S
|
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
£
|
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF
1934
|
Delaware
|
|
33-0362767
|
(State
or other jurisdiction of incorporation or
organization)
|
|
(I.R.S.
Employer Identification
No.)
|
Title
of each class
|
|
Name of each exchange on
which registered
|
Common
Stock, $0.0001 par value
|
|
The NASDAQ Stock
Market LLC
|
Large
accelerated filer £
|
Accelerated
filer £
|
Non-accelerated
filed S
|
Page
|
||
PART
I
|
||
Item
1.
|
Business
|
4
|
Item
1A.
|
Risk
Factors
|
13
|
Item
1B.
|
Unresolved
Staff Comments
|
20
|
Item
2.
|
Properties
|
20
|
Item
3.
|
Legal
Proceedings
|
20
|
Item
4.
|
Submission
of Matters to a Vote of Security Holders
|
20
|
PART
II
|
||
Item
5.
|
Market
for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities
|
21
|
Item
6.
|
Selected
Financial Data
|
23
|
Item
7.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
24
|
Item
7A.
|
Quantitative
and Qualitative Disclosures About Market Risk
|
37
|
Item
8.
|
Financial
Statements and Supplementary Data
|
37
|
Item
9.
|
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
37
|
Item
9A.
|
Controls
and Procedures
|
37
|
Item
9B.
|
Other
Information
|
38
|
PART
III
|
||
Item
10.
|
Directors,
Executive Officers and Corporate Governance
|
38
|
Item
11.
|
Executive
Compensation
|
38
|
Item
12.
|
Security
Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters
|
38
|
Item
13.
|
Certain
Relationships and Related Transactions, and Director
Independence
|
39
|
Item
14.
|
Principal
Accountant Fees and Services
|
39
|
PART
IV
|
||
Item
15.
|
Exhibits
and Financial Statement Schedules
|
40
|
· |
Device
Enablement
-
We offer an array of embedded and external device enablement solutions
that enable integrators and manufacturers of electronic and
electro-mechanical products to add network connectivity, manageability
and
control. Our customers’ products originate from a wide variety of
applications within the M2M market, from blood analyzers that relay
critical patient information directly to a hospital’s information system,
to simple devices such as time clocks, allowing the user to obtain
information from these devices and to improve how they are managed
and
controlled. We also offer products such as multi-port devices servers
that
enable devices outside the data center to cost effectively share
the
network connection and convert various protocols to industry standard
interfaces such as Ethernet and the
Internet.
|
· |
Device
Management -We
offer off-the-shelf appliances such as console servers, digital remote
KVM
extenders, and power control products that enable IT professionals
to
remotely connect, monitor and control network infrastructure equipment,
distributed branch office equipment and large groups of servers using
highly secure out-of-band management technology. In addition, we
offer
off-the-shelf appliances that enable IT professionals to reliably,
remotely and simply monitor, configure and manage multiple devices
from a
single point of control.
|
· |
Non-core
-
Over the years, we have innovated or acquired various product lines
that
are no longer part of our primary, core markets described above.
In
general, these non-core businesses represent decreasing markets and
we
minimize research and development in these product lines. Included
in this
category are terminal servers, visualization solutions, legacy print
servers, software and other miscellaneous products. We have announced
the
end-of-life for almost all of our non-core products and expect a
steep
decline in non-core revenues in fiscal 2008 while we complete the
exit of
this product category.
|
Years
Ended June 30,
|
|||||||||||||
Product
Line
|
Primary
Product Function
|
2007
|
2006
|
2005
|
|||||||||
(In
thousands)
|
|||||||||||||
Device
enablement
|
Enable
electronic products to become network enabled.
|
$
|
39,734
|
$
|
35,419
|
$
|
29,979
|
||||||
Device
management
|
Allow
the user to control equipment by way of a network using a wide
range of
protocols. This category includes console servers and remote
digital
KVM.
|
8,866
|
7,676
|
7,753
|
|||||||||
Total
M2M device networking net revenues
|
48,600
|
43,095
|
37,732
|
||||||||||
Non-core
|
Includes
terminal servers, visualization solutions, legacy print servers,
serial
board, software and miscellaneous products.
|
6,706
|
8,848
|
10,770
|
|||||||||
Total
net revenues
|
$
|
55,306
|
$
|
51,943
|
$
|
48,502
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Top
five customers (1)
|
34.0
|
%
|
38.0
|
%
|
42.0
|
%
|
||||
Ingram
Micro
|
12.0
|
%
|
13.0
|
%
|
16.0
|
%
|
||||
Tech
Data
|
8.0
|
%
|
10.0
|
%
|
11.0
|
%
|
||||
Related
party
|
2.0
|
%
|
3.0
|
%
|
2.0
|
%
|
||||
(1)
Includes Ingram Micro and Tech Data.
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Americas
|
63.2
|
%
|
62.5
|
%
|
64.3
|
%
|
||||
EMEA
|
25.3
|
%
|
27.1
|
%
|
27.2
|
%
|
||||
Asia
Pacific
|
11.5
|
%
|
10.4
|
%
|
8.5
|
%
|
||||
Total
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Sales
and marketing
|
66
|
64
|
56
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(Dollars
in thousands)
|
||||||||||
Number
of employees
|
45
|
45
|
37
|
|||||||
Research
and development expenses
|
$
|
7,362
|
$
|
5,999
|
$
|
6,325
|
· |
product
quality, technological innovation, compatibility with standards
and
protocols, reliability, functionality, ease of use and
compatibility;
|
· |
product
pricing;
|
· |
potential
customers’ awareness and perception of our products and of
network-enabling technologies;
and
|
· |
the
customer’s decision to make vs.
buy.
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Research
and development
|
45
|
45
|
37
|
|||||||
Sales
and marketing
|
66
|
64
|
56
|
|||||||
Operations
|
21
|
21
|
24
|
|||||||
General
and administrative
|
29
|
27
|
27
|
|||||||
Total
employees
|
161
|
157
|
144
|
Name
|
Age
|
Position
|
|||||
Marc
H. Nussbaum
|
51
|
President and Chief Executive Officer | |||||
Reagan
Y. Sakai
|
48
|
Chief Financial Officer and Secretary |
· |
changes
in the mix of net revenues attributable to higher-margin and lower-margin
products;
|
· |
customers’
decisions to defer or accelerate orders;
|
· |
variations
in the size or timing of orders for our
products;
|
· |
changes
in demand for our products;
|
· |
fluctuations
in exchange rates;
|
· |
defects
and other product quality problems;
|
· |
loss
or gain of significant customers;
|
· |
short-term
fluctuations in the cost or availability of our critical
components;
|
· |
announcements
or introductions of new products by our
competitors;
|
· |
effects
of terrorist attacks in the U.S. and abroad;
and
|
· |
changes
in demand for devices that incorporate our
products.
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Top
five customers (1)
|
34.0
|
%
|
38.0
|
%
|
42.0
|
%
|
||||
Ingram
Micro
|
12.0
|
%
|
13.0
|
%
|
16.0
|
%
|
||||
Tech
Data
|
8.0
|
%
|
10.0
|
%
|
11.0
|
%
|
||||
Related
party
|
2.0
|
%
|
3.0
|
%
|
2.0
|
%
|
||||
(1)
Includes Ingram Micro and Tech Data.
|
· |
reduced
control over delivery schedules, quality assurance, manufacturing
yields
and production costs;
|
· |
lack
of guaranteed production capacity or product supply;
and
|
· |
reliance
on these manufacturers to maintain competitive manufacturing
technologies.
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Americas
|
63.2
|
%
|
62.5
|
%
|
64.3
|
%
|
||||
EMEA
|
25.3
|
%
|
27.1
|
%
|
27.2
|
%
|
||||
Asia
Pacific
|
11.5
|
%
|
10.4
|
%
|
8.5
|
%
|
||||
Total
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
· |
unexpected
changes in regulatory requirements, taxes, trade laws and
tariffs;
|
· |
reduced
protection for intellectual property rights in some
countries;
|
· |
differing
labor regulations;
|
· |
compliance
with a wide variety of complex regulatory
requirements;
|
· |
changes
in a country’s or region’s political or economic
conditions;
|
· |
effects
of terrorist attacks in the U.S. and
abroad;
|
· |
greater
difficulty in staffing and managing foreign operations;
and
|
· |
increased
financial accounting and reporting burdens and
complexities.
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Finished
goods
|
$
|
7,848
|
$
|
6,518
|
|||
Raw
materials
|
2,653
|
3,863
|
|||||
Inventory
at distributors
|
1,876
|
1,690
|
|||||
Large
scale integration chips *
|
1,530
|
731
|
|||||
Inventories,
gross
|
13,907
|
12,802
|
|||||
Reserve
for excess and obsolete inventory
|
(2,926
|
)
|
(4,689
|
)
|
|||
Inventories,
net
|
$
|
10,981
|
$
|
8,113
|
· |
be
time-consuming, costly and/or result in
litigation;
|
· |
divert
management’s time and attention from developing our
business;
|
· |
require
us to pay monetary damages, including treble damages if we are held
to
have willfully infringed;
|
· |
require
us to enter into royalty and licensing agreements that we would not
normally find acceptable;
|
· |
require
us to stop selling or to redesign certain of our products;
or
|
· |
require
us to satisfy indemnification obligations to our
customers.
|
· |
laws
and contractual restrictions might not be sufficient to prevent
misappropriation of our technology or deter others from developing
similar
technologies;
|
· |
other
companies might claim common law trademark rights based upon use
that
precedes the registration of our marks;
|
· |
other
companies might assert other rights to market products using our
trademarks;
|
· |
policing
unauthorized use of our products and trademarks is difficult, expensive
and time-consuming, and we might be unable to determine the extent
of this
unauthorized use;
|
· |
courts
may determine that our software programs use open source software
in such
a way that deprives the entire programs of intellectual property
protection; and
|
· |
current
federal laws that prohibit software copying provide only limited
protection from software pirates.
