Form 8-K

8-K — LANTRONIX INC

Accession: 0001683168-26-003534

Filed: 2026-05-06

Period: 2026-05-06

CIK: 0001114925

SIC: 3576 (COMPUTER COMMUNICATIONS EQUIPMENT)

Item: Results of Operations and Financial Condition

Item: Regulation FD Disclosure

Item: Financial Statements and Exhibits

Documents

8-K — lantronix_8k.htm (Primary)

EX-99.1 — PRESS RELEASE (lantronix_ex9901.htm)

EX-99.2 — TRANSCRIPT OF MANAGEMENTS PREPARED REMARKS (lantronix_ex9902.htm)

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8-K — CURRENT REPORT

8-K (Primary)

Filename: lantronix_8k.htm · Sequence: 1

LANTRONIX, INC. 8-K

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0001114925

2026-05-06

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UNITED STATES

SECURITIES AND

EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

May 6, 2026

LANTRONIX,

INC.

(Exact Name of Registrant as Specified in Charter)

Delaware

1-16027

33-0362767

(State or other jurisdiction

of incorporation)

(Commission File Number)

(IRS Employer

Identification No.)

Discovery, Suite

250

Irvine, California 92618

(Address of Principal Executive Offices, including zip code)

Registrant’s telephone number, including area code: (949) 453-3990

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended

to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities

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

Title of each Class

Trading Symbol

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 is an emerging growth

company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934

(17 CFR §240.12b-2).

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 7(a)(2)(B) of Securities Act. ☐

Item 2.02.

Results of Operations and Financial Condition.

On May 6, 2026, Lantronix, Inc., a Delaware

corporation (the “Company”), issued a press release setting forth the Company’s financial results for its third fiscal

quarter ended March 31, 2026. A copy of the press release is attached hereto as Exhibit 99.1. In addition, a transcript of management’s

prepared remarks for the Company’s third quarter fiscal 2026 investor conference call and audio webcast, scheduled for 1:30 p.m.

Pacific Time (4:30 p.m. Eastern Time) on May 6, 2026, is attached hereto as Exhibit 99.2.

Following the conference call, a replay of the webcast will be

available on the Company’s website at www.lantronix.com for one year from the date of the call.

The information furnished under this Item 2.02,

including Exhibits 99.1 and 99.2, shall not be deemed “filed” for purposes of the Securities Exchange Act of 1934, as amended

(the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated

by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except

as shall be expressly set forth by specific reference in such filing.

Item 7.01.

Regulation FD Disclosure.

The information disclosed in Item 2.02 of this

Current Report on Form 8-K is incorporated by reference into this Item 7.01.

The information furnished pursuant to this Item

7.01 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or incorporated by reference in any filing

under the Securities Act or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.

Financial Statements and Exhibits.

The following exhibits are filed with this Current Report on Form 8-K:

Exhibit No.

Description

99.1

Press Release, dated May 6, 2026, reporting the Company’s financial results for the third fiscal quarter ended March 31, 2026.

99.2

Transcript of management’s prepared remarks for third quarter fiscal 2026 investor conference call and audio webcast, scheduled for May 6, 2026.

104

Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements

of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto

duly authorized.

LANTRONIX, INC.

By:

/s/ Brent Stringham

Brent Stringham

Chief Financial Officer

Date: May 6, 2026

EX-99.1 — PRESS RELEASE

EX-99.1

Filename: lantronix_ex9901.htm · Sequence: 2

Exhibit 99.1

Lantronix Reports Fiscal Third-Quarter 2026

Financial Results

· Net Revenue of $30.2 Million

· GAAP EPS of ($0.03)

· Non-GAAP

EPS of $0.04

· Increases FY26 Drone Revenue Expectation to a range of

$10 Million–$14 Million, driven by strong momentum across UAS ecosystem

IRVINE, Calif., May 6, 2026 — Lantronix Inc. (Nasdaq:

LTRX), a global provider of Edge AI and Industrial IoT solutions that power NDAA-compliant unmanned systems, critical infrastructure

and resilient enterprise networks, today reported results for the fiscal third quarter ended March 31, 2026.

Management Commentary

“Our third-quarter results reflect our disciplined execution

and continued momentum across the business as we reported year-over-year revenue and earnings growth,” said Saleel Awsare, president

and CEO of Lantronix. “Our position as a critical onboard edge compute platform for unmanned systems continues to expand, reflected

by the 22 percent growth we delivered in our Embedded IoT Solutions portfolio.”

