Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2017 | Apr. 02, 2018 | Jun. 30, 2017 | |
Document Documentand Entity Information [Abstract] | |||
Entity Registrant Name | DASAN ZHONE SOLUTIONS INC | ||
Entity Central Index Key | 1,101,680 | ||
Trading Symbol | DZSI | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Filer Category | Smaller Reporting Company | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2017 | ||
Document Fiscal Year Focus | 2,017 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 16,430,963 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 34,723,085 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | |
Current assets: | |||
Cash and cash equivalents | $ 17,475 | $ 17,893 | |
Restricted cash | 12,425 | 6,650 | |
Short-term investments | 0 | 993 | |
Trade receivables | 48,257 | 38,324 | |
Related parties | 13,498 | 13,311 | |
Others | 12,494 | 12,068 | |
Related parties | 164 | 171 | |
Inventories | 25,344 | 31,032 | |
Prepaid expenses and other current assets | 3,652 | 4,131 | |
Total current assets | 133,309 | 124,573 | |
Property and equipment, net | 5,873 | 6,288 | |
Goodwill | 3,977 | 3,977 | |
Intangible assets, net | 6,785 | 8,767 | |
Non-current deferred tax assets | 2,954 | 0 | |
Long-term restricted cash | 1,512 | 0 | |
Other assets | 4,717 | 1,842 | |
Total assets | 159,127 | 145,447 | |
Accounts payable | |||
Others | 31,441 | 29,428 | |
Related parties | 1,351 | 1,683 | |
Short-term debt | 19,790 | 17,599 | |
Other payables, Others | 2,032 | 2,040 | |
Other payables, related parties | 1,956 | 7,107 | |
Deferred revenue | 3,279 | 1,901 | |
Accrued and other liabilities | 11,174 | 7,996 | |
Total current liabilities | 71,023 | 67,754 | |
Long-term debt, Others | 2,987 | 0 | |
Long-term debt, Related parties | 6,800 | 6,800 | |
Deferred revenue | 1,883 | 1,674 | |
Other long-term liabilities | 2,667 | 2,351 | |
Total liabilities | 85,360 | 78,579 | |
Commitments and contingencies (Note 14) | |||
Stockholders’ equity and non-controlling interest | |||
Common stock, authorized 36,000 shares, 16,410 and 16,375 shares outstanding as of December 31, 2017 and December 31, 2016 at a $0.001 par value (1) | [1] | 16 | 16 |
Additional paid-in capital | 90,198 | 89,174 | |
Other comprehensive income (loss) | 1,871 | (2,815) | |
Accumulated deficit | (18,852) | (19,923) | |
Total stockholders' equity | 73,233 | 66,452 | |
Non-controlling interest | 534 | 416 | |
Total stockholders' equity and non-controlling interest | 73,767 | 66,868 | |
Total liabilities, stockholders’ equity and non-controlling interest | $ 159,127 | $ 145,447 | |
[1] | (1) Authorized and outstanding share amounts reflect the one-for-five reverse stock split effected on February 28, 2017. |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) $ in Thousands | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares |
Statement of Financial Position [Abstract] | ||
Accounts receivable, allowances for sales returns and doubtful accounts | $ | $ 1,691 | $ 1,143 |
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 36,000,000 | 36,000,000 |
Common stock, issued (in shares) | 16,410,000 | 16,375,000 |
Common stock, outstanding (in shares) | 16,410,000 | 16,375,000 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) shares in Thousands, $ in Thousands | 12 Months Ended | |||
Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | ||
Income Statement [Abstract] | ||||
Net revenue | $ 215,732 | $ 121,670 | $ 114,421 | |
Net revenue - related parties | 31,382 | 28,634 | 24,775 | |
Total net revenue | 247,114 | 150,304 | 139,196 | |
Products and services | 138,792 | 84,415 | 81,420 | |
Products and services - related parties | 26,341 | 24,738 | 21,890 | |
Amortization of intangible assets | 612 | 204 | 0 | |
Total cost of revenue | 165,745 | 109,357 | 103,310 | |
Gross profit | 81,369 | 40,947 | 35,886 | |
Operating expenses: | ||||
Research and product development | 35,437 | 25,396 | 21,331 | |
Selling, marketing, general and administrative | 43,888 | 27,348 | 17,528 | |
Amortization of intangible assets | 1,322 | 1,556 | 4 | |
Gain from sale of assets | 0 | (304) | 0 | |
Total operating expenses | 80,647 | 53,996 | 38,863 | |
Operating income (loss) | 722 | (13,049) | (2,977) | |
Interest income | 129 | 183 | 136 | |
Interest expense | (1,019) | (830) | (532) | |
Other income (expense), net | (731) | (145) | 266 | |
Income (loss) before income taxes | (899) | (13,841) | (3,107) | |
Income tax (benefit) provision | (2,072) | 1,487 | 232 | |
Net income (loss) | 1,173 | (15,328) | (3,339) | |
Net income (loss) attributable to non-controlling interest | 102 | (2) | 0 | |
Net income (loss) attributable to DASAN Zhone Solutions, Inc. | 1,071 | (15,326) | (3,339) | |
Foreign currency translation adjustments | 4,702 | (1,047) | (2,790) | |
Comprehensive income (loss) | 5,875 | (16,375) | (6,129) | |
Comprehensive income attributable to non-controlling interest | 118 | 1 | 0 | |
Comprehensive income (loss) attributable to DASAN Zhone Solutions, Inc. | $ 5,757 | $ (16,376) | $ (6,129) | |
Basic (in dollar per share) | $ / shares | [1] | $ 0.07 | $ (1.32) | $ (0.36) |
Diluted (in dollar per share) | $ / shares | [1] | $ 0.07 | $ (1.32) | $ (0.36) |
Weighted average shares outstanding used to compute basic net income (loss) per share (in shares) | shares | [1] | 16,383 | 11,637 | 9,314 |
Weighted average shares outstanding used to compute diluted net income (loss) per share (in shares) | shares | [1] | 16,396 | 11,637 | 9,314 |
[1] | (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. |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Common stock | Additional paid-in capital | Other comprehensive income (loss) | Accumulated deficit | Total stockholders' equity | Non-controlling interest |
Common stock, outstanding (in shares) | 9,221 | ||||||
Common stock, outstanding (in shares) | 9,493 | ||||||
Beginning Balances, Stockholders' equity at Dec. 31, 2014 | $ 9 | $ 48,857 | $ 1,025 | $ (1,258) | $ 48,633 | ||
Beginning Balances, Non-controlling interests at Dec. 31, 2014 | $ 0 | ||||||
Beginning Balances, Stockholders' equity and non-controlling interest at Dec. 31, 2014 | $ 48,633 | ||||||
Issuance of common stock (in shares) | 272 | ||||||
Issuance of common stock | 1,800 | $ 0 | 1,800 | 1,800 | |||
Net increase in parent company investment | (2,977) | (2,977) | (2,977) | ||||
Net income (loss) | (3,339) | (3,339) | (3,339) | ||||
Other comprehensive income (loss) | (2,790) | (2,790) | (2,790) | ||||
Acquisition of controlling interest | 138 | 138 | |||||
Ending Balances, Stockholders' equity (in shares) at Dec. 31, 2015 | 9,493 | ||||||
Ending Balances, Stockholders' equity at Dec. 31, 2015 | $ 9 | 47,680 | (1,765) | (4,597) | 41,327 | ||
Ending Balances, Non-controlling interests at Dec. 31, 2015 | 138 | 138 | |||||
Ending Balances, Stockholders' equity and non-controlling interest at Dec. 31, 2015 | $ 41,465 | ||||||
Common stock, outstanding (in shares) | 9,493 | ||||||
Common stock, outstanding (in shares) | 16,375 | 16,375 | |||||
Net income (loss) | $ (15,328) | (15,326) | (15,326) | (2) | |||
Other comprehensive income (loss) | $ (1,047) | (1,050) | (1,050) | 3 | |||
Exercise of stock options (in shares) | 0 | ||||||
Stock-based compensation (in shares) | 8 | ||||||
Stock-based compensation | $ 336 | 336 | 336 | ||||
Shares of Legacy Zhone stock as of September 8, 2016 acquired through business combination (in shares) | 6,874 | ||||||
Shares of Legacy Zhone stock as of September 8, 2016 acquired through business combination | 41,442 | $ 7 | 41,435 | 41,442 | |||
Acquisition of additional interest | $ 0 | (277) | (277) | 277 | |||
Ending Balances, Stockholders' equity (in shares) at Dec. 31, 2016 | 16,375 | 16,375 | |||||
Ending Balances, Stockholders' equity at Dec. 31, 2016 | $ 66,452 | $ 16 | 89,174 | (2,815) | (19,923) | 66,452 | |
Ending Balances, Non-controlling interests at Dec. 31, 2016 | 416 | 416 | |||||
Ending Balances, Stockholders' equity and non-controlling interest at Dec. 31, 2016 | $ 66,868 | ||||||
Common stock, outstanding (in shares) | 16,375 | 16,375 | |||||
Common stock, outstanding (in shares) | 16,410 | 16,410 | |||||
Net income (loss) | $ 1,173 | 1,071 | 1,071 | 102 | |||
Other comprehensive income (loss) | $ 4,702 | 4,686 | 4,686 | 16 | |||
Exercise of stock options (in shares) | 25 | 35 | |||||
Exercise of stock options | $ 122 | 122 | 122 | ||||
Stock-based compensation | $ 902 | 902 | 902 | ||||
Ending Balances, Stockholders' equity (in shares) at Dec. 31, 2017 | 16,410 | 16,410 | |||||
Ending Balances, Stockholders' equity at Dec. 31, 2017 | $ 73,233 | $ 16 | $ 90,198 | $ 1,871 | $ (18,852) | $ 73,233 | |
Ending Balances, Non-controlling interests at Dec. 31, 2017 | 534 | $ 534 | |||||
Ending Balances, Stockholders' equity and non-controlling interest at Dec. 31, 2017 | $ 73,767 | ||||||
Common stock, outstanding (in shares) | 16,410 | 16,410 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | |||
Net income (loss) | $ 1,173 | $ (15,328) | $ (3,339) |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 3,817 | 3,173 | 1,404 |
Gain from sale of assets | 0 | (304) | 0 |
Stock-based compensation | 902 | 336 | 0 |
Losses on inventory write-down | 1,848 | 547 | 165 |
Unrealized loss (gain) on foreign currency transactions | 786 | 62 | (1,301) |
Deferred taxes | (2,915) | 1,408 | (86) |
Changes in operating assets and liabilities: | |||
Accounts receivable | (3,132) | (2,092) | 11,442 |
Inventories | 6,233 | (1,627) | 5,861 |
Prepaid expenses and other current assets | (3,526) | 3,074 | 196 |
Accounts payable | (3,576) | 4,488 | (6,676) |
Accrued and other liabilities | 292 | 9,759 | (3,415) |
Net cash provided by (used in) operating activities | 1,902 | 3,496 | 4,251 |
Cash flows from investing activities: | |||
Cash acquired through the Merger | 0 | 7,013 | 0 |
Cash acquired through common control transactions | 1,254 | 0 | 0 |
(Increase) decrease in restricted cash | (5,862) | (2,128) | 1,479 |
Decrease in short-term and long-term loans to others | 0 | 516 | 88 |
Increase in short-term and long-term loans to others | 0 | (214) | (446) |
Proceeds from disposal of property and equipment and other assets | 6 | 10 | 2,230 |
Proceeds from sale of short-term investments | 1,463 | 0 | 0 |
Purchase of short-term investments | (429) | (1,034) | (1,856) |
Purchases of property and equipment | (1,072) | (1,311) | (794) |
Purchases of intangible assets | (90) | (61) | 0 |
Payment for purchase of shares of HandySoft, net of cash acquired | 0 | 0 | (548) |
Net cash used in investing activities | (4,730) | 2,791 | 153 |
Cash flows from financing activities: | |||
Repayments of borrowings | (24,447) | (27,336) | (17,796) |
Proceeds from short-term borrowings | 25,834 | 25,069 | 17,950 |
Proceeds from long-term borrowings - related party | 0 | 5,000 | 0 |
Government grants received | 0 | 0 | 217 |
Proceeds from issuance of common stock | 121 | 0 | 1,800 |
Decrease in other capital | 0 | 0 | (2,977) |
Net cash provided by (used in) financing activities | 1,508 | 2,733 | (806) |
Effect of exchange rate changes on cash | 902 | (222) | (510) |
Net increase (decrease) in cash and cash equivalents | (418) | 8,798 | 3,088 |
Cash and cash equivalents at beginning of period | 17,893 | 9,095 | 6,007 |
Cash and cash equivalents at end of period | $ 17,475 | $ 17,893 | $ 9,095 |
Supplemental disclosure of cash flow information: | |||
Shares of the Company's common stock held in escrow | 949 | 949 | 0 |
Cash paid during the period for: | |||
Interest | $ 838 | $ 663 | $ 570 |
Income taxes | $ 327 | $ 353 | $ 1,496 |
Organization and Summary of Sig