|
High
|
Low
|
||||||
Year
Ended June 30, 2007
|
|||||||
First
Quarter
|
$
|
2.13
|
$
|
1.29
|
|||
Second
Quarter
|
1.78
|
1.36
|
|||||
Third
Quarter
|
1.90
|
1.57
|
|||||
Fourth
Quarter
|
1.61
|
1.24
|
|||||
Year
Ended June 30, 2006
|
|||||||
First
Quarter
|
$
|
1.56
|
$
|
1.19
|
|||
Second
Quarter
|
1.67
|
1.26
|
|||||
Third
Quarter
|
2.57
|
1.64
|
|||||
Fourth
Quarter
|
2.77
|
1.98
|
Years
Ended June 30,
|
||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
Consolidated
Statement of Operations Data
|
(In
thousands, except per share data)
|
|||||||||||||||
Net
revenues (1)
|
$
|
55,306
|
$
|
51,943
|
$
|
48,502
|
$
|
48,885
|
$
|
49,389
|
||||||
Cost
of revenues (2)
|
26,964
|
25,276
|
24,326
|
25,026
|
36,264
|
|||||||||||
Gross
profit
|
28,342
|
26,667
|
24,176
|
23,859
|
13,125
|
|||||||||||
Operating
expenses:
|
||||||||||||||||
Selling,
general and administrative
|
23,243
|
24,203
|
24,770
|
23,599
|
29,734
|
|||||||||||
Research
and development
|
7,362
|
5,999
|
6,325
|
7,854
|
9,809
|
|||||||||||
Litigation
settlement costs
|
90
|
960
|
-
|
-
|
1,533
|
|||||||||||
Amortization
of purchased intangible assets
|
72
|
20
|
65
|
148
|
602
|
|||||||||||
Restructuring
(recovery) charge
|
-
|
(17
|
)
|
-
|
(2,093
|
)
|
5,600
|
|||||||||
Impairment
of goodwill and intangible assets
|
-
|
-
|
-
|
-
|
2,353
|
|||||||||||
Total
operating expenses
|
30,767
|
31,165
|
31,160
|
29,508
|
49,631
|
|||||||||||
Loss
from operations
|
(2,425
|
)
|
(4,498
|
)
|
(6,984
|
)
|
(5,649
|
)
|
(36,506
|
)
|
||||||
Interest
income (expense), net
|
(13
|
)
|
46
|
(20
|
)
|
50
|
248
|
|||||||||
Other
income, net
|
749
|
1,376
|
173
|
(5,333
|
)
|
(926
|
)
|
|||||||||
Loss
before income taxes and cumulative effect of accounting
changes
|
(1,689
|
)
|
(3,076
|
)
|
(6,831
|
)
|
(10,932
|
)
|
(37,184
|
)
|
||||||
Provision
(benefit) for income taxes
|
34
|
(31
|
)
|
229
|
(325
|
)
|
250
|
|||||||||
Loss
from continuing operations
|
(1,723
|
)
|
(3,045
|
)
|
(7,060
|
)
|
(10,607
|
)
|
(37,434
|
)
|
||||||
Income
(loss) from discontinued operations
|
-
|
-
|
56
|
(5,047
|
)
|
(10,115
|
)
|
|||||||||
Loss
before cumulative effect of accounting changes
|
(1,723
|
)
|
(3,045
|
)
|
(7,004
|
)
|
(15,654
|
)
|
(47,549
|
)
|
||||||
Cumulative
effect of accounting changes:
|
||||||||||||||||
Adoption
of new accounting standard SFAS No. 142
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Net
loss
|
$
|
(1,723
|
)
|
$
|
(3,045
|
)
|
$
|
(7,004
|
)
|
(15,654
|
) |
(47,549
|
) | |||
Basic
and diluted loss per share from continuing
|
||||||||||||||||
operations
before cumulative effect of accounting changes
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
(0.12
|
)
|
$
|
(0.19
|
)
|
$
|
(0.69
|
)
|
|
Income
(loss) from discontinued operations
|
-
|
-
|
-
|
(0.09
|
)
|
(0.19
|
)
|
|||||||||
Loss
before cumulative effect of accounting changes
|
(0.03
|
)
|
(0.05
|
)
|
(0.12
|
)
|
(0.28
|
)
|
(0.88
|
)
|
||||||
Cumulative
effect of accounting changes per share:
|
||||||||||||||||
Adoption
of new accounting standard SFAS No. 142
|
-
|
-
|
-
|
-
|
-
|
|||||||||||
Net
loss per share
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
(0.12
|
)
|
$
|
(0.28
|
)
|
$
|
(0.88
|
)
|
|
Weighted
average shares (basic and diluted)
|
59,603
|
58,702
|
58,202
|
56,862
|
54,329
|
|||||||||||
As
of June 30,
|
||||||||||||||||
2007
|
2006
|
2005
|
2004
|
2003
|
||||||||||||
Consolidated
Balance Sheet Data
|
(In
thousands)
|
|||||||||||||||
Cash
and cash equivalents
|
$
|
7,582
|
$
|
7,729
|
$
|
6,690
|
$
|
9,128
|
$
|
7,328
|
||||||
Marketable
securities
|
97
|
88
|
85
|
3,050
|
6,750
|
|||||||||||
Working
capital
|
5,587
|
5,372
|
7,824
|
12,087
|
17,312
|
|||||||||||
Goodwill
|
9,488
|
9,488
|
9,488
|
9,488
|
9,488
|
|||||||||||
Purchased
intangible assets, net
|
485
|
610
|
559
|
2,056
|
4,275
|
|||||||||||
Total
assets
|
35,958
|
47,815
|
30,368
|
37,250
|
54,947
|
|||||||||||
Long-term
capital lease obligations
|
142
|
211
|
51
|
-
|
867
|
|||||||||||
Accumulated
deficit
|
(168,173
|
)
|
(166,450
|
)
|
(163,082
|
)
|
(156,078
|
)
|
(140,424
|
)
|
||||||
Total
stockholders' equity
|
17,228
|
16,778
|
18,468
|
24,791
|
37,717
|
|||||||||||
(1)
Includes net revenues from related party
|
||||||||||||||||
(2)
Includes amortization of purchased intangible assets
|
· |
Net
revenues of $55.3 million for the fiscal year ended June 30, 2007
increased by $3.4 million or 6.5% as compared to $51.9 million
reported for the fiscal year ended June 30, 2006. The increase was
primarily the result of a $5.5 million or 12.8% increase in our M2M
device
networking product lines offset by a $2.1 million or 24.2% decrease
in our
non-core product lines.
|
· |
Gross
profit as a percentage of net revenues was 51.2% for the fiscal year
ended
June 30, 2007 as compared to 51.3% reported for the fiscal year ended
June
30, 2006.
|
· |
Loss
from operations as a percentage of net revenues was 4.4% for the
fiscal
year ended June 30, 2007 as compared to 8.7% for the fiscal year
ended
June 30, 2006.
|
· |
Net
loss of $1.7 million or $0.03 per diluted share, for the fiscal year
ended June 30, 2007 improved from a loss of $3.0 million, or
$0.05 per diluted share, for the fiscal year ended June 30,
2006.
|
· |
Cash,
cash equivalents and marketable securities decreased by $138,000
during
fiscal 2007 to $7.7 million. The decrease in cash, cash equivalents
and
marketable securities was primarily the result of an increase in
inventories and a net loss offset by an increase in our accounts
payable.
In addition, the change in our cash balances is significantly impacted
by
our cash management activities, which included the timing of cash
payments
to our vendors and the timing of cash receipts from our customers.
|
· |
Net
accounts receivable increased by $324,000 during fiscal 2007. Days
sales
outstanding (“DSO”) in receivables remained constant at 21 days as of
June 30, 2007 and 2006, respectively. Our accounts receivable and
DSO are
primarily affected by the timing of shipments within the quarter,
our
collections performance and the fact that a significant portion of
our net
revenues are recognized on a sell-through basis (upon shipment from
distributor inventories rather than as goods are shipped to distributors).
There can be no assurance that we will be able to maintain our DSO
ratios
consistent with historical trends and DSO ratios may increase in
the
future.
|
· |
Net
inventories were $11.0 million as of June 30, 2007 as compared to
$8.1 million as of June 30, 2006. The change in inventories was
primarily a result of an increase in (i) LSI chips, which are sold
individually and embedded in our products and (ii) incremental inventories
to support the launch of new products. Our annualized inventory turns
in
fiscal 2007 of 2.8 turns declined from the 3.4 turns in fiscal 2006.
