Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 02, 2016 | |
Document and Entity Information [Abstract] | ||
Document Type | 10-Q/A | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | DZSI | |
Entity Registrant Name | DASAN ZHONE SOLUTIONS INC | |
Entity Central Index Key | 1,101,680 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 16,374,770 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 | |
Current assets: | |||
Cash and cash equivalents | $ 33,563,000 | $ 10,015,000 | |
Restricted cash | 5,209,000 | 3,844,000 | |
Short-term financial instruments | 821,000 | 0 | |
Trade receivables | 30,247,000 | 27,084,000 | |
Related parties | 9,031,000 | 5,644,000 | |
Other receivables, related parties | 385,000 | 1,742,000 | |
Others receivables, other | 12,383,000 | 11,268,000 | |
Current deferred income tax assets | 459,000 | 327,000 | |
Inventories, net | 34,596,000 | 13,900,000 | |
Prepaid expenses and other current assets | 3,959,000 | 951,000 | |
Total current assets | 130,653,000 | 74,775,000 | |
Property and equipment, net | 6,258,000 | 2,251,000 | |
Goodwill | 3,513,000 | 693,000 | |
Intangible assets, net | 10,236,000 | 3,000 | |
Non-current deferred income tax assets | 2,114,000 | 1,058,000 | |
Other assets | 1,778,000 | 4,811,000 | |
Total assets | 154,552,000 | 83,591,000 | |
Current liabilities: | |||
Accounts payable | 20,859,000 | 14,936,000 | |
Short-term debt | 20,141,000 | 21,848,000 | |
Other payables, related parties | 13,096,000 | 133,000 | |
Other payables, other | 1,603,000 | 1,352,000 | |
Accrued and other liabilities | 10,562,000 | 2,982,000 | |
Total current liabilities | 66,261,000 | 41,251,000 | |
Long-term debt - related party | 6,800,000 | 0 | |
Other long-term liabilities | 3,681,000 | 0 | |
Other non-current financial liabilities | 233,000 | 510,000 | |
Total liabilities | 76,975,000 | 41,761,000 | |
Commitments and contingencies | 0 | 0 | |
Stockholders’ equity: | |||
Common stock, authorized 36,000 shares, 16,375 shares and 9,493 shares of the Company outstanding as of September 30, 2016 and December 31, 2015, respectively, at $0.001 par value (as restated for stock split) (1). | [1] | 16,000 | 9,000 |
Additional paid-in capital (1) | [1] | 88,966,000 | 47,680,000 |
Other comprehensive loss (income) | 905,000 | (1,775,000) | |
Accumulated deficit | (12,774,000) | (4,222,000) | |
Non-controlling interest | 464,000 | 138,000 | |
Total stockholders’ equity | 77,577,000 | 41,830,000 | |
Total liabilities and stockholders’ equity | $ 154,552,000 | $ 83,591,000 | |
[1] | Authorized and outstanding share amounts reflect the one-for-five reverse stock split effected on February 28, 2017. |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances for sales returns and doubtful accounts | $ | $ 5,512 | $ 868 |
Common stock, par value (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 36,000,000 | |
Common stock, issued (in shares) | 16,375,000 | 9,493,000 |
Common stock, outstanding (in shares) | 16,375,000 | 9,493,000 |
Reverse stock split ratio | 0.20 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | Sep. 30, 2015USD ($)$ / sharesshares | ||
Income Statement [Abstract] | |||||
Net revenue | $ 32,080 | $ 22,591 | $ 92,664 | $ 93,339 | |
Cost of revenue | |||||
Products and services | 22,510 | 16,774 | 68,814 | 69,287 | |
Amortization of intangible assets | 51 | 0 | 51 | 0 | |
Gross profit | 9,519 | 5,817 | 23,799 | 24,052 | |
Operating expenses: | |||||
Research and product development | 5,885 | 4,859 | 15,582 | 16,546 | |
Selling, general and administrative | 8,283 | 3,937 | 16,976 | 12,454 | |
Amortization of intangible assets | 251 | 2 | 259 | 4 | |
Total operating expenses | 14,419 | 8,798 | 32,817 | 29,004 | |
Operating loss | (4,900) | (2,981) | (9,018) | (4,952) | |
Interest income | 31 | 27 | 138 | 92 | |
Interest expense | (204) | (114) | (601) | (378) | |
Other income, net | (193) | 583 | (128) | 780 | |
Loss before income taxes | (5,266) | (2,485) | (9,609) | (4,458) | |
Income tax (benefit) expense | (610) | 295 | (1,041) | 480 | |
Net loss | (4,656) | (2,780) | (8,568) | (4,938) | |
Less: Net loss attributable to non-controlling interest | (56) | 0 | (17) | 0 | |
Net loss attributable to DASAN Zhone Solutions, Inc. | (4,600) | (2,780) | (8,551) | (4,938) | |
Other comprehensive income, net of foreign currency translation adjustments | 2,340 | 1,009 | 2,741 | 107 | |
Comprehensive loss | (2,316) | (1,771) | (5,827) | (4,831) | |
Less: Comprehensive income attributable to non-controlling interest | (54) | 0 | 48 | 0 | |
Comprehensive loss attributable to DASAN Zhone Solutions, Inc. | $ (2,262) | $ (1,771) | $ (5,875) | $ (4,831) | |
Basic and diluted net loss per share (in USD per share) | $ / shares | [1] | $ (0.42) | $ (0.30) | $ (0.85) | $ (0.53) |
Weighted average shares outstanding used to compute basic and diluted net loss per share (in shares) | shares | [1] | 11,139 | 9,331 | 10,046 | 9,266 |
Reverse stock split ratio | 0.20 | ||||
[1] | All per share and weighted average share amounts have been adjusted to retroactively reflect the one-for-five reverse stock split effected on February 28, 2017. |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Statement of Cash Flows [Abstract] | ||
Net loss | $ (8,568) | $ (4,938) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,164 | 1,112 |
Stock-based compensation | 128 | 0 |
Unrealized loss (gain) on foreign currency transactions | 1,655 | (2,342) |
Deferred income taxes | (1,069) | 480 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 12,876 | 11,122 |
Inventories | (3,102) | 1,331 |
Prepaid expenses and other assets | 2,320 | (2,504) |
Accounts payable | (5,814) | (16,779) |
Accrued and other liabilities | 13,598 | 5,019 |
Net cash provided by (used in) operating activities | 13,188 | (7,499) |
Cash flows from investing activities: | ||
Cash acquired through the Merger | 7,013 | 0 |
(Increase) decrease in restricted cash | (1,046) | 2,526 |
Decrease in short-term and long-term loans to others | 1,891 | 285 |
Increase in short-term and long-term loans to others | (1,386) | (645) |
Acquisition of other current financial assets | (821) | 106 |
Proceeds of other current financial assets | 0 | 86 |
Proceeds from disposal of property and equipment | 98 | 6 |
Purchase of property and equipment | (401) | (541) |
Purchase of intangible assets | (92) | 0 |
Net cash provided by investing activities | 5,256 | 1,823 |
Cash flows from financing activities: | ||
Repayments of borrowings | (23,088) | (16,407) |
Proceeds from short-term borrowings | 19,769 | 22,177 |
Proceeds from long-term borrowings | 6,800 | 0 |
Government grants received | 31 | 156 |
Proceeds from issuance of common stock | 0 | 1,600 |
Decrease in capital surplus | 0 | (3,002) |
Net cash provided by financing activities | 3,512 | 4,524 |
Effect of exchange rate changes on cash | 1,592 | (440) |
Net increase (decrease) in cash and cash equivalents | 23,548 | (1,592) |
Cash and cash equivalents at beginning of period | 10,015 | 6,786 |
Cash and cash equivalents at end of period | $ 33,563 | $ 5,194 |
Supplemental disclosures of cash flow information: | ||
Shares of the Company's common stock held in escrow (in shares) | 949 | 0 |
Taxes | $ 463 | $ 1,482 |
Interest | $ 577 | $ 704 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Organization and Summary of Significant Accounting Policies | Organization and Summary of Significant Accounting Policies (a) Description of Business DASAN Zhone Solutions, Inc. (formerly known as Zhone Technologies, Inc. and referred to, collectively with its subsidiaries, as "DASAN Zhone" or the "Company") is a global leader in broad-based network access solutions. The Company provides solutions in five major product areas: broadband access, Ethernet switching, mobile backhaul, passive optical LAN ("POLAN") and software defined networks ("SDN"). More than 750 of the world's most innovative network operators, service providers and enterprises turn to DASAN Zhone for fiber access transformation. DASAN Zhone was incorporated under the laws of the state of Delaware in June 1999. On September 9, 2016, the Company acquired Dasan Network Solutions, Inc. ("DNS") through the merger of a wholly owned subsidiary of the Company with and into DNS, with DNS surviving as a wholly owned subsidiary of the Company (the "Merger"). In connection with the Merger, the Company changed its name from Zhone Technologies, Inc. to DASAN Zhone Solutions, Inc. For periods through September 8, 2016, Zhone Technologies, Inc. is referred to as "Legacy Zhone." The Company’s common stock continues to be traded on the Nasdaq Capital Market, and the Company’s ticker symbol was changed from "ZHNE" to "DZSI" effective September 12, 2016. The Company is headquartered in Oakland, California. (b) Consolidated Subsidiaries Details of the Company's consolidated subsidiaries as of September 30, 2016 and December 31, 2015 are as follows: Percentage of ownership (%) Location September 30, 2016 December 31, 2015 Dasan Network Solutions, Inc. ("DNS") US 100.00 % 100.00 % Dasan Network Solutions, Inc. ("DNS Korea") Korea 100.00 % 100.00 % DASAN Network Solutions Japan Co., Ltd. (formerly: HandySoft Japan Co., Ltd.) Japan 69.09 % 50.25 % DASAN Vietnam Co., Ltd Vietnam 100.00 % N/A (c) Basis of Presentation The condensed consolidated financial statements are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All significant inter-company transactions and balances have been eliminated in consolidation. The results of operations for the current interim period are not necessarily indicative of results to be expected for the current year or any other period. As discussed more fully in Note 2, on September 9, 2016, the acquisition of Dasan Network Solutions, Inc. ("DNS") was consummated through the Merger of a wholly owned subsidiary of the Company with and into DNS, with DNS surviving as a wholly owned subsidiary of the Company. For periods through September 8, 2016, Zhone Technologies, Inc. is referred to as "Legacy Zhone." At the effective time of the Merger, all issued and outstanding shares of capital stock of DNS held by DASAN were canceled and converted into the right to receive shares of the Company's common stock in an amount equal to 58% of the issued and outstanding shares of the Company's common stock immediately following the Merger. As a result, immediately following the effective time of the Merger, DASAN held 58% of the outstanding shares of the Company's common stock and the holders of the Company's common stock immediately prior to the Merger retained, in the aggregate, 42% of the outstanding shares of the Company's common stock. The Merger has been accounted for as a reverse acquisition under which DNS was considered the accounting acquirer of the Company. As such, the financial results of the Company for the three and nine months ended September 30, 2016 presented in this Form 10-Q/A reflect the operating results of DNS and its consolidated subsidiaries for the period commencing on the first day of the applicable period through September 8, 2016 and the operating results of both DNS and Legacy Zhone and their respective consolidated subsidiaries for the period September 9 through September 30, 2016. Such results are compared to the financial results of DNS and its consolidated subsidiaries for the three and nine months ended September 30, 2015. The balance sheet of the Company as of September 30, 2016 includes the fair value of the assets and liabilities of Legacy Zhone as of the effective date of the Merger. Those assets include the fair value of acquired intangible assets and goodwill. Due to the foregoing, the Company’s financial results for the three and nine months ended September 30, 2016 are not comparable to its financial results for the three and nine months ended September 30, 2015. The fourth quarter ending December 31, 2016 will be the first quarter in which the Company's financial results reflect a full quarter of operating results for both DNS and Legacy Zhone and their respective consolidated subsidiaries. Except as otherwise specifically noted herein, all references to the "Company" refer to (i) DNS and its consolidated subsidiaries for periods through September 8, 2016 and (ii) the Company and its consolidated subsidiaries for periods on or after September 9, 2016. (d) Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current period presentation. These reclassifications had no effect on the reported results of operations. (e) Reverse Stock Split On February 28, 2017, the Company effected a one-for-five reverse stock split of its common stock. All share and per share information included in the Company's unaudited condensed consolidated financial statements and accompanying notes presented herein reflect the retroactive effect of the one-for-five reverse stock split, as discussed in Note 14. (f) Risks and Uncertainties The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company incurred a net loss of $3.0 million for the year ended December 31, 2015 and a net loss of $8.6 million for the nine months ended September 30, 2016 , which net losses have continued to reduce cash and cash equivalents. As of September 30, 2016 , the Company had approximately $33.6 million in cash and cash equivalents and $26.9 million in aggregate principal amount of outstanding borrowings under short-term loans and the Company's loan agreement with DASAN. In addition, the Company had an aggregate of $37.0 million in revolving line of credit and letter of credit facilities as of September 30, 2016. The Company had $9.5 million committed as security for letters of credit under these facilities as of September 30, 2016. The $25.0 million revolving line of credit and letter of credit facility with Wells Fargo Bank (the "WFB Facility") contains certain financial covenants, and customary affirmative covenants and negative covenants. See Note 7 and Note 9 for additional information. The Company’s current lack of liquidity could harm it by: • increasing its vulnerability to adverse economic conditions in its industry or the economy in general; • requiring substantial amounts of cash to be used for debt servicing, rather than other purposes, including operations; • limiting its ability to plan for, or react to, changes in its business and industry; and • influencing investor and customer perceptions about its financial stability and limiting its ability to obtain financing or acquire customers. In order to meet the Company’s liquidity needs and finance its capital expenditures and working capital needs for the business, the Company may be required to sell assets, issue debt or equity securities, purchase credit insurance or borrow on unfavorable terms. In addition, the Company may be required to reduce its operations in low margin regions, including reductions in headcount. The Company may be unable to sell assets, issue securities or access additional indebtedness to meet these needs on favorable terms, or at all. If additional capital is raised through the issuance of debt securities or other debt financing, the terms of such debt may include covenants, restrictions and financial ratios that may restrict the Company’s ability to operate its business. Likewise, any equity financing could result in additional dilution of the Company’s stockholders. If the Company is unable to sell assets, issue securities or access additional indebtedness to meet these needs on favorable terms, or at all, the Company may become unable to pay its ordinary expenses, including its debt service, on a timely basis and may be required to reduce the scope of its planned product development and sales and marketing efforts beyond the reductions it has previously taken. Based on the Company’s current plans and business conditions, it believes that its focused operating expense discipline along with its existing cash, cash equivalents and available credit facilities will be sufficient to satisfy its anticipated cash requirements for at least the next twelve months. The Company's financial condition and results of operations could be materially and adversely affected by various factors, including: • Potential deferment of purchases and orders by customers; • Customers’ inability to obtain financing to make purchases from the Company and/or maintain their business; • Negative impact from increased financial pressures on third-party dealers, distributors and retailers; • Intense competition in the communication equipment market; • Commercial acceptance of the Company’s products; and • Negative impact from increased financial pressures on key suppliers. The Company may experience material adverse impacts on its business, operating results and financial condition as a result of weak or recessionary economic or market conditions in the United States, Korea or the rest of the world. (g) Restatement of Previously Reported Consolidated Financial Statements The Company has determined that the incorrect application of