Organization and Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [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 "DZS" or the "Company") is a global provider of network access solutions and communications equipment for service provider and enterprise networks. The Company provides a wide array of reliable, cost-effective networking technologies, including broadband access, Ethernet switching, mobile backhaul, Passive Optical LAN and software-defined networks, to a diverse customer base that includes more than 1,000 customers in more than 50 countries worldwide. DZS was incorporated under the laws of the state of Delaware in June 1999. On September 9, 2016, the Company acquired Dasan Network Solutions, Inc., a California corporation ("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"). At the effective time of the Merger, all issued and outstanding shares of capital stock of DNS held by DASAN Networks, Inc. ("DNI") 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. 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 is headquartered in Oakland, California. (b) Risks and Uncertainties The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States ("U.S. GAAP"), assuming the Company will continue as a going concern. The Company had net income of $1.2 million for the year ended December 31, 2017 . However, the Company incurred a net loss of $15.3 million for the year ended December 31, 2016 and significant losses in prior years. As of December 31, 2017 , the Company had an accumulated deficit of $18.9 million and working capital of $62.3 million . As of December 31, 2017 , the Company had $17.5 million in cash and cash equivalents, which included $12.1 million in cash balances held by its Korean subsidiary and $29.6 million in aggregate principal amount of short-term debt obligations, other long-term debt and long-term related party borrowings. In addition, as of December 31, 2017 the Company had $8.6 million committed as security for letters of credit under its revolving credit facilities, leaving $12.0 million in aggregate borrowing availability under these facilities. 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 our business and industry; and • influencing investor and customer perceptions about its financial stability and limiting its ability to obtain financing or acquire customers. These factors indicate that cash flows might not be sufficient for the Company to meet its obligations as they come due in the ordinary course of business for a period of 12 months from the date of this Annual Report on Form 10-K. However, the Company plans to focus on cost management, operating efficiency and restrictions on discretionary spending. In addition, if necessary, the Company may sell assets, issue debt or equity securities or purchase credit insurance. The Company may also reduce the scope of its planned product development, reduce sales and marketing efforts and reduce its operations in low margin regions, including reductions in headcount. Since December 31, 2017, the Company has modified the terms of certain existing debt and obtained a new loan, as described more fully in Note (19), Subsequent Events. Based on the Company's current plans and current business conditions, the Company believes that these measures 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 12 months from the date of this Annual Report on Form 10-K. The Company’s ability to meet its obligations as they become due in the ordinary course of business for the next 12 months will depend on its ability to achieve forecasted results and its ability to access funds approved under existing facilities. Management’s belief that it will achieve these results assumes that, among other things, the Company will continue to be successful in implementing its business strategy and that there will be no material adverse development in its business, liquidity or capital requirements. If one or more of these factors do not occur as expected, it could cause the Company to fail to meets its obligations as they come due. (c) DNI Ownership DNI owned approximately 58% of the outstanding shares of the Company's common stock as of December 31, 2017. For so long as DNI and its affiliates hold shares of the Company's common stock representing at least a majority of the votes, DNI will be able to freely nominate and elect all the members of the Company's board of directors, subject to the provisions of the Company's bylaws and applicable requirements under Nasdaq listing rules and applicable laws. The directors elected by DNI will have the authority to make decisions affecting the Company's capital structure, including the issuance of additional capital stock or options, the incurrence of additional indebtedness, the implementation of stock repurchase programs, and the declaration of dividends. The interests of DNI may not coincide with the interests of the Company's other stockholders or with holders of the Company's indebtedness. DNI’s ability to control all matters submitted to the Company's stockholders for approval limits the ability of other stockholders to influence corporate matters and, as a result, the Company may take actions that the Company's other stockholders or holders of the Company's indebtedness do not view as beneficial. See Note 2, Note 13 and Note 14 to the consolidated financial statements for additional information. (d) Reclassifications Certain prior period balance sheet items have been reclassified to correct for related party payables of $1.3 million which were reclassified from accounts payable - others to accounts payable - related parties and $0.2 million which was reclassified from accrued and other liabilities to other payables - related parties. (e) Basis of Presentation The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and include the accounts of the Company, its wholly-owned subsidiaries and a subsidiary in which it has a controlling interest. All inter-company transactions and balances have been eliminated in consolidation. As discussed more fully in Note 2, on September 9, 2016, the acquisition of 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. At the effective time of the Merger, all issued and outstanding shares of capital stock of DNS held by DNI 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, DNI 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 consolidated financial results of the Company presented in the consolidated financial statements reflect the operating results of DNS and its consolidated subsidiaries for the year ended December 31, 2015 and for the period from January 1, 2016 through September 8, 2016 and the operating results of both DNS and Legacy Zhone and their respective consolidated subsidiaries for all periods from and after September 9, 2016. The balance sheet of the Company as of December 31, 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. The year ended December 31, 2017 was the first fiscal year in which the Company's financial results reflected a full year of operating results for both DNS and Legacy Zhone and their respective consolidated subsidiaries. Due to the foregoing, our financial results for the year ended December 31, 2017 are not comparable to our financial results for prior years. On December 31, 2017, DNS (a wholly owned subsidiary of the Company) acquired 100% and 99.99% of the common stock of D-Mobile Limited (“D-Mobile”) and DASAN India Private Limited (DASAN India), respectively, from DNI. D-Mobile and DASAN India are resellers of the Company's products in Taiwan and India, respectively. The consideration payable by the Company to DNI for the common stock is the net book value of D-Mobile and DASAN India at December 31, 2017, subject to final adjustments. The net book value of D-Mobile and DASAN India was an aggregate of $0.8 million . These transactions were accounted for by the Company as common control transactions, with the net assets transferred recorded at historical cost. The transactions did not result in a change in reporting entity and hence were accounted for prospectively. 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. (f) Consolidated Subsidiaries Details of the Company's consolidated subsidiaries as of December 31, 2017 and December 31, 2016 are as follows: Percentage of ownership (%) Location December 31, 2017 December 31, 2016 Dasan Network Solutions, Inc. (U.S. subsidiary) US 100 % 100 % Dasan Network Solutions, Inc. (Korean subsidiary) Korea 100 % 100 % DASAN Network Solutions Japan Co., Ltd. (formerly: HandySoft Japan Co., Ltd.) Japan 69.06 % 69.06 % DASAN Vietnam Co., Ltd Vietnam 100 % 100 % D-Mobile Taiwan 100 % N/A DASAN India India 99.99 % N/A (g) Use of Estimates The preparation of the 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 consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from those estimates. (h) 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 amendment effected a one-for-five reverse stock split of the Company's common stock and reduced the authorized shares of the Company's 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 Annual Report on Form 10-K are provided on a post-reverse stock split basis. (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 (“BESP”). 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 BESP. The objective of BESP 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 BESP of each deliverable is determined using average discounts from list price from historical sales transactions or cost plus margin approaches based on factors, including but not limited to, the Company’s gross margin objectives, pricing practices and customer and market specific considerations. Training, education and installation service arrangements are typically not material, are short term in nature and are largely completed shortly after delivery of the product. 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) Allowances for Sales Returns and Doubtful Accounts The Company records an allowance for sales returns for estimated future product returns related to current period product revenue. The allowance for sales returns is recorded as a reduction of revenue and an allowance against accounts receivable. The Company bases its allowance for sales returns on periodic assessments of historical trends in product return rates and current approved returned products. If the actual future returns were to deviate from the historical data on which the reserve had been established, the Company’s future revenue could be adversely affected. The Company records an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make payments for amounts owed to the Company. The allowance for doubtful accounts is recorded as an expense to general and administrative expenses. The Company bases its allowance on periodic assessments of its customers’ liquidity and financial condition through analysis of information obtained from credit rating agencies, financial statement review and historical collection trends. Additional allowances may be required in the future if the liquidity or financial condition of the Company's customers deteriorates, resulting in doubts about their ability to make payments. Activity under the Company’s allowance for sales returns and doubtful accounts was comprised as follows (in thousands): Years ended December 31, 2017 2016 2015 Balance at beginning of year $ 1,143 $ 868 $ 136 Charged to revenue 1,387 466 767 Utilization/write offs (974 ) (149 ) — Exchange differences 135 (42 ) (35 ) Balance at end of year $ 1,691 $ 1,143 $ 868 The allowance for doubtful accounts was $0.9 million and $0.8 million and as of December 31, 2017 and 2016 , respectively. (k) Inventories Inventories are stated at the lower of cost or market, with cost being determined using the first-in, first-out method. In assessing the net realizable value of inventories, the Company is required to make judgments as to future demand requirements and compare these with the current or committed inventory levels. Once inventory has been written down to its estimated net realizable value, its carrying value cannot be increased due to subsequent changes in demand. To the extent that a severe decline in forecasted demand occurs, or the Company experiences a higher incidence of inventory obsolescence due to rapidly changing technology and customer requirements, the Company may incur significant expenses for excess and obsolete inventory. The Company also evaluates the terms of its agreements with its suppliers and establish accruals for estimated losses on adverse purchase commitments as necessary, applying the same lower of cost or market approach that is used to value inventory. (l) Foreign Currency Translation For operations outside the United States, the Company translates assets and liabilities of foreign subsidiaries, whose functional currency is the local currency, at end of period exchange rates. Revenues and expenses are translated at periodic average rates. The adjustment resulting from translating the financial statements of such foreign subsidiaries, is included in accumulated other comprehensive income (loss,) which is reflected as a separate component of stockholders’ equity. Gains and losses on foreign currency transactions are included in other income (expense) in the accompanying consolidated statement of comprehensive income (loss). (m) Comprehensive Income (Loss) There have been no items reclassified out of accumulated other comprehensive income (loss) and into net income (loss). The Company’s other comprehensive income (loss) for the years ended December 31, 2017 , 2016 , and 2015 is comprised of foreign currency translation gains or losses. (n) Concentration of Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents consist principally of financial deposits and money market accounts. Cash and cash equivalents are principally held with various domestic financial institutions with high credit standing. 