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Net
revenues (1)
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||
Cost
of revenues (2)
|
48.8
|
%
|
48.7
|
%
|
50.2
|
%
|
||||
Gross
profit
|
51.2
|
%
|
51.3
|
%
|
49.8
|
%
|
||||
Operating
expenses:
|
||||||||||
Selling,
general and administrative
|
42.0
|
%
|
46.6
|
%
|
51.1
|
%
|
||||
Research
and development
|
13.3
|
%
|
11.5
|
%
|
13.0
|
%
|
||||
Litigation
settlement costs
|
0.2
|
%
|
1.8
|
%
|
0.0
|
%
|
||||
Amortization
of purchased intangible assets
|
0.1
|
%
|
0.0
|
%
|
0.1
|
%
|
||||
Restructuring
recovery
|
0.0
|
%
|
0.0
|
%
|
0.0
|
%
|
||||
Total
operating expenses
|
55.6
|
%
|
60.0
|
%
|
64.2
|
%
|
||||
Loss
from operations
|
(4.4
|
%)
|
(8.7
|
%)
|
(14.4
|
%)
|
||||
Interest
income (expense), net
|
(0.1
|
%)
|
0.2
|
%
|
(0.1
|
%)
|
||||
Other
income, net
|
1.4
|
%
|
2.6
|
%
|
0.4
|
%
|
||||
Loss
before income taxes
|
(3.1
|
%)
|
(5.9
|
%)
|
(14.1
|
%)
|
||||
Provision
(benefit) for income taxes
|
0.0
|
%
|
0.0
|
%
|
0.5
|
%
|
||||
Loss
from continuing operations
|
(3.1
|
%)
|
(5.9
|
%)
|
(14.6
|
%)
|
||||
Income
from discontinued operations
|
0.0
|
%
|
0.0
|
%
|
0.2
|
%
|
||||
Net
loss
|
(3.1
|
%)
|
(5.9
|
%)
|
(14.4
|
%)
|
||||
(1)
Includes net revenues from related party
|
||||||||||
(2)
Includes amortization of purchased intangible assets
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2007
|
Revenues
|
2006
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||
Device
enablement
|
$
|
39,734
|
71.9
|
%
|
$
|
35,419
|
68.2
|
%
|
$
|
4,315
|
12.2
|
%
|
|||||||
Device
management
|
8,866
|
16.0
|
%
|
7,676
|
14.8
|
%
|
1,190
|
15.5
|
%
|
||||||||||
M2M
device networking
|
48,600
|
87.9
|
%
|
43,095
|
83.0
|
%
|
5,505
|
12.8
|
%
|
||||||||||
Non-core
|
6,706
|
12.1
|
%
|
8,848
|
17.0
|
%
|
(2,142
|
)
|
(24.2
|
%)
|
|||||||||
Net
revenues
|
$
|
55,306
|
100.0
|
%
|
$
|
51,943
|
100.0
|
%
|
$
|
3,363
|
6.5
|
%
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2007
|
Revenues
|
2006
|
Revenues
|
$
|
%
|
||||||||||||||
(In thousands, except percentages) | |||||||||||||||||||
Americas
|
$
|
34,950
|
63.2
|
%
|
$
|
32,463
|
62.5
|
%
|
$
|
2,487
|
7.7
|
%
|
|||||||
EMEA
|
14,002
|
25.3
|
%
|
14,094
|
27.1
|
%
|
(92
|
)
|
(0.7
|
%)
|
|||||||||
Asia
Pacific
|
6,354
|
11.5
|
%
|
5,386
|
10.4
|
%
|
968
|
18.0
|
%
|
||||||||||
Net
revenues
|
$
|
55,306
|
100.0
|
%
|
$
|
51,943
|
100.0
|
%
|
$
|
3,363
|
6.5
|
%
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Top
five customers (1)
|
34.0
|
%
|
38.0
|
%
|
42.0
|
%
|
||||
Ingram
Micro
|
12.0
|
%
|
13.0
|
%
|
16.0
|
%
|
||||
Tech
Data
|
8.0
|
%
|
10.0
|
%
|
11.0
|
%
|
||||
Related
party
|
2.0
|
%
|
3.0
|
%
|
2.0
|
%
|
||||
(1)
Includes Ingram Micro and Tech Data.
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2007
|
Revenues
|
2006
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||
Gross
profit
|
$
|
28,342
|
51.2
|
%
|
$
|
26,667
|
51.3
|
%
|
$
|
1,675
|
6.3
|
%
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2007
|
Revenues
|
2006
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||
Personnel-related
expenses
|
$
|
12,522
|
$
|
11,200
|
$
|
1,322
|
11.8
|
%
|
|||||||||||
Professional
fees & outside services
|
2,704
|
5,382
|
(2,678
|
)
|
(49.8
|
%)
|
|||||||||||||
Advertising
and marketing
|
3,232
|
3,370
|
(138
|
)
|
(4.1
|
%)
|
|||||||||||||
Facilities
|
2,044
|
1,951
|
93
|
4.8
|
%
|
||||||||||||||
Share-based
compensation
|
922
|
736
|
186
|
25.3
|
%
|
||||||||||||||
Depreciation
|
288
|
322
|
(34
|
)
|
(10.6
|
%)
|
|||||||||||||
Other
|
1,531
|
1,242
|
289
|
23.3
|
%
|
||||||||||||||
Selling,
general and administrative
|
$
|
23,243
|
42.0
|
%
|
$
|
24,203
|
46.6
|
%
|
$
|
(960
|
)
|
(4.0
|
%)
|
Years
Ended June 30,
|
|
||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2007
|
Revenues
|
2006
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||
Personnel-related
expenses
|
$
|
5,315
|
$
|
4,358
|
$
|
957
|
22.0
|
%
|
|||||||||||
Facilities
|
667
|
579
|
88
|
15.2
|
%
|
||||||||||||||
Professional
fees & outside services
|
519
|
398
|
121
|
30.4
|
%
|
||||||||||||||
Share-based
compensation
|
378
|
255
|
123
|
48.2
|
%
|
||||||||||||||
Depreciation
|
41
|
47
|
(6
|
)
|
(12.8
|
%)
|
|||||||||||||
Other
|
442
|
362
|
80
|
22.1
|
%
|
||||||||||||||
Research
and development
|
$
|
7,362
|
13.3
|
%
|
$
|
5,999
|
11.5
|
%
|
$
|
1,363
|
22.7
|
%
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2007
|
Revenues
|
2006
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||
Litigation
settlement costs
|
$
|
90
|
0.2
|
%
|
$
|
960
|
1.8
|
%
|
$
|
(870
|
)
|
(90.6
|
%)
|
Years
Ended June 30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Class
Action and Synergetic
|
$
|
90
|
$
|
1,217
|
|||
Patent
infringement
|
-
|
165
|
|||||
Steve
Cotton settlement recovery
|
-
|
(422
|
)
|
||||
Total
litigation settlement costs
|
$
|
90
|
$
|
960
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2007
|
Revenues
|
2006
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except
percentages)
|
|||||||||||||||||||
Other
income, net
|
$
|
749
|
1.4
|
%
|
$
|
1,376
|
2.6
|
%
|
$
|
(627
|
)
|
(45.6
|
%)
|
Years
Ended June 30,
|
|||||||
2007
|
2006
|
||||||
Effective
tax rate
|
(2.0
|
%)
|
(1.0
|
%)
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2006
|
Revenues
|
2005
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except
percentages)
|
|||||||||||||||||||
Device
enablement
|
$
|
35,419
|
68.2
|
%
|
$
|
29,979
|
61.8
|
%
|
$
|
5,440
|
18.1
|
%
|
|||||||
Device
management
|
7,676
|
14.8
|
%
|
7,753
|
16.0
|
%
|
(77
|
)
|
(1.0
|
%)
|
|||||||||
M2M
device networking
|
43,095
|
83.0
|
%
|
37,732
|
77.8
|
%
|
5,363
|
14.2
|
%
|
||||||||||
Non-core
|
8,848
|
17.0
|
%
|
10,770
|
22.2
|
%
|
(1,922
|
)
|
(17.8
|
%)
|
|||||||||
Net
revenues
|
$
|
51,943
|
100.0
|
%
|
$
|
48,502
|
100.0
|
%
|
$
|
3,441
|
7.1
|
%
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2006
|
Revenues
|
2005
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||
Americas
|
$
|
32,463
|
62.5
|
%
|
$
|
31,162
|
64.3
|
%
|
$
|
1,301
|
4.2
|
%
|
|||||||
EMEA
|
14,094
|
27.1
|
%
|
13,213
|
27.2
|
%
|
881
|
6.7
|
%
|
||||||||||
Asia
Pacific
|
5,386
|
10.4
|
%
|
4,127
|
8.5
|
%
|
1,259
|
30.5
|
%
|
||||||||||
Net
revenues
|
$
|
51,943
|
100.0
|
%
|
$
|
48,502
|
100.0
|
%
|
$
|
3,441
|
7.1
|
%
|
Years
Ended June 30,
|
|||||||
2006
|
2005
|
||||||
Top
five customers (1)
|
38.0
|
%
|
42.0
|
%
|
|||
Ingram
Micro
|
13.0
|
%
|
16.0
|
%
|
|||
Tech
Data
|
10.0
|
%
|
11.0
|
%
|
|||
Related
party
|
3.0
|
%
|
2.0
|
%
|
|||
(1)
Includes Ingram Micro and Tech Data.