generally accepted accounting principles, resulted in material misstatements and a restatement of the Company's unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2016. The Company concluded that the impact of the errors was immaterial to the unaudited condensed consolidated financial statements for the quarter ended September 30, 2015, except for the impact relating to the error in not calculating EPS by retroactively adjusting the weighted average shares for the impact from the Merger. The following schedules reconcile the amounts as previously reported in the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2016 to the corresponding restated amounts (in thousands, except per share data): Unaudited Condensed Consolidated Balance Sheet September 30, 2016 As Previously Reported Restatement Adjustments As Restated Total current assets $ 127,626 $ 3,027 $ 130,653 Intangible assets (1) 22,573 (8,824 ) 13,749 Total assets 160,349 (5,797 ) 154,552 Total current liabilities 69,285 (3,024 ) 66,261 Other long-term liabilities (1) 8,024 (4,110 ) 3,914 Total liabilities 82,309 (5,334 ) 76,975 Common stock (2) 81,874 (81,858 ) 16 Additional paid-in-capital (2) 7,283 81,683 88,966 Other comprehensive loss 908 (3 ) 905 Accumulated deficit (12,743 ) (31 ) (12,774 ) Non-controlling interest 718 (254 ) 464 Total stockholders' equity 78,040 (463 ) 77,577 Total liabilities and stockholders' equity 160,349 (5,797 ) 154,552 (1) Amount presented has been reclassified for comparability purposes. (2) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. Unaudited Condensed Consolidated Balance Sheet December 31, 2015 As Previously Reported Restatement Adjustments As Restated Common stock (1) 56,579 (56,570 ) 9 Additional paid-in-capital (1) (8,890 ) 56,570 47,680 (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. Unaudited Condensed Consolidated Statements of Comprehensive Loss Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 As Previously Reported Restatement Adjustments As Restated As Previously Reported Restatement Adjustments As Restated Net revenue (1) $ 32,166 $ (86 ) $ 32,080 $ 93,256 $ (592 ) $ 92,664 Cost of revenue (2) 22,693 (132 ) 22,561 68,997 (132 ) 68,865 Selling, general and administrative 8,202 81 8,283 16,903 73 16,976 Net loss (4,881 ) 225 (4,656 ) (8,287 ) (281 ) (8,568 ) Comprehensive loss (2,612 ) 296 (2,316 ) (5,617 ) (210 ) (5,827 ) Basic and diluted net loss per share (3) $ (0.30 ) $ (0.12 ) $ (0.42 ) $ (0.51 ) $ (0.34 ) $ (0.85 ) (1) The Company incorrectly recorded $0.5 million of revenue on one of its customer contracts in the second quarter of 2016, which should have been recorded in the third quarter of 2016. The Company has properly presented this revenue in the three and nine months ended September 30, 2016 in the accompanying unaudited condensed consolidated financial statements and will revise the second quarter of 2016 unaudited consolidated condensed financial statements in the unaudited quarterly footnote included in the Company's Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the second quarter of 2017 when comparative financial information is presented. Management has concluded that these adjustments were immaterial to prior period financial statements. (2) Amount presented has been reclassified for comparability purposes. (3) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. Unaudited Condensed Consolidated Statements of Comprehensive Loss Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 As Previously Reported As Restated As Previously Reported As Restated Basic and diluted net loss per share (1) $ (0.30 ) $ (0.42 ) $ (0.51 ) $ (0.85 ) Weighted average shares outstanding used to computer basic and diluted net loss per share (1) 16,368 11,139 16,348 10,046 (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. Unaudited Condensed Consolidated Statements of Comprehensive Loss Three Months Ended Nine Months Ended September 30, 2015 September 30, 2015 As Previously Reported As Restated As Previously Reported As Restated Basic and diluted net loss per share (1) $ (0.04 ) $ (0.30 ) $ (0.07 ) $ (0.53 ) Weighted average shares outstanding used to computer basic and diluted net loss per share (1) 69,401 9,331 69,401 9,266 (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. Unaudited Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2016 As Previously Reported Restatement Adjustments As Restated Cash acquired through Merger (1) $ — $ 7,013 $ 7,013 Movement to and from restricted cash (2) (1,055 ) (812 ) (1,867 ) Net cash (used in ) provided by investing activities (945 ) 6,201 5,256 (1) This amount includes Legacy Zhone's cash balance of $7.0 million as of the effective date of the Merger, which was originally included in the cash and cash equivalents at the beginning of period in the cash flow statement, partially offset by the reclassification of $0.8 million as cash outflow originally included in closing cash and cash equivalents as of September 30, 2016. (2) The Company did not appropriately classify restricted cash of $0.9 million separately from cash and cash equivalents as of December 31, 2015. The Company has corrected for this error as cumulative adjustment as of September 30, 2016. Management has concluded that this is not material to the current or prior period. In addition, certain disclosures included in the unaudited condensed consolidated financial statements previously filed were also restated. These disclosures in this Form 10Q/A include schedules reconciling the amounts previously reported to the corresponding restated amounts in their respective sections. (h) Use of Estimates The preparation of the condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. (i) Revenue Recognition The Company recognizes revenue when the earnings process is complete. The Company recognizes product revenue upon shipment of product under contractual terms which transfer title to customers upon shipment, under normal credit terms, net of estimated sales returns and allowances at the time of shipment. Revenue is deferred if there are significant post-delivery obligations or if the fees are not fixed or determinable. When significant post-delivery obligations exist, revenue is deferred until such obligations are fulfilled. The Company’s arrangements generally do not have any significant post-delivery obligations. If the Company’s arrangements include customer acceptance provisions, revenue is recognized upon obtaining the signed acceptance certificate from the customer, unless the Company can objectively demonstrate that the delivered products or services meet all the acceptance criteria specified in the arrangement prior to obtaining the signed acceptance. In those instances where revenue is recognized prior to obtaining the signed acceptance certificate, the Company uses successful completion of customer testing as the basis to objectively demonstrate that the delivered products or services meet all the acceptance criteria specified in the arrangement. The Company also considers historical acceptance experience with the customer, as well as the payment terms specified in the arrangement, when revenue is recognized prior to obtaining the signed acceptance certificate. When collectability is not reasonably assured, revenue is recognized when cash is collected. The Company makes certain sales to product distributors. These customers are given certain privileges to return a portion of inventory. Return privileges generally allow distributors to return inventory based on a percent of purchases made within a specific period of time. The Company recognizes revenue on sales to distributors that have contractual return rights when the products have been sold by the distributors, unless there is sufficient customer specific sales and sales returns history to support revenue recognition upon shipment. In those instances when revenue is recognized upon shipment to distributors, the Company uses historical rates of return from the distributors to provide for estimated product returns. The Company derives revenue primarily from stand-alone sales of its products. In certain cases, the Company’s products are sold along with services, which include education, training, installation, and/or extended warranty services. As such, some of the Company’s sales have multiple deliverables. The Company’s products and services qualify as separate units of accounting and are deemed to be non-contingent deliverables as the Company’s arrangements typically do not have any significant performance, cancellation, termination and refund type provisions. Products are typically considered delivered upon shipment. Revenue from services is recognized ratably over the period during which the services are to be performed. For multiple deliverable revenue arrangements, the Company allocates revenue to products and services using the relative selling price method to recognize revenue when the revenue recognition criteria for each deliverable are met. The selling price of a deliverable is based on a hierarchy and if the Company is unable to establish vendor-specific objective evidence of selling price (“VSOE”) it uses third-party evidence of selling price (“TPE”), and if no such data is available, it uses a best estimated selling price (“BSP”). In most instances, particularly as it relates to products, the Company is not able to establish VSOE for all deliverables in an arrangement with multiple elements. This may be due to infrequently selling each element separately, not pricing products within a narrow range, or only having a limited sales history. When VSOE cannot be established, the Company attempts to establish the selling price of each element based on TPE. Generally, the Company’s marketing strategy differs from that of the Company’s peers and the Company’s offerings contain a significant level of customization and differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine what similar competitor products’ selling prices are on a stand-alone basis. Therefore, the Company is typically not able to determine TPE for the Company’s products. When the Company is unable to establish selling price using VSOE or TPE, the Company uses BSP. The objective of BSP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The BSP of each deliverable is determined using average discounts from list price from historical sales transactions or cost plus margin approaches based on the factors, including but not limited to, the Company’s gross margin objectives and pricing practices plus customer and market specific considerations. The Company has established TPE for its training, education and installation services. TPE is determined based on competitor prices for similar deliverables when sold separately. These service arrangements are typically short term in nature and are largely completed shortly after delivery of the product. Training and education services are based on a daily rate per person and vary according to the type of class offered. Installation services are based on daily rate per person and vary according to the complexity of the products being installed. Extended warranty services are priced based on the type of product and are sold in one to five year durations. Extended warranty services include the right to warranty coverage beyond the standard warranty period. In substantially all of the arrangements with multiple deliverables pertaining to arrangements with these services, the Company has used and intends to continue using VSOE to determine the selling price for the services. The Company determines VSOE based on its normal pricing practices for these specific services when sold separately. (j) Fair Value of Financial Instruments As of September 30, 2016 and December 31, 2015, the Company's financial instruments included cash and cash equivalents, short-term investments, trade and other receivables, other current assets, accounts payable, other current liabilities and debt. Due to the short-term maturities of cash and cash equivalents, trade and other receivables, other current assets, accounts payable and other current liabilities, the carrying amounts approximate fair value at the applicable balance sheet date. The carrying value of debt approximated its fair value based on a comparison with then-prevailing market interest rates. Due to the short-term maturities of the Company’s investments, carrying amounts approximated fair value at the applicable balance sheet date. The fair value of these instruments would be categorized as Level 2 in the fair value hierarchy, with the exception of cash and cash equivalents, which would be categorized as Level 1. (k) Concentration of Risk The Company’s customers include competitive and incumbent local exchange carriers, competitive access providers, Internet service providers, wireless carriers and resellers serving these markets. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Allowances are maintained for potential doubtful accounts. For the three months ended September 30, 2016 and 2015, three customers represented 55% and 63% of net revenue, respectively. For the nine months ended September 30, 2016 and 2015, three customers represented 48% and 55% of net revenue, respectively. SK Broadband, LG Uplus and DASAN (a related party) each accounted for more than 10% of net revenue for the three months ended September 30, 2016. SK Broadband, LG Uplus, Viettel Group and DASAN (a related party) each accounted for more than 10% of net revenue for the nine months ended September 30, 2016. LG Uplus, Korea Telecom and SK Broadband each accounted for more than 10% of net revenue for the three months ended September 30, 2015. LG Uplus, Korea Telecom and Viettel Group each accounted for more than 10% of net revenue for the nine months ended September 30, 2015. Each of the foregoing customers was a customer of DNS prior to the Merger. No Legacy Zhone customers and no other DNS customers accounted for more than 10% of net revenue during the three and nine months ended September 30, 2016 and 2015. Three customers accounted for 37% and 66% of net accounts receivable as of September 30, 2016 and December 31, 2015, respectively. As of September 30, 2016 and December 31, 2015, receivables from customers in countries other than the United States represented 86% and 93% , respectively, of net accounts receivable. (l) Comprehensive Loss There have been no items reclassified out of accumulated other comprehensive loss and into net loss. The Company’s other comprehensive loss for the three and nine months ended September 30, 2016 and 2015 is comprised of only foreign exchange translation adjustments. (m) Recent Accounting Pronouncements On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of the guidance in ASU No. 2014-09, Revenue from Contracts with Customer, for all entities by one year. With the deferral, the new standard is effective for the Company on January 1, 2018. Early adoption is permitted, but not before the original effective date of January 1, 2017. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, which provides clarification on how to assess collectibility, present sales tax, treat noncash consideration, and account for completed and modified contracts at the time of transition of ASU 2014-09. The effective date of this updated guidance for the Company is the same as the effective date of ASU 2014-09, which is January 1, 2018. The Company does not plan to early adopt this guidance. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in financial statements. The new standard is effective for the annual reporting period ending after December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which requires an entity to measure inventory at the lower of cost and net realizable value. The guidance does not apply to inventory that is measured using last-in, first-out ("LIFO") or the retail inventory method. The guidance applies to all other inventory, which includes inventory that is measured using first-in, first-out ("FIFO") or average cost. The guidance is effective for the Company on January 1, 2017, which will be adopted accordingly. ASU No. 2015-11 should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU 2015-17, Income Taxes, Balance Sheet Classification of Deferred Taxes, which simplifies the classification of deferred tax assets and liabilities as non-currrent in the balance sheet. The updated guidance is effective for the Company on January 1, 2017, which will be adopted accordingly, and early adoption is permitted. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. The updated guidance is effective for the Company on January 1, 2019, and early adoption is permitted, which the Company does not plan to early adopt. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which requires entities to simplify several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on statements of cash flows. The guidance is effective for the Company on January 1, 2017, which will be adopted accordingly, and early adoption is permitted. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated guidance is effective for the Company on January 1, 2018, and early adoption is permitted. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. |