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 year ended December 31, 2017 no customer represented 10% or more of net revenue. For the year ended December 31, 2016, three customers represented 16% , 14% (a related-party) and 10% of net revenue, respectively. For the year ended December 31, 2015, four customers represented 26% , 21% , 17% (a related-party) and 10% of net revenue, respectively. As of December 31, 2017, two customers represented 20% (a related party) and 11% of net accounts receivable, respectively. As of December 31, 2016, two customers accounted for 13% (a related-party) and 10% of net accounts receivable, respectively. As of December 31, 2017 and December 31, 2016 , receivables from customers in countries other than the United States represented 84% and 87% of net accounts receivable. respectively. (o) Property and Equipment Property and equipment are stated at cost, less accumulated depreciation, and are depreciated using the straight-line method over the estimated useful life of each asset. The useful life of each asset category is as follows: Asset Category Useful Life Furniture and fixtures 3 to 4 years Machinery and equipment 3 to 10 years Computers and software 3 years Leasehold improvements Shorter of remaining lease term or estimated useful lives Upon retirement or sale, the cost and related accumulated depreciation of the asset are removed from the balance sheet and the resulting gain or loss is reflected in operating expenses. (p) Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable based on expected undiscounted cash flows attributable to that asset or asset group. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the future net undiscounted cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future net undiscounted cash flows, an impairment expense is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Any assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. The Company estimates the fair value of its long-lived assets based on a combination of market information primarily obtained from third-party quotes and online markets. In the application of impairment testing, the Company is required to make estimates of future operating trends and resulting cash flows and judgments on discount rates and other variables. Actual future results and other assumed variables could differ from these estimates. During the years ended December 31, 2017 , 2016 , and 2015 , the Company recorded no impairment expenses related to the impairment of long-lived assets. (q) Goodwill and Other Acquisition-Related Intangible Assets Goodwill and other acquisition-related intangible assets not subject to amortization are tested annually for impairment using a two-step approach, and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. In the application of impairment testing, the Company is required to make estimates of future operating trends and resulting cash flows and judgments on discount rates and other variables. Actual future results and other assumed variables could differ from these estimates. The Company's future operating performance will be impacted by the future amortization of intangible assets, potential expenses related to purchased in-process research and development for future acquisitions, and potential impairment expenses related to goodwill. Accordingly, the allocation of the purchase price of the acquired companies to intangible assets and goodwill has a significant impact on the Company's future operating results. The allocation process requires management to make significant estimates and assumptions, including estimates of future cash flows expected to be generated by the acquired assets and the appropriate discount rate for these cash flows. Should different conditions prevail, the Company would have to perform an impairment review that might result in material write-downs of intangible assets and/or goodwill. Other factors the Company considers important which could trigger an impairment review, include, but are not limited to, significant changes in the manner of use of its acquired assets, significant changes in the strategy for the Company's overall business or significant negative economic trends. If this evaluation indicates that the value of an intangible asset may be impaired, an assessment of the recoverability of the net carrying value of the asset over its remaining useful life is made. If this assessment indicates that the cost of an intangible asset is not recoverable, based on the estimated undiscounted future cash flows or other comparable market valuations of the entity or technology acquired over the remaining amortization period, the net carrying value of the related intangible asset will be reduced to fair value and the remaining amortization period may be adjusted. Due to uncertain market conditions and potential changes in the Company's strategy and product portfolio, it is possible that forecasts used to support its intangible assets may change in the future, which could result in additional non-cash expenses that would adversely affect its results of operations and financial condition. (r) Business Combination The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets and certain tangible assets such as inventory. Critical estimates in valuing certain tangible and intangible assets include but are not limited to future expected cash flows from the underlying assets and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. (s) Stock-Based Compensation The Company uses the Black Scholes model to estimate the fair value of options, which is affected by the Company's stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company's expected stock price volatility over the term of the awards, actual and projected employee option exercise behaviors, risk-free interest rates and expected dividends. The expected stock price volatility is based on the weighted average of the historical volatility of the Company's common stock over the most recent period commensurate with the estimated expected life of the Company's stock options. The Company based its expected life assumption on its historical experience and on the terms and conditions of the stock awards granted. Risk-free interest rates reflect the yield on zero-coupon U.S. Treasury securities. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statement of comprehensive income (loss). The Company attributes the values of the stock-based compensation to expense using the straight-line method. (t) Income Taxes 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. In 2017, the valuation allowance against the Company's net deferred tax assets in Korea were released after management determined that it is more likely than not that the net deferred tax assets will be realized in this tax jurisdiction. The Company maintains a valuation allowance on its U.S. net deferred tax assets, with the exception of its alternative minimum tax credit carryforward, which is anticipated to be refundable. In 2017 the Company adopted ASU 2015-17 and applied it prospectively as allowed by the standard. In accordance with the standard, we present deferred tax assets and deferred tax liabilities as noncurrent in our balance sheet. Our adoption of ASU 2015-17 did not have a material impact on our consolidated balance sheets and had no impact on our cash provided by or used in operations for any period presented. (u) Net Income (Loss) per Share Attributable to DASAN Zhone Solutions, Inc. Basic net income (loss) per share attributable to DASAN Zhone Solutions, Inc. is computed by dividing the net income (loss) attributable to DASAN Zhone Solutions, Inc. for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net income (loss) per share attributable to DASAN Zhone Solutions, Inc. 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. (v) Shipping and Handling Costs The Company records costs related to shipping |
Merger
Merger | 12 Months Ended |
Dec. 31, 2017 | |
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 DNI 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 stock split) of the Company’s common stock to DNI as consideration in the Merger, of which 949,302 shares (post reverse stock 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, DNI 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(e), 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 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 stock split) of the Company's common stock on September 9, 2016. The total purchase consideration is calculated as follows (in thousands): Shares Estimated Fair Value Shares of Legacy Zhone stock as of September 8, 2016 (1) 6,874 $ 40,902 Legacy Zhone stock options (1) 198 540 Total purchase consideration $ 41,442 (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 allocation of the fair value of the consideration transferred as of the acquisition date (in thousands): Fair Value as of December 31, 2016 Cash and cash equivalents $ 7,013 Accounts receivable 18,510 Inventory 16,456 Prepaid expenses and other current assets 2,191 Property and equipment 4,339 Other assets 125 Identifiable intangible assets 10,479 Goodwill 3,284 Accounts payable (11,021 ) Accrued and other liabilities (7,089 ) Other long-term liabilities (2,845 ) Total Indicated Fair Value of Assets $ 41,442 The goodwill was primarily attributed to people, geographical diversification and complementary products. The goodwill arising from the Merger is not tax deductible. 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 year ended December 31, 2016. These expenses are included in selling, marketing, 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 Developed technology 5 $ 3,060 Customer relationships 10 5,240 Backlog 1 2,179 Total Acquired Intangible Assets $ 10,479 The following unaudited pro forma condensed combined financial information for the year ended December 31, 2016 and 2015 gives effect to the Merger as if it had occurred at the beginning of 2015. The unaudited pro forma condensed combined financial information has been included for comparative purposes only and is not necessarily indicative of what the combined Company's financial position or results of operations might have been had the Merger been completed as of the date 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). Years Ended December 31, (in thousands) 2016 2015 Pro forma total net revenue $ 202,321 $ 240,342 Pro forma net loss (29,514 ) (11,369 ) For the period from September 9, 2016 (the effective date of the Merger) through December 31, 2016, the Company's income statement included $29.0 million of net revenues and $7.6 million of net loss from the Legacy Zhone business. |
Fair Value Measurement
Fair Value Measurement | 12 Months Ended |
Dec. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurement | Fair Value Measurement The Company utilizes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions. The fair value hierarchy consists of the following three levels: Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data. Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable. The following financial instruments are not measured at fair value on the Company’s consolidated balance sheet as of December 31, 2017 and 2016, but require disclosure of their fair values: cash and cash equivalents, short-term investments, accounts receivable, accounts payable and debt. The carrying values of financial instruments such as cash and cash equivalents, short-term investments, accounts receivable and accounts payable approximate their fair values based on their short-term nature. The carrying value of the Company's debt approximates their fair values based on the current rates available to the Company for debt of similar terms and maturities. |
Cash and Cash Equivalents and R
Cash and Cash Equivalents and Restricted Cash | 12 Months Ended |
Dec. 31, 2017 | |
Cash and Cash Equivalents [Abstract] | |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash As of December 31, 2017 and December 31, 2016 , the Company's cash and cash equivalents comprised financial deposits. Restricted cash consisted primarily of cash restricted for performance bonds, warranty bonds and collateral for borrowings. Current and long-term restricted cash increased to a total of $13.9 million at December 31, 2017 from $6.7 million at December 31, 2016 because of an increase in warranty bonds in 2017. |
Balance Sheet Detail
Balance Sheet Detail | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