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2006
|
Revenues
|
2005
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except
percentages)
|
|||||||||||||||||||
Gross
profit
|
$
|
26,667
|
51.3
|
%
|
$
|
24,176
|
49.8
|
%
|
$
|
2,491
|
10.3
|
%
|
Years Ended June 30, | |||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2006
|
Revenues
|
2005
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||
Personnel-related
expenses
|
$
|
11,200
|
$
|
12,991
|
$
|
(1,791
|
)
|
(13.8
|
%)
|
||||||||||
Professional
fees & outside services
|
5,382
|
3,316
|
2,066
|
62.3
|
%
|
||||||||||||||
Advertising
and marketing
|
3,370
|
3,441
|
(71
|
)
|
(2.1
|
%)
|
|||||||||||||
Facilities
|
1,951
|
2,736
|
(785
|
)
|
(28.7
|
%)
|
|||||||||||||
Share-based
compensation
|
736
|
171
|
565
|
330.4
|
%
|
||||||||||||||
Depreciation
|
322
|
486
|
(164
|
)
|
(33.7
|
%)
|
|||||||||||||
Other
|
1,242
|
1,629
|
(387
|
)
|
(23.8
|
%)
|
|||||||||||||
Selling,
general and administrative
|
$
|
24,203
|
46.6
|
%
|
$
|
24,770
|
51.1
|
%
|
$
|
(567
|
)
|
(2.3
|
%)
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2006
|
Revenues
|
2005
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except percentages)
|
|||||||||||||||||||
Personnel-related
expenses
|
$
|
4,358
|
$
|
5,088
|
$
|
(730
|
)
|
(14.3
|
%)
|
||||||||||
Facilities
|
579
|
590
|
(11
|
)
|
(1.9
|
%)
|
|||||||||||||
Professional
fees & outside services
|
398
|
236
|
162
|
68.6
|
%
|
||||||||||||||
Share-based
compensation
|
255
|
-
|
255
|
-
|
|||||||||||||||
Depreciation
|
47
|
45
|
2
|
4.4
|
%
|
||||||||||||||
Other
|
362
|
366
|
(4
|
)
|
(1.1
|
%)
|
|||||||||||||
Research
and development
|
$
|
5,999
|
11.5
|
%
|
$
|
6,325
|
13.0
|
%
|
$
|
(326
|
)
|
(5.2
|
%)
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2006
|
Revenues
|
2005
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except
percentages)
|
|||||||||||||||||||
Litigation
settlement costs
|
$
|
960
|
1.8
|
%
|
$
|
-
|
0.0
|
%
|
$
|
960
|
0.0
|
%
|
Years
Ended June 30,
|
|||||||
2006
|
2005
|
||||||
(In
thousands)
|
|||||||
Class
Action and Synergetic
|
$
|
1,217
|
$
|
-
|
|||
Patent
infringement
|
165
|
-
|
|||||
Steve
Cotton settlement recovery
|
(422
|
)
|
-
|
||||
Total
litigation settlement costs
|
$
|
960
|
$
|
-
|
Years
Ended June 30,
|
|||||||||||||||||||
%
of Net
|
%
of Net
|
Change
|
|||||||||||||||||
2006
|
Revenues
|
2005
|
Revenues
|
$
|
%
|
||||||||||||||
(In
thousands, except
percentages)
|
|||||||||||||||||||
Other
income, net
|
$
|
1,376
|
2.6
|
%
|
$
|
173
|
0.4
|
%
|
$
|
1,203
|
(695.4
|
%)
|
Years
Ended June 30,
|
|||||||
2006
|
2005
|
||||||
Effective
tax rate
|
(1.0
|
%)
|
(3.4
|
%)
|
June
30,
|
Increase
|
|||||||||
2007
|
2006
|
(Decrease)
|
||||||||
(In
thousands)
|
||||||||||
Working
capital
|
$
|
5,587
|
$
|
5,372
|
$
|
215
|
||||
Cash
and cash equivalents
|
$
|
7,582
|
$
|
7,729
|
$
|
(147
|
)
|
|||
Marketable
securities
|
97
|
88
|
9
|
|||||||
Total
cash, cash equivalents and marketable securities
|
$
|
7,679
|
$
|
7,817
|
$
|
(138
|
)
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Available
borrowing capacity
|
$
|
3,462
|
$
|
2,221
|
|||
Outstanding
letters of credit
|
$
|
1,280
|
$
|
1,594
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Net
cash provided by (used in):
|
||||||||||
Net
loss
|
$
|
(1,723
|
)
|
$
|
(3,045
|
)
|
$
|
(7,004
|
)
|
|
Adjustments
to reconcile net loss to cash (used in) provided by operating
activities
|
1,291
|
1,396
|
2,626
|
|||||||
Changes
in operating assets and liabilities:
|
||||||||||
Accounts
receivable
|
(350
|
)
|
(166
|
)
|
141
|
|||||
Inventories
|
(2,881
|
)
|
(958
|
)
|
(315
|
)
|
||||
Contract
manufacturers' receivable
|
(221
|
)
|
(338
|
)
|
289
|
|||||
Prepaid
expenses and other current assets
|
7
|
11
|
843
|
|||||||
Other
assets
|
5
|
22
|
112
|
|||||||
Accounts
payable
|
3,152
|
3,161
|
650
|
|||||||
Accrued
payroll and related expenses
|
397
|
292
|
(303
|
)
|
||||||
Accrued
settlements
|
(400
|
)
|
(200
|
)
|
-
|
|||||
Warranty
reserve
|
(247
|
)
|
(555
|
)
|
(522
|
)
|
||||
Restructuring
reserve
|
(80
|
)
|
(167
|
)
|
(432
|
)
|
||||
Other
liabilities
|
58
|
620
|
(455
|
)
|
||||||
Net
cash (used in) provided by operating activities
|
(992
|
)
|
73
|
(4,370
|
)
|
|||||
Net
cash provided by investing activities
|
208
|
628
|
2,926
|
|||||||
Net
cash provided by (used in) financing activities
|
565
|
267
|
(910
|
)
|
||||||
Effect
of foreign exchange rate changes on cash
|
72
|
71
|
(84
|
)
|
||||||
Increase
(decrease) in cash and cash equivalents
|
$
|
(147
|
)
|
$
|
1,039
|
$
|
(2,438
|
)
|
Years
Ending June 30,
|
|||||||||||||||||||
2008
|
2009
|
2010
|
2011
|
2012
|
Total
|
||||||||||||||
(In
thousands)
|
|||||||||||||||||||
Purchase
obligations
|
$
|
7,432
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
7,432
|
|||||||
Accrued
settlements
|
1,068
|
-
|
-
|
-
|
-
|
1,068
|
|||||||||||||
Operating
leases
|
677
|
687
|
688
|
77
|
-
|
2,129
|
|||||||||||||
Capital
leases
|
143
|
133
|
28
|
2
|
-
|
306
|
|||||||||||||
Total
obligations and commitments
|
$
|
9,320
|
$
|
820
|
$
|
716
|
$
|
79
|
$
|
-
|
$
|
10,935
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Cash
and cash equivalents
|
$
|
7,582
|
$
|
7,729
|
|||
Marketable
securities
|
97
|
88
|
|||||
Total
cash, cash equivalents and marketable securities
|
$
|
7,679
|
$
|
7,817
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Cash
held in foreign currencies
|
$
|
2,042
|
$
|
2,554
|
· |
Information
regarding our directors is set forth under the proposal “Election of
Directors.”
|
· |
Information
regarding our Audit Committee and designated “audit committee financial
experts” is set forth under “Election
of Directors — Audit Committee.”
|
· |
Information
regarding Section 16(a) beneficial ownership reporting compliance is
set forth under "Other
Information — Section 16(a) Beneficial Ownership Reporting
Compliance.”
|
· |
Information
regarding procedures by which stockholders may recommend nominees
to our
board of directors is set forth under "Information Concerning Solicitation
and Voting —
Nomination
of Director Candidates."
|
|
|
Page
|
Report
of Independent Registered Public Accounting Firm, McGladrey & Pullen,
LLP
|
|
F-1
|
Consolidated
Balance Sheets as of June 30, 2007 and 2006
|
|
F-2
|
Consolidated
Statements of Operations for the fiscal years ended June 30, 2007,
2006
and 2005
|
|
F-3
|
Consolidated
Statements of Stockholders’ Equity for the fiscal years ended June 30,
2007, 2006 and 2005
|
|
F-4
|
Consolidated
Statements of Cash Flows for the fiscal years ended June 30, 2007,
2006
and 2005
|
|
F-5
|
Notes
to Consolidated Financial Statements
|
|
F-6 - F-29
|
PAGE | |
(1) Schedule II-Consolidated Valuation and Qualifying Accounts | S-1 |
June
30,
|
June
30,
|
||||||
2007
|
2006
|
||||||
ASSETS
|
|||||||
Current
Assets:
|
|||||||
Cash
and cash equivalents
|
$
|
7,582
|
$
|
7,729
|
|||
Marketable
securities
|
97
|
88
|
|||||
Accounts
receivable (net of allowance for doubtful accounts of
|
|||||||
$105
and $84 at June 30, 2007 and 2006, respectively)
|
3,411
|
3,087
|
|||||
Inventories,
net
|
10,981
|
8,113
|
|||||
Contract
manufacturers' receivable
|
1,270
|
1,049
|
|||||
Settlements
recovery
|
-
|
15,325
|
|||||
Prepaid
expenses and other current assets
|
578
|
577
|
|||||
Total
current assets
|
23,919
|
35,968
|
|||||
Property
and equipment, net
|
1,911
|
1,589
|
|||||
Goodwill
|
9,488
|
9,488
|
|||||
Purchased
intangible assets, net
|
485
|
610
|
|||||
Officer
loans (net of allowance of $3,115 at June 30, 2007 and
2006)
|
129
|
122
|
|||||
Other
assets
|
26
|
38
|
|||||
Total
assets
|
$
|
35,958
|
$
|
47,815
|
|||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|||||||
Current
Liabilities:
|
|||||||
Accounts
payable
|
$
|
11,017
|
$
|
7,865
|
|||
Accrued
payroll and related expenses
|
1,993
|
1,596
|
|||||
Warranty
reserve
|
446
|
693
|
|||||
Restructuring
reserve
|
-
|
80
|
|||||
Accrued
settlements
|
1,068
|
16,767
|
|||||
Other
current liabilities
|
3,808
|
3,595
|
|||||
Total
current liabilities
|
18,332
|
30,596
|
|||||
Long-term
liabilities
|
256
|
230
|
|||||
Long-term
capital lease obligations
|
142
|
211
|
|||||
Commitments
and contingencies
|
|||||||
Stockholders'
equity:
|
|||||||
Preferred
stock, $0.0001 par value; 5,000,000 shares authorized;
|
|||||||
none
issued and outstanding
|
-
|
-
|
|||||
Common
stock, $0.0001 par value; 200,000,000 shares authorized;
|
|||||||
59,879,488
and 59,204,172 shares issued and outstanding at
|
|||||||
June
30, 2007 and 2006, respectively
|
6
|
6
|
|||||
Additional
paid-in capital
|
184,953
|
182,857
|
|||||
Accumulated
deficit
|
(168,173
|
)
|
(166,450
|
)
|
|||
Accumulated
other comprehensive income
|
442
|
365
|
|||||
Total
stockholders' equity
|
17,228
|
16,778
|
|||||
Total
liabilities and stockholders' equity
|
$
|
35,958