Merger
Merger | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Merger | Merger On September 9, 2016, the Company acquired DNS through the Merger of a wholly owned subsidiary of the Company with and into DNS, with DNS surviving as a wholly owned subsidiary of the Company. The Merger combines leading technology platforms with a broadened customer base. At the effective time of the Merger, all issued and outstanding shares of capital stock of DNS held by DASAN were canceled and converted into the right to receive shares of the Company's common stock in an amount equal to 58% of the issued and outstanding shares of the Company's common stock immediately following the Merger. Accordingly, at the effective time of the Merger, the Company issued 9,493,016 shares (post reverse split) of the Company’s common stock to DASAN as consideration in the Merger, of which 949,302 shares (post reverse split) are being held in escrow as security for claims for indemnifiable losses in accordance with the merger agreement relating to the Merger. As a result, immediately following the effective time of the Merger, DASAN held 58% of the outstanding shares of the Company's common stock and the holders of the Company's common stock immediately prior to the Merger retained, in the aggregate, 42% of the outstanding shares of the Company's common stock. As described in Note 1, the Company accounted for the Merger as a reverse acquisition under the acquisition method of accounting in accordance with ASC 805, "Business Combination." Consequently, for the purpose of the Purchase Price Allocation ("PPA") DNS' assets and liabilities have been retained at their carrying values and Legacy Zhone's assets acquired, and liabilities assumed, by DNS (as the accounting acquirer in the Merger) have been recorded at their fair value measured as of September 9, 2016. The total purchase consideration in the Merger is based on the number of shares of Legacy Zhone common stock and Legacy Zhone stock options vested and outstanding immediately prior to the closing of the Merger, and was determined based on the closing price of $5.95 per share (post reverse split) of the Company's common stock on the September 9, 2016 (the effective date of the Merger) and the 6,874,253 shares (post reverse split). The estimated total purchase consideration is calculated as follows (in thousands): Shares Estimated Fair Value As Previously Reported Restatement Adjustments As Restated Shares of Legacy Zhone stock as of September 8, 2016 (1) 6,874 $ 40,902 $ — $ 40,902 Legacy Zhone stock options (1) 265 715 (175 ) 540 Assumed liabilities 25,717 (5,474 ) 20,243 Total Purchase Consideration $ 67,334 $ (5,649 ) $ 61,685 (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. The following table summarizes the preliminary allocation of the fair value consideration transferred as of the acquisition date (unaudited, in thousands). The purchase price allocation is preliminary because the Company is still in the process of finalizing the valuation of acquired inventory balances: Fair Value of Total Assets As Previously Reported Restatement Adjustments As Restated Current tangible assets $ 40,747 $ 3,175 $ 43,922 Non-current tangible assets 4,464 — 4,464 Total tangible assets $ 45,211 $ 3,175 $ 48,386 Identifiable Intangible Assets Developed technology 3,040 20 3,060 Customer relationships 6,740 (1,500 ) 5,240 Backlog 2,017 162 2,179 Total Intangible Assets $ 11,797 $ (1,318 ) $ 10,479 Goodwill $ 10,326 $ (7,506 ) $ 2,820 Total Indicated Fair Value of Assets $ 67,334 $ (5,649 ) $ 61,685 The goodwill was primarily attributed to people, geographic diversification and complementary products. The Goodwill arising from the Merger is not tax deductible. The fair value of the assets acquired included trade receivables of $17.7 million , net of allowances for sales returns and doubtful accounts of $4.6 million . The Company considered the deferred tax liabilities caused by the Merger to be a source of income to support recoverability of acquired deferred tax assets, before considering the recoverability of the acquirer's existing deferred tax assets. Accordingly, the valuation allowance on the acquiree's deferred tax assets was reduced by the deferred tax liabilities caused by the Merger and accounted for as part of the purchase price allocation. The Company recorded $1.3 million in Merger-related costs during the three and nine months ended September 30, 2016. These expenses are included in selling, general and administrative expense. The following table presents the fair values of the acquired intangible assets at the effective date of the Merger (in thousands, except years): Useful life (in Years) Fair Value Accumulated Amortization Net Developed technology 5 $ 3,060 $ (51 ) $ 3,009 Customer relationships 10 5,240 (80 ) 5,160 Backlog 1 2,179 (168 ) 2,011 $ 10,479 $ (299 ) $ 10,180 The following unaudited pro forma condensed combined financial information for the three and nine months ended September 30, 2016 and 2015 gives effect to the Merger as if it had occurred at the beginning of each period presented. The unaudited pro forma condensed combined financial information has been included for comparative purposes only and is not necessarily indicative of the combined company's financial position or results of operations might have been had the Merger been completed as of the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or results of operations of the combined company. The unaudited pro forma condensed combined financial information reflects adjustments related to the Merger, such as to record certain incremental expenses resulting from purchase accounting adjustments (such as amortization expenses in connection with the fair value adjustments to intangible assets and Merger-related costs). Three Months Ended September 30, Nine Months Ended 2016 2015 2016 2015 (As Restated) (As Restated) Pro forma total net revenue $ 40,580 $ 44,719 $ 144,362 $ 170,082 Pro forma net loss (15,436 ) (4,516 ) (24,989 ) (13,052 ) For the period from September 9, 2016 (the effective date of the Merger) through September 30, 2016, the Company's income statement included $5.7 million of revenues and $2.3 million of net loss from the Legacy Zhone business. |
Cash and Cash Equivalents and R
Cash and Cash Equivalents and Restricted Cash | 9 Months Ended |
Sep. 30, 2016 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash As of September 30, 2016 and December 31, 2015, the Company's cash and cash equivalents comprised financial deposits and money market accounts. Restricted cash comprised cash restricted for research and development activities and collateral for borrowings. |
Inventories
Inventories | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories, net Inventories, net as of September 30, 2016 and December 31, 2015 were as follows (in thousands): September 30, December 31, (As Restated) Raw materials $ 13,094 $ 5,519 Work in process 3,383 2,074 Finished goods 18,119 6,307 $ 34,596 $ 13,900 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, net Property and equipment, net, as of September 30, 2016 and December 31, 2015 were as follows (in thousands): September 30, December 31, (As Restated) Furniture and fixtures $ 23,521 $ 21,524 Machinery and equipment 5,709 3,173 Leasehold improvements 2,981 — Computers and software 410 — Other 77 74 32,698 24,771 Less accumulated depreciation and amortization (26,097 ) (22,121 ) Less government grants (343 ) (399 ) $ 6,258 $ 2,251 Depreciation expense associated with property and equipment for each of the three months ended September 30, 2016 and 2015 amounted to $0.3 million . Depreciation expense associated with property and equipment for the nine months ended September 30, 2016 and 2015 amounted to $ 0.8 million and $1.1 million , respectively. The Company receives grants from the government mainly to support capital expenditures. Such grants are deferred and are generally refundable to the extent the Company does not utilize the funds for qualifying expenditures. Once earned, the Company records the grants as a contra amount to the assets and amortizes such amount over the useful lives of the related assets as a reduction to depreciation expense. |
Goodwill and Intangible Assets,
Goodwill and Intangible Assets, net | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, net | Intangible Assets, net Goodwill as of September 30, 2016 and December 31, 2015 was as follows (in thousands): September 30, December 31, (As Restated) Beginning balance $ 693 $ — Addition due to acquisition 2,820 693 Less: accumulated impairment — — Ending balance $ 3,513 $ 693 The Company did not recognize impairment loss on goodwill as of September 30, 2016 and December 31, 2015. Intangible assets, net, as of September 30, 2016 and December 31, 2015 were as follows (in thousands): September 30, December 31, (As Restated) Developed Technology $ 3,060 $ — Customer Relationships 5,240 — Backlog 2,179 — Other 137 40 Less accumulated amortization (380 ) (37 ) Intangible assets, net $ 10,236 $ 3 Amortization expense associated with intangible assets for the three months ended September 30, 2016 and 2015 amounted to $0.3 million and less than $0.1 million , respectively. Amortization expense associated with intangible assets for the nine months ended September 30, 2016 and 2015 amounted to $0.4 million and less than $0.1 million , respectively. As of September 30, 2016, expected future amortization expense for the fiscal years indicated was as follows (in thousands): Period Expected Amortization Expense Remainder of 2016 $ 1,470 2017 2,087 2018 1,145 2019 1,166 2020 1,136 Thereafter 3,232 Total $ 10,236 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt | Debt Wells Fargo Bank Facility As of September 30, 2016 , the Company had a $25.0 million revolving line of credit and letter of credit facility with Wells Fargo Bank ("WFB"). Under the WFB Facility, the Company has the option of borrowing funds at agreed upon interest rates. The amount that the Company is able to borrow under the WFB Facility varies based on eligible accounts receivable and inventory, as defined in the agreement, as long as the aggregate amount outstanding does not exceed $25.0 million less the amount committed as security for letters of credit, which as of September 30, 2016 was $3.8 million . To maintain availability of funds under the WFB Facility, the Company pays a commitment fee on the unused portion. The commitment fee is 0.25% per annum and is recorded as interest expense. Based on eligible accounts receivable and inventory, as defined in the WFB Facility, the Company had $ 2.9 million of borrowing availability under the WFB Facility as of September 30, 2016 . The Company had no outstanding borrowings under its WFB Facility as of September 30, 2016. The amounts borrowed under the WFB Facility bear interest, payable monthly, at a floating rate equal to the three-month LIBOR plus a margin based on our average excess availability (as calculated under the WFB Facility). The interest rate on the WFB Facility was 3.35% at September 30, 2016 . The maturity date under the WFB Facility is March 31, 2019. The Company’s obligations under the WFB Facility are secured by substantially all of its personal property assets and those of its subsidiaries that guarantee the WFB Facility, including their intellectual property. The WFB Facility contains certain financial covenants, and customary affirmative covenants and negative covenants. If the Company defaults under the WFB Facility due to a covenant breach or otherwise, WFB may be entitled to, among other things, require the immediate repayment of all outstanding amounts and sell the Company’s assets to satisfy the obligations under the WFB Facility. As of September 30, 2016 , the Company was in compliance with these covenants. Bank and Trade Facilities - Foreign Operations Certain of the Company's foreign subsidiaries have entered into various financing arrangements with foreign banks and other lending institutions consisting primarily of revolving lines of credit, trade facilities, term loans and export development loans. These facilities are renewed on an annual basis and are generally secured by a security interest in certain assets of the applicable foreign subsidiaries. Payments under such facilities are made in accordance with the given lender’s amortization schedules. As of September 30, 2016 and December 31, 2015, the Company had an aggregate outstanding balance of $20.1 million and $21.8 million , respectively, under such financing arrangements, and the interest rates per annum applicable to outstanding borrowings under these financing arrangements were as listed in the tables below. As of September 30, 2016 Interest rate (%) Amount Industrial Bank of Korea Trade loan 2.06-2.38 $ 941 Shinhan Bank General loan 4.26 3,649 Shinhan Bank Trade finance 3.23-3.29 3,100 NongHyup Bank Trade loan 1.66-2.31 207 KEB Han Bank Comprehensive credit loan 2.89 4,034 The Export-Import Bank of Korea Export development loan 2.88 8,210 $ 20,141 As of December 31, 2015 Interest rate (%) Amount Industrial Bank of Korea Trade loan 2.04-2.34 $ 3,431 Shinhan Bank General loan 2.94 3,413 Shinhan Bank Trade finance 2.80 329 NongHyup Bank Trade loan 1.60-1.95 1,574 KEB Han Bank Comprehensive credit loan 3.55 5,421 The Export-Import Bank of Korea Export development loan 2.94 7,680 $ 21,848 As of September 30, 2016, the Company also had a $12.0 million letter of credit facility with certain foreign banks, under which $5.7 million was committed as security for letters of credit. |
Non-Controlling Interests (Note
Non-Controlling Interests (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Noncontrolling Interest [Abstract] | |
Non-Controlling Interests | Non-Controlling Interests Non-controlling interests were as follows (in thousands): Nine Months Ended September 30, 2016 2015 Beginning non-controlling interests $ 138 $ — Acquisition of additional interest in a subsidiary 277 — Net income attributable to non-controlling interests (17 ) — Foreign currency translation adjustments (OCI) 66 — Ending non-controlling interests $ 464 $ — |
Related Party
Related Party | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Related Party | Related Party Related Party Debt In connection with the Merger, on September 9, 2016, the Company entered into a Loan Agreement with DASAN for a $5.0 million unsecured subordinated term loan facility. Under the Loan Agreement, the Company was permitted to request drawdowns of one or more term loans in an aggregate principal amount not to exceed $5.0 million . As of September 30, 2016, $5.0 million in term loans was outstanding under the facility. Such term loans mature in September 2021 and are pre-payable at any time by the Company without premium or penalty. The interest rate as of September 30, 2016 under this facility was 4.6% per annum. In addition, the Company's subsidiary DNS borrowed $1.8 million from DASAN for capital investment in February 2016, which amount was outstanding as of September 30, 2016. This loan matured in March 2017 with an option of renewal by mutual agreement, and bore interest at a rate of 6.9% per annum, payable annually. Effective, February 27, 2017, DNS amended the terms of this loan to extend the repayment date from March 2017 to March 2018 and to reduce the interest rate from 6.9% to 4.6% per annum. Other Related Party Transactions Sales and Purchases to and from Related Parties Sales and purchases to and from related parties for the three and nine months ended September 30, 2016 and 2015 were as follows (in thousands): Three Months Ended September 30, 2016 Counterparty Sales Selling, Administrative and R&D Expenses Other Expenses Parent Company DASAN $ 4,960 $ 1,032 $ 89 Other related parties DASAN RND Co., LTD — — — PANDA Media, Inc. — — — DMC, Inc. — — — Tomato Soft Ltd. — 38 — Tomato Soft (Xi'an) Ltd. — 188 — CHASAN Networks (Shenzhen) Co., Ltd. — 175 — D-Mobile 1,267 128 — DASAN FRANCE 3 — — HANDYSOFT, Inc. 68 — — J-Mobile Corporation — 11 — $ 6,298 $ 1,572 $ 89 Nine Months Ended September 30, 2016 Counterparty Sales Selling, Administrative and R&D Expenses Other Expenses Parent Company DASAN $ 9,857 $ 4,620 $ 309 Other related parties DASAN RND Co., LTD — — — PANDA Media, Inc. — 2 — DMC, Inc. 1 — — Tomato Soft Ltd. — 98 — Tomato Soft (Xi'an) Ltd. — 559 — CHASAN Networks (Shenzhen) Co., Ltd. — 545 — D-Mobile 3,135 317 — DASAN FRANCE 3 — — HANDYSOFT, Inc. 151 — — J-Mobile Corporation 3 633 — $ 13,150 $ 6,774 $ 309 Three Months Ended September 30, 2015 Counterparty Sales Selling, Administrative and R&D Expenses Other Expenses Parent Company DASAN $ 2,630 $ 1,285 $ 96 Other related parties DASAN RND Co., LTD — 35 — PANDA Media, Inc. — — — DMC, Inc. — — — Tomato Soft Ltd. — 37 — Tomato Soft (Xi'an) Ltd. — 161 — CHASAN Networks (Shenzhen) Co., Ltd. — 234 — D-Mobile — — — DASAN FRANCE — — — HANDYSOFT, Inc. 69 — 1 J-Mobile Corporation — 576 — $ 2,699 $ 2,328 $ 97 Nine Months Ended September 30, 2015 Counterparty Sales Selling, Administrative and R&D Expenses Other Expenses Acquisition of Tangible and Intangible Assets Parent Company DASAN $ 8,385 $ 5,339 $ 436 $ — Other related parties DASAN RND Co., LTD — 335 — — PANDA Media, Inc. — — — — DMC, Inc. — — — — Tomato Soft Ltd. — 70 — — Tomato Soft (Xi'an) Ltd. — 316 — — CHASAN Networks (Shenzhen) Co., Ltd. — 487 — — D-Mobile — — — — DASAN FRANCE — — — — HANDYSOFT, Inc. 1,292 — 21 187 J-Mobile Corporation — 646 — — $ 9,677 $ 7,193 $ 457 $ 187 The Selling, administrative and R&D expenses to DASAN for the three and nine months ended September 30, 2016 and 2015, represent the service fee paid for human resources, administrative, finance and accounting services, and other shared services provided by DASAN to DNS Korea. Balances of Receivables and Payables with Related Parties Balances of receivables and payables arising from sales and purchases of goods and services with related parties as of September 31, 2016 and December 31, 2015 were as follows (in thousands): As of September 30, 2016 Counterparty Account Receivables Loans Other* Other Receivables Other Payables Parent Company DASAN $ 5,893 $ — $ 780 $ 70 $ 12,665 Other related parties PANDA Media, Inc. — — — — — DMC, Inc. — — — — — Tomato Soft Ltd. — — — — 9 Tomato Soft (Xi'an) Ltd. — — — — 63 CHASAN Networks — — — — — (Shenzhen) Co., Ltd. — — — — 63 D-Mobile 3,107 — — 13 — ABLE 3 — — — — DASAN France — — — 4 — HANDYSOFT, Inc. 28 — — — — J-Mobile Corporation — 298 296 $ 9,031 $ — $ 780 $ 385 $ 13,096 As of December 31, 2015 Counterparty Account Receivables Loans Other* Other Receivables Other Payables Parent Company DASAN $ 5,622 $ — $ 3,137 $ 1,431 $ — Other related parties PANDA Media, Inc. — — — — — DMC, Inc. — — — 1 — Tomato Soft Ltd. — — — — 16 Tomato Soft (Xi'an) Ltd. — — — — 55 CHASAN Networks (Shenzhen) Co., Ltd. — — — — 62 D-Mobile — — — — — ABLE — — — — — DASAN France — — — — — HANDYSOFT, Inc. 22 — — — — J-Mobile Corporation — 430 310 — $ 5,644 $ 430 $ 3,137 $ 1,742 $ 133 * Included in other assets related to deposits for lease in the unaudited condensed consolidated balance sheet as of September 30, 2016 and the audited consolidated balance sheet as of December 31, 2015. |
