LANTRONIX, INC. FORM 10-Q

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

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

For the transition period from _________ to _________.

Commission file number: 001-16027

LANTRONIX, INC.

(Exact name of registrant as specified in its charter)

Delaware	33-0362767
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

48 Discovery, Suite 250, Irvine, California

(Address of principal executive offices)

92618

(Zip Code)

(949) 453-3990

(Registrant’s telephone number, including area code)

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.0001 par value	LTRX	The Nasdaq Stock Market LLC

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

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

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

Large accelerated filer ☐		Accelerated filer ☒
Non-accelerated filer ☐		Smaller reporting company ☒
Emerging Growth Company ☐

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

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

As of May 1, 2025, there were 38,890,328 shares of the registrant’s common stock outstanding.

LANTRONIX, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED

MARCH 31, 2025

INDEX

		Page

	CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS	3

PART I.	FINANCIAL INFORMATION	4

Item 1.	Financial Statements	4

	Unaudited Condensed Consolidated Balance Sheets at March 31, 2025 and June 30, 2024	4

	Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended March 31, 2025 and 2024	5

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three and Nine Months Ended March 31, 2025 and 2024	6

	Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months Ended March 31, 2025 and 2024	7

	Notes to Unaudited Condensed Consolidated Financial Statements	8

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	34

Item 4.	Controls and Procedures	35

PART II.	OTHER INFORMATION	36

Item 1.	Legal Proceedings	36

Item 1A.	Risk Factors	36

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51

Item 3.	Defaults Upon Senior Securities	51

Item 4.	Mine Safety Disclosures	51

Item 5.	Other Information	51

Item 6.	Exhibits	51

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q for the three months ended March 31, 2025 (the “Report”) contains forward-looking statements within the meaning of the federal securities laws, which statements are subject to substantial risks and uncertainties. These forward-looking statements are intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact included in this Report, or incorporated by reference into this Report, are forward-looking statements. Throughout this Report, we have attempted to identify forward-looking statements by using words such as “may,” “believe,” “will,” “could,” “project,” “anticipate,” “expect,” “estimate,” “should,” “continue,” “potential,” “plan,” “forecasts,” “goal,” “seek,” “intend,” other forms of these words or similar words or expressions or the negative thereof. Additionally, statements concerning future matters such as our expected earnings, revenues, expenses and financial condition, our expectations with respect to the development of new products, our expectations regarding the benefits of our acquisition of Netcomm Wireless Pty Ltd, and other statements regarding matters that are not historical are forward-looking statements.

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

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

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

PART I. FINANCIAL INFORMATION

Item 1.

Financial Statements

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)


	March 31,			June 30,
	2025			2024
Assets
Current assets:
Cash and cash equivalents	$	19,999		$	26,237
Accounts receivable, net		23,648			31,279
Inventories, net		28,151			27,698
Contract manufacturers' receivables		1,637			1,401
Prepaid expenses and other current assets		3,029			2,335
Total current assets		76,464			88,950
Property and equipment, net		2,768			4,016
Goodwill		31,089			27,824
Intangible assets, net		4,310			5,251
Lease right-of-use assets		8,974			9,567
Other assets		584			600
Total assets	$	124,189		$	136,208

Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	11,005		$	10,347
Accrued payroll and related expenses		3,905			5,836
Current portion of long-term debt, net		3,063			3,002
Other current liabilities		10,594			10,971
Total current liabilities		28,567			30,156
Long-term debt, net		9,458			13,219
Other non-current liabilities		10,694			11,478
Total liabilities		48,719			54,853

Commitments and contingencies (Note 9)		–

Stockholders' equity:
Common stock		4			4
Additional paid-in capital		306,858			304,001
Accumulated deficit		(231,763	)		(223,021	)
Accumulated other comprehensive income		371			371
Total stockholders' equity		75,470			81,355
Total liabilities and stockholders' equity	$	124,189		$	136,208

See accompanying notes to unaudited condensed consolidated financial statements.