|
$
|
47,815
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Net
revenues (1)
|
$
|
55,306
|
$
|
51,943
|
$
|
48,502
|
||||
Cost
of revenues (2)
|
26,964
|
25,276
|
24,326
|
|||||||
Gross
profit
|
28,342
|
26,667
|
24,176
|
|||||||
Operating
expenses:
|
||||||||||
Selling,
general and administrative
|
23,243
|
24,203
|
24,770
|
|||||||
Research
and development
|
7,362
|
5,999
|
6,325
|
|||||||
Litigation
settlement costs
|
90
|
960
|
-
|
|||||||
Amortization
of purchased intangible assets
|
72
|
20
|
65
|
|||||||
Restructuring
recovery
|
-
|
(17
|
)
|
-
|
||||||
Total
operating expenses
|
30,767
|
31,165
|
31,160
|
|||||||
Loss
from operations
|
(2,425
|
)
|
(4,498
|
)
|
(6,984
|
)
|
||||
Interest
income (expense), net
|
(13
|
)
|
46
|
(20
|
)
|
|||||
Other
income, net
|
749
|
1,376
|
173
|
|||||||
Loss
before income taxes
|
(1,689
|
)
|
(3,076
|
)
|
(6,831
|
)
|
||||
Provision
(benefit) for income taxes
|
34
|
(31
|
)
|
229
|
||||||
Loss
from continuing operations
|
(1,723
|
)
|
(3,045
|
)
|
(7,060
|
)
|
||||
Income
from discontinued operations
|
-
|
-
|
56
|
|||||||
Net
loss
|
$
|
(1,723
|
)
|
$
|
(3,045
|
)
|
$
|
(7,004
|
)
|
|
Net
loss per share (basic and diluted):
|
||||||||||
Loss
from continuing operations
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
(0.12
|
)
|
|
Income
from discontinued operations
|
-
|
-
|
-
|
|||||||
Net
loss per share
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
(0.12
|
)
|
|
Weighted
average shares (basic and diluted)
|
59,603
|
58,702
|
58,202
|
|||||||
(1)
Includes net revenues from related party
|
$
|
1,073
|
$
|
1,376
|
$
|
1,136
|
||||
(2)
Includes amortization of purchased intangible assets
|
$
|
16
|
$
|
570
|
$
|
1,432
|
Accumulated
|
|||||||||||||||||||||
Additional
|
Other
|
Total
|
|||||||||||||||||||
Comon
Stock
|
Paid-In
|
Deferred
|
Accumulated
|
Comprehensive
|
Stockholders'
|
||||||||||||||||
Shares
|
Amount
|
Capital
|
Compensation
|
Deficit
|
Income
|
Equity
|
|||||||||||||||
Balance
at June 30, 2004
|
58,154,747
|
$
|
6
|
$
|
180,712
|
$
|
(103
|
)
|
$
|
(156,078
|
)
|
$
|
254
|
$
|
24,791
|
||||||
Stock
options exercised
|
281,862
|
-
|
193
|
-
|
-
|
-
|
193
|
||||||||||||||
Employee
stock purchase plan
|
353,804
|
-
|
275
|
-
|
-
|
-
|
275
|
||||||||||||||
Share-based
compensation
|
-
|
-
|
84
|
86
|
-
|
-
|
170
|
||||||||||||||
Components
of comprehensive loss:
|
|||||||||||||||||||||
Translation
adjustment
|
-
|
-
|
-
|
-
|
-
|
(42
|
)
|
(42
|
)
|
||||||||||||
Change
in net unrealized income on investment
|
-
|
-
|
-
|
-
|
-
|
85
|
85
|
||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(7,004
|
)
|
-
|
(7,004
|
)
|
||||||||||||
Comprehensive
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(6,961
|
)
|
|||||||||||||
Balance
at June 30, 2005
|
58,790,413
|
6
|
181,264
|
(17
|
)
|
(163,082
|
)
|
297
|
18,468
|
||||||||||||
Stock
options exercised
|
261,293
|
-
|
203
|
-
|
-
|
-
|
203
|
||||||||||||||
Employee
stock purchase plan
|
266,453
|
-
|
240
|
-
|
-
|
-
|
240
|
||||||||||||||
Deferred
compensation net
|
-
|
-
|
(17
|
)
|
17
|
-
|
-
|
-
|
|||||||||||||
Share-based
compensation
|
-
|
-
|
1,091
|
-
|
-
|
-
|
1,091
|
||||||||||||||
Synergetics
settlement
|
84,053
|
-
|
175
|
-
|
-
|
-
|
175
|
||||||||||||||
Cotton
settlement
|
(198,040
|
)
|
-
|
(99
|
)
|
-
|
(323
|
)
|
-
|
(422
|
)
|
||||||||||
Components
of comprehensive loss:
|
|||||||||||||||||||||
Translation
adjustment
|
-
|
-
|
-
|
-
|
-
|
65
|
65
|
||||||||||||||
Change
in net unrealized income
on investment
|
-
|
-
|
-
|
-
|
-
|
3
|
3
|
||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(3,045
|
)
|
-
|
(3,045
|
)
|
||||||||||||
Comprehensive
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(2,977
|
)
|
|||||||||||||
Balance
at June 30, 2006
|
59,204,172
|
6
|
182,857
|
-
|
(166,450
|
)
|
365
|
16,778
|
|||||||||||||
Stock
options exercised
|
344,393
|
-
|
346
|
-
|
-
|
-
|
346
|
||||||||||||||
Employee
stock purchase plan
|
330,923
|
-
|
361
|
-
|
-
|
-
|
361
|
||||||||||||||
Share-based
compensation
|
-
|
-
|
1,389
|
-
|
-
|
-
|
1,389
|
||||||||||||||
Components
of comprehensive loss:
|
|||||||||||||||||||||
Translation
adjustment
|
-
|
-
|
-
|
-
|
-
|
68
|
68
|
||||||||||||||
Change
in net unrealized income
on investment
|
-
|
-
|
-
|
-
|
-
|
9
|
9
|
||||||||||||||
Net
loss
|
-
|
-
|
-
|
-
|
(1,723
|
)
|
-
|
(1,723
|
)
|
||||||||||||
Comprehensive
loss
|
-
|
-
|
-
|
-
|
-
|
-
|
(1,646
|
)
|
|||||||||||||
Balance
at June 30, 2007
|
59,879,488
|
$
|
6
|
$
|
184,953
|
$
|
-
|
$
|
(168,173
|
)
|
$
|
442
|
$
|
17,228
|
Years
Ended June 30,
|
||||||||||
Cash
flows from operating activities:
|
2007
|
2006
|
2005
|
|||||||
Net
loss
|
$
|
(1,723
|
)
|
$
|
(3,045
|
)
|
$
|
(7,004
|
)
|
|
Adjustments
to reconcile net loss to net cash provided by (used in) operating
activities:
|
||||||||||
Share-based
compensation
|
1,389
|
1,091
|
171
|
|||||||
Gain
on sale of long-term investment
|
(700
|
)
|
(1,300
|
)
|
-
|
|||||
Depreciation
|
386
|
424
|
611
|
|||||||
Provision
(recovery) for inventories
|
13
|
(327
|
)
|
163
|
||||||
Litigation
settlement costs
|
90
|
960
|
-
|
|||||||
Amortization
of purchased intangible assets
|
87
|
590
|
1,497
|
|||||||
Provision
(recovery) for doubtful accounts
|
26
|
(24
|
)
|
140
|
||||||
Restructuring
recovery
|
-
|
(17
|
)
|
(56
|
)
|
|||||
(Gain)
loss on disposal of fixed assets
|
-
|
(1
|
)
|
22
|
||||||
Foreign
currency transaction gain
|
-
|
-
|
78
|
|||||||
Changes
in operating assets and liabilities:
|
||||||||||
Accounts
receivable
|
(350
|
)
|
(166
|
)
|
141
|
|||||
Inventories
|
(2,881
|
)
|
(958
|
)
|
(315
|
)
|
||||
Contract
manufacturers' receivable
|
(221
|
)
|
(338
|
)
|
289
|
|||||
Prepaid
expenses and other current assets
|
7
|
11
|
843
|
|||||||
Other
assets
|
5
|
22
|
112
|
|||||||
Accounts
payable
|
3,152
|
3,161
|
650
|
|||||||
Accrued
payroll and related expenses
|
397
|
292
|
(303
|
)
|
||||||
Accrued
settlements
|
(400
|
)
|
(200
|
)
|
-
|
|||||
Warranty
reserve
|
(247
|
)
|
(555
|
)
|
(522
|
)
|
||||
Restructuring
reserve
|
(80
|
)
|
(167
|
)
|
(432
|
)
|
||||
Other
liabilities
|
58
|
620
|
(455
|
)
|
||||||
Net
cash (used in) provided by operating activities
|
(992
|
)
|
73
|
(4,370
|
)
|
|||||
Cash
flows from investing activities:
|
||||||||||
Purchases
of property and equipment, net
|
(492
|
)
|
(672
|
)
|
(124
|
)
|
||||
Proceeds
from sale of long-term investment
|
700
|
1,300
|
-
|
|||||||
Proceeds
from sale of marketable securities
|
-
|
-
|
4,050
|
|||||||
Purchases
of marketable securities
|
-
|
-
|
(1,000
|
)
|
||||||
Net
cash provided by investing activities
|
208
|
628
|
2,926
|
|||||||
Cash
flows from financing activities:
|
||||||||||
Net
proceeds from issuances of common stock
|
707
|
443
|
468
|
|||||||
Payment
of capital lease obligations
|
(142
|
)
|
(176
|
)
|
(11
|
)
|
||||
Payment
of convertible note payable
|
-
|
-
|
(867
|
)
|
||||||
Payment
of line of credit
|
-
|
-
|
(500
|
)
|
||||||
Net
cash provided by (used in) financing activities
|
565
|
267
|
(910
|
)
|
||||||
Effect
of foreign exchange rate changes on cash
|
72
|
71
|
(84
|
)
|
||||||
Increase
(decrease) in cash and cash equivalents
|
(147
|
)
|
1,039
|
(2,438
|
)
|
|||||
Cash
and cash equivalents at beginning of period
|
7,729
|
6,690
|
9,128
|
|||||||
Cash
and cash equivalents at end of period
|
$
|
7,582
|
$
|
7,729
|
$
|
6,690
|
||||
Supplemental
disclosure of cash flow information:
|
||||||||||
Interest
paid
|
$
|
136
|
$
|
30
|
$
|
85
|
||||
Income
taxes (refunded) paid
|
$
|
30
|
$
|
(23
|
)
|
$
|
179
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Hardware
|
99.2%
|
|
98.9%
|
|
99.0%
|
|
||||
Non-hardware
|
0.8%
|
|
1.1%
|
|
1.0%
|
|
||||
Total
net revenues
|
100.0%
|
|
100.0%
|
|
100.0%
|
|
Year
Ended
|
||||
June
30, 2005
|
||||
(In
thousands,
|
||||
except
per share data)
|
||||
Net
loss - as reported
|
$
|
(7,004
|
)
|
|
Add:
Share-based employee compensation expense included
|
||||
in
net loss, net of related tax effects - as reported
|
171
|
|||
Deduct:
Share-based employee compensation expense determined
|
||||
under
fair value method, net of related tax effects - pro forma
|
(1,186
|
)
|
||
Net
loss - pro forma
|
$
|
(8,019
|
)
|
|
Net
loss per share (basic and diluted) - as reported
|
$
|
(0.12
|
)
|
|
Net
loss per share (basic and diluted) - pro forma
|
$
|
(0.14
|
)
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Finished
goods
|
$
|
7,848
|
$
|
6,518
|
|||
Raw
materials
|
2,653
|
3,863
|
|||||
Inventory
at distributors
|
1,876
|
1,690
|
|||||
Large
scale integration chips *
|
1,530
|
731
|
|||||
Inventories,
gross
|
13,907
|
12,802
|
|||||
Reserve
for excess and obsolete inventory
|
(2,926
|
)
|
(4,689
|
)
|
|||
Inventories,
net
|
$
|
10,981
|
$
|
8,113
|
|||
*
This item is both sold individually and embedded into the Company's
products.