Net Loss Per Share
Net Loss Per Share | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Net Loss Per Share | Net Loss Per Share Basic net loss per share is computed by dividing the net loss applicable to holders of common stock for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net loss per share gives effect to common stock equivalents; however, potential common equivalent shares are excluded if their effect is antidilutive. Potential common equivalent shares are composed of incremental shares of common equivalent shares issuable upon the exercise of stock options and warrants. The following table is a reconciliation of the numerator and denominator in the basic and diluted net loss per share calculation (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 (As Restated) (As Restated) Net loss: $ (4,656 ) $ (2,780 ) $ (8,568 ) $ (4,938 ) Weighted average number of shares outstanding: Basic (as restated) (1) 11,139 9,331 10,046 9,266 Effect of dilutive securities: Stock options and share awards — — — — Diluted (as restated) (1) 11,139 9,331 10,046 9,266 Net loss per share Basic (as restated) (1) $ (0.42 ) $ (0.30 ) $ (0.85 ) $ (0.53 ) Diluted (as restated) (1) $ (0.42 ) $ (0.30 ) $ (0.85 ) $ (0.53 ) (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. The following tables set forth potential shares of the Company's common stock that are not included in the diluted net loss per share calculation for the three and nine months ended September 30, 2016 because their effect would be antidilutive for the periods indicated (in thousands, except exercise price per share data): Three Months Ended September 30, 2016 Weighted Average Exercise Price Nine Months Ended September 30, 2016 Weighted Average Exercise Price Outstanding stock options (1) 804 $ 1.38 804 $ 1.38 (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. There were no shares that had anti-dilutive effect on the calculation of diluted net loss per share for the three and nine months ended September 30, 2015. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Leases The Company has entered into operating leases for certain office space and equipment, some of which contain renewal options. Estimated future lease payments under all non-cancelable operating leases with terms in excess of one year, including taxes and service fees, are as follows (in thousands): Operating Leases As Previously Reported Restatement Adjustments As Restated Year ending December 31: 2016 (remainder of the year) $ 272 $ 564 $ 836 2017 1,470 2,156 3,626 2018 1,066 1,852 2,918 2019 597 1,738 2,335 2020 and thereafter 4,237 8,299 12,536 Total minimum lease payments $ 7,642 $ 14,609 $ 22,251 Warranties The Company accrues for warranty costs based on historical trends for the expected material and labor costs to provide warranty services. Warranty periods are generally up to two years from the date of shipment. The following table reconciles changes in the Company’s accrued warranties and related costs for the nine months ended September 30, 2016 and 2015 (in thousands): Nine Months Ended September 30, 2016 2015 Beginning balance $ 441 $ 389 Warranty liabilities acquired 652 — Charged to cost of revenue 703 289 Claims and settlements (805 ) (297 ) Ending balance $ 991 $ 381 Performance Bonds In the normal course of operations, from time to time, the Company arranges for the issuance of various types of surety bonds, such as bid and performance bonds, which are agreements under which the surety company guarantees that the Company will perform in accordance with contractual or legal obligations. As of September 30, 2016 , the Company did not have any outstanding surety bonds. Purchase Commitments The Company has agreements with various contract manufacturers which include non-cancellable inventory purchase commitments. The Company’s inventory purchase commitments typically allow for cancellation of orders 30 days in advance of the required inventory availability date as set by the Company at time of order. The amount of unrecognized purchase commitments was $10.2 million as of September 30, 2016 . Payment Guarantees Provided by Third Parties The following table sets forth third parties that have provided payment guarantees of the Company's indebtedness and other obligations as of September 30, 2016 (in thousands): Guarantor Amount Guaranteed Description of Obligations Guaranteed DASAN $ 4,378 Borrowings from Shinhan Bank DASAN 4,800 Borrowings from KEB Hana Bank DASAN 11,684 Borrowings from Industrial Bank of Korea DASAN 6,000 Letter of credit from Nonghyup Bank Industrial Bank of Korea 3,593 Letter of credit NongHyup Bank 2,156 Letter of credit Other 1,438 Performance payment guarantee $ 34,049 Royalties The Company has certain royalty commitments associated with the shipment and licensing of certain products. Royalty expense is generally based on a dollar amount per unit shipped or a percentage of the underlying revenue and is recorded in cost of revenue. Legal Proceedings The Company is subject to various legal proceedings, claims and litigation arising in the ordinary course of business. While the outcome of these matters is currently not determinable, the Company does not expect that the ultimate costs to resolve these matters will have a material adverse effect on its consolidated financial position or results of operations. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. If an unfavorable ruling were to occur, there exists the possibility of a material adverse impact on the results of operations of the period in which the ruling occurs, or future periods. |
Enterprise-Wide Information
Enterprise-Wide Information | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Enterprise-Wide Information | Enterprise-Wide Information The Company is a global leader in broad-based network access solutions. There are no segment managers who are held accountable for operations, operating results and plans for levels or components below the Company unit level. Accordingly, the Company is considered to be in a single reporting segment and operating unit structure. The Company’s chief operating decision makers are the Company’s Co-Chief Executive Officers, who review financial information presented on a consolidated basis accompanied by disaggregated information about revenues by geographic region for purposes of making operating decisions and assessing financial performance. The following summarizes required disclosures about geographic concentrations and revenue by products and services (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (As restated) (As restated) Revenue by Geography: United States $ 6,558 $ 550 $ 7,495 $ 3,988 Canada 255 — 255 — Total North America 6,813 550 7,750 3,988 Latin America 1,406 — 1,406 — Europe, Middle East, Africa 1,301 — 1,301 — Korea 18,073 18,453 52,337 67,116 Other Asia Pacific 4,487 3,588 29,870 22,235 Total International 25,267 22,041 84,914 89,351 $ 32,080 $ 22,591 $ 92,664 $ 93,339 Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (As restated) (As restated) Revenue by Products and Services: Products $ 29,731 $ 22,371 $ 86,498 $ 88,946 Services 2,349 220 6,166 4,393 Total $ 32,080 $ 22,591 $ 92,664 $ 93,339 The following summarizes required disclosures about assets that are available to allocate by country, which are only property and equipment and not the remainder long-lived assets as they cannot separately be attributed to a location (in thousands): September 30, 2016 December 31, 2015 Assets by Geography: United States $ 4,363 $ 113 Korea 1,732 2,138 Japan and Vietnam 163 — $ 6,258 $ 2,251 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The total amount of unrecognized tax benefits, including interest and penalties, at September 30, 2016 was not material. The amount of tax benefits that would impact the effective income tax rate, if recognized, is not expected to be material. There were no significant changes to unrecognized tax benefits during the three and nine months ended September 30, 2016 and 2015. The Company does not anticipate any significant changes with respect to unrecognized tax benefits within the next 12 months. The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The open tax years for the major jurisdictions are as follows: • Federal 2012 – 2015 • California and Canada 2011 – 2015 • Brazil 2010 – 2015 • Germany 2008 – 2015 • Japan 2011 – 2015 • Korea 2014 – 2015 • United Kingdom 2011 – 2015 However, due to the fact the Company had net operating losses and credits carried forward in most jurisdictions, certain items attributable to technically closed years are still subject to adjustment by the relevant taxing authority through an adjustment to tax attributes carried forward to open years. The Company uses the asset and liability method to account for income taxes. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting and the income tax bases of assets and liabilities. Deferred tax assets and liabilities are measured using enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. The Company estimates that its foreign income will generally be subject to taxation in the United States on a current basis and that its foreign subsidiaries and representative offices will therefore not have any material untaxed earnings subject to deferred taxes. In addition, to the extent the Company is deemed to have a sufficient connection to a particular taxing jurisdiction to enable that jurisdiction to tax the Company but the Company has not filed an income tax return in that jurisdiction for the year(s) at issue, the jurisdiction would typically be able to assert a tax liability for such years without limitation on the number of years it may examine. The Company is not currently under examination for income taxes in any material jurisdiction. The deferred tax liabilities arising from the Merger were applied to the acquiree's deferred tax assets first. Accordingly, the tax benefit arising from those deferred tax liabilities was used to offset the corresponding deferred tax assets as part of the purchase price allocation. The Company recognizes deferred tax liabilities associated with undistributed earnings of foreign subsidiaries, unless the earnings are expected to be reinvested permanently. Thus, the Company has not recorded deferred taxes on undistributed earnings, as they are intended to be permanently reinvested. If circumstances change and it becomes apparent that some or all of the undistributed earnings will not be invested indefinitely, or will be remitted in the foreseeable future, an additional deferred tax liability will be recorded for some or all of the undistributed earnings. |
Subsequent Events (Notes)
Subsequent Events (Notes) | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Subsequent Events Reverse Stock Split On February 28, 2017, the Company filed a Certificate of Amendment with the Delaware Secretary of State to amend the Company's Restated Certificate of Incorporation, which the amendment effected a one-for-five reverse stock split of the Company's common stock and reduced the authorized shares of common stock from 180 million to 36 million . As a result of the reverse stock split, the number of shares of the Company's common stock then issued and outstanding was reduced from approximately 81.9 million to approximately 16.4 million . References to shares of the Company's common stock, stock options (and associated exercise price) and restricted stock units in this Form 10-Q/A are provided on a post-reverse stock split basis. Amendment of DNS Loan The Company's subsidiary DNS borrowed $1.8 million from DASAN for capital investment in February 2016, which amount was outstanding as of September 30, 2016. This loan matured in March 2017 with an option of renewal by mutual agreement, and bore interest at a rate of 6.9% per annum, payable annually. Effective, February 27, 2017, DNS amended the terms of this loan to extend the repayment date from March 2017 to March 2018, and to reduce the interest rate from 6.9% to 4.6% per annum. |
Organization and Summary of S20
