0001101680false00011016802024-04-012024-04-01

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
Amendment No. 1

CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 1, 2024
DZS INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware000-3274322-3509099
(State or Other Jurisdiction
of Incorporation)
(Commission
File No.)
(I.R.S. Employer
Identification No.)
5700 Tennyson Parkway, Suite 400
Plano, TX 75024
(Address of Principal Executive Offices, Including Zip Code)
(469) 327-1531
(Registrant’s Telephone Number, Including Area Code)
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:
oWritten communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
oSoliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
oPre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
oPre-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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.001 par valueDZSIThe 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 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company o
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 13(a) of the Exchange Act. o


Explanatory Note
On April 5, 2024, DZS Inc. (the “Company”) and DZS California Inc. (“DZS California”), a wholly owned subsidiary of the Company, consummated the previously disclosed sale (the “Asia Sale”) contemplated by the Stock Purchase Agreement, dated as of January 5, 2024, as amended (the “Stock Purchase Agreement”), among the Company, DZS California and DASAN Networks, Inc., a Korean company and significant stockholder of the Company (“DNI”).
This Amendment No. 1 on Form 8-K/A is being filed to amend Item 9.01(b) of the Current Report on Form 8-K that the Company filed with the Securities and Exchange Commission (“SEC”) on April 5, 2024 regarding the completion of its Asia Sale to include the pro forma financial information required by Item 9.01(b) of Form 8-K.
Item 9.01 Financial Statements and Exhibits.
(b) Pro forma financial information.
Unaudited pro forma condensed consolidated statements of income of the Company for the year ended December 31, 2023 and for the three months ended March 31, 2024, unaudited pro forma condensed consolidated balance sheet of the Company as of March 31, 2024, and the notes related thereto are attached hereto as Exhibit 99.1 and incorporated herein by reference.
(d) Exhibits.
Exhibit No.Description
 
99.1
104Cover 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.
Date: August 23, 2024DZS Inc.
 
By:/s/ Misty Kawecki
Misty Kawecki
Chief Financial Officer

Exhibit 99.1

DZS, INC. AND SUBSIDIARIES
UNAUDITED PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
On April 5, 2024, DZS Inc. (“DZS”) and DZS California Inc. ("DZS California"), a wholly owned subsidiary of DZS, consummated the previously disclosed sale of the Asia business contemplated by the Stock Purchase Agreement, dated as of January 5, 2024, as amended (the “Stock Purchase Agreement”), among DZS, DZS California, and DASAN Networks, Inc., a Korean company and significant shareholder of the Company (“DNI”). Pursuant to the Stock Purchase Agreement, DZS California sold to DNI all of the equity interests in DASAN Network Solutions, Inc., a Korean company (“DNS”), D-Mobile Limited, a Chinese company, DZS Vietnam Company Limited, a Vietnamese company, Dasan India Private Limited, an Indian company, and DZS Japan, Inc., a Japanese company (collectively, the “Asia” business) for a purchase price consisting of approximately $3.8 million in cash, net of certain adjustments, and the elimination of approximately $34.3 million in debt and interest owed to DNI at the transaction date.
The following unaudited pro forma condensed consolidated financial statements as of and for the three-month period ended March 31, 2024 and for the year ended December 31, 2023, the date of the latest publicly available financial information for DZS Inc. and subsidiaries (collectively, the “Company”), gives effect to the divestiture of its Asia business pursuant to Article 11 of Regulation S-X or Rule 8-05 of Regulation S-X. DZS and its subsidiaries (collectively, the “Company”) had previously recognized the Asia business as discontinued operations within the consolidated financial statements as of and for the three-month period ended March 31, 2024, and therefore those historical financial statements of the Company were previously reported to exclude the results of operations from its Asia business from continuing operations within its statement of comprehensive loss. Additionally, the assets and liabilities of the Asia business were previously recognized as assets or liabilities held for sale within its consolidated balance sheet.
The following unaudited pro forma condensed consolidated balance sheet as of March 31, 2024 is presented as if the Asia divestiture had occurred on March 31, 2024. The following unaudited pro forma condensed consolidated statements of comprehensive loss for the three-month period ended March 31, 2024 and for the year ended December 31, 2023 are presented on a basis to reflect the Asia divestiture as if it had occurred on January 1, 2023. For purposes of the consolidated statement of comprehensive loss for the year ended December 31, 2023, the exclusion of the operating results of the Asia business have been incorporated, on a pro forma basis, within the adjustments labeled “Asia Divestiture.” The other adjustments shown on the unaudited pro forma condensed consolidated financial information are transaction accounting adjustments.
The unaudited pro forma condensed consolidated financial statements should be read in conjunction with the notes to the unaudited pro forma condensed consolidated financial statements. The unaudited pro forma condensed consolidated financial statements and the notes to the unaudited pro forma condensed consolidated financial statements are based on, and should be read in conjunction with, the Company’s historical audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023, and the historical unaudited condensed consolidated financial statements and notes thereto included in the Company’s Quarterly Report on Form 10-Q for the three-month period ended March 31, 2024.
The Company's historical consolidated financial information has been adjusted in the unaudited pro forma condensed financial statements to give effect to pro forma events that are (i) directly attributable to the Asia divestiture, (ii) factually supportable, and (iii) with respect to the unaudited pro forma statement of comprehensive loss, expected to have a continuing impact on the Company's results of operations. The resulting unaudited pro forma condensed consolidated financial statements do not include any management adjustments related to cost savings, operating synergies, tax benefits or revenue enhancements (or the necessary costs to achieve such benefits) that are expected to result from the Asia divestiture.
The pro forma adjustments are based upon available information and assumptions that management believes reasonably reflect the Asia divestiture. The unaudited pro forma condensed consolidated financial statements are provided for illustrative purposes only and do not purport to represent what actual results of operations or the consolidated financial position would have been had the Asia divestiture occurred on the applicable date assumed, nor are they necessarily indicative of our future consolidated results of operations or financial position.