Lantronix continues to deepen its presence across the unmanned systems

ecosystem, broadening its customer list and capabilities. The company is evolving from initially supporting the camera to now enabling

fully intelligent drone and counter-drone systems. As the autonomous ecosystem continues to evolve, Lantronix is positioned to become

the provider of choice for unmanned systems compute, further strengthening the business as a critical platform partner to the unmanned

ecosystem.

“We are approaching the

end of fiscal 2026 from a position of strength, and our recent momentum gives us great confidence in our growth trajectory. We believe

we will carry the momentum we’ve created into next year and aim to deliver double-digit

revenue growth in fiscal 2027, an important step in our evolution towards a faster-growing, higher quality and more profitable business,”

concluded Awsare

Q3 FY2026 Financial Results

· Net Revenue: $30.2 Million

· GAAP EPS: ($0.03)

· Non-GAAP

EPS: $0.04

· Cash and Cash Equivalents: $23.5 million

Q3 FY2026 and Recent Business Highlights

· Strategically collaborated with Unusual Machines (NYSE American:

UMAC) to develop the next generation of autonomous drone components, integrating Lantronix’s high-performance Edge AI compute and

system-on-module with Unusual Machines’ flight components.

· Secured new customer win for the counter-UAS market, integrating Lantronix's

Edge AI solution to detect, track, identify and mitigate hostile drones, radars and ground control stations in real time, deepening Lantronix’s

presence across the unmanned ecosystem.

· Advanced multi-silicon strategy with MediaTek (TSWE: 2454), strengthening

Lantronix's ability to serve a wider range of Edge AI and Industrial IoT applications, delivering performance-optimized, power-efficient

compute platforms across various deployment requirements and volume tiers.

· Developed

partnership with Melchioni Electronics to distribute Lantronix’s IoT and Edge AI

product solutions across key European markets, leveraging Melchioni’s established regional

presence, multi-country infrastructure and long-standing customer relationships to accelerate

Lantronix's market penetration.

· Signed post-quantum security MoU with Pairpoint (a Vodafone company) to

integrate certificate-free encrypted communications and post-quantum cryptography with Lantronix’s award-winning, industrial-grade

edge routers and gateways.

Q4 FY2026 Financial Outlook

Revenue:

$29.0 million to $33.0 million, or $31.0 million at the midpoint

Non-GAAP EPS: $0.03 to $0.05

Conference Call and Webcast

Management will host an investor conference call and audio webcast

today (Wednesday, May 6, 2026) at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss its results for the fiscal third quarter

of 2026 and financial outlook. To access the live conference call, investors should dial 1-844-802-2442 (U.S.) or 1-412-317-5135 (international)

and indicate they are participating in the Lantronix fiscal 2026 third-quarter call. The webcast will also be available simultaneously

via the investor relations section of the Company’s website.

Investors can access a conference call replay starting at approximately

4:00 p.m. Pacific Time on May 6, 2026, on the Lantronix website. A telephonic replay will also be available through May 13, 2026, by dialing

1-855-669-9658 (US & Canada Toll-Free) or 1-412-317-0088 (international) and entering passcode 7909343.

About Lantronix

Lantronix Inc. (Nasdaq: LTRX) is a global leader in Edge AI and Industrial

IoT solutions, delivering intelligent computing, secure connectivity and remote management for mission-critical applications. Serving

high-growth markets, including smart cities, enterprise IT and commercial and defense unmanned systems, including drones, Lantronix enables

customers to optimize operations and accelerate digital transformation. Its comprehensive portfolio of hardware, software and services

powers applications from secure video surveillance and intelligent utility infrastructure to resilient out-of-band network management.

By bringing intelligence to the network edge, Lantronix helps organizations achieve efficiency, security and a competitive edge in today’s

AI-driven world.

For more information, visit the Lantronix website.

Discussion of Non-GAAP Financial Measures

Lantronix believes that the presentation of non-GAAP financial information,

when presented in conjunction with the corresponding GAAP measures, provides important supplemental information to management and investors

regarding financial and business trends relating to the company’s financial condition and results of operations. Management uses

the aforementioned non-GAAP measures to monitor and evaluate ongoing operating results and trends to gain an understanding of our comparative

operating performance. The non-GAAP financial measures disclosed by the company should not be considered a substitute for, or superior

to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations

of the non-GAAP financial measures to the financial measures calculated in accordance with GAAP should be carefully evaluated. The non-GAAP

financial measures used by the company may be calculated differently from, and therefore may not be comparable to, similarly titled measures

used by other companies. The company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP

financial measures.