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)


	Three Months Ended						Nine Months Ended
	March 31,						March 31,
	2025			2024			2025			2024
Net revenue	$	28,500		$	41,183		$	94,084		$	111,252
Cost of revenue		16,097			24,679			53,922			65,620
Gross profit		12,403			16,504			40,162			45,632
Operating expenses:
Selling, general and administrative		8,959			9,753			27,237			29,147
Research and development		4,463			5,186			14,403			15,017
Restructuring, severance and related charges		1,581			350			2,674			900
Acquisition-related costs		100			–			337			–
Fair value remeasurement of earnout consideration		–			–			–			(9	)
Amortization of intangible assets		879			1,310			3,378			4,004
Total operating expenses		15,982			16,599			48,029			49,059
Loss from operations		(3,579	)		(95	)		(7,867	)		(3,427	)
Interest expense, net		(159	)		(171	)		(404	)		(741	)
Other income (expense), net		(19	)		2			(48	)		(2	)
Loss before income taxes		(3,757	)		(264	)		(8,319	)		(4,170	)
Provision for income taxes		111			159			423			732
Net loss	$	(3,868	)	$	(423	)	$	(8,742	)	$	(4,902	)

Net loss per share - basic and diluted	$	(0.10	)	$	(0.01	)	$	(0.23	)	$	(0.13	)

Weighted-average common shares - basic and diluted		38,820			37,509			38,493			37,283

See accompanying notes to unaudited condensed consolidated financial statements.

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)


	Three Months Ended March 31, 2025
											Accumulated
					Additional						Other		Total
	Common Stock				Paid-In			Accumulated			Comprehensive		Stockholders'
	Shares		Amount		Capital			Deficit			Income		Equity
Balance at December 31, 2024		38,788	$	4	$	305,433		$	(227,895	)	$	371		77,913
Shares issued pursuant to stock awards, net		102		–		–			–			–		–
Tax withholding paid on behalf of employees for restricted shares		–		–		(92	)		–			–		(92	)
Share-based compensation		–		–		1,517			–			–		1,517
Net loss		–		–		–			(3,868	)		–		(3,868	)
Balance at March 31, 2025		38,890	$	4	$	306,858		$	(231,763	)	$	371	$	75,470

	Three Months Ended March 31, 2024
											Accumulated
					Additional						Other		Total
	Common Stock				Paid-In			Accumulated			Comprehensive		Stockholders'
	Shares		Amount		Capital			Deficit			Income		Equity
Balance at December 31, 2023		37,476	$	4	$	299,385		$	(222,984	)	$	371	$	76,776
Shares issued pursuant to stock awards, net		103		–		22			–			–		22
Tax withholding paid on behalf of employees for restricted shares		–		–		(162	)		–			–		(162	)
Share-based compensation		–		–		1,872			–			–		1,872
Net loss		–		–		–			(423	)		–		(423	)
Balance at March 31, 2024		37,579	$	4	$	301,117		$	(223,407	)	$	371	$	78,085

	Nine Months Ended March 31, 2025
											Accumulated
					Additional						Other		Total
	Common Stock				Paid-In			Accumulated			Comprehensive		Stockholders'
	Shares		Amount		Capital			Deficit			Income		Equity
Balance at June 30, 2024		37,872	$	4	$	304,001		$	(223,021	)	$	371	$	81,355
Shares issued pursuant to stock awards, net		1,018		–		220			–			–		220
Tax withholding paid on behalf of employees for restricted shares		–		–		(1,993	)		–			–		(1,993	)
Share-based compensation		–		–		4,630			–			–		4,630
Net loss		–		–		–			(8,742	)		–		(8,742	)
Balance at March 31, 2025		38,890	$	4	$	306,858		$	(231,763	)	$	371	$	75,470

	Nine Months Ended March 31, 2024
											Accumulated
					Additional						Other		Total
	Common Stock				Paid-In			Accumulated			Comprehensive		Stockholders'
	Shares		Amount		Capital			Deficit			Income		Equity
Balance at June 30, 2023		36,875	$	4	$	295,686		$	(218,505	)	$	371	$	77,556
Shares issued pursuant to stock awards, net		704		–		522			–			–		522
Tax withholding paid on behalf of employees for restricted shares		–		–		(881	)		–			–		(881	)
Share-based compensation		–		–		5,790			–			–		5,790
Net loss		–		–		–			(4,902	)		–		(4,902	)
Balance at March 31, 2024		37,579	$	4	$	301,117		$	(223,407	)	$	371	$	78,085

See accompanying notes to unaudited condensed consolidated financial statements.

