Lantronix Inc – ‘10-Q’ for 12/31/01 – EX-18

On:  Thursday, 2/14/02   ·   For:  12/31/01   ·   Accession #:  1021408-2-2433   ·   File #:  1-16027

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Quarterly Report   —   Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report Ended 12/31/2001                     26    179K 
 2: EX-10.1     Employment Agrmt./Fred Thiel                          25     59K 
 3: EX-10.2     Employment Agmt/ Steve Cotton                         23     60K 
 4: EX-10.3     Loan and Security Agreement                           30     99K 
 5: EX-18       Change in Accounting                                   1      8K 

EX-18   —   Change in Accounting

EX-18
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                                                                      EXHIBIT 18

February 14, 2002                                                               

Board of Directors                                                              

Lantronix, Inc.                                                                 
15353 Barranca Parkway                                                          
Irvine, CA 92618                                                                

Gentlemen:                                                                      

Note 2 of Notes to the condensed consolidated financial statements of Lantronix,
Inc. included in its Form 10-Q for the six months ended December 31, 2001       
describes a change in the method of accounting for revenue on sales through     
distributors. Previously, the Company recognized revenue from these transactions
upon shipment of product to the distributor, but provided specific reserves for 
possible returns and allowances. Following the accounting change, revenue will  
be deferred for these transactions until the products are sold to end-users. You
have advised us that you believe that the change in accounting principle is     
preferable based on your circumstances because: (1) it better reflects the      
substance of the transactions considering your recent entry in the semiconductor
marketplace and the changing business environment; and (2) the new accounting   
method is consistent with other companies in your industry and, therefore,      
provides greater comparability in the presentation of financial results among   
the Company and its peers.                                                      

There are no authoritative criteria for determining a `preferable' method of    
accounting for revenue recognition on sales through distributors; however, we   
conclude that such change in the method of accounting for revenue on sales      
through distributors is to an acceptable alternative method which, based on your
business judgment to make this change and for the stated reasons, is preferable 
in your circumstances. We have not conducted an audit in accordance with        
generally accepted auditing standards of any financial statements of the Company
as of any date or for any period subsequent to June 30, 2001, and therefore we  
do not express any opinion on any financial statements of Lantronix, Inc.       
subsequent to that date.                                                        

                                   Very truly yours,

                                       /s/ Ernst & Young LLP

Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘10-Q’ Filing		Date		Other Filings
		2/15/02
Filed on:		2/14/02		SC 13G/A
For Period End:		12/31/01		10-Q/A
		6/30/01		10-K,  10-K/A
				List all Filings