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Debt
 3 Months Ended
Sep. 30, 2025
Debt Disclosure [Abstract]  
Debt

 

5. Debt

 

Bank Line of Credit

 

On August 15, 2025, we entered into a Fourth Amended and Restated Loan and Security Agreement (the “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 new line provides us with a revolving credit facility of up to $15,000,000, subject to customary borrowing base limitations. The revolving credit facility is scheduled to mature on August 1, 2028. Borrowings under the revolving credit facility will bear interest on the outstanding principal equal to the greater of (i) 5.0% and (ii) the Prime Rate, as defined in the Loan Agreement, plus a margin of 0.0% to 0.5%, with the applicable margin depending on our liquidity.

 

The Loan Agreement requires us to comply with a minimum liquidity test. The Loan Agreement also includes customary representations and warranties and affirmative and negative covenants, including covenants that limit or restrict 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 Loan Agreement includes 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 Loan Agreement occurs (subject, in certain instances, to specified grace or cure periods), the principal, interest and any other monetary obligations on all the then outstanding amounts may become due and payable immediately.

 

The following table summarizes our outstanding debt:

          
   September 30,   June 30, 
   2025   2025 
   (In thousands) 
Outstanding debt  $10,828   $11,829 
Less: Unamortized debt issuance costs   (166)   (75)
Net Carrying amount of debt   10,662    11,754 
Less: Current portion   –    (3,070)
Non-current portion  $10,662   $8,684 

 

During the three months ended September 30, 2025, we recognized $191,000 of interest expense in the accompanying unaudited condensed consolidated statements of operations related to interest and amortization of debt issuance associated with the debt. As of September 30, 2025 the available borrowing capacity on the line of credit was $1,891,000.

 

Financial Covenants

 

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

 

Liquidity

 

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

 

Maximum leverage ratio

 

The Loan Agreement requires 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 September 30, 2025 we were in compliance with all financial covenants.