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Computer
and office equipment
|
$
|
2,639
|
$
|
6,572
|
|||
Furniture
and fixtures
|
1,069
|
1,100
|
|||||
Production
and warehouse equipment
|
854
|
621
|
|||||
Construction-in-progress
|
78
|
859
|
|||||
Property
and equipment, gross
|
4,640
|
9,152
|
|||||
Less
accumulated depreciation
|
(2,729
|
)
|
(7,563
|
)
|
|||
Property
and equipment, net
|
$
|
1,911
|
$
|
1,589
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Property
and equipment
|
$
|
413
|
$
|
516
|
|||
Less
accumulated depreciation
|
(122
|
)
|
(169
|
)
|
|||
Total
|
$
|
291
|
$
|
347
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Capitalized
internal use software
|
$
|
728
|
$
|
410
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Depreciation
of capitalized internal use software
|
$
|
89
|
$
|
32
|
$
|
64
|
June
30, 2007
|
June
30, 2006
|
|||||||||||||||||||||
Useful
|
||||||||||||||||||||||
Lives
|
Accumulated
|
Accumulated
|
||||||||||||||||||||
in
Years
|
Gross
|
Amortization
|
Net
|
Gross
|
Amortization
|
Net
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||
Existing
technology
|
1
- 5
|
$
|
7,259
|
$
|
(7,119
|
)
|
$
|
140
|
$
|
7,297
|
$
|
(7,103
|
)
|
$
|
194
|
|||||||
Patent/core
technology
|
6
|
839
|
(494
|
)
|
345
|
839
|
(423
|
)
|
416
|
|||||||||||||
Total
purchased intangible assets
|
$
|
8,098
|
$
|
(7,613
|
)
|
$
|
485
|
$
|
8,136
|
$
|
(7,526
|
)
|
$
|
610
|
Years
Ended June 30,
|
||||||||||||||||||||||
2008
|
2009
|
2010
|
2011
|
2012
|
2013
|
Total
|
||||||||||||||||
(In
thousands)
|
||||||||||||||||||||||
Amount
remaining to be amortized
|
$
|
141
|
$
|
73
|
$
|
73
|
$
|
73
|
$
|
73
|
$
|
52
|
$
|
485
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Beginning
balance
|
$
|
693
|
$
|
1,248
|
|||
Charged
(recovered) to cost of revenues
|
107
|
(35
|
)
|
||||
Usage
|
(354
|
)
|
(520
|
)
|
|||
Ending
balance
|
$
|
446
|
$
|
693
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Accrued
settlements:
|
|||||||
Class
Action and Synergetic
|
$
|
1,068
|
$
|
15,167
|
|||
Derivative
|
-
|
1,200
|
|||||
Patent
infringement
|
-
|
400
|
|||||
Total
accrued settlements
|
1,068
|
16,767
|
|||||
Settlements
recovery:
|
|||||||
Class
Action and Synergetic
|
-
|
14,125
|
|||||
Derivative
|
-
|
1,200
|
|||||
Total
settlements recovery
|
-
|
15,325
|
|||||
Direct
settlement obligations of the Company
|
$
|
1,068
|
$
|
1,442
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Class
Action and Synergetic
|
$
|
90
|
$
|
1,217
|
$
|
-
|
||||
Patent
infringement
|
-
|
165
|
-
|
|||||||
Steve
Cotton settlement recovery
|
-
|
(422
|
)
|
-
|
||||||
Total
litigation settlement costs
|
$
|
90
|
$
|
960
|
$
|
-
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Current
|
|||||||
Customer
deposits and refunds
|
$
|
1,187
|
$
|
1,274
|
|||
ERP
implementation costs
|
500
|
364
|
|||||
Taxes
payable
|
241
|
320
|
|||||
Insurance
payable
|
264
|
198
|
|||||
Deferred
revenue
|
155
|
155
|
|||||
Short-term
capital lease obligations
|
136
|
129
|
|||||
Reimbursable
legal expense
|
138
|
-
|
|||||
Other
|
1,187
|
1,155
|
|||||
Total
other current liabilities
|
$
|
3,808
|
$
|
3,595
|
|||
Long-term
|
|||||||
Deferred
revenue
|
$
|
128
|
$
|
117
|
|||
Other
|
128
|
113
|
|||||
Total
other long-term liabilities
|
$
|
256
|
$
|
230
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Advertising
expenses
|
$
|
862
|
$
|
888
|
$
|
1,191
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Interest
expense
|
$
|
136
|
$
|
29
|
$
|
78
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands, except per share data)
|
||||||||||
Numerator:
|
||||||||||
Loss
from continuing operations
|
$
|
(1,723
|
)
|
$
|
(3,045
|
)
|
$
|
(7,060
|
)
|
|
Income
from discontinued operations
|
-
|
-
|
56
|
|||||||
Net
loss
|
$
|
(1,723
|
)
|
$
|
(3,045
|
)
|
$
|
(7,004
|
)
|
|
Denominator:
Weighted-average shares outstanding
|
59,603
|
59,034
|
58,534
|
|||||||
Less:
Unvested common shares outstanding
|
-
|
(332
|
)
|
(332
|
)
|
|||||
Denominator
for net loss per share (basic and diluted)
|
59,603
|
58,702
|
58,202
|
|||||||
Net
loss per share (basic and diluted):
|
||||||||||
Loss
from continuing operations
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
(0.12
|
)
|
|
Income
from discontinued operations
|
-
|
-
|
-
|
|||||||
Net
loss per share
|
$
|
(0.03
|
)
|
$
|
(0.05
|
)
|
$
|
(0.12
|
)
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Common
stock equivalents
|
2,605,689
|
2,656,221
|
2,297,323
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Non-cash
acquisition of property and equipment
|
$
|
216
|
$
|
666
|
$
|
214
|
||||
Common
stock consideration for settlement of Synergetics claims
|
-
|
175
|
-
|
|||||||
Tenant
leasehold improvements
|
-
|
-
|
98
|
Gross
Unrealized
|
Fair
|
||||||||||||
Cost
|
Gains
|
Losses
|
Value
|
||||||||||
June
30, 2007
|
(In
thousands)
|
||||||||||||
Publicly
traded equity securities
|
$
|
-
|
$
|
97
|
$
|
-
|
$
|
97
|
|||||
June
30, 2006
|
|||||||||||||
Publicly
traded equity securities
|
$
|
-
|
$
|
88
|
$
|
-
|
$
|
88
|
Consolidation
|
||||
of
Excess
|
||||
Facilities
|
||||
Restructuring
liabilities at June 30, 2004
|
$
|
752
|
||
Restructuring
activity included in discontinued operations
|
(56
|
)
|
||
Cash
payments
|
(432
|
)
|
||
Restructuring
liabilities at June 30, 2005
|
264
|
|||
Reversal
of restructuring liabilities
|
(17
|
)
|
||
Cash
payments
|
(167
|
)
|
||
Restructuring
liabilities at June 30, 2006
|
80
|
|||
Cash
payments
|
(80
|
)
|
||
Restructuring
liabilities at June 30, 2007
|
$
|
-
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Available
borrowing capacity
|
$
|
3,462
|
$
|
2,221
|
|||
Outstanding
letters of credit
|
$
|
1,280
|
$
|
1,594
|
June
30, 2007
|
||||
Shares
|
||||
Authorized
|
||||
for
Grant
|
||||
2000
Stock Plan (“2000 Plan”)
|
14,000,000
|
|||
2000
Employee Stock Purchase Plan (“ESPP”)
|
2,400,000
|
|||
Total
shares authorized for grant
|
16,400,000
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Cost
of revenues
|
$
|
89
|
$
|
100
|
$
|
-
|
||||
Selling,
general and administrative
|
922
|
736
|
160
|
|||||||
Research
and development
|
378
|
255
|
11
|
|||||||
Total
share-based compensation
|
$
|
1,389
|
$
|
1,091
|
$
|
171
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Stock
option
|
$
|
1,095
|
$
|
919
|
$
|
171
|
||||
ESPP
|
294
|
172
|
-
|
|||||||
Total
share-based compensation
|
$
|
1,389
|
$
|
1,091
|
$
|
171
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Expected
term (in years)
|
6.23
|
6.23
|
4.00
|
|||||||
Expected
volatility
|
0.89
|
0.93
|
0.97
|
|||||||
Risk-free
interest rate
|
4.67
|
%
|
4.57
|
%
|
3.57
|
%
|
||||
Dividend
yield
|
0.00
|
%
|
0.00
|
%
|
0.00
|
%
|
Weighted-Average
|
||||||||||||||||
Shares
|
Remaining
|
Aggregate
|
||||||||||||||
Available
for
|
Number
of
|
Exercise
|
Contractual
|
Intrinsic
|
||||||||||||
Grant
|
Shares
|
Price
|
Term
|
Value
|
||||||||||||
(In
thousands, except per share data)
|
||||||||||||||||
Balance
at June 30, 2006
|
5,803,076
|
5,467,753
|
$
|
1.62
|
||||||||||||
Additional
shares reserved
|
2,000,000
|
-
|
-
|
|||||||||||||
Options
granted
|
(1,306,537
|
)
|
1,306,537
|
1.62
|
||||||||||||
Options
forfeited
|
473,819
|
(473,819
|
)
|
1.69
|
||||||||||||
Options
expired
|
64,182
|
(64,182
|
)
|
1.57
|
||||||||||||
Options
exercised
|
-
|
(344,393
|
)
|
1.01
|
||||||||||||
Balance
at June 30, 2007
|
7,034,540
|
5,891,896
|
$
|
1.65