Non-GAAP net loss consists of net loss excluding (i) share-based compensation

and the employer portion of withholding taxes on stock grants, (ii) depreciation and amortization, (iii) interest income (expense), (iv)

other income (expense), (v) income tax provision (benefit), (vi) restructuring, severance and related charges, (vii) acquisition related

costs, (viii) impairment of long-lived assets, (ix) amortization of purchased intangibles, (x) amortization of manufacturing profit in

acquired inventory, (xi) fair value remeasurement of earnout consideration, and (xii) loss on extinguishment of debt.

Non-GAAP EPS is calculated by dividing non-GAAP net income by non-GAAP

weighted-average shares outstanding (diluted). For purposes of calculating non-GAAP EPS, the calculation of GAAP weighted-average shares

outstanding (diluted) is adjusted to exclude share-based compensation, which, for GAAP purposes, is treated as proceeds assumed to be

used to repurchase shares under the GAAP treasury stock method.

Guidance on earnings per share growth is provided only on a non-GAAP

basis due to the inherent difficulty of forecasting the timing or amount of certain items that have been excluded from the forward-looking

non-GAAP measures, and a reconciliation to the comparable GAAP guidance has not been provided because certain factors that are materially

significant to Lantronix’s ability to estimate the excluded items are not accessible or estimable on a forward-looking basis without

unreasonable effort.

Forward-Looking Statements

This news release contains forward-looking statements, including statements

concerning our expectations for revenue and earnings for the fourth quarter of fiscal 2026, revenue for our drone business for fiscal

2026, and revenue growth for fiscal 2027; our positioning to become the provider of choice for unmanned systems compute and strengthen

our business as a critical platform partner to the unmanned ecosystem; and our expectations regarding the future benefits of our recent

collaborations, partnerships and customer wins. These forward-looking statements are intended to qualify for the safe harbor from liability

established by the Private Securities Litigation Reform Act of 1995. We have based our forward-looking statements on our 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 results or experiences, or 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 news release. Other 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: the effects of negative or worsening

regional and worldwide economic conditions or market instability on our business, including effects on purchasing decisions by our customers;

our ability to mitigate any disruption in our and our suppliers’ and vendors’ supply chains due to changes in U.S. trade policy,

including recently increased or future tariffs, a pandemic or similar outbreak, wars and recent conflicts in Europe, Asia and the Middle

East, hostilities in the Red Sea, or other causes; our ability to successfully convert our backlog and current demand; the impact

of a pandemic or similar outbreak on our business, employees, customers, supply and distribution chains and the global economy; our ability

to successfully implement our acquisition strategy or integrate acquired companies; uncertainty as to the future profitability of acquired

businesses, and delays in the realization of, or the failure to realize, any accretion from acquisition transactions; acquiring, managing

and integrating new operations, businesses or assets, and the associated diversion of management attention or other related costs or difficulties;

our ability to continue to generate revenue from products sold into mature markets; our ability to develop, market, and sell new products;

our ability to succeed with our new software offerings; our use of AI may result in reputational, competitive or financial harm and liability;

fluctuations in our revenue due to the project-based timing of orders from certain customers; unpredictable timing of our revenues due

to the lengthy sales cycle for our products and services and potential delays in customer completion of projects; our ability to accurately

forecast future demand for our products; delays in qualifying revisions of existing products; constraints or delays in the supply of,

or quality control issues with, certain materials or components; difficulties associated with the delivery, quality or cost of our products

from our contract manufacturers or suppliers; risks related to the outsourcing of manufacturing and international operations; difficulties

associated with our distributors or resellers; intense competition in our industry and resultant downward price pressure; rises in inventory

levels and inventory obsolescence; undetected software or hardware errors or defects in our products; cybersecurity risks; our ability

to obtain appropriate industry certifications or approvals from governmental regulatory bodies; changes in applicable U.S. and foreign

government laws, regulations, and tariffs; our ability to protect patents and other proprietary rights and avoid infringement of others’

proprietary technology rights; issues relating to the stability of our financial and banking institutions and relationships; the level

of our indebtedness, our ability to service our indebtedness and the restrictions in our debt agreements; the impact of rising interest

rates; our ability to attract and retain qualified management; and any additional factors included in our Report on Form 10-K for the

fiscal year ended June 30, 2025, filed with the Securities and Exchange Commission (the “SEC”) on Aug. 29, 2025, including

in the section entitled “Risk Factors” in Item 1A of Part I of that report; in our Quarterly Report on Form 10-Q for

the fiscal quarter ended Dec. 31, 2025, filed with the SEC on Feb. 5, 2026, including in the section entitled “Risk Factors”

in Item 1A of Part II of such report; and in our other public filings with the SEC. 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.

