lantronix_defa-111710.htm


 
 
UNITED STATES
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LANTRONIX, INC.
(Name of Registrant as Specified In Its Charter)
 
 
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INDUSTRY LEADER IN SECURE
COMMUNICATIONS SOLUTIONS
Jerry Chase 
Chief Executive Officer
Reagan Sakai
Chief Financial Officer
November 2010
 
 

 
 This presentation contains forward-looking statements, including statements concerning
 financial results, anticipated market growth, market size, market vision, product features and
 availability timing, competitive assessments, the Company’s expectations concerning its
 operating results for fiscal year 2011, second fiscal quarter 2011, and future revenues, margins
 and operating expenses. These forward-looking statements are based on current management
 expectations and are subject to risks and uncertainties that could cause actual reported results
 and outcomes to differ materially from those expressed in the forward-looking statements,
 including but not limited to: quarterly fluctuations in operating results; changing market
 conditions; government and industry standards; market acceptance of the Company’s products
 by its customers; pricing trends; actions by competitors; future revenues and margins; changes
 in the cost or availability of critical components; court approval of settlements in significant
 litigation; unusual or unexpected expenses; cash usage; and other factors that may affect
 financial performance. For a more detailed discussion of these and other risks and
 uncertainties, see the Company's recent SEC filings, including its Form 10-K for the fiscal year
 ended June 30, 2010 and Form 10-Q for the fiscal quarters ended March 31, 2010 and
 September 30, 2010. Viewers are cautioned not to place undue reliance on these forward-
 looking statements, which speak only as of the date hereof, and the company undertakes no
 obligation to update these forward-looking statements to reflect subsequent events or
 circumstances.
Safe Harbor Statement
November 2010 | Page 2 | © Lantronix 2010 - Confidential
 
 

 
 Founded: 1989
 Headquarters: Irvine, CA
 Business Segment:
 Networking
 and Communications
 Fiscal Year End: June 30th
 Employees: 115
Company Overview
Fiscal Q1 2011 Highlights (Fiscal year ends June 30th)
 Net Revenue of $12.1 million, up 11% YOY
 Non-GAAP net income of $228,000, or $0.02 per share
 Ninth consecutive quarter of non-GAAP net income
 Cash increased $383,000 to $10.5 million
Key Products
 Introduced AccessMyDevice™, a subscription-based
 service enabling equipment to be securely and
 remotely accessed behind firewalls from anywhere via
 a secure web browser.
The industry leader in secure communications solutions to
connect and control any type of equipment via the Internet
November 2010 | Page 3 | © Lantronix 2010 - Confidential
 
 

 
Our Path to Growth
Where We Were
2003 - 2007
 Lost Generation of Products.
 
Period of failed products:
 o Did not meet customer
 needs
 Financials:
 o Negative cash flow
 o Limited liquidity reserves
 and options
 Strategic Issues.
 o Management team in
 disarray
 o Lack of unified strategy and
 vision
Where We Are
2008 - 2010
Where We’re Going
2010+
 Financial Stability
 o Reduced operating
 expenses
 o Increased gross margins
 o Non-GAAP profitability 9
 consecutive quarters
 o Improved cash position
 o Multi-billion dollar market
 opportunity with no category
 leader
 o Fits with existing product
 architecture
 o New hires: Medical industry
 veterans in sales, marketing,
 business development
 o Existing marquee medical
 customer base
November 2010 | Page 4 | © Lantronix 2010 - Confidential
 
 

 
Standards-based enterprise mechanisms
(SOA, XML, HL7, Web services, etc.) that allow
“backend” applications easy access to devices
Moving Up The Value Chain
November 2010 | Page 5 | © Lantronix 2010 - Confidential
 
 