DZS Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Balance Sheet
As of March 31, 2024
(In thousands)
AsiaTransaction
HistoricalDivestitureAccounting
Note 3 (a)Note 3 (b)AdjustmentsNote 3Pro Forma
Current assets:
Cash and cash equivalents$2,636 $— $3,784 (d)$6,420 
Restricted cash1,285 — — 1,285 
Accounts receivable38,428 — — 38,428 
Other receivables453 — — 453 
Inventories31,807 — — 31,807 
Contract assets756 — — 756 
Prepaid expenses and other current assets7,807 — — 7,807 
Current assets held for sale89,378 (89,378)— — 
Total current assets172,550 (89,378)3,784 86,956 
Property, plant, and equipment, net2,801 — — 2,801 
Right-of-use assets from operating leases3,929 — — 3,929 
Intangible assets, net23,875 — — 23,875 
Other assets12,959 — — 12,959 
Non-current assets held for sale6,574 (6,574)— — 
Total assets$222,688 $(95,952)$3,784 $130,520 
Current liabilities:
Accounts payable-trade$35,805 — 1,413 (e), (f)$37,218 
Contract liabilities14,825 — — 14,825 
Operating lease liabilities2,647 — — 2,647 
Accrued and other liabilities25,109 — — 25,109 
Current liabilities held for sale71,204 (66,380)(4,824)(d)— 
Total current liabilities149,590 (66,380)(3,411)79,799 
Long-term debt7,641 — — 7,641 
Contract liabilities - non-current2,021 — — 2,021 
Operating lease liabilities - non-current3,909 — — 3,909 
Pension liabilities11,136 — — 11,136 
Other long-term liabilities1,547 — — 1,547 
Non-current liabilities held for sale31,849 (2,392)(29,457)(d)— 
Total liabilities207,693 (68,772)(32,868)106,053 
Commitments and contingencies
Stockholders' equity:
Common stock36 — — 36 
Additional paid-in-capital307,358 — — 307,358 
Accumulated other comprehensive income(9,805)11,329 — 1,524 
Accumulated deficit(282,594)(38,509)36,652 (d), (e), (f)(284,451)
Total stockholders' equity14,995 (27,180)36,652 24,467 
Total liabilities and stockholders' equity$222,688 $(95,952)$3,784 $130,520 


DZS Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Comprehensive Loss
For the three months ended March 31, 2024
(In thousands, except per share data)
Transaction
HistoricalAccounting
Note 3 (a)AdjustmentsNote 3Pro Forma
Net revenue$27,667 $— $27,667 
Cost of revenue15,054 — 15,054 
Gross profit12,613 — 12,613 
Operating expenses:
Research and product development7,034 — 7,034 
Selling, marketing, general and administrative14,993 — 14,993 
Restructuring and other charges288 — 288 
Impairment of long-lived assets— — — 
Amortization of intangible assets1,190 — 1,190 
Total operating expenses23,505 — 23,505 
Operating loss(10,892)— (10,893)
Interest expense, net(1,213)— (1,213)
Other income (expense), net(324)— (324)
Income/(loss) before income taxes(12,429)— (12,429)
Income tax provision (benefit)1,106 — (j)1,106 
Net income/(loss) from continuing operations(13,535)— (13,535)
Income/(loss) from discontinued operations (net of income tax benefit)(5,171)5,171 (g)— 
Net income/(loss) (18,706)5,171 (13,535)
Foreign currency translation adjustments(1,320)1,357 (h)37 
Actuarial loss(38)— (38)
Comprehensive income/(loss)$(20,064)$6,528 $(13,536)
Net income/(loss) from continuing operations per share
Basic$(0.36)$(0.36)
Diluted$(0.36)$(0.36)
Net income/(loss) from discontinued operations per share
Basic$(0.14)$— 
Diluted$(0.14)$— 
Weighted average shares outstanding
Basic 37,399 37,399 
Diluted37,399 37,399 


