8-K: DZS Inc. to be Delisted from Nasdaq After Failing to Meet Filing Deadline

DZS Inc. will be delisted from the Nasdaq Stock Market after failing to meet the deadline to file its overdue financial reports.

Summary

• DZS Inc. has received a delisting notice from Nasdaq due to its failure to file required financial reports by the August 5, 2024 deadline.
• The company had previously received notices for not filing its quarterly reports for June 30, 2023, September 30, 2023, and March 31, 2024, as well as its annual report for December 31, 2023.
• DZS presented a plan to regain compliance, but was unable to meet the deadline due to ongoing efforts to restate its financial statements.
• Trading of DZS stock on Nasdaq will be suspended on August 8, 2024, and the company expects its shares to then trade on the over-the-counter market.
• The company is working to complete the restatements and file the delayed reports as soon as possible, with the intention to reapply for listing on Nasdaq.

Sentiment

Score: 2

Explanation: The sentiment is very negative due to the delisting from Nasdaq, indicating significant issues with financial reporting and compliance. The company's future is uncertain, and investor confidence is likely to be severely impacted.

Positives

• DZS is actively working to complete the restatements of its financial statements and file the delayed reports.
• The company intends to reapply for listing on Nasdaq once all required reports are filed.
• DZS expects its shares to continue trading on the over-the-counter market after delisting.

Negatives

• DZS failed to meet the Nasdaq deadline to regain compliance with listing rules.
• The company's stock will be suspended from trading on Nasdaq on August 8, 2024.
• DZS will be delisted from Nasdaq, moving to the over-the-counter market.
• The company has been unable to file its quarterly reports for June 30, 2023, September 30, 2023, and March 31, 2024, and its annual report for December 31, 2023.

Risks

• There is no guarantee that DZS will be accepted to be listed again on Nasdaq in the future.
• The company's stock will be traded on the over-the-counter market, which may have lower liquidity and visibility.
• The delay in filing financial reports could negatively impact investor confidence.
• The restatement of financial statements could reveal further issues or adjustments.

Future Outlook

DZS intends to apply to restore its listing on Nasdaq as soon as practicable after filing all restated periodic reports and delayed reports, however, no assurance can be given regarding a definitive date or whether the company will ultimately be accepted to be listed again.

Management Comments

• We missed the required filing of our restated periodic reports for the periods of 2022 and Q1 2023 and Delayed Reports, said Misty Kawecki, Chief Financial Officer, DZS.
• We have taken a thorough approach to completing the filing of these reports, which included assessing the related impact of our recently divested Asia business on April 5, 2024, and our acquisition of NetComm on June 1, 2024.
• Unfortunately, we did not meet the timeline required by Nasdaq to file such restated periodic reports and Delayed Reports.

Industry Context

The delisting of DZS from Nasdaq highlights the importance of timely financial reporting and compliance with exchange listing rules. This situation could impact investor confidence in the company and potentially affect its ability to raise capital in the future. Other companies in the technology sector are also facing challenges related to supply chain disruptions and economic uncertainty, which may be contributing to delays in financial reporting.

Comparison to Industry Standards

• Many companies in the technology sector, such as ADTRAN and Calix, are also listed on Nasdaq and are expected to adhere to the same filing deadlines.
• Failure to meet these deadlines is a significant breach of listing requirements and can lead to delisting, as seen in the case of DZS.
• Companies like Nokia and Ericsson, while larger, also face scrutiny regarding their financial reporting and compliance with regulations.
• The delisting of DZS is a negative event compared to industry standards where companies strive to maintain compliance and transparency.

Stakeholder Impact

• Shareholders will be negatively impacted by the delisting and the move to the over-the-counter market.
• Employees may experience uncertainty due to the company's financial and listing challenges.
• Customers and suppliers may have concerns about the company's stability and future prospects.
• Creditors may be concerned about the company's ability to meet its financial obligations.

Next Steps

• DZS will complete the restatements of its financial statements and file the delayed reports.
• The company will apply to restore its listing on Nasdaq.
• DZS will host an earnings call after filing all restated periodic reports and delayed reports, as well as the Form 10-Q for the second quarter of 2024.

Key Dates

Keywords

delisting, Nasdaq, financial reports, compliance, restatement, over-the-counter, DZSI, filing deadline