|
7.0
|
$
|
1,377
|
|||||||||
Vested
or expected to vest at June 30, 2007
|
5,549,388
|
$
|
1.65
|
6.9
|
$
|
1,372
|
||||||||||
Options
exercisable at June 30, 2007
|
3,719,154
|
$
|
1.64
|
5.9
|
$
|
1,303
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands, except per share data)
|
||||||||||
Weighted-average
grant-date fair value per share
|
$
|
1.25
|
$
|
1.63
|
$
|
0.80
|
||||
Grant-date
fair value of shares vested
|
$
|
1,018
|
$
|
783
|
$
|
1,337
|
||||
Intrinsic
value of options exercised
|
$
|
212
|
$
|
272
|
$
|
166
|
Year
Ended June 30, 2007
|
|||||||||||||
Weighted-Average
|
Remaining
|
||||||||||||
Remaining
|
Unrecognized
|
||||||||||||
Grant-Date
|
Years
|
Compensation
|
|||||||||||
Shares
|
Fair
Value
|
To
Vest
|
Cost
|
||||||||||
(In
thousands, except per share data)
|
|||||||||||||
Nonvested
outstanding at beginning of fiscal year
|
2,225,316
|
$
|
1.26
|
||||||||||
Granted
|
1,306,537
|
1.25
|
|||||||||||
Vested
|
(885,292
|
)
|
1.15
|
||||||||||
Forfeited
|
(473,819
|
)
|
1.30
|
||||||||||
Nonvested
outstanding at end of fiscal year
|
2,172,742
|
$
|
1.29
|
2.8
|
$
|
2,476
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Shares
available for issuance at beginning of fiscal year
|
537,685
|
654,138
|
107,942
|
|||||||
Shares
reserved for issuance
|
150,000
|
150,000
|
900,000
|
|||||||
ESPP
shares issued
|
(330,923
|
)
|
(266,453
|
)
|
(353,804
|
)
|
||||
Shares
available for future issuance at end of fiscal year
|
356,762
|
537,685
|
654,138
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands, except per share data)
|
||||||||||
Average
purchase price of common shares
|
$
|
1.09
|
$
|
0.90
|
$
|
0.78
|
||||
Intrinsic
value of ESPP shares on purchase date
|
$
|
159
|
$
|
237
|
$
|
139
|
June
30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Accumulated
unrealized gain on investments
|
$
|
97
|
$
|
88
|
|||
Accumulated
translation adjustment
|
345
|
277
|
|||||
Total
accumulated other comprehensive income
|
$
|
442
|
$
|
365
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
401(k)
matching contributions
|
$
|
290
|
$
|
247
|
$
|
270
|
· |
The
Company agreed to a cease and desist order from future violations
of
securities laws;
|
· |
The
Company was not required to pay any monetary penalties;
and
|
· |
The
Company has agreed to cooperate with the Commission on any further
proceedings in connection with its
investigation.
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Current:
|
||||||||||
Federal
|
$
|
-
|
$
|
-
|
$
|
-
|
||||
State
|
-
|
-
|
(6
|
)
|
||||||
Foreign
|
34
|
(31
|
)
|
235
|
||||||
34
|
(31
|
)
|
229
|
|||||||
Deferred:
|
||||||||||
Federal
|
-
|
-
|
-
|
|||||||
State
|
-
|
-
|
-
|
|||||||
|
- |
-
|
-
|
|||||||
Provision
(benefit) for income taxes
|
$
|
34
|
$
|
(31
|
)
|
$
|
229
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
United
States
|
$
|
(1,840
|
)
|
$
|
(3,191
|
)
|
$
|
(7,047
|
)
|
|
Foreign
|
151
|
115
|
216
|
|||||||
Loss
from continuing operations
|
$
|
(1,689
|
)
|
$
|
(3,076
|
)
|
$
|
(6,831
|
)
|
Years
Ended June 30,
|
|||||||
2007
|
2006
|
||||||
(In
thousands)
|
|||||||
Deferred
tax assets:
|
|||||||
Tax
losses and credits
|
$
|
36,985
|
$
|
34,965
|
|||
Reserves
not currently deductible
|
3,241
|
2,996
|
|||||
Inventory
capitalization
|
1,399
|
2,086
|
|||||
Marketing
rights
|
1,010
|
1,102
|
|||||
Deferred
compensation
|
535
|
314
|
|||||
Writeoff
of long-term investment
|
-
|
990
|
|||||
Gross
deferred tax assets
|
43,170
|
42,453
|
|||||
Valuation
allowance
|
(40,480
|
)
|
(40,193
|
)
|
|||
Deferred
tax assets, net
|
2,690
|
2,260
|
|||||
Deferred
tax liabilities:
|
|||||||
State
tax
|
(2,369
|
)
|
(2,041
|
)
|
|||
Depreciation
|
(119
|
)
|
(144
|
)
|
|||
Other
|
(202
|
)
|
(75
|
)
|
|||
Deferred
tax liabilities
|
(2,690
|
)
|
(2,260
|
)
|
|||
Net
deferred tax assets (liabilities)
|
$
|
-
|
$
|
-
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Statutory
federal provision (benefit) for income taxes
|
$
|
(574
|
)
|
$
|
(1,046
|
)
|
$
|
(2,322
|
)
|
|
Increase
(decrease) resulting from:
|
||||||||||
Change
in valuation allowance
|
556
|
(1,200
|
)
|
2,897
|
||||||
Deferred
compensation
|
239
|
75
|
-
|
|||||||
Research
and development credit
|
(121
|
)
|
(277
|
)
|
(444
|
)
|
||||
Permanent
differences
|
26
|
28
|
24
|
|||||||
Investment
in foreign subsidiaries
|
21
|
276
|
-
|
|||||||
Foreign
tax rate variances
|
(17
|
)
|
23
|
162
|
||||||
Change
in effective state tax rate
|
-
|
1,999
|
-
|
|||||||
State
taxes, net of federal tax benefit
|
-
|
-
|
(4
|
)
|
||||||
Other
|
(96
|
)
|
91
|
(84
|
)
|
|||||
Provision
(benefit) for income taxes
|
$
|
34
|
$
|
(31
|
)
|
$
|
229
|
Capital
|
Operating
|
|||||||||
Years
Ended June 30,
|
Leases
|
Leases
|
|
Total
|
||||||
(In
thousands)
|
||||||||||
2008
|
$
|
143
|
$
|
677
|
$
|
820
|
||||
2009
|
133
|
687
|
820
|
|||||||
2010
|
28
|
688
|
716
|
|||||||
2011
|
2
|
77
|
79
|
|||||||
Total
|
306
|
$
|
2,129
|
$
|
2,435
|
|||||
Amounts
representing interest
|
(28
|
)
|
||||||||
Present
value of net minimum lease payments
|
278
|
|||||||||
Less:
capital lease obligations, short-term portion
|
||||||||||
(included
in other current liabilities)
|
136
|
|||||||||
Capital
lease obligations, long-term portion
|
$
|
142
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Facilities
rent expense
|
$
|
878
|
$
|
871
|
$
|
1,080
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Americas
|
63.2%
|
|
62.5%
|
|
64.3%
|
|
||||
EMEA
|
25.3%
|
|
27.1%
|
|
27.2%
|
|
||||
Asia
Pacific
|
11.5%
|
|
10.4%
|
|
8.5%
|
|
||||
Total
|
100.0%
|
|
100.0%
|
|
100.0%
|
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
(In
thousands)
|
||||||||||
Device
enablement
|
$
|
39,734
|
$
|
35,419
|
$
|
29,979
|
||||
Device
management
|
8,866
|
7,676
|
7,753
|
|||||||
Non-core
|
6,706
|
8,848
|
10,770
|
|||||||
Total
net revenues
|
$
|
55,306
|
$
|
51,943
|
$
|
48,502
|
Years
Ended June 30,
|
||||||||||
2007
|
2006
|
2005
|
||||||||
Top
five customers (1)
|
34.0%
|
|
38.0%
|
|
42.0%
|
|
||||
Ingram
Micro
|
12.0%
|
|
13.0%
|
|
16.0%
|
|
||||
Tech
Data
|
8.0%
|
|
10.0%
|
|
11.0%
|
|
||||
Related
party
|
2.0%
|
|
3.0%
|
|
2.0%
|
|
||||
Quarter
Ended Fiscal 2007
|
|||||||||||||||||||
Sept
30,
|
Dec
31,
|
Mar
31,
|
June
30,
|
Total
|
|||||||||||||||
(In
thousands, except per share data)
|
|||||||||||||||||||
Net
revenues
|
$
|
12,514
|
$
|
14,829
|
$
|
13,253
|
$
|
14,710
|
$
|
55,306
|
|||||||||
Gross
profit
|
$
|
6,607
|
$
|
7,400
|
$
|
6,866
|
$
|
7,469
|
$
|
28,342
|
|||||||||
Net
(loss) income
|
$
|
(651
|
)
|
$
|
87
|
(1)
|
$
|
(1,070
|
)
|
$
|
(89
|
)
|
$
|
(1,723
|
)
|
||||
Basic
and diluted net (loss) income per share
|
$
|
(0.01
|
)
|
$
|
0.00
|
$
|
(0.02
|
)
|
$
|
(0.00
|
)
|
$
|
(0.03
|
)
|
*
|
|
|||
|
|||||||||||||||||||
Quarter
Ended Fiscal 2006
|
|||||||||||||||||||
|
Sep
30,
|
Dec
31,
|
Mar
31,
|
June
30,
|
Total
|
||||||||||||||
(In
thousands, except per share
data)
|
|||||||||||||||||||
Net
revenues
|
$
|
12,240
|
$
|
12,955
|
$
|
13,063
|
$
|
13,685
|
$
|
51,943
|
|||||||||
Gross
profit
|
$
|
6,120
|
$
|
6,598
|
$
|
6,572
|
$
|
7,377
|
$
|
26,667
|
|||||||||
Net
(loss) income
|
$
|
(1,341
|
)
|
$
|
(3,571
|
) (2)
|
$
|
399
|
(3) |
$
|
1,468
|
(4) |
$
|
(3,045
|
)
|
||||
Basic
and diluted net (loss) income per share
|
$
|
(0.02
|
)
|
$
|
(0.06
|
)
|
$
|
0.01
|
$
|
0.02
|
$
|
(0.05
|
)
|
*
|
|
Incorporated
by Reference
|
||||||
Exhibit
Number
|
Exhibit
Description
|
Form
|
File
No.