DZS Inc. and Subsidiaries
Unaudited Pro Forma Condensed Consolidated Statement of Comprehensive Loss
For the year ended December 31, 2023
(In thousands, except per share data)
AsiaTransaction
DivestitureAccounting
HistoricalNote 3 (c)AdjustmentsNote 3Pro Forma
Net revenue$244,541 $(123,296)$— $121,245 
Cost of revenue204,102 (102,169)101,933 
Gross profit40,439 (21,127)— 19,312 
Operating expenses:
Research and product development55,780 (21,225)— 34,555 
Selling, marketing, general and administrative88,260 (18,019)612 (f)70,853 
Restructuring and impairment charges4,491 — — 4,491 
Impairment of long-lived assets3,073 (1,560)— 1,513 
Impairment of goodwill12,594 (1,642)— 10,952 
Amortization of intangible assets5,230 — — 5,230 
Total operating expenses169,428 (42,445)612 127,595 
Operating income/(loss)(128,989)21,318 (612)(108,283)
Interest income/(expense), net(3,992)1,292 — (2,700)
Loss on extinguishment of debt(594)— — (594)
Other income (expense), net(864)1,084 (1,926)(i)(1,705)
Income/(loss) before income taxes(134,439)23,694 (2,538)(113,283)
Income tax provision (benefit)779 (65)— (j)714 
Net income/(loss) (135,218)23,759 (2,538)(113,997)
Foreign currency translation adjustments(2,844)— 1,819 (h)(1,025)
Actuarial loss(941)— — (941)
Comprehensive income/(loss)$(139,003)$23,759 $1,819 $(115,963)
Net loss per share
Basic$(4.29)$(3.61)
Diluted$(4.29)$(3.61)
Weighted average shares outstanding
Basic31,546 31,546 
Diluted31,546 31,546 

DZS INC. AND SUBSIDIARIES
Notes to the Pro Forma Condensed Consolidated Financial Statements (Unaudited)
(in millions, except per share figures)
1. BASIS FOR PRO FORMA PRESENTATION
The unaudited pro forma condensed consolidated balance sheet as of March 31, 2024 is presented as if the Asia business divestiture had occurred on March 31, 2024. The unaudited pro forma condensed consolidated statements of comprehensive loss for the three-month period ended March 31, 2024 and for the year ended December 31, 2023 are presented as if the Asia business divestiture had occurred on January 1, 2023. The Company previously recognized the Asia business as discontinued operations within the consolidated financial statements as of and for the three-month period ended March 31, 2024, and therefore those historical financial statements of the Company were previously reported to exclude the results of operations from its Asia business from its continuing operations within its statement of comprehensive loss. Additionally, the assets and liabilities of the Asia business were previously recognized as assets and liabilities held for sale within its statement of balance sheet as of March 31, 2024. For purposes of the unaudited pro forma condensed consolidated statement of comprehensive loss for the year ended December 31, 2023, the exclusion of the operating results of the Asia business have been incorporated within the adjustments labeled “Asia Divestiture.”
The Company reports the results of operations of a business as discontinued operations if a disposal represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results when a business is sold and classified as held for sale, in accordance with the criteria of Accounting Standards Codification (“ASC”) Topic 205 Presentation of Financial Statements and ASC Topic 360 Property, Plant and Equipment. The results of discontinued operations are reported in Income from Discontinued Operations, Net of Tax in the statement of comprehensive loss for the current and prior periods commencing in the period in which the business met the criteria of discontinued operations, and includes any gain or loss recognized on closing, or adjustment of the carrying amount to fair value less cost to sell. Assets and liabilities of a business classified as held for sale are recorded at the lower of their carrying amount or estimated fair value less cost to sell. If the carrying amount of the business exceeds its estimated fair value less cost to sell, a loss is recognized. Assets and liabilities related to a business classified as held for sale are segregated in the current and prior balance sheets in the period in which the business is classified as held for sale. Transactions between the businesses held for sale and businesses held for use that are expected to continue to exist after the disposal are not eliminated to appropriately reflect the continuing operations and balances held for sale.
2. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies under U.S. GAAP that were used in the preparation of the unaudited pro forma condensed consolidated financial information are those set forth in the Company’s financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2023 and in its Quarterly Report on Form 10-Q for the three-month period ended March 31, 2024.
3. NOTES TO UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
The unaudited pro forma condensed consolidated financial information has been prepared to give effect of the divestiture of the Asia business as follows:
(a)Represents the Company’s historical condensed consolidated statements of comprehensive loss for the three months ended March 31, 2024 and for the year ended December 31, 2023 and historical condensed consolidated balance sheet as of March 31, 2024, prior to any pro forma adjustments described below.
(b)Represents historical assets and liabilities of the Asia business for the three months ended March 31, 2024.
(c)Represents the historical results of operations of the Asia business for the year ended December 31, 2023.
(d)Represents the $38.1 million purchase price from the sale of the Asia business, which was comprised primarily of the elimination of certain loan and interest balances between DNI and the Company and $3.8 million cash paid to the Company.
(e)Represents the recognition of a net payable amount owed to DNI as a result of operations expected to continue after completion of the divestiture.
(f)Subsequent to March 31, 2024, the Company has incurred additional non-recurring costs of approximately $0.6 million to complete the transaction. These costs primarily relate to accounting, legal and other advisory fees associated with separation activities.
(g)Reflects the removal of the loss from discontinued operations for the three-month period ended March 31, 2024.

