v3.26.1
Debt
 12 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Debt

 

4.   Debt

 

Bank Line of Credit

 

On August 15, 2025, we entered into a Fourth Amended and Restated Loan and Security Agreement (the “Prior Loan Agreement”) with Silicon Valley Bank (“SVB”), which effectively refinanced our outstanding term loan with an asset-backed revolving line of credit secured by our accounts receivable. The line provided us with a revolving credit facility of up to $15,000,000, subject to customary borrowing base limitations. The revolving credit facility was scheduled to mature on August 1, 2028. Borrowings under the revolving credit facility bore interest on the outstanding principal equal to the greater of (i) 5.0% and (ii) the Prime Rate, as defined in the Prior Loan Agreement, plus a margin of 0.0% to 0.5%, with the applicable margin depending on our liquidity.

 

The Prior Loan Agreement required us to comply with a minimum liquidity test. The Prior Loan Agreement also included customary representations and warranties and affirmative and negative covenants, including covenants that limited or restricted our ability to incur liens or indebtedness, dispose of assets, make investments, make restricted payments, merge or consolidate, and enter into certain transactions with our affiliates. The Prior Loan Agreement also included customary events of default, including, among other things, non-payment defaults, covenant defaults, bankruptcy and insolvency defaults, and material judgment defaults. If any event of default under the Prior Loan Agreement had occurred (subject, in certain instances, to specified grace or cure periods), the principal, interest and any other monetary obligations on all the then outstanding amounts would have become due and payable immediately.

 

The following table summarizes our outstanding debt:

          
   June 30, 
   2026   2025 
   (In thousands) 
Outstanding debt  $         –   $11,829 
Less: Unamortized debt issuance costs   –    (75)
Net Carrying amount of debt   –    11,754 
Less: Current portion   –    (3,070)
Non-current portion  $–   $8,684 

 

During the years ended June 30, 2026 and 2025, we recognized $539,000 and $1,238,000, respectively, of interest expense in the accompanying consolidated statements of operations related to interest and amortization of issuance costs associated with debt. As of June 30, 2026 the available borrowing capacity on the line of credit was $13,591,000.

 

Financial Covenants

 

The Prior Loan Agreement required Lantronix to comply with a minimum liquidity test and a minimum interest coverage ratio.

 

Liquidity

 

The Prior Loan Agreement required that we maintain a minimum liquidity of $5,000,000 at SVB, as measured at the end of each month.

 

Interest Coverage ratio

 

The Prior Loan Agreement required that we maintain a minimum interest coverage ratio, calculated as the ratio of interest expense for the trailing 12-month period to the consolidated trailing 12-month earnings before interest, taxes, depreciation and amortization, and certain other allowable exclusions of 1.50 to 1.00 for each calendar quarter.

 

As of June 30, 2026 we were in compliance with all financial covenants under the Prior Loan Agreement.

 

Fifth Amended and Restated Loan and Security Agreement

 

On July 31, 2026, we entered into a Fifth Amended and Restated Loan and Security Agreement (the “Amended Loan Agreement”) with SVB, pertaining to our existing revolving credit facility and term loan (together, the “Senior Credit Facilities”). The Amended Loan Agreement amends and restates in its entirety the Prior Loan Agreement.

 

The Amended Loan Agreement provides for a $15,000,000 revolving credit facility and a $5,000,000 term loan. The revolving credit facility and term loan each mature on August 1, 2028. The term loan requires quarterly principal payments of $62,500 commencing after funding, which occurred in August 2026, with the remaining outstanding principal due at maturity.

 

Borrowings under the Senior Credit Facilities bear interest at a floating rate equal to the greater of (i) 5.0% or (ii) the Prime Rate plus an applicable margin.

 

In addition to the existing financial covenants under the Amended Loan Agreement, the Amended Loan Agreement requires that we maintain a minimum liquidity coverage ratio of 2.0 to 1.0, as measured at the end of each month.