Balance Sheet Detail | Balance Sheet Detail Balance sheet detail as of December 31, 2017 and 2016 is as follows (in thousands): 2017 2016 Inventories: Raw materials $ 12,671 $ 13,547 Work in process 2,150 3,705 Finished goods 10,523 13,780 $ 25,344 $ 31,032 Inventories provided as collateral for borrowings from Export-Import Bank of Korea amounted to $11.4 million and $14.4 million as of December 31, 2017 and December 31, 2016 , respectively. 2017 2016 Property and equipment, net: Furniture and fixtures $ 22,988 $ 20,040 Machinery and equipment 5,455 4,530 Leasehold improvements 3,647 3,573 Computers and software 621 411 Other 1,007 922 33,718 29,476 Less accumulated depreciation and amortization (27,584 ) (22,922 ) Less government grants (261 ) (266 ) $ 5,873 $ 6,288 Depreciation expense associated with property and equipment was $1.9 million , $1.3 million and $1.4 million for the years ended December 31, 2017 , 2016 and 2015 , respectively. The Company receives grants from various government entities 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. 2017 2016 Accrued and other liabilities (in thousands): Accrued warranty $ 931 $ 878 Accrued compensation 1,905 2,834 Other accrued expenses 8,338 4,284 $ 11,174 $ 7,996 The Company accrues for warranty costs based on historical trends for the expected material and labor costs to provide warranty services. The Company's standard warranty period is one year from the date of shipment with the ability for customers to purchase an extended warranty of up to five years from the date of shipment. The following table summarizes the activity related to the product warranty liability (in thousands): Balance at December 31, 2015 $ 441 Balance assumed with the Merger 652 Charged to cost of revenue 717 Claims and settlements (925 ) Foreign exchange impact (7 ) Balance at December 31, 2016 878 Charged to cost of revenue 723 Claims and settlements (695 ) Foreign exchange impact 25 Balance at December 31, 2017 $ 931 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets, net | Goodwill and Intangible Assets Goodwill as of December 31, 2017 and December 31, 2016 was as follows (in thousands): December 31, December 31, Beginning balance $ 3,977 $ 693 Goodwill from Merger — 2,820 Correction of errors — 464 Less: accumulated impairment — — Ending balance $ 3,977 $ 3,977 The Company did not recognize impairment loss on goodwill during the years ended December 31, 2017 , 2016 or 2015 because no impairment triggers were identified during those years. Intangible assets as of December 31, 2017 and December 31, 2016 were as follows (in thousands): December 31, 2017 Gross Carrying Amount Accumulated Amortization Government Grant Net Developed Technology $ 3,060 $ (816 ) $ — $ 2,244 Customer Relationships 5,240 (699 ) — 4,541 Backlog 2,179 (2,179 ) — — Total intangible assets, net $ 10,479 $ (3,694 ) $ — $ 6,785 December 31, 2016 Gross Carrying Amount Accumulated Amortization Government Grant Net Developed Technology $ 3,060 $ (203 ) $ — $ 2,857 Customer Relationships 5,240 (321 ) — 4,919 Backlog 2,179 (1,236 ) — 943 Other 105 (34 ) (23 ) 48 Total intangible assets, net $ 10,584 $ (1,794 ) $ (23 ) $ 8,767 Amortization expense associated with intangible assets for the years ended December 31, 2017 and 2016 amounted to $1.9 million , and $1.8 million , respectively. Amortization of intangible assets in 2015 was $10,000 . As of December 31, 2017 , expected future amortization expense for the years indicated was as follows (in thousands): Period Expected Amortization Expense 2018 $ 1,136 2019 1,136 2020 1,136 2021 932 2022 524 Thereafter 1,921 Total $ 6,785 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Debt | Debt Wells Fargo Bank Facility As of December 31, 2017 , the Company had a $25.0 million revolving line of credit and letter of credit facility (the "WFB 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 WFB Facility, as long as the aggregate amount outstanding does not exceed $25.0 million less the amount committed as security for letters of credit. 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. As of December 31, 2017 , the Company had no outstanding borrowings under its WFB Facility. Based on the Company's eligible accounts receivable and inventory and $2.3 million committed as security for letters of credit, the Company had $9.2 million of borrowing availability under the WFB Facility as of December 31, 2017 . 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 the Company's average excess availability (as calculated under the WFB Facility). The interest rate on the WFB Facility was 4.19% at December 31, 2017 . The maturity date under the WFB Facility was March 31, 2019. Effective March 30, 2018 , the Company and WFB amended the WFB Facility to extend the maturity date from March 31, 2019 to July 15, 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 December 31, 2017, the Company was in technical violation of covenants under the WFB Facility to pledge the stock of certain foreign subsidiaries and transfer certain funds to WFB bank accounts. On March 19, 2018, the Company executed an amendment with WFB which cured the breach. Effective March 27, 2018 , the Company and WFB modified the definition of Liquidity Trigger Event (as defined in the WFB Facility) from $10.0 million to $5.0 million on March 31, 2018 or $10.0 million for subsequent quarters. Effective March 30, 2018 , the Company and WFB amended the WFB Facility to extend the maturity date from March 31, 2019 to July 15, 2019 . 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 as they mature and are generally secured by a security interest in certain assets of the applicable foreign subsidiaries and supported by guarantees given by DNI or third parties. Payments under such facilities are made in accordance with the given lender’s amortization schedules. As of December 31, 2017 and December 31, 2016, the Company had an aggregate outstanding balance of $22.8 million and $17.6 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 (in thousands). As of December 31, 2017 Interest rate (%) Amount Industrial Bank of Korea Credit facility 2.89 ~ 3.26 $ 2,328 Industrial Bank of Korea Trade Finance 4.47 ~ 5.97 2,401 Shinhan Bank General loan 5.91 2,987 Shinhan Bank Trade finance 3.90 ~ 4.14 3,050 NongHyup Bank (Korea) Credit facility 2.83 ~ 3.42 860 The Export-Import Bank of Korea Export development loan 3.20 ~ 3.28 7,570 Mitsubishi Bank (Japan) SoftBank AR Factoring 1.58 1,872 Shinhan Bank (India) General loan 8.70-8.90 1,709 $ 22,777 As of December 31, 2016 Interest rate (%) Amount Industrial Bank of Korea Credit facility 2.16 - 2.76 $ 1,106 Shinhan Bank General loan 4.08 3,310 Shinhan Bank Trade finance 3.28 - 3.44 1,752 NongHyup Bank (Korea) Credit facility 1.92 - 2.66 482 KEB Hana Bank Comprehensive credit loan 2.79 3,501 The Export-Import Bank of Korea Export development loan 3.10 7,448 $ 17,599 On March 27, 2018 , DNS (a Korean-based, wholly-owned subsidiary of the Company) borrowed KRW 6.5 billion ( $6.0 million in USD) from DNI. The loan bears interest at a rate of 4.6% and is due on June 27, 2019 . On March 28, 2018, DNS (a wholly-owned subsidiary of the Company) and Shinhan Bank extended the term of their $3.0 million loan from March 30, 2018 to March 30, 2019. As such, the Company reclassed this debt to long-term as of December 31, 2017. As of December 31, 2017 , the Company had $3.2 million in outstanding borrowings and $6.3 million committed as security for letters of credit under the Company's $12.3 million credit facility with certain foreign banks. |
Executive Compensation
Executive Compensation | 12 Months Ended |
Dec. 31, 2017 | |
Compensation Related Costs [Abstract] | |
Executive Compensation | Executive Compensation Il Yung Kim In October 2017 , we entered into an amended and restated employment agreement with Mr. Kim. This agreement has a term of three years expiring on October 10, 2020 . Following the execution of this agreement, Mr. Kim was paid a one-time bonus of $100,000 . During the term, Mr. Kim will perform the responsibilities as President, Chief Executive Officer, reporting to the Board of Directors of the company, with such duties and responsibilities as are commensurate with such positions. Under the employment agreement, Mr. Kim’s annual salary is $400,000 , and will be reviewed on at least an annual basis by the Compensation Committee. In addition, Mr. Kim is eligible to participate in a performance-based annual bonus program, to be earned and paid quarterly in equal installments. Mr. Kim’s target bonus is equal to 100% of his annual salary. The Company shall pay for or reimburse Mr. Kim for housing expenses up to maximum of $6,500 per month. In addition, in the event that Mr. Kim's employment is terminated, the Company will pay or reimburse Mr. Kim for up to an additional $30,000 in relocation expenses at such termination of his employment, unless he voluntarily resigns without "good reason" (as defined below). The relocation expenses to be provided to Mr. Kim will be grossed-up for taxes. Mr. Kim is also eligible to participate in all health benefits, insurance programs, pension and retirement plans and other employee benefit and compensation arrangements generally available to our other officers. Under Mr. Kim’s employment agreement, Mr. Kim will receive certain compensation in the event that his employment is terminated by us for any reason other than by reason of Mr. Kim’s death, disability, his termination for “cause” (as defined in the employment agreement), if Mr. Kim resigns for “good reason” (as defined in the employment agreement) or as a result of expiration of the term of his employment agreement (which we refer to as a Qualifying Termination). In the event of a Qualifying termination, Mr. Kim will be entitled to receive a lump sum payment equal to his annual salary as in effect immediately prior to the date of termination (or, if greater, $400,000 ) plus the sum of the bonuses earned in the four most recently completed quarters. In addition, in the event of Mr. Kim’s Qualifying Termination, the vesting and exercisability of his stock options will accelerate on the date of termination. James Norrod Mr. Norrod’s employment agreement had an initial term expiring on September 9, 2017 . Pursuant to the management transition in September 2017 , Mr. Norrod stepped down from his position as Co-Chief Executive Officer and a director of the company effective September 11, 2017 . Mr. Norrod entered into a release agreement in connection with his resignation from his management roles and employment with the company. Pursuant to his separation and release agreement, Mr. Norrod was paid $300,000 in 2017 plus up to six months of continued health benefits under COBRA. In addition the expiration date of Mr. Norrod's vested stock options was extended through September 11, 2018 . Michael Golomb In December 2017 , we entered into an employment agreement with Mr. Golomb. This agreement has a term of three years expiring on December 1, 2020 . During the term, Mr. Golomb will perform the responsibilities as Chief Financial Officer, Treasurer and Corporate Secretary reporting to the Chief Executive Officer of the company, with such duties and responsibilities as are commensurate with such positions. Under the employment agreement, Mr. Golomb’s annual salary is $300,000 , and will be reviewed on at least an annual basis by the Compensation Committee. In addition Mr. Golomb received 130,000 stock options which vest over three years with one third vesting on the first anniversary and the remaining two thirds vesting monthly thereafter. After six months of employment , pending a recommendation by the CEO and approval by the Board of Directors, Mr. Golomb may be entitled to receive options to purchase up to 1% of the Company's then outstanding shares. Under Mr. Golomb’s employment agreement, Mr. Golomb will receive certain compensation in the event that his employment is terminated by us for any reason other than by reason of Mr. Golomb’s death, disability, or his termination for “cause” (as defined in the employment agreement), or in the event of expiration of the term of his employment agreement (each of which we refer to as a Qualifying Termination). In the event of a Qualifying Termination, including a Qualifying Termination following a change in control, Mr. Golomb will be entitled to receive a lump sum payment equal to his six months' base salary as in effect immediately prior to the date of termination (or, if greater, $150,000 ) and the vesting and exercisability of his stock options will accelerate on the date of termination. Kirk Misaka Pursuant to his separation and release agreement, the Company agreed to pay Mr. Misaka $232,500 . Payment was made in March 2018 . In addition the exercise date of Mr. Misaka vested stock options was extended through September 11, 2018 . |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity | Stockholders’ Equity (a) Overview The Company’s equity capitalization consisted of 36.0 million authorized shares of common stock, of which 16.4 million were outstanding at December 31, 2017 . (b) Stock-Based Compensation Prior to September 9, 2016, the date of the Merger, DNS did not have any stock-based compensation plans. The plan information described below represents stock-based compensation plans that were carried over from Legacy Zhone and were in effect as of December 31, 2016 and an additional stock-based