DZS INC. AND SUBSIDIARIES
Notes to the Pro Forma Condensed Consolidated Financial Statements (Unaudited)
(in millions, except per share figures)
(h)Reflects the reduction in the foreign currency translation adjustments of $1.4 million and $1.8 million in comprehensive loss as a result of the Asia divestiture for the three-month period ended March 31, 2024 and the year ended December 31, 2023, respectively.
(i)Adjustment reflects the provisional net loss on disposition of approximately $1.9 million before taxes and expenses as of the acquisition date, reflecting an approximately $10.4 million loss resulting from reclassifications out of accumulated other comprehensive income partially offset by an $8.5 million gain from divestiture of the Asia net assets.
(j)The estimated tax impacts of the pro forma adjustments are not material to the pro forma financial information.
4. NET LOSS PER SHARE
Represents the net loss per share calculated using the historical weighted average shares outstanding, assuming the Asia divestiture occurred on January 1, 2023. Although the Asia divestiture is reflected as if it had occurred as of January 1, 2023, the calculation of weighted average shares outstanding for basic and diluted net loss per share is not changed from the historical amounts for the periods presented as no changes occurred to the Company’s capital structure as a result of these transactions.
(in thousands, except for share and per share data)
 For the three-month period ended March 31, 2024
For the year ended
December 31, 2023
Pro forma loss attributable to common stockholders
 $ (13,535)$ (113,997)
Pro forma weighted-average shares outstanding, basic and diluted
 37,398,86231,545,605
Net loss per share – basic and diluted
 $ (0.36)$ (3.61)
The following potential outstanding securities were excluded from the computation of pro forma net loss per share, basic and diluted, because their effect would have been anti-dilutive or issuance of such shares is contingent upon the satisfaction of certain conditions which are not satisfied as of the period end for pro forma presentation purposes.
Share Type Shares as of March 31, 2024Shares as of December 31, 2023
Stock options
1,268,1241,326,817
Unvested restricted stock units
8,016,9522,897,885
Warrants
6,100,000199,000



v3.24.2.u1
Cover
Apr. 01, 2024
Cover [Abstract]  
Document Type 8-K/A
Document Period End Date Apr. 01, 2024
Entity Incorporation, State or Country Code DE
Entity Registrant Name DZS INC.
Entity File Number 000-32743
Entity Tax Identification Number 22-3509099
Entity Address, Address Line One 5700 Tennyson Parkway, Suite 400
Entity Address, City or Town Plano
Entity Address, State or Province TX
Entity Address, Postal Zip Code 75024
City Area Code 469
Local Phone Number 327-1531
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Title of 12(b) Security Common Stock, $0.001 par value
Trading Symbol DZSI
Security Exchange Name NASDAQ
Entity Emerging Growth Company false
Entity Central Index Key 0001101680
Amendment Flag false
DZS (NASDAQ:DZSI)
Historical Stock Chart
From Oct 2024 to Nov 2024 Click Here for more DZS Charts.
DZS (NASDAQ:DZSI)
Historical Stock Chart
From Nov 2023 to Nov 2024 Click Here for more DZS Charts.