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)


	Nine Months Ended March 31,
	2025			2024
Operating activities
Net loss	$	(8,742	)	$	(4,902	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Share-based compensation		4,630			5,790
Depreciation and amortization		1,618			1,599
Amortization of intangible assets		3,378			4,004
Amortization of manufacturing profit in acquired inventory associated with acquisitions		44			696
Amortization of deferred debt issuance costs		35			83
Fair value remeasurement of earnout consideration		–			(9	)
Changes in operating assets and liabilities, net of assets and liabilities acquired:
Accounts receivable		7,631			(860	)
Inventories		300			8,488
Contract manufacturers’ receivables		(236	)		1,457
Prepaid expenses and other current assets		(694	)		76
Lease right-of-use assets		1,389			1,455
Other assets		16			(114	)
Accounts payable		650			1,390
Accrued payroll and related expenses		(1,972	)		2,108
Other liabilities		(1,814	)		(4,913	)
Net cash provided by operating activities		6,233			16,348
Investing activities
Purchases of property and equipment		(362	)		(1,325	)
Cash payment for acquisition		(6,458	)		–
Net cash used in investing activities		(6,820	)		(1,325	)
Financing activities
Net proceeds from issuances of common stock		220			522
Tax withholding paid on behalf of employees for restricted shares		(1,993	)		(881	)
Earnout consideration paid for acquisition		–			(1,262	)
Payment of borrowings on term loan		(3,735	)		(2,075	)
Payment of lease liabilities		(143	)		(137	)
Net cash used in financing activities		(5,651	)		(3,833	)
Increase (decrease) in cash and cash equivalents		(6,238	)		11,190
Cash and cash equivalents at beginning of period		26,237			13,452
Cash and cash equivalents at end of period	$	19,999		$	24,642

See accompanying notes to unaudited condensed consolidated financial statements.

LANTRONIX, INC.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2025

1.	Company and Significant Accounting Policies

Company

Lantronix, Inc., which we refer to herein as the Company, Lantronix, we, our, or us, is a global leader of compute and connectivity solutions, targeting high-growth markets such as Smart Cities, Automotive, and Enterprise markets. Our products and services empower companies to succeed in the growing internet of things (“IoT”) market by delivering customizable solutions that enable AI Edge Intelligence.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements of Lantronix have been prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Securities and Exchange Commission (“SEC”) Regulation S-X. Accordingly, they should be read in conjunction with the audited consolidated financial statements and notes thereto for the fiscal year ended June 30, 2024, included in our Annual Report on Form 10-K for the fiscal year ended June 30, 2024, which was filed with the SEC on September 9, 2024. The unaudited condensed consolidated financial statements contain all normal recurring accruals and adjustments that, in the opinion of management, are necessary to present fairly the consolidated financial position of Lantronix at March 31, 2025, the consolidated results of our operations for the three and nine months ended March 31, 2025 and our consolidated cash flows for the nine months ended March 31, 2025. All intercompany accounts and transactions have been eliminated.

Significant Accounting Policies

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Accounting measurements at interim dates inherently involve greater reliance on estimates than at year-end.

The results of operations for the three and nine months ended March 31, 2025 are not necessarily indicative of the results to be expected for the full year or any future interim periods.

Recent Accounting Pronouncements

Disaggregated Expenses Disclosures

In November 2024, the Financial Accounting Standards Board (“FASB”) issued final guidance requiring public business entities to disclose, on an annual and interim basis, disaggregated information about certain income statement expense line items. The required information includes purchases of inventory, employee compensation, depreciation, intangible asset amortization and depletion. The standard will be effective for Lantronix beginning with our annual financial statements for the fiscal year ending June 30, 2028. We are currently evaluating the impact that our adoption of this guidance will have on our consolidated financial statements.