For these reasons, investors are cautioned not to place undue reliance on any forward-looking statements. 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 Stock Market LLC. If we do update or correct any forward-looking statements, investors

should not conclude that we will make additional updates or corrections.

trademark. Other trademarks and trade names are those of their respective owners.

# # #

Lantronix Investor Contact:

Matt Glover and Greg Robles

Gateway Group, Inc.

investors@lantronix.com

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

March 31,

June 30,

2026

2025

Assets

Current assets:

Cash and cash equivalents

$ 23,515

$ 20,098

Accounts receivable, net

23,510

25,092

Inventories, net

26,422

26,371

Contract manufacturers' receivables

884

3,071

Prepaid expenses and other current assets

2,647

2,761

Total current assets

76,978

77,393

Property and equipment, net

1,673

2,456

Goodwill

31,089

Intangible assets, net

2,327

3,738

Lease right-of-use assets

7,307

8,422

Other assets

643

624

Total assets

$ 120,017

$ 123,722

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$ 13,729

$ 13,259

Accrued payroll and related expenses

3,860

3,471

Current portion of long-term debt, net

–

3,070

Other current liabilities

10,503

10,622

Total current liabilities

28,092

30,422

Long-term debt, net

8,691

8,684

Other non-current liabilities

8,764

10,238

Total liabilities

45,547

49,344

Commitments and contingencies

Stockholders' equity:

Common stock

Additional paid-in capital

312,428

308,397

Accumulated deficit

(238,306 )

(234,394 )

Accumulated other comprehensive income

344

371

Total stockholders' equity

74,470

74,378

Total liabilities and stockholders' equity

$ 120,017

$ 123,722

LANTRONIX, INC.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

Three Months Ended

Nine Months Ended

March 31,

December 31,

March 31,

2026

2025

2026

2025

Net revenue

$ 30,177

$ 29,774

$ 28,500

$ 89,745

$ 94,084

Cost of revenue

17,172

16,807

16,097

50,427

53,922

Gross profit

13,005

12,967

12,403

39,318

40,162

Operating expenses:

Selling, general and administrative

9,432

8,740

8,959

27,714

27,237

Research and development

4,149

4,620

4,463

13,367

14,403

Restructuring, severance and related charges

288

1,581

424

2,674

Acquisition-related costs

100

131

337

Amortization of intangible assets

216

598

879

1,411

3,378

Total operating expenses

14,133

14,041

15,982

43,047

48,029

Loss from operations

(1,128 )

(1,074 )

(3,579 )

(3,729 )

(7,867 )

Interest expense, net

(2 )

(9 )

(159 )

(26 )

(404 )

Other income (loss), net

(17 )

(4 )

(19 )

162

(48 )

Loss before income taxes

(1,147 )

(1,087 )

(3,757 )

(3,593 )

(8,319 )

Provision for income taxes

243

111

319

423

Net loss

$ (1,181 )

$ (1,330 )

$ (3,868 )

$ (3,912 )

$ (8,742 )

Net loss per share - basic and diluted

$ (0.03 )

$ (0.10 )

$ (0.23 )

Weighted-average common shares - basic and diluted

39,731

39,496

38,820

39,472

38,493

LANTRONIX, INC.

UNAUDITED RECONCILIATION OF NON-GAAP ADJUSTMENTS

(In thousands, except per share data)

Three Months Ended

Nine Months Ended

March 31,

December 31,

March 31,

2026

2025

2026

2025

GAAP net loss

$ (1,181 )

$ (1,330 )

$ (3,868 )

$ (3,912 )

$ (8,742 )

Non-GAAP adjustments:

Cost of revenue:

Share-based compensation

100

146

Employer portion of withholding taxes on stock grants

–

Amortization of manufacturing profit in acquired inventory

–

Depreciation and amortization

108

106

101

320

338

Total adjustments to cost of revenue

146

139

179

446

535

Selling, general and administrative:

Share-based compensation

1,358

1,354

1,159

4,166

3,329

Employer portion of withholding taxes on stock grants

116

111

Depreciation and amortization

246

252

345

788

1,044

Total adjustments to selling, general and administrative

1,655

1,644

1,517

5,070

4,484

Research and development:

Share-based compensation

207

197

324

688

1,155

Employer portion of withholding taxes on stock grants

Depreciation and amortization

140

236

Total adjustments to research and development

261

258

384

859

1,416

Restructuring, severance and related charges

288

1,581

424

2,674

Acquisition related costs

100

131

337

Amortization of purchased intangible assets

216

598

879

1,411

3,378

Litigation settlement cost

–

198

Total non-GAAP adjustments to operating expenses

2,468

2,583

4,461

7,895

12,487

Interest expense, net

159

404

Other (income) expense, net

(162 )