compensation plan adopted by the Company in January 2017. As of December 31, 2017 , the Company had one significant stock-based compensation plan related to equity compensation (including equity compensation in the form of stock options, restricted stock and restricted stock units) and one plan related to employee stock purchases. The following table summarizes stock-based compensation expense for the year ended December 31, 2017 and 2016 (in thousands): Year ended December 31, 2017 2016 Compensation expense relating to employee stock options, restricted stock units and restricted stock $ 902 $ 336 Stock Incentive Plans The Company’s stock-based compensation plans are designed to attract, motivate, retain and reward employees, directors and consultants and align stockholder and employee interests. The Company's former Amended and Restated 2001 Stock Incentive Plan (the 2001 Plan") expired in March 2017. The Board of Directors of the Company approved the DASAN Zhone Solutions, Inc. 2017 Incentive Award Plan (the "2017 Plan") on January 4, 2017, subject to stockholder approval at the Company’s 2017 annual meeting of stockholders. The Company's stockholders approved the 2017 Plan at the 2017 annual meeting of stockholders. The 2017 Plan authorizes the issuance of stock options, restricted stock, restricted stock units, dividend equivalents, stock payment awards, stock appreciation rights, performance bonus awards and other incentive awards. The 2017 Plan authorizes the grant of awards to employees, non-employee directors and consultants of the Company and its subsidiaries. The maximum number of shares of the Company’s common stock for which grants may be made under the 2017 Plan is the sum of (i) 600,000 shares, plus (ii) any shares subject to awards granted under the 2001 Plan to the extent such shares become available for issuance under the 2017 Plan pursuant to its terms, plus (iii) any shares subject to an annual increase on each January 1 during the 10 year term of the 2017 Plan equal to the lesser of 4% of the total shares of the Company’s common stock outstanding (on an as-converted basis) and such smaller amount as may be determined by the Board of Directors in its sole discretion. The annual increase on January 1, 2018 was 656,410 shares. In addition, the following annual limitations apply: (i) the maximum aggregate number of shares of the Company’s common stock that may be subject to awards granted to any one participant during a calendar year is 4,000,000 shares and (ii) the maximum aggregate amount of cash that may be paid to any one participant during any calendar year with respect to awards initially payable in cash is $10 million . The number of shares of the Company’s common stock that may be issued or transferred pursuant to awards granted under the 2017 Plan shall not exceed an aggregate of 7,000,000 . The Company’s former 2001 Plan provided for the grant of incentive stock options, non-statutory stock options, restricted stock unit awards, restricted stock awards and other stock-based awards to officers, employees, directors and consultants of the Company, and expired in March 2017. Under the 2001 Plan, options were permitted to be granted at an exercise price less than, equal to or greater than the fair market value on the date of grant, except that any options granted to a 10% stockholder must have an exercise price equal to at least 110% of the fair market value of the Company’s common stock on the date of grant. The Board of Directors determined the term of each option, the option exercise price and the vesting terms. Stock options were generally granted at an exercise price equal to the fair market value on the date of grant, expiring seven to ten years from the date of grant and vesting over a period of four years. The Company has estimated the fair value of stock-based payment awards on the date of grant using the Black Scholes pricing model, which is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company’s expected stock price volatility over the term of the awards, actual and projected employee option exercise behaviors, risk-free interest rate and expected dividends. The estimated expected term of options granted was determined based on historical option exercises. Estimated volatility was based on historical volatility and the risk free interest rate was based on U.S. Treasury yield in effect at the time of grant for the expected life of the options. The Company does not anticipate paying any cash dividends in the foreseeable future and therefore used an expected dividend yield of zero in the option valuation model. Forfeitures are recognized as they occur. The weighted average assumptions used to value option grants for the year ended December 31, 2017 and 2016 are as follows: Year ended December 31, 2017 2016 Expected term (years) 4.87 4.78 Expected volatility 81.32 % 79.70 % Risk free interest rate 1.92 % 1.14 % The weighted average grant date fair value of options granted during the years ended December 31, 2017 and December 31, 2016 were $3.90 and $4.08 , respectively. The following table sets forth the summary of option activity under the stock option program for the year ended December 31, 2017 (in thousands, except per share data): Options Outstanding Weighted Average Exercise Price (1) Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2016 787 $ 6.84 Granted 733 6.01 Canceled/Forfeited (282 ) 6.57 Exercised (25 ) 4.91 Outstanding as of December 31, 2017 1,213 6.50 7.83 $ 3,586 Vested and expected to vest at December 31, 2017 1,213 6.50 7.83 3,586 Vested and exercisable at December 31, 2017 310 7.65 4.14 713 The aggregate intrinsic value represents the total pretax intrinsic value, based on the Company’s closing stock price as of December 31, 2017 of $9.26 , per share which would have been received by the option holders had the option holders exercised their options as of that date. As of December 31, 2017 , there was $3.2 million of unrecognized compensation costs which are expected to be recognized over a weighted average period of 2.8 years. The following table sets forth the summary of option activity under the stock option program for the year ended December 31, 2016 (in thousands, except per share data): Options Outstanding Weighted Average Exercise Price (1) Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2015 — $ — Options assumed as part of the Merger 265 8.68 Granted 530 5.95 Canceled/Forfeited (8 ) 11.75 Exercised — — Outstanding as of December 31, 2016 787 6.84 8.56 $ 60 Vested and expected to vest at December 31, 2017 684 7.01 8.39 52 Vested and exercisable at December 31, 2016 233 8.34 5.85 14 |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | Net Income (Loss) Per Share The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data): Years ended December 31, 2017 2016 2015 Numerator: Net income (loss) attributable to DASAN Zhone Solutions, Inc. $ 1,071 $ (15,326 ) $ (3,339 ) Denominator: Weighted average number of shares outstanding: Basic (1) 16,383 11,637 9,314 Effect of dilutive securities: Stock options, restricted stock units and share awards 13 — — Diluted (1) 16,396 11,637 9,314 Net income (loss) per share attributable to DASAN Zhone Solutions Inc.: Basic (1) $ 0.07 $ (1.32 ) $ (0.36 ) Diluted (1) $ 0.07 $ (1.32 ) $ (0.36 ) (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 common stock that is not included in the diluted net income (loss) per share calculation above because their effect would be anti-dilutive for the periods indicated (in thousands, except exercise price per share data): 2017 Weighted average option exercise price 2016 Weighted average Outstanding stock options, restricted stock units and unvested restricted shares 1,037 $ 8.93 796 $ 6.84 As of December 31, 2017 , 2016 and 2015, no shares of issued common stock were subject to repurchase. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The following is a summary of the components of income tax expense applicable to loss before income taxes (in thousands): Years ended December 31, 2017 2016 2015 Current: Federal $ (86 ) $ — $ — State 17 (9 ) — Foreign 912 88 318 Total current tax expense $ 843 $ 79 $ 318 Deferred: Federal $ (12 ) $ — $ — State — — — Foreign (2,903 ) 1,408 (86 ) Total deferred tax expense $ (2,915 ) $ 1,408 $ (86 ) Total tax expense $ (2,072 ) $ 1,487 $ 232 A reconciliation of the expected tax expense (benefit) to the actual tax expense is as follows (in thousands): Years ended December 31, 2017 2016 2015 Expected tax expense (benefit) at statutory rate (34%) $ (306 ) $ (4,644 ) $ (929 ) State taxes, net of Federal effect 4 (348 ) — Foreign rate differential (927 ) 391 328 Tax impact on US corporate income tax change 5,287 — — Valuation allowance (4,555 ) 7,004 218 Permanent differences 234 687 40 Tax credit carry-forwards (1,235 ) (896 ) (674 ) Tax on accumulated earnings from prior year — 29 1,348 Tax paid to overseas jurisdictions — 71 — Tax expense adjustments after tax return for prior period (574 ) (837 ) — Foreign currency translation — 124 — Other — (94 ) (99 ) Total tax expense $ (2,072 ) $ 1,487 $ 232 Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2017 and 2016 are as follows (in thousands): 2017 2016 Deferred tax assets: Net operating loss, capital loss, and tax credit carryforwards $ 11,945 $ 14,243 Reduction of gross deferred tax assets due to built-in loss limitation (678 ) (4,402 ) Fixed assets and intangible assets 2,158 3,775 Inventory and other reserves 3,516 4,573 Other 2,279 2,661 Gross deferred tax assets 19,220 20,850 Less valuation allowance (16,266 ) (20,850 ) Total net deferred tax assets $ 2,954 $ — For the years ended December 31, 2017 and 2016 , the net changes in the valuation allowance were a decrease of $4.6 million and increase of $19.4 million , respectively. The decrease during 2017 was mainly due to the release of valuation allowance against the Company's net deferred tax assets in Korea. Management determined that it is more likely than not that the net deferred tax assets will be realized in this tax jurisdiction. The Company maintains a valuation allowance on its U.S. net deferred tax assets, with the exception of its alternative minimum tax credit carryforward, which is anticipated to be refundable. As of December 31, 2017 , the Company had net operating loss carryforwards for federal and state income tax purposes of approximately $28.8 million and $47.2 million , respectively. The federal losses begin to expire in 2025. The state losses begin to expire in 2018. As of December 31, 2017 , the Company had research credit carryforwards of approximately $0.4 million , $0.5 million , and $1.6 million for federal, state, and foreign income tax purposes, respectively. If not utilized, the federal carryforward will expire in various amounts beginning in 2036. The state credit can be carried forward indefinitely. If not utilized, the foreign credit carryforward will expire in 2021. On December 22, 2017, President Trump signed the Tax Cuts and Jobs Act (the “Act”) into law. The new legislation decreases the U.S. corporate federal income tax rate from 35% to 21% effective January 1, 2018. The reduction in tax rate resulted in a $5.3 million reduction in net deferred tax assets. There was no impact on recorded deferred tax balances as the remeasurement of net deferred tax assets was offset by a change in valuation allowance. The Act imposes a one-time deemed repatriation tax on undistributed foreign earnings. The Company did not have a deemed repatriation due to its foreign earnings deficits. The Act also includes a number of other provisions including the elimination of loss carrybacks, limitations on the use of future losses, repeal of the Alternative Minimum Tax regime, and the introduction of a base erosion and anti-abuse tax. These provisions are not expected to have immediate effect on the Company. The Securities and Exchange Commission issued Staff Accounting Bulletin No. 118 (“SAB 118”) on December 23, 2017 which provides a one–year measurement period from a registrant’s reporting period that includes the Act’s enactment date to allow the registrant sufficient time to obtain, prepare and analyze information to complete the accounting required under ASC 740. While the Company was able to make reasonable estimates under SAB 118 for the impact of the reduction in corporate rate and the deemed repatriation transition tax, the Company has not completed its analysis for other changes from the Act, including accounting for global-intangible-low-tax income. The final impacts of the Act may differ from the above estimates, possibly materially, due to, among other things, changes in interpretations of the Act, any legislative action to address questions that arise because of the Act, any changes in accounting standards for income taxes or related interpretations in response to the Act, or any updates or