Organization and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The condensed consolidated financial statements are unaudited and reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). All significant inter-company transactions and balances have been eliminated in consolidation. The results of operations for the current interim period are not necessarily indicative of results to be expected for the current year or any other period. As discussed more fully in Note 2, on September 9, 2016, the acquisition of Dasan Network Solutions, Inc. ("DNS") was consummated through the Merger of a wholly owned subsidiary of the Company with and into DNS, with DNS surviving as a wholly owned subsidiary of the Company. For periods through September 8, 2016, Zhone Technologies, Inc. is referred to as "Legacy Zhone." At the effective time of the Merger, all issued and outstanding shares of capital stock of DNS held by DASAN were canceled and converted into the right to receive shares of the Company's common stock in an amount equal to 58% of the issued and outstanding shares of the Company's common stock immediately following the Merger. As a result, immediately following the effective time of the Merger, DASAN held 58% of the outstanding shares of the Company's common stock and the holders of the Company's common stock immediately prior to the Merger retained, in the aggregate, 42% of the outstanding shares of the Company's common stock. The Merger has been accounted for as a reverse acquisition under which DNS was considered the accounting acquirer of the Company. As such, the financial results of the Company for the three and nine months ended September 30, 2016 presented in this Form 10-Q/A reflect the operating results of DNS and its consolidated subsidiaries for the period commencing on the first day of the applicable period through September 8, 2016 and the operating results of both DNS and Legacy Zhone and their respective consolidated subsidiaries for the period September 9 through September 30, 2016. Such results are compared to the financial results of DNS and its consolidated subsidiaries for the three and nine months ended September 30, 2015. The balance sheet of the Company as of September 30, 2016 includes the fair value of the assets and liabilities of Legacy Zhone as of the effective date of the Merger. Those assets include the fair value of acquired intangible assets and goodwill. Due to the foregoing, the Company’s financial results for the three and nine months ended September 30, 2016 are not comparable to its financial results for the three and nine months ended September 30, 2015. The fourth quarter ending December 31, 2016 will be the first quarter in which the Company's financial results reflect a full quarter of operating results for both DNS and Legacy Zhone and their respective consolidated subsidiaries. Except as otherwise specifically noted herein, all references to the "Company" refer to (i) DNS and its consolidated subsidiaries for periods through September 8, 2016 and (ii) the Company and its consolidated subsidiaries for periods on or after September 9, 2016. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when the earnings process is complete. The Company recognizes product revenue upon shipment of product under contractual terms which transfer title to customers upon shipment, under normal credit terms, net of estimated sales returns and allowances at the time of shipment. Revenue is deferred if there are significant post-delivery obligations or if the fees are not fixed or determinable. When significant post-delivery obligations exist, revenue is deferred until such obligations are fulfilled. The Company’s arrangements generally do not have any significant post-delivery obligations. If the Company’s arrangements include customer acceptance provisions, revenue is recognized upon obtaining the signed acceptance certificate from the customer, unless the Company can objectively demonstrate that the delivered products or services meet all the acceptance criteria specified in the arrangement prior to obtaining the signed acceptance. In those instances where revenue is recognized prior to obtaining the signed acceptance certificate, the Company uses successful completion of customer testing as the basis to objectively demonstrate that the delivered products or services meet all the acceptance criteria specified in the arrangement. The Company also considers historical acceptance experience with the customer, as well as the payment terms specified in the arrangement, when revenue is recognized prior to obtaining the signed acceptance certificate. When collectability is not reasonably assured, revenue is recognized when cash is collected. The Company makes certain sales to product distributors. These customers are given certain privileges to return a portion of inventory. Return privileges generally allow distributors to return inventory based on a percent of purchases made within a specific period of time. The Company recognizes revenue on sales to distributors that have contractual return rights when the products have been sold by the distributors, unless there is sufficient customer specific sales and sales returns history to support revenue recognition upon shipment. In those instances when revenue is recognized upon shipment to distributors, the Company uses historical rates of return from the distributors to provide for estimated product returns. The Company derives revenue primarily from stand-alone sales of its products. In certain cases, the Company’s products are sold along with services, which include education, training, installation, and/or extended warranty services. As such, some of the Company’s sales have multiple deliverables. The Company’s products and services qualify as separate units of accounting and are deemed to be non-contingent deliverables as the Company’s arrangements typically do not have any significant performance, cancellation, termination and refund type provisions. Products are typically considered delivered upon shipment. Revenue from services is recognized ratably over the period during which the services are to be performed. For multiple deliverable revenue arrangements, the Company allocates revenue to products and services using the relative selling price method to recognize revenue when the revenue recognition criteria for each deliverable are met. The selling price of a deliverable is based on a hierarchy and if the Company is unable to establish vendor-specific objective evidence of selling price (“VSOE”) it uses third-party evidence of selling price (“TPE”), and if no such data is available, it uses a best estimated selling price (“BSP”). In most instances, particularly as it relates to products, the Company is not able to establish VSOE for all deliverables in an arrangement with multiple elements. This may be due to infrequently selling each element separately, not pricing products within a narrow range, or only having a limited sales history. When VSOE cannot be established, the Company attempts to establish the selling price of each element based on TPE. Generally, the Company’s marketing strategy differs from that of the Company’s peers and the Company’s offerings contain a significant level of customization and differentiation such that the comparable pricing of products with similar functionality cannot be obtained. Furthermore, the Company is unable to reliably determine what similar competitor products’ selling prices are on a stand-alone basis. Therefore, the Company is typically not able to determine TPE for the Company’s products. When the Company is unable to establish selling price using VSOE or TPE, the Company uses BSP. The objective of BSP is to determine the price at which the Company would transact a sale if the product or service were sold on a stand-alone basis. The BSP of each deliverable is determined using average discounts from list price from historical sales transactions or cost plus margin approaches based on the factors, including but not limited to, the Company’s gross margin objectives and pricing practices plus customer and market specific considerations. The Company has established TPE for its training, education and installation services. TPE is determined based on competitor prices for similar deliverables when sold separately. These service arrangements are typically short term in nature and are largely completed shortly after delivery of the product. Training and education services are based on a daily rate per person and vary according to the type of class offered. Installation services are based on daily rate per person and vary according to the complexity of the products being installed. Extended warranty services are priced based on the type of product and are sold in one to five year durations. Extended warranty services include the right to warranty coverage beyond the standard warranty period. In substantially all of the arrangements with multiple deliverables pertaining to arrangements with these services, the Company has used and intends to continue using VSOE to determine the selling price for the services. The Company determines VSOE based on its normal pricing practices for these specific services when sold separately |
Fair Value of Financial Instruments | Fair Value of Financial Instruments As of September 30, 2016 and December 31, 2015, the Company's financial instruments included cash and cash equivalents, short-term investments, trade and other receivables, other current assets, accounts payable, other current liabilities and debt. Due to the short-term maturities of cash and cash equivalents, trade and other receivables, other current assets, accounts payable and other current liabilities, the carrying amounts approximate fair value at the applicable balance sheet date. The carrying value of debt approximated its fair value based on a comparison with then-prevailing market interest rates. Due to the short-term maturities of the Company’s investments, carrying amounts approximated fair value at the applicable balance sheet date. The fair value of these instruments would be categorized as Level 2 in the fair value hierarchy, with the exception of cash and cash equivalents, which would be categorized as Level 1 |
Concentration of Risk | Concentration of Risk The Company’s customers include competitive and incumbent local exchange carriers, competitive access providers, Internet service providers, wireless carriers and resellers serving these markets. The Company performs ongoing credit evaluations of its customers and generally does not require collateral. Allowances are maintained for potential doubtful accounts |
Comprehensive Loss | Comprehensive Loss There have been no items reclassified out of accumulated other comprehensive loss and into net loss. The Company’s other comprehensive loss for the three and nine months ended September 30, 2016 and 2015 is comprised of only foreign exchange translation adjustments |
Recent Accounting Pronouncements | Recent Accounting Pronouncements On May 28, 2014, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The standard permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB issued ASU 2015-14, which defers the effective date of the guidance in ASU No. 2014-09, Revenue from Contracts with Customer, for all entities by one year. With the deferral, the new standard is effective for the Company on January 1, 2018. Early adoption is permitted, but not before the original effective date of January 1, 2017. In May 2016, the FASB issued ASU 2016-12, Revenue from Contracts with Customers, Narrow-Scope Improvements and Practical Expedients, which provides clarification on how to assess collectibility, present sales tax, treat noncash consideration, and account for completed and modified contracts at the time of transition of ASU 2014-09. The effective date of this updated guidance for the Company is the same as the effective date of ASU 2014-09, which is January 1, 2018. The Company does not plan to early adopt this guidance. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In August 2014, the FASB issued ASU No. 2014-15, Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern, which describes how an entity should assess its ability to meet obligations and sets rules for how this information should be disclosed in financial statements. The new standard is effective for the annual reporting period ending after December 31, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In July 2015, the FASB issued ASU No. 2015-11, Simplifying the Measurement of Inventory, which requires an entity to measure inventory at the lower of cost and net realizable value. The guidance does not apply to inventory that is measured using last-in, first-out ("LIFO") or the retail inventory method. The guidance applies to all other inventory, which includes inventory that is measured using first-in, first-out ("FIFO") or average cost. The guidance is effective for the Company on January 1, 2017, which will be adopted accordingly. ASU No. 2015-11 should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In November 2015, the FASB issued ASU 2015-17, Income Taxes, Balance Sheet Classification of Deferred Taxes, which simplifies the classification of deferred tax assets and liabilities as non-currrent in the balance sheet. The updated guidance is effective for the Company on January 1, 2017, which will be adopted accordingly, and early adoption is permitted. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In February 2016, the FASB issued ASU 2016-02, Leases. ASU 2016-02 requires that lease arrangements longer than 12 months result in an entity recognizing an asset and liability. The updated guidance is effective for the Company on January 1, 2019, and early adoption is permitted, which the Company does not plan to early adopt. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which requires entities to simplify several aspects of the accounting for share-based payment transactions, including income tax consequences, classification of awards as either equity or liabilities, and classification on statements of cash flows. The guidance is effective for the Company on January 1, 2017, which will be adopted accordingly, and early adoption is permitted. The Company is in the process of evaluating the impact of the guidance on its consolidated financial statements and related disclosures. In August 2016, FASB issued ASU 2016-15, Statement of Cash Flows, Classification of Certain Cash Receipts and Cash Payments, which addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The updated guidance is effective for the Company on January 1, 2018, and early adoption is permitted. |
Organization and Summary of S21
Organization and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accounting Policies [Abstract] | |
Schedule of Error Corrections and Prior Period Adjustments | The following schedules reconcile the amounts as previously reported in the unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2016 to the corresponding restated amounts (in thousands, except per share data): Unaudited Condensed Consolidated Balance Sheet September 30, 2016 As Previously Reported Restatement Adjustments As Restated Total current assets $ 127,626 $ 3,027 $ 130,653 Intangible assets (1) 22,573 (8,824 ) 13,749 Total assets 160,349 (5,797 ) 154,552 Total current liabilities 69,285 (3,024 ) 66,261 Other long-term liabilities (1) 8,024 (4,110 ) 3,914 Total liabilities 82,309 (5,334 ) 76,975 Common stock (2) 81,874 (81,858 ) 16 Additional paid-in-capital (2) 7,283 81,683 88,966 Other comprehensive loss 908 (3 ) 905 Accumulated deficit (12,743 ) (31 ) (12,774 ) Non-controlling interest 718 (254 ) 464 Total stockholders' equity 78,040 (463 ) 77,577 Total liabilities and stockholders' equity 160,349 (5,797 ) 154,552 (1) Amount presented has been reclassified for comparability purposes. (2) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. Unaudited Condensed Consolidated Balance Sheet December 31, 2015 As Previously Reported Restatement Adjustments As Restated Common stock (1) 56,579 (56,570 ) 9 Additional paid-in-capital (1) (8,890 ) 56,570 47,680 (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. Unaudited Condensed Consolidated Statements of Comprehensive Loss Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 As Previously Reported Restatement Adjustments As Restated As Previously Reported Restatement Adjustments As Restated Net revenue (1) $ 32,166 $ (86 ) $ 32,080 $ 93,256 $ (592 ) $ 92,664 Cost of revenue (2) 22,693 (132 ) 22,561 68,997 (132 ) 68,865 Selling, general and administrative 8,202 81 8,283 16,903 73 16,976 Net loss (4,881 ) 225 (4,656 ) (8,287 ) (281 ) (8,568 ) Comprehensive loss (2,612 ) 296 (2,316 ) (5,617 ) (210 ) (5,827 ) Basic and diluted net loss per share (3) $ (0.30 ) $ (0.12 ) $ (0.42 ) $ (0.51 ) $ (0.34 ) $ (0.85 ) (1) The Company incorrectly recorded $0.5 million of revenue on one of its customer contracts in the second quarter of 2016, which should have been recorded in the third quarter of 2016. The Company has properly presented this revenue in the three and nine months ended September 30, 2016 in the accompanying unaudited condensed consolidated financial statements and will revise the second quarter of 2016 unaudited consolidated condensed financial statements in the unaudited quarterly footnote included in the Company's Annual Report on Form 10-K and Quarterly Report on Form 10-Q for the second quarter of 2017 when comparative financial information is presented. Management has concluded that these adjustments were immaterial to prior period financial statements. (2) Amount presented has been reclassified for comparability purposes. (3) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. Unaudited Condensed Consolidated Statements of Comprehensive Loss Three Months Ended Nine Months Ended September 30, 2016 September 30, 2016 As Previously Reported As Restated As Previously Reported As Restated Basic and diluted net loss per share (1) $ (0.30 ) $ (0.42 ) $ (0.51 ) $ (0.85 ) Weighted average shares outstanding used to computer basic and diluted net loss per share (1) 16,368 11,139 16,348 10,046 (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. Unaudited Condensed Consolidated Statements of Comprehensive Loss Three Months Ended Nine Months Ended September 30, 2015 September 30, 2015 As Previously Reported As Restated As Previously Reported As Restated Basic and diluted net loss per share (1) $ (0.04 ) $ (0.30 ) $ (0.07 ) $ (0.53 ) Weighted average shares outstanding used to computer basic and diluted net loss per share (1) 69,401 9,331 69,401 9,266 (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. Unaudited Condensed Consolidated Statements of Cash Flows Nine Months Ended September 30, 2016 As Previously Reported Restatement Adjustments As Restated Cash acquired through Merger (1) $ — $ 7,013 $ 7,013 Movement to and from restricted cash (2) (1,055 ) (812 ) (1,867 ) Net cash (used in ) provided by investing activities (945 ) 6,201 5,256 (1) This amount includes Legacy Zhone's cash balance of $7.0 million as of the effective date of the Merger, which was originally included in the cash and cash equivalents at the beginning of period in the cash flow statement, partially offset by the reclassification of $0.8 million as cash outflow originally included in closing cash and cash equivalents as of September 30, 2016. (2) The Company did not appropriately classify restricted cash of $0.9 million separately from cash and cash equivalents as of December 31, 2015. The Company has corrected for this error as cumulative adjustment as of September 30, 2016. Management has concluded that this is not material to the current or prior period. |
