing, applications and

sales management roles at Linfinity Microelectronics until its acquisition by Microsemi in 1999..

Holliday served in various product marketing, applications and sales management roles

at Linfinity Microelectronics until its acquisition by Microsemi in 1999.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business