changes to estimates the company has utilized under SAB 118. The Company will continue to analyze the impact of the Act as additional information and guidance is provided and complete our analysis within the measurement period in accordance with SAB 118. Pursuant to Sections 382 and 383 of the Code, annual use of the Company's net operating losses and tax credit carryforwards may be limited in the event a cumulative change in ownership of more than 50% occurs within a three-year-period. The Company had an ownership change in September 2016, which resulted in an annual limitation on the amount of net operating losses and tax credit carryforwards which arose prior to that date that the Company can utilize. The Company does not intend to distribute the foreign earnings from its foreign subsidiaries and has not recorded any deferred taxes related to such amounts. The Company considers the remaining excess of the amount for financial reporting over the tax basis of our investments in our foreign subsidiaries to be indefinitely reinvested and the determination of any deferred tax liability on this amount is not practicable. In accordance with ASC 740 the Company is require to inventory, evaluate, and measure all uncertain tax positions taken or to be taken on tax returns, and to record liabilities for the amount of such positions that may not be sustained, or may only be partially sustained, upon examination by the relevant taxing authorities. At December 31, 2017 , the Company had gross unrecognized tax benefits of $0.4 million , none of which if recognized, would reduce the effective tax rate in a future period, due to the Company's full valuation allowance on U.S. net deferred tax assets. A reconciliation of the beginning and ending unrecognized tax benefit amounts for 2017 and 2016 are as follows (in thousands): Balance at December 31, 2015 $ — Increases related to current year tax positions 77 Balance at December 31, 2016 77 Increases related to prior year tax positions 17 Increases related to current year tax positions 286 Balance at December 31, 2017 $ 380 It is the Company's policy to account for interest and penalties related to uncertain tax positions as interest expense and general administrative expense, respectively in its statement of operations. The Company did not record any interest and penalty (benefit) expense during the year ended December 31, 2017 and 2016 . 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 2014 - 2017 • California and Canada 2013 - 2017 • Brazil 2012 - 2017 • Germany 2013 - 2017 • Japan 2012 - 2017 • Korea 2015 - 2017 • United Kingdom 2014 - 2017 • Vietnam 2016 - 2017 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 is not currently under examination for income taxes in any material jurisdiction. |
Non-Controlling Interests
Non-Controlling Interests | 12 Months Ended |
Dec. 31, 2017 | |
Noncontrolling Interest [Abstract] | |
Non-Controlling Interests | Non-Controlling Interests Non-controlling interests were as follows (in thousands): Years Ended December 31, 2017 2016 Beginning non-controlling interests $ 416 $ 138 Acquisition of additional interest in a subsidiary — 277 Net income (loss) attributable to non-controlling interests 102 (2 ) Foreign currency translation adjustments (Other Comprehensive Income) 16 3 Ending non-controlling interests $ 534 $ 416 |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related-Party Transactions | Related Party Transactions Related Party Acquisitions On December 31, 2017, DNS (a wholly owned subsidiary of the Company) acquired 100% and 99.99% of the common stock of D-Mobile Limited (“D-Mobile”) and DASAN India Private Limited (DASAN India), respectively, from DNI. D-Mobile and DASAN India are resellers of the Company's products in Taiwan and India, respectively. The consideration payable by the Company to DNI for the common stock is the net book value of D-Mobile and DASAN India at December 31, 2017, subject to final adjustments. The net book value of D-Mobile and DASAN India was an aggregate of $0.8 million . These transactions were accounted for by the Company as common control transactions, with the net assets transferred recorded at historical cost. The transactions did not result in a change in reporting entity and hence were accounted for prospectively. Related Party Debt In connection with the Merger, on September 9, 2016, the Company entered into a loan agreement with DNI 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 December 31, 2017, $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 December 31, 2017 under this facility was 4.6% per annum. In addition, the Company borrowed $1.8 million from DNI for capital investment in February 2016, which amount was outstanding as of December 31, 2017. This loan was due to mature in March 2018 with an option of renewal by mutual agreement, and bore interest at a rate of 4.6% per annum, payable annually. Effective February 27, 2018, the Company and DNI amended the terms of this loan to extend the repayment date from March 2018 to July 2019 and maintain an interest rate of 4.6% (see Note 19, Subsequent Events). On March 27, 2018 , DNS (a Korean-based, wholly-owned subsidiary of the Company) borrowed KRW 6.5 billion ( $6.0 million in USD) from DNI. The loan bears interest at a rate of 4.6% and is due on June 27, 2019 (see Note 19, Subsequent Events). On June 23, 2017, the Company borrowed $3.5 million from Solueta, an affiliate of DNI. This loan was repaid in November 2017 and bore interest at a rate of 4.6% per annum, payable monthly. Interest expense on these related party borrowings was $0.3 million in 2017 and $0.1 million in 2016. Other Related Party Transactions Sales and Purchases to and from Related Parties Sales and purchases, cost of revenue, research and product development, selling, marketing, general and administrative and other income and expenses to and from related parties for the years ended December 31, 2017, 2016 and 2015 were as follows (in thousands): For the year ended December 31, 2017 Counterparty DNI direct ownership interest Sales Cost of revenue Manufacturing (Cost of revenue) Research and product development Selling, marketing, general and administrative Other expenses DNI (Parent Company) N/A $ 16,559 $ 14,020 $ — $ — $ 4,502 $ 223 Tomato Soft Ltd. 100% — — 140 246 — — Tomato Soft (Xi'an) Ltd. 100% — — — 448 37 — CHASAN Networks Co., Ltd. 100% — — 810 98 — — D-Mobile N/A 4,316 2,769 — — 427 — DASAN FRANCE 100% 2,168 2,006 — — 383 — HANDYSOFT, Inc. 17.63% 88 24 — — 6 4 J-Mobile Corporation 90.47% 8 — — — 132 — DASAN INDIA Private Limited N/A 8,245 6,461 — — 30 — Fine Solution 100% — — — — 4 — Solueta 27.21% — — — — — 3 $ 31,384 $ 25,280 $ 950 $ 792 $ 5,521 $ 230 For the year ended December 31, 2016 Counterparty DNI ownership interest Sales Cost of revenue Manufacturing (Cost of revenue) Research and product development Selling, marketing, general and administrative Other income Other expenses DNI (Parent Company) N/A $ 21,214 $ 18,173 $ — $ — $ 5,079 $ — $ 389 ABLE 61.99% 50 — — — — — — CHASAN Networks Co., Ltd. 100% — — 720 149 — — — DASAN France 100% 19 18 — — — — DASAN INDIA Private Limited 99.99% 2,710 2,080 — — — — — DMC 100% 1 1 — — — — — D-Mobile 100% 4,431 3,610 — — 421 — — DTS 81.56% — — — — — 1 — HANDYSOFT, Inc. 17.64% 155 136 — — — — J-Mobile Corporation 68.56% 54 — — — 634 25 — PANDA Media, Inc. 90% — — — — 2 — 1 Tomato Soft (Xi'an) Ltd. 100% — — — 750 — — — $ 28,634 $ 24,018 $ 720 $ 899 $ 6,136 $ 26 $ 390 For the year ended December 31, 2015 Counterparty DNI Ownership Interest Sales Cost of revenue Manufacturing (Cost of revenue) Research and product development Selling, marketing, general and administrative Other income Other expenses DNI (Parent Company) N/A $ 23,365 $ 19,822 $ — $ — $ 7,230 $ 24 $ 363 CHASAN Networks Co., Ltd. 100% — — 731 358 — — — DASAN RND Co., LTD 100% — — — — 605 — — D-Mobile 100% — — — — 91 — — HANDYSOFT, Inc. 17.64% 1,410 1,337 — — — — 184 J-Mobile Corporation 68.56% — — — — 1,511 15 — Tomato Soft (Xi'an) Ltd. 100% — — — 631 — — — $ 24,775 $ 21,159 $ 731 $ 989 $ 9,437 $ 39 $ 547 The Company has entered into sales agreements with DNI and certain of its subsidiaries. Sales and cost of revenue to DNI, DASAN France, DASAN INDIA Private Limited, and D-Mobile represent finished goods produced by the Company that are sold to these related parties who sell the Company's products in Korea, France, India and Taiwan, respectively. As discussed above, on December 31, 2017 DNS acquired DASAN India Private Limited and D-Mobile from DNI. The Company has entered into an agreement with CHASAN Networks Co., Ltd. to provide manufacturing and research and development services for the Company. Under the agreement with CHASAN Networks., Ltd., the Company is charged a cost plus 7% fee for the manufacturing and development of certain deliverables. The Company has entered into an agreement with Tomato Soft (Xi'an) Ltd. to provide research and development services for the Company. Under the agreement with Tomato Soft (Xi'an) Ltd., the Company is charged an expected annual fee of $0.8 million for the development of certain deliverables. Prior to the Merger, as DNS was then a wholly owned subsidiary of DNI, DNI had sales agreements with certain customers on DNS' behalf. Since the Merger, due to these prior sales agreements, the Company has entered into an agreement with DNI in which DNI acts as a sales channel to these customers. Sales to DNI necessary for DNI to fulfill agreements with its customers are recorded net of royalty fees in related party revenue. The Company shares office space with DNI and certain of DNI's subsidiaries. Prior to the Merger, DNS, then a wholly owned subsidiary of DNI, shared human resources, treasury and other administrative support with DNI. As such, the Company entered into certain service sharing agreements with DNI and certain of its subsidiaries for the shared office space and shared administrative services. Expenses related to rent and administrative services are allocated to the Company based on square footage occupied and headcount, respectively. Other income from J-Mobile Corporation represents interest income earned on a loan receivable from J-Mobile Corporation. The loan receivable was issued for the amount of $0.5 million and earned an interest rate of 6.9% per annum. The loan receivable was scheduled to mature on July 1, 2020, but was fully paid off on September 3, 2016. Other expenses to related parties represent expenses to DNI for its payment guarantees relating to the Company's borrowings. The Company pays DNI a guarantee fee which is calculated as 0.9% of the guaranteed amount. 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 December 31, 2017 and 2016 were as follows (in thousands): As of December 31, 2017 Counterparty DNI Ownership Interest Account receivables Other receivables Deposits for lease* Long-term debt Accounts payable Other payables Accrued and other current liabilities** DNI (parent company) N/A $ 12,576 $ 93 $ 786 $ 6,800 $ 1,264 $ 1,859 $ 59 Tomato Soft Ltd. 100% — — — — — 18 — Tomato Soft (Xi'an) Ltd. 100% — — — — — 54 — D-Mobile 100% — — — — — — — ABLE 94.57% — — — — — — — DASAN France 100% 870 71 — — — — — HANDYSOFT, Inc. 17.63% 52 — — — — — — CHASAN Networks Co., Ltd. 100% — — — — 87 — — Solueta 100% — — — — — 25 — $ 13,498 $ 164 $ 786 $ 6,800 $ 1,351 $ 1,956 $ 59 As of December 31, 2016 Counterparty DNI Ownership Interest Account receivables Other receivables Deposits for lease* Long-term debt Accounts payable Other payables DNI (Parent Company) N/A $ 6,679 $ 171 $ 690 $ 6,800 $ 1,613 $ 7,028 ABLE 61.99% 53 — 9 — — — DASAN France 100% 23 — — — — — DASAN INDIA Private Limited 99.99% 2,606 — — — — — D-Mobile 100% 3,943 — — — — HANDYSOFT, Inc. 17.64% 2 — — — — — J-Mobile Corporation 68.56% 5 — — — — — Tomato Soft Ltd. 100% — — — — — 16 Tomato Soft (Xi'an) Ltd. 100% — — — — 70 63 $ 13,311 $ 171 $ 699 $ 6,800 $ 1,683 $ 7,107 * Included in other assets related to deposits for lease in the consolidated balance sheets as of December 31, 2017 and 2016. **Included in accrued and other liabilities in the consolidated balance sheet as of December 31, 2017. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2017 | |