Provision for income taxes

243

111

319

423

Total non-GAAP adjustments

2,667

2,978

4,929

8,524

13,897

Non-GAAP net income

$ 1,486

$ 1,648

$ 1,061

$ 4,612

$ 5,155

Non-GAAP net income per share - diluted

$ 0.04

$ 0.03

$ 0.11

$ 0.13

Denominator for GAAP net loss per share - diluted

39,731

39,496

38,820

39,472

38,493

Non-GAAP adjustment

2,134

2,209

1,300

2,185

1,034

Denominator for non-GAAP net income per share - diluted

41,865

41,705

40,120

41,657

39,527

GAAP cost of revenue

$ 17,172

$ 16,807

$ 16,097

$ 50,427

$ 53,922

Non-GAAP adjustments to cost of revenue

(146 )

(139 )

(179 )

(446 )

(535 )

Non-GAAP cost of revenue

17,026

16,668

15,918

49,981

53,387

Non-GAAP gross profit

$ 13,151

$ 13,106

$ 12,582

$ 39,764

$ 40,697

Non-GAAP gross margin

43.6%

44.0%

44.1%

44.3%

43.3%

LANTRONIX, INC.

UNAUDITED NET REVENUES BY PRODUCT LINE AND REGION

(In thousands)

Three Months Ended

Nine Months Ended

March 31,

2026

December 31,

2025

March 31,

2025

March 31,

2026

March 31,

2025

Embedded IoT Solutions

$ 14,616

$ 13,865

$ 11,990

$ 39,948

$ 36,161

IoT System Solutions

13,229

13,281

14,730

42,969

52,081

Software & Services

2,332

2,628

1,780

6,828

5,842

$ 30,177

$ 29,774

$ 28,500

$ 89,745

$ 94,084

Three Months Ended

Nine Months Ended

March 31,

2026

December 31, 2025

March 31,

2025

March 31,

2026

March 31, 2

025

Americas

$ 20,268

$ 20,481

$ 16,497

$ 61,400

$ 50,303

EMEA

6,175

5,138

6,048

16,400

25,568

Asia Pacific Japan

3,734

4,155

5,955

11,945

18,213

$ 30,177

$ 29,774

$ 28,500

$ 89,745

$ 94,084

EX-99.2 — TRANSCRIPT OF MANAGEMENTS PREPARED REMARKS

EX-99.2

Filename: lantronix_ex9902.htm · Sequence: 3

Exhibit 99.2

FYQ3’26 Combined Script

Intro: Brent Stringham

Good afternoon everyone, and thank you for joining our fiscal third

quarter earnings call. Joining me today is our President and Chief Executive Officer Saleel Awsare.

A “live” and archived webcast of today’s call will

be available on the Company’s website. In addition, you can find the call-in details for the phone replay in today’s earnings

release.

During this call, we may make forward-looking statements which involve

risks and uncertainties that could cause our results to differ materially from current expectations.

We encourage you to review the cautionary statements and risk factors

contained in today’s earnings release, which was furnished to the SEC and is available on our website, and other SEC filings such

as our 10-K and 10-Qs. Lantronix undertakes no obligation to revise or update publicly any forward-looking statements to reflect future

events or circumstances.

Additionally, during the call, we will discuss non-GAAP financial measures.

Today's earnings release, which is posted in the Investor Relations section of our website, describes the differences between our non-GAAP

and GAAP reporting and presents reconciliations for the non-GAAP financial measures that we use.

With that, I will now turn the call over to Saleel.

Saleel Awsare (Section 1):

Thanks, Brent, and thank you, everyone, for joining today’s call.

We delivered revenue of $30.2 million and non-GAAP EPS of $0.04, both

within our guidance range.

Our Embedded IoT Solutions portfolio delivered extremely robust growth

of 22% year-over-year, driving overall sequential and year-over-year revenue growth for the company. This performance reinforces our position

as a critical onboard edge compute platform for unmanned systems, an increasingly important contributor to our business.

Gross margin also remained strong at above 43%, supported by a richer

mix of higher-margin products and recurring revenue across the portfolio.

Overall, these results reflect disciplined execution and continued

momentum across the business.