|
Exhibit
|
Filing
Date
|
Filed
Herewith
|
3.1
|
Amended
and Restated Certificate of Incorporation of Lantronix,
Inc.
|
8
-
K
|
001-16027
|
99.1
|
07/29/2005
|
|
3.2
|
Amended
and Restated Bylaws as amended on July 28, 2005
|
8
-
K
|
001-16027
|
99.2
|
07/29/2005
|
|
4.1
|
Form
of Registrant’s common stock certificate
|
S
-
1,
Amend.
No. 1
|
333-37508
|
06/13/2000
|
||
10.1
|
Form
of Indemnification Agreement entered into by Registrant with each
of its
directors and executive officers
|
S
-
1,
Amend.
No. 1
|
333-37508
|
06/13/2000
|
||
10.2
|
1993
Stock Option Plan and forms of agreements thereunder
|
S
-
1,
Amend.
No. 1
|
333-37508
|
06/13/2000
|
||
10.3
|
1994
Nonstatutory Stock Option Plan and forms of agreements
thereunder
|
S
-
1,
Amend.
No. 1
|
333-37508
|
06/13/2000
|
||
10.4
|
2000
Stock Plan and forms of agreement thereunder
|
S
-
8,
|
333-
103395
|
4.1
|
02/24/2003
|
|
10.4.1
|
Form
of Stock Option Agreement
|
X
|
||||
10.5
|
Amendment
to the 2000 Stock Plan
|
S
-
8
|
333-
103395
|
4.2
|
02/24/2003
|
|
10.6
|
2000
Employee Stock Purchase Plan, amended and restated as of November
18,
2004
|
S
-
8,
|
333-121000
|
4.1
|
12/06/2004
|
|
10.7
|
Employment
Agreement between Registrant and Fred Thiel
|
S
-
1
|
333-37508
|
05/19/2000
|
||
10.8
|
Employment
Agreement between Registrant and Steve Cotton
|
S
-
1
|
333-37508
|
05/19/2000
|
||
10.9
|
Employment
Agreement between Registrant and Johannes Rietschel
|
S
-
1
|
333-37508
|
05/19/2000
|
||
10.10
|
Lease
Agreement between Registrant and The Irvine Company
|
S
-
1,
Amend.
No. 1
|
333-37508
|
06/13/2000
|
||
10.11
|
First
Amendment to Lease Agreement between Registrant and Irvine Technology
Partners III dated as of August 10, 1995
|
S
-
1
Amend.
No. 1
|
333-37508
|
06/13/2000
|
||
10.12
|
Second
Amendment to Lease Agreement between Registrant and Irvine Technology
Partners III dated as of July 6, 2000
|
10
- K
|
001-16027
|
10.03
|
09/28/2000
|
|
10.13
|
Third
Amendment to Lease Agreement between Registrant and Irvine Technology
Partners dated as of March 16, 2005
|
8
-
K
|
001-16027
|
10.04
|
03/22/2005
|
|
10.14
|
Research
and Development Agreement between Registrant and Gordian
|
S
-
1,
Amend.
No. 1
|
333-37508
|
06/13/2000
|
||
*
Confidential treatment pursuant to Rule 406
|
||||||
10.15
|
Distributor
Contract between Registrant and Tech Data Corporation
|
S
-
1,
Amend.
No. 1
|
333-37508
|
06/13/2000
|
||
*
Confidential treatment pursuant to Rule 406
|
||||||
10.16
|
Distributor
Contract between Registrant and Ingram Micro Inc.
|
S
-
1,
Amend.
No. 1
|
333-37508
|
06/13/2000
|
||
*
Confidential treatment pursuant to Rule 406
|
||||||
10.17
|
Offer
to Exchange Outstanding Options, dated December 19, 2002
|
Schedule
TO
|
001-16027
|
99(a)(1)
|
12/19/2002
|
|
10.18
|
Loan
and Security Agreement between Registrant and Silicon Valley Bank
dated
February 14, 2002
|
10-Q
|
001-16027
|
10.16
|
02/14/2002
|
|
10.19
|
Amendment
to Loan Documents between Registrant and Silicon Valley Bank dated
February 15, 2005
|
8
-
K
|
001-16027
|
10.17
|
02/15/2005
|
10.20
|
Letter
from Ernst & Young LLP, dated January 21, 2005
|
8
-
K
|
001-16027
|
16.1
|
01/21/2005
|
|
10.21
|
Loan
and Security Agreement between Registrant and Silicon Valley Bank
dated
May 31, 2006.
|
8
-
K
|
001-
16027
|
06/02/2006
|
||
10.22
|
Consulting,
Severance and Release Agreement effective as of January 22, 2007
between
Registrant and James Kerrigan.
|
8
-
K
|
001-
16027
|
10.1
|
04/27/2007
|
|
10.23
|
Severance
Agreement effective as of May 15, 2007 between the Registrant and
Marc
Nussbaum.
|
8
-
K
|
001-
16027
|
10.1
|
06/15/2007
|
|
10.24
|
Severance
Agreement effective as of May 15, 2007 between the Registrant and
Reagan
Sakai.
|
8
-
K
|
001-
16027
|
10.1
|
06/20/2007
|
|
21.1
|
Subsidiaries
of Registrant
|
10
- K
|
X
|
|||
23.1
|
Consent
of Independent Registered Public Accounting Firm, McGladrey & Pullen,
LLP
|
X
|
||||
24.1
|
Power
of Attorney (see page II-2)
|
|||||
31.1
|
Certificate
of Chief Executive Officer
Pursuant
to Section 302 of the Sarbanes - Oxley Act of 2002
|
X
|
||||
31.2
|
Certificate
of Chief Financial Officer Pursuant to Section 302 of the Sarbanes
- Oxley
Act of 2002
|
X
|
||||
32.1
|
Certification
of Chief Executive Officer and Chief Financial Officer furnished
pursuant
to 18 U.S.C. § 1350, as adopted pursuant to § 906 of Sarbanes Oxley Act of
2002
|
X
|
||||
99.1
|
Consolidated
Valuation and Qualifying
Accounts
|
X
|
LANTRONIX, INC. | ||
|
|
|
By: | /s/ REAGAN Y. SAKAI | |
REAGAN Y. SAKAI | ||
CHIEF FINANCIAL OFFICER |
Signature
|
Title
|
Date
|
/s/ H. K. DESAI | Chairman of the Board | September 7, 2007 |
H. K. DESAI | ||
/s/ MARC H. NUSSBAUM | Chief Executive Officer, | September 7, 2007 |
MARC H. NUSSBAUM | President (Principal Executive Officer) | |
/s/ REAGAN Y. SAKAI | Chief Financial Officer and Secretary | September 7, 2007 |
REAGAN Y. SAKAI | (Principal Financial and Accounting Officer) | |
/s/ THOMAS W. BURTON | Director | September 7, 2007 |
THOMAS W. BURTON | ||
/s/ HOWARD T. SLAYEN | Director | September 7, 2007 |
HOWARD T. SLAYEN | ||
/s/ KATHRYN B. LEWIS | Director | September 7, 2007 |
KATHRYN B. LEWIS | ||
/s/ BERNHARD BRUSCHA | Director | September 7, 2007 |
BERNHARD BRUSCHA | ||
/s/ CURT BROWN | Director | September 7, 2007 |
CURT BROWN |