Merger (Tables)
Merger (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Business Combinations [Abstract] | |
Schedule of Business Acquisitions, by Acquisition | The estimated total purchase consideration is calculated as follows (in thousands): Shares Estimated Fair Value As Previously Reported Restatement Adjustments As Restated Shares of Legacy Zhone stock as of September 8, 2016 (1) 6,874 $ 40,902 $ — $ 40,902 Legacy Zhone stock options (1) 265 715 (175 ) 540 Assumed liabilities 25,717 (5,474 ) 20,243 Total Purchase Consideration $ 67,334 $ (5,649 ) $ 61,685 |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block] | The following table summarizes the preliminary allocation of the fair value consideration transferred as of the acquisition date (unaudited, in thousands). The purchase price allocation is preliminary because the Company is still in the process of finalizing the valuation of acquired inventory balances: Fair Value of Total Assets As Previously Reported Restatement Adjustments As Restated Current tangible assets $ 40,747 $ 3,175 $ 43,922 Non-current tangible assets 4,464 — 4,464 Total tangible assets $ 45,211 $ 3,175 $ 48,386 Identifiable Intangible Assets Developed technology 3,040 20 3,060 Customer relationships 6,740 (1,500 ) 5,240 Backlog 2,017 162 2,179 Total Intangible Assets $ 11,797 $ (1,318 ) $ 10,479 Goodwill $ 10,326 $ (7,506 ) $ 2,820 Total Indicated Fair Value of Assets $ 67,334 $ (5,649 ) $ 61,685 |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The following table presents the fair values of the acquired intangible assets at the effective date of the Merger (in thousands, except years): Useful life (in Years) Fair Value Accumulated Amortization Net Developed technology 5 $ 3,060 $ (51 ) $ 3,009 Customer relationships 10 5,240 (80 ) 5,160 Backlog 1 2,179 (168 ) 2,011 $ 10,479 $ (299 ) $ 10,180 |
Business Acquisition, Pro Forma Information | The following unaudited pro forma condensed combined financial information for the three and nine months ended September 30, 2016 and 2015 gives effect to the Merger as if it had occurred at the beginning of each period presented. The unaudited pro forma condensed combined financial information has been included for comparative purposes only and is not necessarily indicative of the combined company's financial position or results of operations might have been had the Merger been completed as of the dates indicated. In addition, the unaudited pro forma condensed combined financial information does not purport to project the future financial position or results of operations of the combined company. The unaudited pro forma condensed combined financial information reflects adjustments related to the Merger, such as to record certain incremental expenses resulting from purchase accounting adjustments (such as amortization expenses in connection with the fair value adjustments to intangible assets and Merger-related costs). Three Months Ended September 30, Nine Months Ended 2016 2015 2016 2015 (As Restated) (As Restated) Pro forma total net revenue $ 40,580 $ 44,719 $ 144,362 $ 170,082 Pro forma net loss (15,436 ) (4,516 ) (24,989 ) (13,052 ) |
Inventories (Tables)
Inventories (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | Inventories, net as of September 30, 2016 and December 31, 2015 were as follows (in thousands): September 30, December 31, (As Restated) Raw materials $ 13,094 $ 5,519 Work in process 3,383 2,074 Finished goods 18,119 6,307 $ 34,596 $ 13,900 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and equipment, net, as of September 30, 2016 and December 31, 2015 were as follows (in thousands): September 30, December 31, (As Restated) Furniture and fixtures $ 23,521 $ 21,524 Machinery and equipment 5,709 3,173 Leasehold improvements 2,981 — Computers and software 410 — Other 77 74 32,698 24,771 Less accumulated depreciation and amortization (26,097 ) (22,121 ) Less government grants (343 ) (399 ) $ 6,258 $ 2,251 |
Goodwill and Intangible Asset25
Goodwill and Intangible Assets, net (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill as of September 30, 2016 and December 31, 2015 was as follows (in thousands): September 30, December 31, (As Restated) Beginning balance $ 693 $ — Addition due to acquisition 2,820 693 Less: accumulated impairment — — Ending balance $ 3,513 $ 693 |
Schedule of Intangible Assets and Goodwill | Intangible assets, net, as of September 30, 2016 and December 31, 2015 were as follows (in thousands): September 30, December 31, (As Restated) Developed Technology $ 3,060 $ — Customer Relationships 5,240 — Backlog 2,179 — Other 137 40 Less accumulated amortization (380 ) (37 ) Intangible assets, net $ 10,236 $ 3 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | As of September 30, 2016, expected future amortization expense for the fiscal years indicated was as follows (in thousands): Period Expected Amortization Expense Remainder of 2016 $ 1,470 2017 2,087 2018 1,145 2019 1,166 2020 1,136 Thereafter 3,232 Total $ 10,236 |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term Debt | As of September 30, 2016 and December 31, 2015, the Company had an aggregate outstanding balance of $20.1 million and $21.8 million , respectively, under such financing arrangements, and the interest rates per annum applicable to outstanding borrowings under these financing arrangements were as listed in the tables below. As of September 30, 2016 Interest rate (%) Amount Industrial Bank of Korea Trade loan 2.06-2.38 $ 941 Shinhan Bank General loan 4.26 3,649 Shinhan Bank Trade finance 3.23-3.29 3,100 NongHyup Bank Trade loan 1.66-2.31 207 KEB Han Bank Comprehensive credit loan 2.89 4,034 The Export-Import Bank of Korea Export development loan 2.88 8,210 $ 20,141 As of December 31, 2015 Interest rate (%) Amount Industrial Bank of Korea Trade loan 2.04-2.34 $ 3,431 Shinhan Bank General loan 2.94 3,413 Shinhan Bank Trade finance 2.80 329 NongHyup Bank Trade loan 1.60-1.95 1,574 KEB Han Bank Comprehensive credit loan 3.55 5,421 The Export-Import Bank of Korea Export development loan 2.94 7,680 $ 21,848 |
Non-Controlling Interests (Tabl
Non-Controlling Interests (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Noncontrolling Interest [Abstract] | |
Redeemable Noncontrolling Interest | Non-controlling interests were as follows (in thousands): Nine Months Ended September 30, 2016 2015 Beginning non-controlling interests $ 138 $ — Acquisition of additional interest in a subsidiary 277 — Net income attributable to non-controlling interests (17 ) — Foreign currency translation adjustments (OCI) 66 — Ending non-controlling interests $ 464 $ — |
Related Party (Tables)
Related Party (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Sales and purchases to and from related parties for the three and nine months ended September 30, 2016 and 2015 were as follows (in thousands): Three Months Ended September 30, 2016 Counterparty Sales Selling, Administrative and R&D Expenses Other Expenses Parent Company DASAN $ 4,960 $ 1,032 $ 89 Other related parties DASAN RND Co., LTD — — — PANDA Media, Inc. — — — DMC, Inc. — — — Tomato Soft Ltd. — 38 — Tomato Soft (Xi'an) Ltd. — 188 — CHASAN Networks (Shenzhen) Co., Ltd. — 175 — D-Mobile 1,267 128 — DASAN FRANCE 3 — — HANDYSOFT, Inc. 68 — — J-Mobile Corporation — 11 — $ 6,298 $ 1,572 $ 89 Nine Months Ended September 30, 2016 Counterparty Sales Selling, Administrative and R&D Expenses Other Expenses Parent Company DASAN $ 9,857 $ 4,620 $ 309 Other related parties DASAN RND Co., LTD — — — PANDA Media, Inc. — 2 — DMC, Inc. 1 — — Tomato Soft Ltd. — 98 — Tomato Soft (Xi'an) Ltd. — 559 — CHASAN Networks (Shenzhen) Co., Ltd. — 545 — D-Mobile 3,135 317 — DASAN FRANCE 3 — — HANDYSOFT, Inc. 151 — — J-Mobile Corporation 3 633 — $ 13,150 $ 6,774 $ 309 Three Months Ended September 30, 2015 Counterparty Sales Selling, Administrative and R&D Expenses Other Expenses Parent Company DASAN $ 2,630 $ 1,285 $ 96 Other related parties DASAN RND Co., LTD — 35 — PANDA Media, Inc. — — — DMC, Inc. — — — Tomato Soft Ltd. — 37 — Tomato Soft (Xi'an) Ltd. — 161 — CHASAN Networks (Shenzhen) Co., Ltd. — 234 — D-Mobile — — — DASAN FRANCE — — — HANDYSOFT, Inc. 69 — 1 J-Mobile Corporation — 576 — $ 2,699 $ 2,328 $ 97 Nine Months Ended September 30, 2015 Counterparty Sales Selling, Administrative and R&D Expenses Other Expenses Acquisition of Tangible and Intangible Assets Parent Company DASAN $ 8,385 $ 5,339 $ 436 $ — Other related parties DASAN RND Co., LTD — 335 — — PANDA Media, Inc. — — — — DMC, Inc. — — — — Tomato Soft Ltd. — 70 — — Tomato Soft (Xi'an) Ltd. — 316 — — CHASAN Networks (Shenzhen) Co., Ltd. — 487 — — D-Mobile — — — — DASAN FRANCE — — — — HANDYSOFT, Inc. 1,292 — 21 187 J-Mobile Corporation — 646 — — $ 9,677 $ 7,193 $ 457 $ 187 Balances of receivables and payables arising from sales and purchases of goods and services with related parties as of September 31, 2016 and December 31, 2015 were as follows (in thousands): As of September 30, 2016 Counterparty Account Receivables Loans Other* Other Receivables Other Payables Parent Company DASAN $ 5,893 $ — $ 780 $ 70 $ 12,665 Other related parties PANDA Media, Inc. — — — — — DMC, Inc. — — — — — Tomato Soft Ltd. — — — — 9 Tomato Soft (Xi'an) Ltd. — — — — 63 CHASAN Networks — — — — — (Shenzhen) Co., Ltd. — — — — 63 D-Mobile 3,107 — — 13 — ABLE 3 — — — — DASAN France — — — 4 — HANDYSOFT, Inc. 28 — — — — J-Mobile Corporation — 298 296 $ 9,031 $ — $ 780 $ 385 $ 13,096 As of December 31, 2015 Counterparty Account Receivables Loans Other* Other Receivables Other Payables Parent Company DASAN $ 5,622 $ — $ 3,137 $ 1,431 $ — Other related parties PANDA Media, Inc. — — — — — DMC, Inc. — — — 1 — Tomato Soft Ltd. — — — — 16 Tomato Soft (Xi'an) Ltd. — — — — 55 CHASAN Networks (Shenzhen) Co., Ltd. — — — — 62 D-Mobile — — — — — ABLE — — — — — DASAN France — — — — — HANDYSOFT, Inc. 22 — — — — J-Mobile Corporation — 430 310 — $ 5,644 $ 430 $ 3,137 $ 1,742 $ 133 * Included in other assets related to deposits for lease in the unaudited condensed consolidated balance sheet as of September 30, 2016 and the audited consolidated balance sheet as of December 31, 2015. |
Net Loss Per Share (Tables)
Net Loss Per Share (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The following table is a reconciliation of the numerator and denominator in the basic and diluted net loss per share calculation (in thousands, except per share data): Three Months Ended September 30, Nine Months Ended September 30, 2016 2015 2016 2015 (As Restated) (As Restated) Net loss: $ (4,656 ) $ (2,780 ) $ (8,568 ) $ (4,938 ) Weighted average number of shares outstanding: Basic (as restated) (1) 11,139 9,331 10,046 9,266 Effect of dilutive securities: Stock options and share awards — — — — Diluted (as restated) (1) 11,139 9,331 10,046 9,266 Net loss per share Basic (as restated) (1) $ (0.42 ) $ (0.30 ) $ (0.85 ) $ (0.53 ) Diluted (as restated) (1) $ (0.42 ) $ (0.30 ) $ (0.85 ) $ (0.53 ) (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. |
Potential Common Stock not Included in Diluted Net Income (Loss) Per Share Calculation | The following tables set forth potential shares of the Company's common stock that are not included in the diluted net loss per share calculation for the three and nine months ended September 30, 2016 because their effect would be antidilutive for the periods indicated (in thousands, except exercise price per share data): Three Months Ended September 30, 2016 Weighted Average Exercise Price Nine Months Ended September 30, 2016 Weighted Average Exercise Price Outstanding stock options (1) 804 $ 1.38 804 $ 1.38 (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Estimated Future Lease Payments under All Non Cancelable Operating Leases | Estimated future lease payments under all non-cancelable operating leases with terms in excess of one year, including taxes and service fees, are as follows (in thousands): Operating Leases As Previously Reported Restatement Adjustments As Restated Year ending December 31: 2016 (remainder of the year) $ 272 $ 564 $ 836 2017 1,470 2,156 3,626 2018 1,066 1,852 2,918 2019 597 1,738 2,335 2020 and thereafter 4,237 8,299 12,536 Total minimum lease payments $ 7,642 $ 14,609 $ 22,251 |
Reconciliation of Changes in Accrued Warranties and Related Costs | The following table reconciles changes in the Company’s accrued warranties and related costs for the nine months ended September 30, 2016 and 2015 (in thousands): Nine Months Ended September 30, 2016 2015 Beginning balance $ 441 $ 389 Warranty liabilities acquired 652 — Charged to cost of revenue 703 289 Claims and settlements (805 ) (297 ) Ending balance $ 991 $ 381 |
Schedule of Payment Guarantees | The following table sets forth third parties that have provided payment guarantees of the Company's indebtedness and other obligations as of September 30, 2016 (in thousands): Guarantor Amount Guaranteed Description of Obligations Guaranteed DASAN $ 4,378 Borrowings from Shinhan Bank DASAN 4,800 Borrowings from KEB Hana Bank DASAN 11,684 Borrowings from Industrial Bank of Korea DASAN 6,000 Letter of credit from Nonghyup Bank Industrial Bank of Korea 3,593 Letter of credit NongHyup Bank 2,156 Letter of credit Other 1,438 Performance payment guarantee $ 34,049 |
Enterprise-Wide Information (Ta
Enterprise-Wide Information (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Segment Reporting [Abstract] | |
Revenue and Assets by Geography | September 30, 2016 December 31, 2015 Assets by Geography: United States $ 4,363 $ 113 Korea 1,732 2,138 Japan and Vietnam 163 — $ 6,258 $ 2,251 The following summarizes required disclosures about geographic concentrations and revenue by products and services (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (As restated) (As restated) Revenue by Geography: United States $ 6,558 $ 550 $ 7,495 $ 3,988 Canada 255 — 255 — Total North America 6,813 550 7,750 3,988 Latin America 1,406 — 1,406 — Europe, Middle East, Africa 1,301 — 1,301 — Korea 18,073 18,453 52,337 67,116 Other Asia Pacific 4,487 3,588 29,870 22,235 Total International 25,267 22,041 84,914 89,351 $ 32,080 $ 22,591 $ 92,664 $ 93,339 |
Revenue by Products and Services | Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (As restated) (As restated) Revenue by Products and Services: Products $ 29,731 $ 22,371 $ 86,498 $ 88,946 Services 2,349 220 6,166 4,393 Total $ 32,080 $ 22,591 $ 92,664 $ 93,339 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Income Tax Disclosure [Abstract] | |
Open Tax Years for Major Jurisdictions | The Company or one of its subsidiaries files income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. The open tax years for the major jurisdictions are as follows: • Federal 2012 – 2015 • California and Canada 2011 – 2015 • Brazil 2010 – 2015 • Germany 2008 – 2015 • Japan 2011 – 2015 • Korea 2014 – 2015 • United Kingdom 2011 – 2015 |
Organization and Summary of S33
Organization and Summary of Significant Accounting Policies - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016USD ($)customer | Sep. 30, 2015USD ($)customer | Sep. 30, 2016USD ($)productcustomer | Sep. 30, 2015USD ($)customer | Dec. 31, 2015USD ($)customer | Dec. 31, 2014USD ($) | |
Significant Accounting Policies [Line Items] | ||||||
Number of product areas | product | 5 | |||||
Net loss | $ (4,656,000) | $ (2,780,000) | $ (8,568,000) | $ (4,938,000) | $ (3,000,000) | |
Cash and cash equivalents | 33,563,000 | $ 5,194,000 | 33,563,000 | $ 5,194,000 | 10,015,000 | $ 6,786,000 |
Outstanding debt | 26,900,000 | 26,900,000 | ||||
Maximum borrowing amount | 37,000,000 | 37,000,000 | ||||
Letters of credit outstanding | 9,500,000 | 9,500,000 | ||||
Short-term debt | $ 20,141,000 | $ 20,141,000 | $ 21,848,000 | |||
Minimum | ||||||
Significant Accounting Policies [Line Items] | ||||||
Extended product warranty, term | 1 year | |||||
Maximum | ||||||
Significant Accounting Policies [Line Items] | ||||||
Extended product warranty, term | 5 years | |||||
Net Revenue | ||||||
Significant Accounting Policies [Line Items] | ||||||
Number of customers | customer | 3 | 3 | 3 | 3 | ||
Net Revenue | Customer Concentration Risk | Three major customers | ||||||
Significant Accounting Policies [Line Items] | ||||||
Percentage of net revenue | 55.00% | 63.00% | 48.00% | 55.00% | ||
Accounts Receivable | ||||||
Significant Accounting Policies [Line Items] | ||||||
Number of customers | customer | 3 | 3 | ||||
Accounts Receivable | Customer Concentration Risk | Three major customers | ||||||
Significant Accounting Policies [Line Items] | ||||||
Percentage of net revenue | 37.00% | 66.00% | ||||