Turning to our results. We continue to see strong demand for unmanned

systems, or drones, supported by favorable industry and military tailwinds that position Lantronix for sustained growth. Our customer

list in unmanned systems continues to expand, reflecting both the effectiveness of our drone strategy and the increasing need for reliable,

real-time computing solutions. Drones are physical AI in action, and we deliver that capability to our customers by enabling autonomy,

edge compute and real-time decision-making - further increasing the value of our technology.

The FCC’s December 2025 action, which bars DJI and other foreign

drone makers on the Covered List from obtaining approval for new drone models in the U.S., has meaningfully improved the outlook for domestic

and trusted-supplier platforms.

This environment strengthens our competitive moat as a U.S. partner

that is both NDAA- and TAA-compliant, providing trusted and secure AI-enabled edge compute platform solutions for the groups 1 and 2 drone

ecosystem.

Further, we are expanding both our capabilities and the number of active

engagements. Our SOMs, or system on modules, provide the onboard edge compute foundation for greater autonomy, which is becoming increasingly

critical as mission complexity rises, and the market pushes beyond what human operators alone can support. In aerospace and defense, scale

will require more intelligence, more autonomy, and Lantronix is helping enable that shift. As a result, we are moving up the tech stack,

evolving from supporting the camera to enabling full intelligent drone and counter-drone systems. In parallel, growing interest in swarming

and coordinated autonomy is driving demand for larger fleets requiring more advanced edge AI and machine learning–based compute

solutions to support increasingly complex missions.

Beyond the drone itself, we are expanding our role into counter-UAS

and spectrum dominance applications. These markets require high performance, low-power compute to process sensor data and enable real-time

decision-making in contested environments. As systems become more intelligent, connected, and electronically aware, we expect our SOMs

and broader technology to play an increasingly central role across more of the mission stack.

Given the growth opportunity ahead, we are investing to scale. We’re

expanding our technical R&D talent to deepen our capabilities and capture more opportunities across the drone ecosystem, while also

expanding our dedicated drone sales effort. As the unmanned aerial systems market continues to heat up, new entrants will emerge. However,

our first mover advantage positions us to become the go-to provider of unmanned systems compute, and these investments are designed to

strengthen the moat around our business as a critical platform partner to the unmanned ecosystem.

In parallel with those investments, we are also advancing the product

and technology initiatives that will support our next phase of growth. During the quarter, we announced the advancement of our multi-silicon

strategy with MediaTek’s Genio family of System-on-Chip, or SoC, platforms, strengthening our ability to serve a wider range of

Edge AI and Industrial IoT applications. MediaTek’s SoCs deliver strong AI performance with processing power comparable to our Qualcomm

platforms, while offering a feature set highly optimized for industrial and commercial use cases.

By adding MediaTek, we’re filling important use-case coverage

in our portfolio – both MediaTek and Qualcomm are highly capable edge AI compute solutions, and together, allow Lantronix to serve

a broader set of customers and end markets with architectures tuned to their specific requirements.

Diving deeper, we continued to build momentum during the quarter. We

significantly expanded the number of OEMs we’re engaged with and have now shipped product to over a dozen of thse partners.

Importantly, we recently converted one of these engagements into a

design win - another Drone-as-First-Responder program with one of the largest U.S.-based body camera makers. This adds a new DFR customer

and further validates our position as a leading compute and connectivity provider across the UAS ecosystem.

We also secured a new customer win with a payload that identifies hostile

drone operators, marking our expansion into counter drones. This new win reinforces our role as a trusted partner in mission-critical

applications, underscoring our expanding relevance into counter-unmanned systems, where FPV drones are used to detect, track, identify

and mitigate hostile systems in contested environments. More broadly, it demonstrates how our edge AI drone solution supports the full

UAS ecosystem – including counter-drone use cases.

In addition to expanding capabilities and applications, we have been

growing beyond the U.S. market into international markets, as we are now supporting global expansion with Red Cat as they enter NATO and

across the Asia Pacific.

We also made our first shipment to Evolve Dynamics, a UK-based developer

of unmanned aerial systems serving the defense, emergency response, and critical infrastructure markets. Expanding our unmanned OEM customer

base internationally is an important part of our growth strategy, and this shipment marks another step in expanding our reach across the

global autonomous systems ecosystem.

Additionally, we recently engaged with multiple Ukraine drone makers.

Ukraine is becoming one of the most leading-edge and fastest evolving markets for unmanned systems globally, and its domestic drone companies

have demonstrated remarkable real-world performance. As the U.S. Department of War continues to increase its investments in unmanned systems,

collaborating with leading Ukrainian innovators provides us with critical insights and validation opportunities for our technology in

highly demanding, real-world environments.