Income Tax Disclosures

In December 2023, the FASB issued a final standard on improvements to income tax disclosures. The new standard requires disaggregated information about a company’s effective tax rate reconciliation and information on income taxes paid. The standard will be effective for Lantronix beginning with our annual financial statements for the fiscal year ending June 30, 2026. We are currently evaluating the impact that our adoption of this guidance will have on our consolidated financial statements.

Segment Disclosures

In November 2023, the FASB issued a new Accounting Standards Update (“ASU”) requiring incremental disclosures related to a public company’s reportable segments. The new guidance was issued primarily to provide financial statement users with more disaggregated expense information about a company’s reportable segments. The guidance does not change the definition of a segment, the method for determining segments, or the criteria for aggregating operating segments into reportable segments. The guidance is effective for Lantronix on a retrospective basis beginning with our annual financial statements for the fiscal year ending June 30, 2025. We do not anticipate its adoption to materially impact our financial statements.

2.	Revenue

Revenue is recognized upon the transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We apply the following five-step approach in determining the amount and timing of revenue to be recognized: (i) identifying the contract with a customer, (ii) identifying the performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the performance obligations in the contract and (v) recognizing revenue when the performance obligations are satisfied. On occasion we enter into contracts that can include various combinations of products and services, which are generally capable of being distinct and accounted for as separate performance obligations.

Revenue is recognized exclusive of (i) any taxes collected from customers, which are subsequently remitted to governmental authorities and (ii) shipping and handling costs collected from customers.

Products

Most of our product revenue is recognized as a distinct single performance obligation when products are tendered to a carrier for delivery, which represents the point in time that our customer obtains control of the promised products. A smaller portion of our product revenue is recognized when our customer receives delivery of the promised products.

A significant portion of our products are sold to distributors under agreements which contain (i) limited rights to return unsold products and (ii) price adjustment provisions, both of which are accounted for as variable consideration when estimating the amount of revenue to recognize. We base our estimates for returns and price adjustments primarily on historical experience; however, we also consider contractual allowances, approved pricing adjustments and other known or anticipated returns and price adjustments in a given period. Such estimates are generally made at the time of shipment to the customer and updated at the end of each reporting period as additional information becomes available and only to the extent that it is probable that a significant reversal of any incremental revenue will not occur. Our estimates of accrued variable consideration are included in other current liabilities in the accompanying unaudited condensed consolidated balance sheets.

Services

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

We prepay sales commissions related to certain of these contracts, which are incremental costs of obtaining the contract. We capitalize these costs and expense them ratably on a straight-line basis over the life of the contract. At March 31, 2025, prepaid sales commissions included in prepaid expenses and other current assets totaled $341,000 and those included in other assets totaled $135,000.

Engineering Services

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

	·	Time & Materials (“T&M”) – services consist of revenues from software modification, consulting implementation, training and integration services. These services are set forth separately in the contractual arrangements such that the total price of the customer arrangement is expected to vary depending on the actual time and materials incurred based on the customer’s needs.

	·	Fixed Price – arrangements to render specific consulting and software modification services which tend to be more complex.

Performance obligations for T&M contracts qualify for the “Right to Invoice” practical expedient within the revenue guidance. Under this practical expedient, we may recognize revenue, over time, in the amount to which we have a right to invoice. In addition, we are not required to estimate variable consideration upon inception of the contract and reassess the estimate each reporting period. We have determined that this method best represents the transfer of services as, upon billing, we have a right to consideration from a customer in an amount that directly corresponds with the value to the customer of our performance completed to date.

We recognize revenue on fixed price contracts, over time, using an input method based on the proportion of our actual costs incurred (generally labor hours expended) to the total costs expected to complete the contract performance obligation. We have determined that this method best represents the transfer of services as the proportion closely depicts the efforts or inputs completed towards the satisfaction of a fixed price contract performance obligation.