Accounts Receivable | Geographic Concentration Risk | Other than the United States | ||||||
Significant Accounting Policies [Line Items] | ||||||
Percentage of net revenue | 86.00% | 93.00% | ||||
WFB Facility | ||||||
Significant Accounting Policies [Line Items] | ||||||
Maximum borrowing amount | $ 25,000,000 | $ 25,000,000 | ||||
Letters of credit outstanding | $ 3,800,000 | $ 3,800,000 |
Organization and Summary of S34
Organization and Summary of Significant Accounting Policies - Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2014 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Total current assets | $ 130,653 | $ 74,775 | |||
Intangible assets, net | 13,749 | ||||
Total assets | 154,552 | 83,591 | |||
Total current liabilities | 66,261 | 41,251 | |||
Other long-term liabilities | 3,914 | ||||
Total liabilities | 76,975 | 41,761 | |||
Common stock | [1] | 16 | 9 | ||
Additional paid-in capital (1) | [1] | 88,966 | 47,680 | ||
Other comprehensive loss | 905 | (1,775) | |||
Accumulated deficit | (12,774) | (4,222) | |||
Non-controlling interest | 464 | 138 | $ 0 | $ 0 | |
Total stockholders’ equity | 77,577 | 41,830 | |||
Total liabilities and stockholders’ equity | 154,552 | 83,591 | |||
Scenario, Previously Reported [Member] | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Total current assets | 127,626 | ||||
Intangible assets, net | 22,573 | ||||
Total assets | 160,349 | ||||
Total current liabilities | 69,285 | ||||
Other long-term liabilities | 8,024 | ||||
Total liabilities | 82,309 | ||||
Common stock | 81,874 | 56,579 | |||
Additional paid-in capital (1) | 7,283 | (8,890) | |||
Other comprehensive loss | 908 | ||||
Accumulated deficit | (12,743) | ||||
Non-controlling interest | 718 | ||||
Total stockholders’ equity | 78,040 | ||||
Total liabilities and stockholders’ equity | 160,349 | ||||
Restatement Adjustment [Member] | |||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||
Total current assets | 3,027 | ||||
Intangible assets, net | (8,824) | ||||
Total assets | (5,797) | ||||
Total current liabilities | (3,024) | ||||
Other long-term liabilities | (4,110) | ||||
Total liabilities | (5,334) | ||||
Common stock | (81,858) | (56,570) | |||
Additional paid-in capital (1) | 81,683 | $ 56,570 | |||
Other comprehensive loss | (3) | ||||
Accumulated deficit | (31) | ||||
Non-controlling interest | (254) | ||||
Total stockholders’ equity | (463) | ||||
Total liabilities and stockholders’ equity | $ (5,797) | ||||
[1] | Authorized and outstanding share amounts reflect the one-for-five reverse stock split effected on February 28, 2017. |
Organization and Summary of S35
Organization and Summary of Significant Accounting Policies - Consolidated Statements of Comprehensive Loss (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | ||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
Net revenue | $ 32,080 | $ 22,591 | $ 92,664 | $ 93,339 | |||
Cost of revenue | 22,561 | 68,865 | |||||
Selling, general and administrative | 8,283 | 3,937 | 16,976 | 12,454 | |||
Net loss | (4,656) | (2,780) | (8,568) | (4,938) | $ (3,000) | ||
Comprehensive loss | $ (2,316) | $ (1,771) | $ (5,827) | $ (4,831) | |||
Basic and diluted net loss per share (in USD per share) | [1] | $ (0.42) | $ (0.30) | $ (0.85) | $ (0.53) | ||
Weighted average shares outstanding used to compute basic and diluted net loss per share (in shares) | [1] | 11,139 | 9,331 | 10,046 | 9,266 | ||
Scenario, Previously Reported [Member] | |||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
Net revenue | $ 32,166 | $ 93,256 | |||||
Cost of revenue | 22,693 | 68,997 | |||||
Selling, general and administrative | 8,202 | 16,903 | |||||
Net loss | (4,881) | (8,287) | |||||
Comprehensive loss | $ (2,612) | $ (5,617) | |||||
Basic and diluted net loss per share (in USD per share) | $ (0.30) | $ (0.04) | $ (0.51) | $ (0.07) | |||
Weighted average shares outstanding used to compute basic and diluted net loss per share (in shares) | 16,368 | 69,401 | 16,348 | 69,401 | |||
Restatement Adjustment [Member] | |||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
Net revenue | $ (86) | $ (592) | |||||
Cost of revenue | (132) | (132) | |||||
Selling, general and administrative | 81 | 73 | |||||
Net loss | 225 | (281) | |||||
Comprehensive loss | $ 296 | $ (210) | |||||
Basic and diluted net loss per share (in USD per share) | $ (0.12) | $ (0.34) | |||||
Revenue Recorded In Wrong Period [Member] | Scenario, Previously Reported [Member] | |||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||||||
Net revenue | $ 500 | ||||||
[1] | All per share and weighted average share amounts have been adjusted to retroactively reflect the one-for-five reverse stock split effected on February 28, 2017. |
Organization and Summary of S36
Organization and Summary of Significant Accounting Policies - Consolidated Statement of Cash Flows (Details) - USD ($) $ in Thousands | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cash acquired through the Merger | $ 7,013 | $ 0 | |
Movement to and from restricted cash | 1,867 | ||
Net cash provided by investing activities | 5,256 | $ 1,823 | |
Cash | 7,000 | ||
Inappropriately Included In Cash And Cash Equivalents [Member] | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Restricted cash | $ 900 | ||
Scenario, Previously Reported [Member] | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cash acquired through the Merger | 0 | ||
Movement to and from restricted cash | 1,055 | ||
Net cash provided by investing activities | (945) | ||
Restatement Adjustment [Member] | |||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | |||
Cash acquired through the Merger | 7,013 | ||
Movement to and from restricted cash | 812 | ||
Net cash provided by investing activities | 6,201 | ||
Cash | $ 800 |
Organization and Summary of S37
Organization and Summary of Significant Accounting Policies - Subsidiary Ownership Percentages (Details) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Dasan Network Solutions, Inc. (DNS) | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Subsidiary ownership percent | 100.00% | 100.00% |
Dasan Network Solutions, Inc. (DNS Korea) | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Subsidiary ownership percent | 100.00% | 100.00% |
DASAN Network Solutions Japan Co., Ltd. (formerly: HandySoft Japan Co., Ltd.) | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Subsidiary ownership percent | 69.09% | 50.25% |
DASAN Vietnam Co., Ltd | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Subsidiary ownership percent | 100.00% |
Merger (Details)
Merger (Details) - USD ($) $ / shares in Units, $ in Millions | Sep. 09, 2016 | Sep. 30, 2016 | Sep. 08, 2016 | Apr. 11, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | |||||
Common stock, outstanding (in shares) | 16,375,000 | 6,874,253 | 9,493,000 | ||
Merger Agreement with Dragon Acquisition Company | |||||
Business Acquisition [Line Items] | |||||
Percent of voting interest acquired | 58.00% | ||||
Shares issued in merger (in shares) | 9,493,016 | ||||
Shares issued in merger held in escrow (in shares) | 949,302 | ||||
Percent of voting interest retained by existing shareholders | 42.00% | ||||
Business acquisition, share price (in dollars per share) | $ 5.95 | ||||
Common stock, outstanding (in shares) | 6,874,000 | ||||
Business combination, fair value of trade receivables acquired | $ 17.7 | ||||
Business combination, allowance for doubtful accounts receivable | 4.6 | ||||
Merger related costs | $ 1.3 | ||||
Business combination, revenues since acquisition | $ 5.7 | ||||
Business combination, net income (loss) since acquisition | $ (2.3) |
Merger - Estimated Purchase Con
Merger - Estimated Purchase Consideration (Details) - USD ($) $ in Thousands | Sep. 09, 2016 | Sep. 30, 2016 | Sep. 08, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||||
Shares issued in merger (in shares) | 16,375,000 | 6,874,253 | 9,493,000 | |
Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Shares issued in merger (in shares) | 6,874,000 | |||
Shares issued in merger, fair value | $ 40,902 | |||
Stock options assumed in merger (in shares) | 265,000 | |||
Stock options assumed in merger, fair value | 540 | |||
Assumed liabilities | 20,243 | |||
Total Purchase Consideration | 61,685 | |||
Scenario, Previously Reported [Member] | ||||
Business Acquisition [Line Items] | ||||
Shares issued in merger (in shares) | 81,900,000 | |||
Scenario, Previously Reported [Member] | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Shares issued in merger, fair value | 40,902 | |||
Stock options assumed in merger, fair value | 715 | |||
Assumed liabilities | 25,717 | |||
Total Purchase Consideration | 67,334 | |||
Restatement Adjustment [Member] | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Shares issued in merger, fair value | 0 | |||
Stock options assumed in merger, fair value | (175) | |||
Assumed liabilities | (5,474) | |||
Total Purchase Consideration | $ (5,649) |
Merger - Schedule of Assets Acq
Merger - Schedule of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Sep. 09, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 3,513 | $ 693 | $ 0 | |
Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Current tangible assets | $ 43,922 | |||
Non-current tangible assets | 4,464 | |||
Total tangible assets | 48,386 | |||
Identifiable Intangible Assets | 10,479 | |||
Goodwill | 2,820 | |||
Total Indicated Value of Assets | 61,685 | |||
Developed Technology | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Identifiable Intangible Assets | 3,060 | |||
Customer Relationships | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Identifiable Intangible Assets | 5,240 | |||
Backlog | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Identifiable Intangible Assets | 2,179 | |||
Scenario, Previously Reported [Member] | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Current tangible assets | 40,747 | |||
Non-current tangible assets | 4,464 | |||
Total tangible assets | 45,211 | |||
Identifiable Intangible Assets | 11,797 | |||
Goodwill | 10,326 | |||
Total Indicated Value of Assets | 67,334 | |||
Scenario, Previously Reported [Member] | Developed Technology | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Identifiable Intangible Assets | 3,040 | |||
Scenario, Previously Reported [Member] | Customer Relationships | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Identifiable Intangible Assets | 6,740 | |||
Scenario, Previously Reported [Member] | Backlog | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Identifiable Intangible Assets | 2,017 | |||
Restatement Adjustment [Member] | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Current tangible assets | 3,175 | |||
Non-current tangible assets | 0 | |||
Total tangible assets | 3,175 | |||
Identifiable Intangible Assets | (1,318) | |||
Goodwill | (7,506) | |||
Total Indicated Value of Assets | (5,649) | |||
Restatement Adjustment [Member] | Developed Technology | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Identifiable Intangible Assets | 20 | |||
Restatement Adjustment [Member] | Customer Relationships | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Identifiable Intangible Assets | (1,500) | |||
Restatement Adjustment [Member] | Backlog | Merger Agreement with Dragon Acquisition Company | ||||
Business Acquisition [Line Items] | ||||
Identifiable Intangible Assets | $ 162 |
Merger - Fair Value of Intangib
Merger - Fair Value of Intangible Assets Acquired (Details) - Merger Agreement with Dragon Acquisition Company $ in Thousands | Sep. 09, 2016USD ($) |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair Value | $ 10,479 |
Accumulated Amortization | (299) |
Net | $ 10,180 |
Developed Technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life (in Years) | 5 years |
Fair Value | $ 3,060 |
Accumulated Amortization | (51) |
Net | $ 3,009 |
Customer Relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life (in Years) | 10 years |
Fair Value | $ 5,240 |
Accumulated Amortization | (80) |
Net | $ 5,160 |
Backlog | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life (in Years) | 1 year |
Fair Value | $ 2,179 |
Accumulated Amortization | (168) |
Net | $ 2,011 |
Merger - Proforma Information (
Merger - Proforma Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Business Acquisition [Line Items] | |||||
Pro forma net loss | $ (4,656) | $ (2,780) | $ (8,568) | $ (4,938) | $ (3,000) |
Merger Adjustments | Merger Agreement with Dragon Acquisition Company | |||||
Business Acquisition [Line Items] | |||||
Pro forma total net revenue | 40,580 | 44,719 | 144,362 | 170,082 | |
Pro forma net loss | $ (15,436) | $ (4,516) | $ (24,989) | $ (13,052) |
Inventories (Detail)
Inventories (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 13,094 | $ 5,519 |
Work in process | 3,383 | 2,074 |
Finished goods | 18,119 | 6,307 |
Inventories | $ 34,596 | $ 13,900 |
Property and Equipment, Net (De
Property and Equipment, Net (Detail) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 32,698 | $ 24,771 |
Less accumulated depreciation and amortization | (26,097) | (22,121) |
Less government grants | (343) | (399) |
Property and equipment, net | 6,258 | 2,251 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 23,521 | 21,524 |
Machinery and equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 5,709 | 3,173 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 2,981 | 0 |
Computers and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 410 | 0 |
Other | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 77 | $ 74 |
Property and Equipment, Net -
Property and Equipment, Net - Additional Information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Property, Plant and Equipment [Abstract] | ||||
Depreciation and amortization associated with property and equipment | $ 0.3 | $ 0.3 | $ 0.8 | $ 1.1 |
Goodwill and Intangible Asset46
Goodwill and Intangible Assets, net - Goodwill (Details) - USD ($) $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2015 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 693 | $ 0 |
Addition due to acquisition | 2,820 | 693 |
Less: accumulated impairment | 0 | 0 |
Ending balance | $ 3,513 | $ 693 |
Goodwill and Intangible Asset47
Goodwill and Intangible Assets, net (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||||
Less accumulated amortization | $ (380,000) | $ (380,000) | $ (37,000) | ||
Intangible assets, net | 10,236,000 | 10,236,000 | 3,000 | ||
Amortization of intangible assets | 300,000 | $ 100,000 | 400,000 | $ 100,000 | |
Developed Technology | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, gross | 3,060,000 | 3,060,000 | 0 | ||
Customer Relationships | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, gross | 5,240,000 | 5,240,000 | 0 | ||
Backlog | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, gross | 2,179,000 | 2,179,000 | 0 | ||
Other | |||||
Finite-Lived Intangible Assets [Line Items] | |||||
Finite-lived intangible assets, gross | $ 137,000 | $ 137,000 | $ 40,000 |
Goodwill and Intangible Asset48
Goodwill and Intangible Assets, net - Future Amortization (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Remainder of 2016 | $ 1,470 |
2,017 | 2,087 |
2,018 | 1,145 |
2,019 | 1,166 |
2,020 | 1,136 |
Thereafter | 3,232 |
Finite-Lived Intangible Assets, Net | $ 10,236 |
Debt - Additional Information
Debt - Additional Information (Detail) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Line of Credit Facility [Line Items] | ||
Maximum borrowing amount | $ 37,000,000 | |
Letters of credit outstanding | 9,500,000 | |
WFB credit facility, unused borrowing availability | $ 2,900,000 | |
WFB credit facility, interest rate | 3.35% | |
Short-term debt | $ 20,141,000 | $ 21,848,000 |
WFB Facility | ||
Line of Credit Facility [Line Items] | ||
Maximum borrowing amount | 25,000,000 | |
Letters of credit outstanding | $ 3,800,000 | |
WFB credit facility, commitment fee on unused capacity, percentage | 0.25% | |
Financing Arrangements of Foreign Subsidiaries | ||
Line of Credit Facility [Line Items] | ||
Short-term debt | $ 20,100,000 | $ 21,800,000 |
Foreign Line of Credit [Member] | ||
Line of Credit Facility [Line Items] | ||
Letters of credit outstanding | 12,000,000 | |
Commitment as security for various letters of credit | $ 5,700,000 |
Debt - Schedule of Short Term D
Debt - Schedule of Short Term Debt (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Short-term Debt [Line Items] | ||
Short-term debt | $ 20,141 | $ 21,848 |
Industrial Bank of Korean, Trade Loan | ||
Short-term Debt [Line Items] | ||
Short-term debt | 941 | 3,431 |
Shinhan Bank, General Loan | ||
Short-term Debt [Line Items] | ||
Short-term debt | $ 3,649 | $ 3,413 |
Stated interest rate | 4.26% | 2.94% |
Shinhan Bank, Trade Finance | ||
Short-term Debt [Line Items] | ||
Short-term debt | $ 3,100 | $ 329 |
NongHyup Bank, Trade Loan | ||
Short-term Debt [Line Items] | ||
Short-term debt | 207 | 1,574 |
KEB Hana Bank Credit Loan | ||
Short-term Debt [Line Items] | ||