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 and escalation clauses. Estimated future lease payments under all non-cancellable operating leases with terms in excess of one year, including taxes and service fees, are as follows (in thousands): Minimum Future Lease Payments Year ending December 31: 2018 $ 3,794 2019 2,928 2020 2,844 2021 2,590 2022 2,664 Thereafter 8,423 Total minimum lease payments $ 23,243 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 December 31, 2017 , the Company had $2.5 million of surety bonds guaranteed by third parties. 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 non-cancellable purchase commitments outstanding, net of reserve, was $8.0 million as of December 31, 2017 . Payment Guarantees Provided by Third Parties and DNI The following table sets forth payment guarantees of the Company's indebtedness and other obligations as of December 31, 2017 that have been provided by third parties and DNI. DNI owns approximately 58% of the outstanding shares of our common stock. Guarantor Amount Guaranteed (in thousands) Description of Obligations Guaranteed DNI $ 3,584 Borrowings from Shinhan Bank DNI 1,792 Purchasing card from Shinhan Bank DNI 10,640 Letter of credit from Industrial Bank of Korea DNI 6,000 Letter of credit from NongHyup Bank DNI 560 Purchasing card from NongHyup Bank DNI 6,368 Borrowings from Export-Import Bank of Korea Industrial Bank of Korea 6,221 Letter of credit Industrial Bank of Korea 284 Letter of credit (local) NongHyup Bank 2,983 Letter of credit Shinhan Bank 330 Purchasing card Industrial Bank of Korea 1,806 Performance bonds KEB Hana Bank 34 Performance bonds State Bank of India 39 Performance bonds Seoul Guarantee Insurance Co. 594 Performance payment guarantee* $ 41,235 *The Company is responsible for the warranty liabilities generally for the period of two years regarding major product sales and have contracted surety insurance over part of the warranty liabilities. 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. |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2017 | |
Loss Contingency, Information about Litigation Matters [Abstract] | |
Litigation | Litigation On November 30, 2017, the Company settled a patent infringement claim asserted by TQ Delta LLC by entering into a patent license agreement with TQ Delta LLC. Under the terms of the agreement, the Company expensed $0.4 million in royalty payments in 2017 and will expense $1.0 million in royalty payment in 2018. 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 records an accrual for legal contingencies that it has determined to be probable to the extent that the amount of the loss can be reasonably estimated. 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. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2017 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Employee Benefit Plans The Company maintains a 401(k) plan for its employees whereby eligible employees may contribute up to a specified percentage of their earnings, on a pretax basis, subject to the maximum amount permitted by the Internal Revenue Code. Under the 401(k) plan, the Company may make discretionary contributions. The 401(k) plan is a Legacy Zhone plan. The Company made no discretionary contributions to the plan in 2017 or 2016. The Company also maintains a defined contribution plan for its employees in Korea. Under the defined contribution plan, the Company contributes 8.33% of an employee's gross salary into the plan every quarter. |
Enterprise Wide Information
Enterprise Wide Information | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Enterprise Wide Information | Enterprise-Wide Information The Company is a global provider of network access solutions and communications equipment for service providers and enterprise networks. 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 maker is the Company’s Chief Executive Officer, who reviews 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 Company attributes revenue from customers to individual countries based on location shipped. The following summarizes required disclosures about geographical concentrations and revenue by products and services (in thousands): Years ended December 31, 2017 2016 2015 Revenue by geography: United States $ 48,840 $ 16,872 $ 4,426 Canada 5,631 1,967 7 Total North America 54,471 18,839 4,433 Latin America 26,206 9,604 2,510 Europe, Middle East, Africa 30,768 13,611 9,383 Korea 81,533 77,979 114,676 Other Asia Pacific 54,136 30,271 8,194 Total International 192,643 131,465 134,763 Total $ 247,114 $ 150,304 $ 139,196 Years ended December 31, 2017 2016 2015 Revenue by products and services: Products $ 235,117 $ 142,238 $ 133,036 Services 11,997 8,066 6,160 Total $ 247,114 $ 150,304 $ 139,196 The Company's property and equipment, net of accumulated depreciation, were located in the following geographical areas as of December 31, 2017 and 2016 (in thousands): As of December 31, 2017 2016 United States $ 3,393 $ 4,094 Korea 1,633 1,455 Japan and Vietnam 810 739 Taiwan and India 37 — $ 5,873 $ 6,288 |
Quarterly Information (unaudite
Quarterly Information (unaudited) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Information (unaudited) | Quarterly Information (unaudited) Year ended December 31, 2017 Q1 (1) Q2 (1) Q3 (1) Q4 (in thousands, except per share data) Net revenue $ 52,112 $ 59,941 $ 66,438 $ 68,623 Gross profit 17,792 19,189 22,073 22,315 Operating income (loss) (2,529 ) (803 ) 1,661 2,393 Net income (loss) (3,498 ) (874 ) 1,387 4,157 Net income (loss) attributable to non-controlling interest 249 (65 ) (12 ) (70 ) Net income (loss) attributable to DASAN Zhone Solutions, Inc. (3,747 ) (809 ) 1,399 4,227 Net income (loss) per share attributable to DASAN Zhone Solutions, Inc.: Basic $ (0.23 ) $ (0.05 ) $ 0.09 $ 0.26 Diluted $ (0.23 ) $ (0.05 ) $ 0.09 $ 0.26 Weighted-average shares outstanding: Basic 16,378 16,380 16,382 16,391 Diluted 16,378 16,380 16,382 16,445 Year ended December 31, 2016 Q1 Q2 Q3 (1) Q4 (1) (in thousands, except per share data) Net revenue $ 25,340 $ 34,252 $ 31,240 $ 59,472 Gross profit 4,611 9,002 9,300 18,034 Operating loss (4,341 ) (165 ) (5,114 ) (3,429 ) Net loss (3,761 ) (533 ) (4,789 ) (6,245 ) Net income (loss) attributable to non-controlling interest 6 33 (56 ) 15 Net loss attributable to DASAN Zhone Solutions, Inc. (3,767 ) (566 ) (4,733 ) (6,260 ) Net loss per share attributable to DASAN Zhone Solutions, Inc.: Basic $ (0.40 ) $ (0.06 ) $ (0.42 ) $ (0.38 ) Diluted $ (0.40 ) $ (0.06 ) $ (0.42 ) $ (0.38 ) Weighted-average shares outstanding: Basic 9,493 9,493 11,139 16,375 Diluted 9,493 9,493 11,139 16,375 (1) Results include the operating results of Legacy Zhone from and after September 9, 2016. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events In February 2016, the Company borrowed $1.8 million from DNI for capital investment, which amount was outstanding as of December 31, 2017. This loan was due to mature in March 2018 with an option of renewal by mutual agreement, and bore interest at a rate of 4.6% per annum, payable annually. Effective February 27, 2018, the Company amended the terms of this loan to extend the repayment date from March 2018 to July 2019 and maintain an interest rate of 4.6% . On March 27, 2018 , DNS (a Korean-based, wholly-owned subsidiary of the Company) borrowed KRW 6.5 billion ( $6.0 million in USD) from DNI. The loan bears interest at a rate of 4.6% and is due on June 27, 2019 . Effective March 27, 2018 , the Company and WFB modified the definition of Liquidity Trigger Event (as defined in the WFB Facility) from $10.0 million to $5.0 million on March 31, 2018 or $10.0 million for subsequent quarters. Effective March 30, 2018 , the Company and WFB amended the WFB Facility to extend the maturity date from March 31, 2019 to July 15, 2019 . On March 28, 2018 , DNS and Shinhan Bank extended the term of their $3.0 million loan from March 30, 2018 to March 30, 2019 . As such, the Company reclassed this debt to long-term as of December 31, 2017. |
Organization and Summary of S26
Organization and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States and include the accounts of the Company, its wholly-owned subsidiaries and a subsidiary in which it has a controlling interest. All inter-company transactions and balances have been eliminated in consolidation. As discussed more fully in Note 2, on September 9, 2016, the acquisition of 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. At the effective time of the Merger, all issued and outstanding shares of capital stock of DNS held by DNI 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, DNI 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 consolidated financial results of the Company presented in the consolidated financial statements reflect the operating results of DNS and its consolidated subsidiaries for the year ended December 31, 2015 and for the period from January 1, 2016 through September 8, 2016 and the operating results of both DNS and Legacy Zhone and their respective consolidated subsidiaries for all periods from and after September 9, 2016. The balance sheet of the Company as of December 31, 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. The year ended December 31, 2017 was the first fiscal year in which the Company's financial results reflected a full year of operating results for both DNS and Legacy Zhone and their respective consolidated subsidiaries. Due to the foregoing, our financial results for the year ended December 31, 2017 are not comparable to our financial results for prior years. On December 31, 2017, DNS (a wholly owned subsidiary of the Company) acquired 100% and 99.99% of the common stock of D-Mobile Limited (“D-Mobile”) and DASAN India Private Limited (DASAN India), respectively, from DNI. D-Mobile and DASAN India are resellers of the Company's products in Taiwan and India, respectively. The consideration payable by the Company to DNI for the common stock is the net book value of D-Mobile and DASAN India at December 31, 2017, subject to final adjustments. The net book value of D-Mobile and DASAN India was an aggregate of $0.8 million . These transactions were accounted for by the Company as common control transactions, with the net assets transferred recorded at historical cost. The transactions did not result in a change in reporting entity and hence were accounted for prospectively. 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. |
Reclassification of Prior Year Presentation | Reclassifications Certain prior period balance sheet items have been reclassified to correct for related party payables of $1.3 million which were reclassified from accounts payable - others to accounts payable - related parties and $0.2 million which was reclassified from accrued and other liabilities to other payables - related parties. |
Use of Estimates | Use of Estimates The preparation of the 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 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 (“BESP”). 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 BESP. The objective of BESP 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 BESP of each deliverable is determined using average discounts from list price from historical sales transactions or cost plus margin approaches based on factors, including but not limited to, the Company’s gross margin objectives, pricing practices and customer and market specific considerations. Training, education and installation service arrangements are typically not material, are short term in nature and are largely completed shortly after delivery of the product. 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. |
Allowances for Sales Returns and Doubtful Accounts | Allowances for Sales Returns and Doubtful Accounts The Company records an allowance for sales returns for estimated future product returns related to current period product revenue. The allowance for sales returns is recorded as a reduction of revenue and an allowance against accounts receivable. The Company bases its allowance for sales returns on periodic assessments of historical trends in product return rates and current approved returned products. If the actual future returns were to deviate from the historical data on which the reserve had been established, the Company’s future revenue could be adversely affected. The Company records an allowance for doubtful accounts for estimated losses resulting from the inability of customers to make payments for amounts owed to the Company. The allowance for doubtful accounts is recorded as an expense to general and administrative expenses. The Company bases its allowance on periodic assessments of its customers’ liquidity and financial condition through analysis of information obtained from credit rating agencies, financial statement review and historical collection trends. Additional allowances may be required in the future if the liquidity or financial condition of the Company's customers deteriorates, resulting in doubts about their ability to make payments. |
Inventories | Inventories Inventories are stated at the lower of cost or market, with cost being determined using the first-in, first-out method. In assessing the net realizable value of inventories, the Company is required to make judgments as to future demand requirements and compare these with the current or committed inventory levels. Once inventory has been written down to its estimated net realizable value, its carrying value cannot be increased due to subsequent changes in demand. To the extent that a severe decline in forecasted demand occurs, or the Company experiences a higher incidence of inventory obsolescence due to rapidly changing technology and customer requirements, the Company may incur significant expenses for excess and obsolete inventory. |