Multiple Performance Obligations

From time to time, we may enter into contracts with customers that include promises to transfer multiple deliverables that may include sales of products, professional engineering services and other product qualification or certification services. Determining whether the deliverables in such arrangements are considered distinct performance obligations that should be accounted for separately versus together often requires judgment. We consider performance obligations to be distinct when the customer can benefit from the promised good or service on its own or by combining it with other resources readily available and when the promised good or service is separately identifiable from other promised goods or services in the contract. In such arrangements, we allocate revenue on a relative standalone selling price basis by maximizing the use of observable inputs to determine the standalone selling price for each performance obligation.

Net Revenue by Product Line and Geographic Region

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

We conduct our business globally and manage our sales teams by three geographic regions: the Americas; Europe, Middle East, and Africa (“EMEA”); and Asia Pacific Japan (“APJ”).

The following tables present our net revenue by product line and by geographic region. We present net revenues by geographic region generally based on the “ship-to” location of our customers for product sales and the “bill-to” location for services.


	Three Months Ended March 31,				Nine Months Ended March 31,
	2025		2024		2025		2024
			(In thousands)
Embedded IoT Solutions	$	11,990	$	12,452	$	36,161	$	35,589
IoT System Solutions		14,730		26,789		52,081		68,847
Software & Services		1,780		1,942		5,842		6,816
	$	28,500	$	41,183	$	94,084	$	111,252

Revenue by geography:


	Three Months Ended March 31,				Nine Months Ended March 31,
	2025		2024		2025		2024
			(In thousands)
Americas	$	16,497	$	17,543	$	50,303	$	61,077
EMEA		6,048		18,354		25,568		37,831
Asia Pacific Japan		5,955		5,286		18,213		12,344
	$	28,500	$	41,183	$	94,084	$	111,252

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


	Three Months Ended March 31,				Nine Months Ended March 31,
	2025		2024		2025		2024

Product revenues		94%		96%		94%		94%
Service revenues		6%		4%		6%		6%

Service revenues are comprised primarily of professional services, software license subscriptions, and extended warranties.

Contract Balances

In certain instances, the timing of revenue recognition may differ from the timing of invoicing to our customers. We record a contract asset receivable when revenue is recognized prior to invoicing, and a contract or deferred revenue liability when revenue is recognized subsequent to invoicing. With respect to product shipments, we expect to fulfill contract obligations within one year and so we have elected not to separately disclose the amount nor the timing of recognition of these remaining performance obligations. For contract balances related to contracts that include services and multiple performance obligations, refer to the deferred revenue discussion below.

Deferred Revenue

Deferred revenue is primarily comprised of unearned revenue related to our extended warranty, support and maintenance services and certain software services. These services are generally invoiced at the beginning of the contract period and revenue is recognized ratably over the service period. Current and non-current deferred revenue balances represent revenue allocated to the remaining unsatisfied performance obligations at the end of a reporting period and are respectively included in other current liabilities and other non-current liabilities in the accompanying unaudited condensed consolidated balance sheets.

The following table presents the changes in our deferred revenue balance for the nine months ended March 31, 2025 (in thousands):


Balance, June 30, 2024	$	5,753
New performance obligations		2,344
Recognition of revenue from satisfying performance obligations		(3,422	)
Balance, March 31, 2025		4,675
Less: non-current portion of deferred revenue		2,285
Current portion, March 31, 2025	$	2,390

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

3.	Acquisition

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

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

Schedule of purchase consideration
Cash paid, including working capital adjustments	$	6,458
Total purchase consideration	$	6,458

We recorded the tangible and intangible assets and liabilities acquired based on their estimated fair values as of the Closing Date and allocated the remaining purchase consideration to goodwill. Our valuation assumptions of acquired assets and assumed liabilities require significant estimates, especially with respect to intangible assets. Updates to the valuation of certain assets acquired and liabilities assumed may result in changes to the recorded amounts of assets and liabilities, with corresponding adjustments to goodwill in subsequent periods. We expect to complete the purchase price allocation within 12 months of the Closing Date.

During the three months ended March 31, 2025, based on additional anal

SEC Form 10-Q filed by Lantronix Inc.