 
What is AccessMyDevice.com?
  Enterprise-grade, industrial strength remote access service.
  “In the cloud” software-based solution
What does it do?
  Allows users to easily and securely view, manage, control, and service virtually any PC,
 server, machine, or electronic device from a web browser.
Benefits
   Reduced service costs
   Remote manageability from anywhere with Internet access
   Easier to manage and configure than VPN
   No reconfiguration of network
   No opening up of ports / Safer than port forwarding
   Easy to use
Who is it for?
  Users: Business and technology professionals.
  Industries: Designed to work across all industries, all company sizes, in any location around
 the world.
Business Model
  Low-cost, on-demand monthly subscription service
November 2010 | Page 6 | © Lantronix 2010 - Confidential
AccessMyDevice - Value Proposition
 
 

 
The Lantronix Solutions Architecture
External Products since 2009
Texas Instruments
Renesas
Others on a prioritized basis
Competitor 1
Competitor 2
Other existing / future comp
November 2010 | Page 7 | © Lantronix 2010 - Confidential
Embedded Products since 2009
All Future Products
 
 

 
Ex: AccessMyDevice & Microprocessor
November 2010 | Page 8 | © Lantronix 2010 - Confidential
 
 

 
Medical Market Opportunity Growth Drivers
 Aging population: 13,000 US adults turn 60 each day for the next 20 years
 Increased efficiency for medical care being driven by medical device and
 Health Information Technology investment ($225B for Hospital IT in 2009)
 American Recovery and Re-investment Act ($17B for Electronic Healthcare)
 Congressional Budget Office states total spending on health was 16% of
 GDP in 2007 and predicts 25% GDP by 2025
Source: Centers for Medicare & Medicaid
Services, Office of the Actuary. Data released
February 23, 2009.
Incremental Served Market
Opportunity
Medical Device Connectivity
November 2010 | Page 9 | © Lantronix 2010 - Confidential
 
 

 
Where we Participate - HIT Networks
Hospital Information Technology
(HIT) Network
Respiratory
Gateway
Infusion Pump
Gateway
Glucose Meter
Gateway
Patient Room
Proprietary
I/F
HL7 I/F
Proprietary
I/F
HL7 I/F
Hospital
Health Record System
Other
Hospital
Systems
Proprietary to
HL7 Gateway
Patient Room
Respiratory
Gateway
LTRX
Gateway
Device Server
or software
With Serial to HL7
Lantronix Confidential
November 2010 | Page 10 | © Lantronix 2010 - Confidential
 
 

 
Devices
HIT System
Making data
“Network-ready”
Making data
“Application-ready”
Delivering
“Actionable data”
LTRX
Device
Server
Patient
in wired or wireless environments (our “box”
product)
Driving Connectivity to the Point-of-Care
November 2010 | Page 11 | © Lantronix 2010 - Confidential
 
 

 
World Class Customer Base
Security
(800+ customers)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Manufacturing
(1,200+ customers)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
IT / Data Center
(1,100+ customers)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Medical
(650+ customers)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Hosp & Leisure
(100+ customers)
 
 
 
 
 
 
 
 
 
 
 
 
 
Over 2 million devices connected, across 10,000+ customers worldwide
November 2010 | Page 12 | © Lantronix 2010 - Confidential
 
 

 
Quarterly Revenue
$ in Millions
FQ1’11 YOY growth of 11%; sequential growth of 3%
FQ4’10 YOY growth of 4%
November 2010 | Page 13 | © Lantronix 2010 - Confidential
 
 

 
Gross Margin
$ in Millions
Gross Margin % remains 50% plus
GM expansion: fixed overhead absorption, product cost & spending reductions
November 2010 | Page 14 | © Lantronix 2010 - Confidential
 
 

 
Non-GAAP Profitability
$ in Millions
Non-GAAP profitable in FY10
Eight consecutive quarters of non-GAAP profitability (10 of last 11 quarters)
November 2010 | Page 15 | © Lantronix 2010 - Confidential
 
 

 
 Addressing growing markets with AccessMyDevice and
 medical-vertical focus
 New products beginning to contribute to revenue
 Strong order rates across verticals, geographies,
 product lines
 Nine consecutive quarters of “cash earnings”
 Strong balance sheet
Summary
November 2010 | Page 16 | © Lantronix 2010 - Confidential
 
 

 
INDUSTRY LEADER IN SECURE
COMMUNICATIONS SOLUTIONS
THANK YOU