The cofounder and largest shareholder in Irvine networking electronics maker Lantronix Inc. is mounting a board fight, charging the company’s current management and directors with “lackluster” results and a “lack of vision.”
Bernhard Bruscha, a former Lantronix chairman and current director, is backing himself and two other candidates running for spots on the company’s nine-member board.
Lantronix is set to elect a board at its December annual meeting.
The company makes small electronic devices that allow vending machines, thermostats, retail terminals, ATMs and other machines to be accessed via the Internet or other computers.
Lantronix’s shares are flat since the start of the year after giving up earlier gains that saw them peak at a 40% rise in May.
The company has a market value of about $35 million.
Bruscha’s TL Investment GMBH, based in Germany, owns 38% of Lantronix.
He’s seeking the resignations of Chairman Lewis Solomon and Chief Executive Jerry Chase, according to a letter filed with the Securities and Exchange Commission.
“Sadly, under Mr. Chase’s and Mr. Solomon’s leadership over the past two years, Lantronix today is losing its foothold in a rapidly expanding market,” Bruscha said. “The company’s lackluster financial and operational results are directly attributed to leadership’s lack of vision, failure to implement a coherent market and customer-driven product strategy and unwillingness to listen to experts in the space.”
Bruscha’s slate also includes Frederick Thiel, a former Lantronix chief executive from 1998 to 2002, and Hoshi Printer, a former chief financial officer with Irvine’s Autobytel Inc.
The prospect of a board fight would mark more turbulence for a company that’s had a troubled history.
Lantronix is yet to fully recover from a 2001 accounting error in which it recorded shipments to German distributor Transtec AG, only to have the products returned later, after Lantronix did a stock sale.
Lantronix ended up restating revenue for 18 months in 2000 and 2001, eliminating about $7.4 million in sales.
Board candidate Thiel was at the helm during Lantronix’s accounting problems. Bruscha was a director at the time and also controls Transtec, where he’s chairman.
Both were part a 2001 company probe and a subsequent Securities and Exchange Commission investigation.
Neither was found to have committed wrongdoing.
Around 2002, former Lantronix chairman H.K. Desai, who’s chief executive of Aliso Viejo-based QLogic Corp., helped straighten out the company’s finances and corporate practices. He left Lantronix’s board in 2006.
Chief Executive Chase was brought on in 2008 after an executive shakeup and a settlement with the SEC over the accounting issue.
Chase has cut costs, reworked finances and tried to make good with customers who felt spurned by the company, he told the Business Journal in 2009.
Growth has been harder to come by.
For the 12 months through June, Lantronix had sales of $46 million, down 5% from a year earlier. The company lost $1.5 million, widened from $780,000 a year earlier.
