What changed in this filing

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Item 1. Business

2022-08-29 compared with 2021-08-27 · 145 added, 163 removed, 174 unchanged (64% 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”).

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.

is a global Industrial and Enterprise IoT provider

of solutions that target diversified verticals ranging from Smart Cities, Utilities and Healthcare to Enterprise, Intelligent Transportation,

and Industrial Automation.

Building on a long history of connectivity and video processing competence, target applications include Video

Surveillance, Traffic management, Infotainment systems, Robotics, Edge Computing and Remote Environment Management (“REM”).

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

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(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 organize our portfolio services and products into the following

product lines:

Embedded IoT Modules, IoT Systems Solutions, and Software and Engineering Services.

We were incorporated in California in 1989 and reincorporated in Delaware

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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.

connecting their machines and electronic devices to the Internet, manage them remotely, and reduce costs.

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 are addressing the market opportunity by offering our customers turnkey solutions, leveraging the layers of the IoT Stack, such as

Collect, Connect, Compute, Control and Comprehend, through a combination of services, hardware and software enablement, accessible and

manageable through our SaaS platform.

We are executing a growth strategy that includes continuous innovation

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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.

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

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

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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.

These 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:

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 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

Embedded IoT Modules

This portfolio of embedded products provides a variety of solutions

including Compute System-on-Module (SOM) or System-in-Package (SIP) solutions supplemented with wired and wireless network Connectivity

As the level of silicon integration continues to grow, the compute modules also provide the ability to Collect digital information

(Video, Audio or Sensors) and analyze/comprehend the data streams based on specific AI/ML algorithms.

The new implementations of SIP devices

can process multiple media streams with CV (Computer Vision) technology and the modules can be Controlled remotely via ConsoleFlow™,

Lantronix’s Cloud SaaS platform.

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

functionality at the edge.

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, 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 embedded 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 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.

The following product families are included in our Embedded IoT Solutions

product line:

XPort®, XPort® Pro, WiPort®, System on Module (“SoM”), Single Board Computer (“SBC”),

Development Kits, MicroM110, xPico®, xPico® Wi-Fi, NICS, Optical SFPs, PremierWave® EN, and PremierWave® XC.

IoT System Solutions

The IoT Systems Solutions portfolio consists of fully functional standalone

systems that provider 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.

Most of our IoT System 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 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 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,

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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, 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’ 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.

Our 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.

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 3G, 4G, and LTE cellular

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’

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

Engineering Services

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 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

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,

all from a single platform login, virtually connected as though directly on each device.

Our platform eliminates the need to have 24/7

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

As Edge Computing deployment accelerates, REM allows for full comprehension

and control of a remote IT infrastructure, across a range of sensors (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 REM product line includes out-of-band management, console management,

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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.

following product families are included in IoT System Solutions product line:

EDS, EDS-MD, xPress™, xDirect®, E21x, E22x, G52x,

X30x, Bolero4x, FOX3-4G, FOX4, SGX™, SLB ™ , SLC ™ 8000, Spider ™ , UDS, EMG ™ .

S40 and Power over Ethernet Switches.

In addition, we offer

non-PoE Network Switches and Media Converters.

Software and Engineering Services

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, all

from a single platform login, virtually connected as though directly on each device.

Our platform eliminates the need to have 24/7 personnel

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

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.

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 such as;

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.

We also offer services for mechanical, hardware,

and software engineering for camera, audio, and artificial intelligence / machine learning development.

The following product families are included in our Software & Services

product line:

Engineering Services, ConsoleFlow™, Level Services and J-Integra.

Net Revenue by Product Line

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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.

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

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Manufacturing

Our manufacturing operations are primarily conducted through two third-party

Our manufacturing operations are primarily conducted through four 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 currently utilize Hana Microelectronics, primarily located in Thailand and China, Honortone, primarily located

in China, Ruby Tech in Taiwan, and Tailyn in China as our contract manufacturers for most of our products.

In 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

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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.

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 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.

As of August 16, 2022, we had 348 total employees including 335 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

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Vice President of Worldwide Sales

PICKLE joined Lantronix as its President and Chief Executive

Officer and as a member of its Board of Directors in April 2019.

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

PICKLE has served as our President and Chief Executive Officer,

and as a member of our Board, since April 2019.

Before joining Lantronix, 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 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

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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