Short-term debt | $ 4,034 | $ 5,421 |
Stated interest rate | 2.89% | 3.55% |
The Export-Import Bank of Korea, Export Development Loan | ||
Short-term Debt [Line Items] | ||
Short-term debt | $ 8,210 | $ 7,680 |
Stated interest rate | 2.88% | 2.94% |
Minimum | Industrial Bank of Korean, Trade Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 2.06% | 2.04% |
Minimum | Shinhan Bank, Trade Finance | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.23% | 2.80% |
Minimum | NongHyup Bank, Trade Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 1.66% | 1.60% |
Maximum | Industrial Bank of Korean, Trade Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 2.38% | 2.34% |
Maximum | Shinhan Bank, Trade Finance | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 3.29% | |
Maximum | NongHyup Bank, Trade Loan | ||
Short-term Debt [Line Items] | ||
Stated interest rate | 2.31% | 1.96% |
Non-Controlling Interests (Deta
Non-Controlling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Stockholders' Equity Attributable to Noncontrolling Interest [Roll Forward] | ||||
Beginning non-controlling interests | $ 138 | $ 0 | ||
Acquisition of additional interest in a subsidiary | 277 | 0 | ||
Net income attributable to non-controlling interests | $ (56) | $ 0 | (17) | 0 |
Foreign currency translation adjustments (OCI) | 66 | 0 | ||
Ending non-controlling interests | $ 464 | $ 0 | $ 464 | $ 0 |
Related Party (Details)
Related Party (Details) - USD ($) | Sep. 09, 2016 | Feb. 29, 2016 | Feb. 27, 2017 | Sep. 30, 2016 |
Related Party Transaction [Line Items] | ||||
Maximum borrowing amount | $ 37,000,000 | |||
Junior Lien [Member] | DASAN [Member] | Majority Shareholder [Member] | Loan Agreement [Member] | Dasan Network Solutions, Inc. (DNS) | ||||
Related Party Transaction [Line Items] | ||||
Origination of notes receivable from related parties | $ 1,800,000 | |||
Stated interest rate | 6.90% | |||
Unsecured Debt [Member] | Junior Lien [Member] | DASAN [Member] | Term Loan [Member] | Majority Shareholder [Member] | Loan Agreement [Member] | ||||
Related Party Transaction [Line Items] | ||||
Maximum borrowing amount | $ 5,000,000 | |||
Origination of notes receivable from related parties | $ 5,000,000 | |||
Stated interest rate | 4.60% | |||
Subsequent Event [Member] | Junior Lien [Member] | DASAN [Member] | Majority Shareholder [Member] | Loan Agreement [Member] | Dasan Network Solutions, Inc. (DNS) | ||||
Related Party Transaction [Line Items] | ||||
Stated interest rate | 4.60% |
Related Party - Sales and Purch
Related Party - Sales and Purchases To and From Related Parties (Details) - Sales And Purchases To And From Related Parties [Member] - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Related Party Transaction [Line Items] | ||||
Sales | $ 6,298 | $ 2,699 | $ 13,150 | $ 9,677 |
Selling, Administrative and R&D Expenses | 1,572 | 2,328 | 6,774 | 7,193 |
Other Expenses | 89 | 97 | 309 | 457 |
Acquisition of Tangible and Intangible Assets | 187 | |||
DASAN [Member] | Majority Shareholder [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 4,960 | 2,630 | 9,857 | 8,385 |
Selling, Administrative and R&D Expenses | 1,032 | 1,285 | 4,620 | 5,339 |
Other Expenses | 89 | 96 | 309 | 436 |
Acquisition of Tangible and Intangible Assets | 0 | |||
DASAN RND Co, LTD [Member] | Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
Selling, Administrative and R&D Expenses | 0 | 35 | 0 | 335 |
Other Expenses | 0 | 0 | 0 | 0 |
Acquisition of Tangible and Intangible Assets | 0 | |||
PANDA Media, Inc. [Member] | Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
Selling, Administrative and R&D Expenses | 0 | 0 | 2 | 0 |
Other Expenses | 0 | 0 | 0 | 0 |
Acquisition of Tangible and Intangible Assets | 0 | |||
DMC, Inc. [Member] | Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 0 | 0 | 1 | 0 |
Selling, Administrative and R&D Expenses | 0 | 0 | 0 | 0 |
Other Expenses | 0 | 0 | 0 | 0 |
Acquisition of Tangible and Intangible Assets | 0 | |||
Tomato Soft Ltd. [Member] | Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
Selling, Administrative and R&D Expenses | 38 | 37 | 98 | 70 |
Other Expenses | 0 | 0 | 0 | 0 |
Acquisition of Tangible and Intangible Assets | 0 | |||
Tomato Soft (Xi'an) Ltd. [Member] | Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
Selling, Administrative and R&D Expenses | 188 | 161 | 559 | 316 |
Other Expenses | 0 | 0 | 0 | 0 |
Acquisition of Tangible and Intangible Assets | 0 | |||
CHASAN Networks (Shenzhen) Co., Ltd. [Member] | Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 0 | 0 | 0 | 0 |
Selling, Administrative and R&D Expenses | 175 | 234 | 545 | 487 |
Other Expenses | 0 | 0 | 0 | 0 |
Acquisition of Tangible and Intangible Assets | 0 | |||
D-Mobile [Member] | Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 1,267 | 0 | 3,135 | 0 |
Selling, Administrative and R&D Expenses | 128 | 0 | 317 | 0 |
Other Expenses | 0 | 0 | 0 | 0 |
Acquisition of Tangible and Intangible Assets | 0 | |||
DASAN France [Member] | Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 3 | 0 | 3 | 0 |
Selling, Administrative and R&D Expenses | 0 | 0 | 0 | 0 |
Other Expenses | 0 | 0 | 0 | 0 |
Acquisition of Tangible and Intangible Assets | 0 | |||
HANDYSOFT, Inc. [Member] | Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 68 | 69 | 151 | 1,292 |
Selling, Administrative and R&D Expenses | 0 | 0 | 0 | 0 |
Other Expenses | 0 | 1 | 0 | 21 |
Acquisition of Tangible and Intangible Assets | 187 | |||
J-Mobile Corporation [Member] | Affiliated Entity [Member] | ||||
Related Party Transaction [Line Items] | ||||
Sales | 0 | 0 | 3 | 0 |
Selling, Administrative and R&D Expenses | 11 | 576 | 633 | 646 |
Other Expenses | $ 0 | $ 0 | $ 0 | 0 |
Acquisition of Tangible and Intangible Assets | $ 0 |
Related Party - Balances of Rec
Related Party - Balances of Receivables and Payables with Related Parties (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Related Party Transaction [Line Items] | ||
Others | $ 1,603 | $ 1,352 |
Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 9,031 | 5,644 |
Loans | 0 | 430 |
Other | 780 | 3,137 |
Other Receivables | 385 | 1,742 |
Others | 13,096 | 133 |
DASAN [Member] | Majority Shareholder [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 5,893 | 5,622 |
Loans | 0 | 0 |
Other | 780 | 3,137 |
Other Receivables | 70 | 1,431 |
Others | 12,665 | 0 |
PANDA Media, Inc. [Member] | Affiliated Entity [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 0 | 0 |
Loans | 0 | 0 |
Other | 0 | 0 |
Other Receivables | 0 | 0 |
Others | 0 | 0 |
DMC, Inc. [Member] | Affiliated Entity [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 0 | 0 |
Loans | 0 | 0 |
Other | 0 | 0 |
Other Receivables | 0 | 1 |
Others | 0 | 0 |
Tomato Soft Ltd. [Member] | Affiliated Entity [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 0 | 0 |
Loans | 0 | 0 |
Other | 0 | 0 |
Other Receivables | 0 | 0 |
Others | 9 | 16 |
Tomato Soft (Xi'an) Ltd. [Member] | Affiliated Entity [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 0 | 0 |
Loans | 0 | 0 |
Other | 0 | 0 |
Other Receivables | 0 | 0 |
Others | 63 | 55 |
CHASAN Networks (Shenzhen) Co., Ltd. [Member] | Affiliated Entity [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 0 | 0 |
Loans | 0 | 0 |
Other | 0 | 0 |
Other Receivables | 0 | 0 |
Others | 63 | 62 |
D-Mobile [Member] | Affiliated Entity [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 3,107 | 0 |
Loans | 0 | 0 |
Other | 0 | 0 |
Other Receivables | 13 | 0 |
Others | 0 | 0 |
ABLE [Member] | Affiliated Entity [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 3 | 0 |
Loans | 0 | 0 |
Other | 0 | 0 |
Other Receivables | 0 | 0 |
Others | 0 | 0 |
DASAN France [Member] | Affiliated Entity [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 0 | 0 |
Loans | 0 | 0 |
Other | 0 | 0 |
Other Receivables | 4 | 0 |
Others | 0 | 0 |
HANDYSOFT, Inc. [Member] | Affiliated Entity [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 28 | 22 |
Loans | 0 | 0 |
Other | 0 | 0 |
Other Receivables | 0 | 0 |
Others | 0 | 0 |
J-Mobile Corporation [Member] | Affiliated Entity [Member] | Receivables And Payables With Related Parties [Member] | ||
Related Party Transaction [Line Items] | ||
Account Receivables | 0 | 0 |
Loans | 430 | |
Other Receivables | 298 | 310 |
Others | $ 296 | $ 0 |
Net Loss Per Share - Reconcilia
Net Loss Per Share - Reconciliation of Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Earnings Per Share [Abstract] | |||||
Net loss | $ (4,656) | $ (2,780) | $ (8,568) | $ (4,938) | $ (3,000) |
Weighted average number of shares outstanding: | |||||
Basic (in shares) | 11,139 | 9,331 | 10,046 | 9,266 | |
Dilutive effect of stock options and share awards (in shares) | 0 | 0 | 0 | 0 | |
Diluted (in shares) | 11,139 | 9,331 | 10,046 | 9,266 | |
Net loss per share | |||||
Basic (in dollars per share) | $ (0.42) | $ (0.30) | $ (0.85) | $ (0.53) | |
Diluted (in dollars per share) | $ (0.42) | $ (0.30) | $ (0.85) | $ (0.53) |
Net Loss Per Share - Potential
Net Loss Per Share - Potential Common Stock not Included in Diluted Net Income (Loss) Per Share Calculation (Details) - Outstanding stock options (1) - $ / shares shares in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016 | Sep. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of loss per share calculation, shares | 804 | 804 |
Weighted average exercise price of outstanding stock options and unvested restricted shares (in USD per share) | $ 1.38 | $ 1.38 |
Commitments and Contingencies -
Commitments and Contingencies - Estimated Future Lease Payments under All Non-Cancelable Operating Leases (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Operating leases | |
2016 (remainder of the year) | $ 836 |
2,017 | 3,626 |
2,018 | 2,918 |
2,019 | 2,335 |
2020 and thereafter | 12,536 |
Total minimum lease payments | 22,251 |
Scenario, Previously Reported [Member] | |
Operating leases | |
2016 (remainder of the year) | 272 |
2,017 | 1,470 |
2,018 | 1,066 |
2,019 | 597 |
2020 and thereafter | 4,237 |
Total minimum lease payments | 7,642 |
Restatement Adjustment [Member] | |
Operating leases | |
2016 (remainder of the year) | 564 |
2,017 | 2,156 |
2,018 | 1,852 |
2,019 | 1,738 |
2020 and thereafter | 8,299 |
Total minimum lease payments | $ 14,609 |
Commitments and Contingencies
Commitments and Contingencies - Additional Information (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2016USD ($) | |
Guarantor Obligations [Line Items] | |
Product warranty period from the date of shipment | 2 years |
Purchase Commitment | |
Guarantor Obligations [Line Items] | |
Number of notice days required to notice in advance for cancellation of orders | 30 days |
Amount of non-cancellable purchase commitments outstanding | $ 10.2 |
Commitments and Contingencies59
Commitments and Contingencies - Reconciliation of Changes in Accrued Warranties and Related Costs (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 441 | $ 389 |
Warranty liabilities acquired | 652 | 0 |
Charged to cost of revenue | 703 | 289 |
Claims and settlements | (805) | (297) |
Ending balance | $ 991 | $ 381 |
Commitments and Contingencies60
Commitments and Contingencies - Payment Guarantees to Third Parties (Details) $ in Thousands | Sep. 30, 2016USD ($) |
Guarantor Obligations [Line Items] | |
Amount Guaranteed | $ 34,049 |
Dasan Network Solutions, Inc. (DNS) | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Amount Guaranteed | 6,000 |
Dasan Network Solutions, Inc. (DNS) | Shinhan Bank, General Loan | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Amount Guaranteed | 4,378 |
Dasan Network Solutions, Inc. (DNS) | KEB Hana Bank Credit Loan | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Amount Guaranteed | 4,800 |
Dasan Network Solutions, Inc. (DNS) | Industrial Bank of Korea Facility | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Amount Guaranteed | 11,684 |
Industrial Bank of Korea | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Amount Guaranteed | 3,593 |
NongHyup Bank | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Amount Guaranteed | 2,156 |
Other | Payment Guarantee | |
Guarantor Obligations [Line Items] | |
Amount Guaranteed | $ 1,438 |
Enterprise-Wide Information - R
Enterprise-Wide Information - Revenue by Geography (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue from External Customer [Line Items] | ||||
Net revenue | $ 32,080 | $ 22,591 | $ 92,664 | $ 93,339 |
United States | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 6,558 | 550 | 7,495 | 3,988 |
Canada | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 255 | 0 | 255 | 0 |
Total North America | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 6,813 | 550 | 7,750 | 3,988 |
Latin America | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 1,406 | 0 | 1,406 | 0 |
Europe, Middle East, Africa | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 1,301 | 0 | 1,301 | 0 |
Korea | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 18,073 | 18,453 | 52,337 | 67,116 |
Asia Pacific | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 4,487 | 3,588 | 29,870 | 22,235 |
Total International | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | $ 25,267 | $ 22,041 | $ 84,914 | $ 89,351 |
Enterprise-Wide Information -
Enterprise-Wide Information - Revenue by Products and Services (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Revenue from External Customer [Line Items] | ||||
Net revenue | $ 32,080 | $ 22,591 | $ 92,664 | $ 93,339 |
Products | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | 29,731 | 22,371 | 86,498 | 88,946 |
Services | ||||
Revenue from External Customer [Line Items] | ||||
Net revenue | $ 2,349 | $ 220 | $ 6,166 | $ 4,393 |
Enterprise-Wide Information - A
Enterprise-Wide Information - Assets by Geography (Details) - USD ($) $ in Thousands | Sep. 30, 2016 | Dec. 31, 2015 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property and equipment, net | $ 6,258 | $ 2,251 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property and equipment, net | 4,363 | 113 |
Korea | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property and equipment, net | 1,732 | 2,138 |
Japan and Vietnam | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Property and equipment, net | $ 163 | $ 0 |
Income Taxes (Details)
Income Taxes (Details) | 9 Months Ended |
Sep. 30, 2016 | |
Maximum | Federal | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,015 |
Maximum | United States And Canada | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,015 |
Maximum | BRAZIL | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,015 |
Maximum | Germany | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,015 |
Maximum | JAPAN | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,015 |
Maximum | Korea | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,015 |
Maximum | United Kingdom | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,015 |
Minimum | Federal | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,012 |
Minimum | United States And Canada | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,011 |
Minimum | BRAZIL | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,010 |
Minimum | Germany | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,008 |
Minimum | JAPAN | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,011 |
Minimum | Korea | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,014 |
Minimum | United Kingdom | |
Operating Loss Carryforwards [Line Items] | |
Open Tax Year | 2,011 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | 1 Months Ended | 9 Months Ended | ||||
Feb. 29, 2016USD ($) | Sep. 30, 2016shares | Feb. 28, 2017shares | Feb. 27, 2017 | Sep. 08, 2016shares | Dec. 31, 2015shares | |
Subsequent Event [Line Items] | ||||||
Reverse stock split ratio | 0.20 | |||||
Common stock, authorized (in shares) | 36,000,000 | |||||
Common stock, issued (in shares) | 16,375,000 | 9,493,000 | ||||
Common stock, outstanding (in shares) | 16,375,000 | 6,874,253 | 9,493,000 | |||
Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Common stock, authorized (in shares) | 36,000,000 | |||||
Common stock, issued (in shares) | 16,400,000 | |||||
Common stock, outstanding (in shares) | 16,400,000 | |||||
Junior Lien [Member] | Loan Agreement [Member] | DASAN [Member] | Majority Shareholder [Member] | Dasan Network Solutions, Inc. (DNS) | ||||||
Subsequent Event [Line Items] | ||||||
Origination of notes receivable from related parties | $ | $ 1.8 | |||||
Stated interest rate | 6.90% | |||||
Junior Lien [Member] | Loan Agreement [Member] | DASAN [Member] | Majority Shareholder [Member] | Dasan Network Solutions, Inc. (DNS) | Subsequent Event [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Stated interest rate | 4.60% | |||||
Scenario, Previously Reported [Member] | ||||||
Subsequent Event [Line Items] | ||||||
Common stock, authorized (in shares) | 180,000,000 | |||||
Common stock, issued (in shares) | 81,900,000 | |||||
Common stock, outstanding (in shares) | 81,900,000 |