We are seeing a broader shift toward trusted platforms, with customers

increasingly moving away from Chinese components toward NDAA-compliant solutions. This transition is creating meaningful opportunities

for Lantronix, particularly as customers evaluate our products, such as our drone reference platform, which helps shorten development

cycles and accelerate evaluation to deployment.

Further, in March, we formed a strategic collaboration with Unusual

Machines to support the next generation of unmanned platforms. This partnership combines Lantronix’s edge compute and integrated

connectivity solutions with UMAC’s flight components to help accelerate deployment timelines and enhance ISR and autonomous capabilities

across aerial systems. Together, this enables both companies to pursue emerging opportunities tied to the DoW’s Drone Dominance

Program, and we believe we are well-positioned to capitalize on this near-term growth opportunity. We are encouraged by the early progress

made during the collaboration so far and we’ll release additional updates as appropriate.

We are making a concerted effort to strengthen our position in the

unmanned ecosystem by scaling the platform and introducing new capabilities that support faster, easier, and more effective deployments.

As we expand the platform, we are building an ecosystem around it – one that enables customers and partners to adopt, integrate

and scale solutions more seamlessly.

We are encouraged by the momentum we’ve built in unmanned systems

since entering the market just over a year ago and are once again increasing our fiscal 2026 drone outlook, now to a range of $10 million

to $14 million. Our team is executing with urgency, and we continue to see a clear path for unmanned systems to represent 15% to 20% of

overall revenue in fiscal 2027.

Moving to software and services, we remain excited about the expanding

ARR we are seeing. Over the last two quarters, we have expanded our software, and services mix from 5-6% to 8-9% of total revenue, and

we see a clear path of sustainably reaching double digits over the midterm. This confidence is driven by our ability to layer higher-value

software and services onto our growing installed base of hardware already in the field. As we integrate capabilities such as device management,

analytics and AI orchestration, we are not only expanding recurring revenue streams but also improving overall mix and increasing the

lifetime value of each deployment. Over time, we believe this will drive greater revenue visibility, stronger margins and a higher-quality

business model overall.

On IoT System Solutions, we continue to experience slower federal spending

and extended procurement cycles, particularly with our core enterprise and networking products, which include media converters and out-of-band

management. Federal customers are moving more cautiously, and continued government shutdowns have resulted in slower ordering patterns

and a more measured pace of conversion.

That said, these are timing dynamics, not demand issues. Importantly,

enterprise and networking continue to deliver margins well above our corporate average and provide strong cash generation, giving us the

ability to reallocate resources into newer, higher-growth opportunities such as unmanned aerial systems and critical infrastructure monitoring.

In summary, I am encouraged by our third-quarter performance and the

discipline of our execution as we continue to deliver strong margins and profitability. We are hyper-focused on growing the business,

and we are putting the right team and capabilities in place to capture the growing opportunities we are seeing.

Before passing the call over to Brent, I want to highlight a couple

important developments, starting with a key leadership addition for our next phase of growth. In March, we appointed Sano Marsiano as

our new VP of Operations, bringing years of leadership experience across global operations, manufacturing, and quality.

Also in March, we participated in ISC West 2026, where we showcased

SmartSwitch.ai, SmartEdge Gateways, and our Edge AI solutions for autonomous systems. We saw strong interest in both our drone reference

platform and SmartSwitch, particularly from security and surveillance customers evaluating next-generation perimeter monitoring and agentic

Edge network configuration, monitoring and proactive maintenance. A consistent theme was the growing shift toward drone-based surveillance

for large compounds, complementing, or in some cases, reducing reliance on fixed-perimeter camera infrastructure – an area where

we’re uniquely positioned. We offer an integrated, full-stack solution that spans switches and drones, offering customers

a single, differentiated partner for autonomous perimeter security – nobody else in the market can deliver the breadth we provide.

With that, I’ll turn the call back to Brent to cover financial

results. Brent?

Brent Stringham:

Thank you, Saleel.

I’ll first start with our fiscal third quarter financial results

and some of the key drivers behind our performance. After which I’ll provide our outlook for the fourth quarter ending June 30,

2026.

As previously discussed, current quarter revenue was $30.2 million.

We saw sequential and year-over-year growth driven by strength in embedded compute products, including our A&D and Drone programs,

and continuing momentum in software and services revenues. Federal customers are moving cautiously, resulting in slower ordering patterns

for our core enterprise and networking products. However, like Saleel mentioned, we believe these are primarily timing dynamics, not demand

issues, and we should benefit once this market normalizes.

