LANTRONIX INC Leases Disclosure
| 9. | Leases |
In general, our leases include office buildings for various facilities worldwide which are all classified as operating leases. We also have financing leases related to some office equipment in the U.S.
The following presents components of lease expense and supplemental cash flow information:
| Years Ended June 30, | ||||||||
| 2025 | 2024 | |||||||
| Components of lease expense | (In thousands) | |||||||
| Operating lease cost | $ | 2,369 | $ | 2,465 | ||||
| Financing lease cost | 107 | 110 | ||||||
| Financing lease interest expense | 25 | 39 | ||||||
| Supplemental cash flow information | ||||||||
| Cash paid for amounts included in the measurement of operating lease liabilities | $ | 1,765 | $ | 1,772 | ||||
| Cash paid for amounts included in the measurement of financing lease liabilities | $ | 213 | $ | 222 | ||||
| Right-of-use assets obtained in exchange for lease obligation | $ | 1,027 | $ | – | ||||
As of June 30, 2025 and 2024, the weighted average discount rate for leases was 4.8% and 4.6%, respectively, and the weighted average remaining lease term for leases was 2.9 years and 3.4 years, respectively.
Maturities of lease liabilities as of June 30, 2025 were as follows:
| Years ending June 30, | Operating | Financing | ||||||
| (In thousands) | ||||||||
| 2026 | $ | 1,959 | $ | 117 | ||||
| 2027 | 1,906 | 22 | ||||||
| 2028 | 1,968 | 20 | ||||||
| 2029 | 1,741 | – | ||||||
| 2030 | 976 | – | ||||||
| Thereafter | 2,025 | – | ||||||
| Total remaining lease payments | 10,575 | 159 | ||||||
| less: imputed interest | (1,310 | ) | (19 | ) | ||||
| Lease liability | $ | 9,265 | $ | 140 | ||||
| Reported as: | ||||||||
| Current liabilities | $ | 1,489 | $ | 105 | ||||
| Non-current liabilities | $ | 7,776 | $ | 35 | ||||
About Leases Disclosures
Lease disclosures under ASC 842 provide a comprehensive view of a company's leased asset portfolio, including the split between operating and finance leases, discount rates used to present-value future payments, and the maturity schedule of lease obligations. This section reveals a significant source of off-balance-sheet commitments that were largely hidden before the current standard.
Key signals: the weighted-average discount rate affects the size of recorded lease liabilities — a higher rate reduces the reported obligation, so compare the chosen rate against the company's incremental borrowing rate. The operating versus finance lease mix affects both EBITDA and operating income presentation. Watch the maturity table for concentration risk: large payment cliffs in specific years may create cash flow pressure. Variable lease payments excluded from the liability measurement represent real obligations that do not appear on the balance sheet. Compare total lease costs against prior-year operating lease expense to assess the true economic burden.