Turning to our gross margins…

In the third quarter, GAAP gross margin was 43.1%, roughly flat compared

to a year ago. On a non-GAAP basis, gross margin was 43.6%, slightly down compared to a year ago. Our current quarter margins reflect

the revenue mix we have spoken to, with embedded IoT solutions, particularly our compute products, driving our growth. We continue to

remain focused on disciplined cost management that has driven our execution over the last year, which we expect to contribute to sustaining

our gross margins near current levels.

Looking at expenses and profitability…

GAAP operating expenses in the third quarter of fiscal 2026 were $14.1

million, nearly flat with the prior quarter, and down approximately 12% from $16.0 million in the year-ago period. We continue to observe

the leverage in our Opex model based on the actions we took last year, and the ongoing cost discipline that we are executing on.

GAAP net loss for the third quarter of fiscal 2026 improved to $1.2

million, or 3 cents per share, compared to GAAP net loss of $3.9 million, or 10 cents per share, in the year-ago quarter. On a non-GAAP

basis, net income of $1.5 million, or 4 cents per share, was consistent with the prior quarter, and an improvement from the $0.03 per

share in the year ago quarter.

Moving to the balance sheet…

· We ended the quarter with cash and cash equivalents of $23.5 million, an

increase of approximately $500 thousand from the prior quarter and $3.5 million from the year-ago period. During the current quarter and

fiscal year-to-date periods, we generated positive operating cash flow of nearly $2.2 million and $7.9 million, respectively.

· Net inventories were $26.4 million as of March 31, 2026, compared to $27.1

million last quarter and $28.2 million in the year-ago quarter.

· Our current debt balance is $8.7 million, after having paid down about another

$1 million during the current quarter. In the last 12 months we have lowered our debt balance by nearly $4 million. Our net cash position

on March 31, 2026 was approximately $14.8 million.

Lastly, our outlook for the fourth quarter of fiscal 2026 ending June

30, 2026 is as follows:

· We expect revenue to be in the range of $29 million to $33 million.

· Non-GAAP EPS is expected to be in the range of 3 to 5 cents per share.

Now back to Saleel for some closing remarks.

Saleel Awsare (Section 2):

Thanks, Brent.

Before turning to Q&A, I want to leave you with a few key takeaways

as we approach the end of fiscal 2026.

We remain highly confident in the opportunity ahead in unmanned systems.

This market is scaling rapidly, supported by strong customer engagement, favorable regulatory dynamics, and an expanding base of OEMs

and end-market relationships. We continue to broaden our customer roster, win new programs, and deepen our role with existing partners.

At the same time, we are moving up the technology stack beyond cameras – adding more intelligence, secure connectivity, and system-level

capabilities – positioning Lantronix as a more strategic and valuable partner over time.

At the midpoint of our raised drone outlook, we are targeting $12 million

in revenue this fiscal year. We recently had one of the largest funding catalysts yet with the fiscal 2027 Department of War budget release

and a record $75 billion proposed for unmanned and autonomous systems through the Defense Autonomous Warfare Group, or DAWG, reinforcing

our view that the supercycle is accelerating across the ecosystem. Looking ahead, we continue to expect drone revenue to roughly double

in fiscal 2027 and represent approximately 15% to 20% of total revenue. Just over nine months ago, drones contributed minimal revenue

– today, they are becoming a meaningful growth driver and helping propel our next phase of growth.

As Brent mentioned, our Q4 outlook points to a strong finish to fiscal

2026. We believe we are operating from a position of strength and have greater confidence in our growth trajectory today than at any point

since beginning this transformation.

In embedded IoT, revenue grew by over 20% year over year driven by

strong traction in unmanned systems. We have raised our drone expectations once again, supported by a growing number of shipments, new

customer engagements, and expanding use cases across drone and counter-drone applications. We are also broadening our geographic reach

with new international customers, further validating Lantronix’s role as a trusted edge AI compute partner for the unmanned systems

ecosystem.

In critical infrastructure monitoring, we completed deployment for

our tier-1 MNO customer and are adding ARR to the business, which we expect will support higher margins and greater revenue visibility

over time. We also see additional land-and-expand opportunities in adjacent high-value cell tower applications, including power banks

and rectifiers, while Kompress.ai

continues to gain traction in the industrial compressor market.

The progress we’ve made repositioning Lantronix toward higher-growth

verticals is becoming increasingly evident in our results, and we believe the momentum we’ve built will carry into next year. Based

on what we are seeing today, we expect to deliver double-digit revenue growth in fiscal 2027, marking an important next step in Lantronix’s

evolution toward a more focused, faster-growing, higher-quality, and more profitable business.

With that, operator, we will now open the call for questions.

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