Foreign Currency Translation | Foreign Currency Translation For operations outside the United States, the Company translates assets and liabilities of foreign subsidiaries, whose functional currency is the local currency, at end of period exchange rates. Revenues and expenses are translated at periodic average rates. The adjustment resulting from translating the financial statements of such foreign subsidiaries, is included in accumulated other comprehensive income (loss,) which is reflected as a separate component of stockholders’ equity. Gains and losses on foreign currency transactions are included in other income (expense) in the accompanying consolidated statement of comprehensive income (loss). |
Comprehensive Income (Loss) | Comprehensive Income (Loss) There have been no items reclassified out of accumulated other comprehensive income (loss) and into net income (loss). The Company’s other comprehensive income (loss) for the years ended December 31, 2017 , 2016 , and 2015 is comprised of foreign currency translation gains or losses. |
Concentration of Risk | Concentration of Risk Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents consist principally of financial deposits and money market accounts. Cash and cash equivalents are principally held with various domestic financial institutions with high credit standing. 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 year ended December 31, 2017 no customer represented 10% or more of net revenue. For the year ended December 31, 2016, three customers represented 16% , 14% (a related-party) and 10% of net revenue, respectively. For the year ended December 31, 2015, four customers represented 26% , 21% , 17% (a related-party) and 10% of net revenue, respectively. As of December 31, 2017, two customers represented 20% (a related party) and 11% of net accounts receivable, respectively. As of December 31, 2016, two customers accounted for 13% (a related-party) and 10% of net accounts receivable, respectively. As of December 31, 2017 and December 31, 2016 , receivables from customers in countries other than the United States represented 84% and 87% of net accounts receivable. respectively. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost, less accumulated depreciation, and are depreciated using the straight-line method over the estimated useful life of each asset. The useful life of each asset category is as follows: Asset Category Useful Life Furniture and fixtures 3 to 4 years Machinery and equipment 3 to 10 years Computers and software 3 years Leasehold improvements Shorter of remaining lease term or estimated useful lives Upon retirement or sale, the cost and related accumulated depreciation of the asset are removed from the balance sheet and the resulting gain or loss is reflected in operating expenses. |
Long-Lived Assets | Long-Lived Assets The Company reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable based on expected undiscounted cash flows attributable to that asset or asset group. Recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to the future net undiscounted cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future net undiscounted cash flows, an impairment expense is recognized in the amount by which the carrying amount of the asset exceeds the fair value of the asset. Any assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and would no longer be depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. The Company estimates the fair value of its long-lived assets based on a combination of market information primarily obtained from third-party quotes and online markets. In the application of impairment testing, the Company is required to make estimates of future operating trends and resulting cash flows and judgments on discount rates and other variables. Actual future results and other assumed variables could differ from these estimates. |
Goodwill and Other Acquisition-Related Intangible Assets | Goodwill and Other Acquisition-Related Intangible Assets Goodwill and other acquisition-related intangible assets not subject to amortization are tested annually for impairment using a two-step approach, and are tested for impairment more frequently if events and circumstances indicate that the asset might be impaired. An impairment loss is recognized to the extent that the carrying amount exceeds the asset’s fair value. In the application of impairment testing, the Company is required to make estimates of future operating trends and resulting cash flows and judgments on discount rates and other variables. Actual future results and other assumed variables could differ from these estimates. The Company's future operating performance will be impacted by the future amortization of intangible assets, potential expenses related to purchased in-process research and development for future acquisitions, and potential impairment expenses related to goodwill. Accordingly, the allocation of the purchase price of the acquired companies to intangible assets and goodwill has a significant impact on the Company's future operating results. The allocation process requires management to make significant estimates and assumptions, including estimates of future cash flows expected to be generated by the acquired assets and the appropriate discount rate for these cash flows. Should different conditions prevail, the Company would have to perform an impairment review that might result in material write-downs of intangible assets and/or goodwill. Other factors the Company considers important which could trigger an impairment review, include, but are not limited to, significant changes in the manner of use of its acquired assets, significant changes in the strategy for the Company's overall business or significant negative economic trends. If this evaluation indicates that the value of an intangible asset may be impaired, an assessment of the recoverability of the net carrying value of the asset over its remaining useful life is made. If this assessment indicates that the cost of an intangible asset is not recoverable, based on the estimated undiscounted future cash flows or other comparable market valuations of the entity or technology acquired over the remaining amortization period, the net carrying value of the related intangible asset will be reduced to fair value and the remaining amortization period may be adjusted. Due to uncertain market conditions and potential changes in the Company's strategy and product portfolio, it is possible that forecasts used to support its intangible assets may change in the future, which could result in additional non-cash expenses that would adversely affect its results of operations and financial condition. |
Business Combinations | Business Combination The Company allocates the fair value of purchase consideration to the tangible assets acquired, liabilities assumed and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair values of these identifiable assets and liabilities is recorded as goodwill. When determining the fair values of assets acquired and liabilities assumed, management makes significant estimates and assumptions, especially with respect to intangible assets and certain tangible assets such as inventory. Critical estimates in valuing certain tangible and intangible assets include but are not limited to future expected cash flows from the underlying assets and discount rates. Management’s estimates of fair value are based upon assumptions believed to be reasonable, but which are inherently uncertain and unpredictable and, as a result, actual results may differ from estimates. |
Accounting for Stock-Based Compensation | Stock-Based Compensation The Company uses the Black Scholes model to estimate the fair value of options, which is affected by the Company's stock price as well as assumptions regarding a number of complex and subjective variables. These variables include the Company's expected stock price volatility over the term of the awards, actual and projected employee option exercise behaviors, risk-free interest rates and expected dividends. The expected stock price volatility is based on the weighted average of the historical volatility of the Company's common stock over the most recent period commensurate with the estimated expected life of the Company's stock options. The Company based its expected life assumption on its historical experience and on the terms and conditions of the stock awards granted. Risk-free interest rates reflect the yield on zero-coupon U.S. Treasury securities. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statement of comprehensive income (loss). The Company attributes the values of the stock-based compensation to expense using the straight-line method. |
Income Taxes | Income Taxes 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. |
Net Income (Loss) per Common Share | Net Income (Loss) per Share Attributable to DASAN Zhone Solutions, Inc. Basic net income (loss) per share attributable to DASAN Zhone Solutions, Inc. is computed by dividing the net income (loss) attributable to DASAN Zhone Solutions, Inc. for the period by the weighted average number of shares of common stock outstanding during the period. The calculation of diluted net income (loss) per share attributable to DASAN Zhone Solutions, Inc. 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. |
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 collectability, present sales tax, treat noncash consideration, and account for completed and modified contracts at the time of transition to 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 has elected to use the modified retrospective method which will result in a cumulative effect transition which will be recorded in 2018. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. 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 was effective for the Company on January 1, 2017, and was adopted accordingly. The adoption of this standard had no impact on the Company's consolidated financial statements. 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. The Company does not plan to early adopt this guidance. The Company expects its assets and liabilities to increase as a result of the adoption of this standard. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. The Company is not able to quantify or cannot reasonably estimate quantitative information related to the impact of the new standard on its consolidated financial statements at this time. 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 was effective for the Company on January 1, 2017, and was adopted accordingly. The adoption of this standard had no material impact on the Company's consolidated financial statements. 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. The Company continues to assess all the potential impacts of the new standard and is not able to quantify or cannot reasonably estimate quantitative information related to the impact of the new standard on its consolidated financial statements at this time. In November 2016, FASB issued ASU 2016-18, Statement of Cash Flows, Restricted Cash, which require that a statement of cash flows to explain the change during the period in the total of cash, cash equivalents and amounts generally described as restricted cash and restricted cash equivalents. The updated guidance is effective for the Company beginning on January 1, 2018. Adoption of this ASU is applied using a retrospective approach. As a result, the Company will no longer present transfers between cash and cash equivalents and restricted cash in the consolidated cash flow statements. In January 2017, FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, which simplifies the accounting for goodwill impairment. The updated guidance is effective for the Company on January 1, 2020, and will be adopted accordingly. Early adoption is permitted. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. The Company is not able to quantify or cannot reasonably estimate quantitative information related to the impact of the new standard on its consolidated financial statements at this time. In May 2017, the FASB issued ASU No. 2017-09, Compensation—Stock Compensation (Topic 718): Scope of modification accounting. The purpose of the amendment is to clarify which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting. The updated guidance is effective for the Company beginning on January 1, 2018. The Company is currently assessing the potential impact of adopting this new guidance on its consolidated financial statements. |
Organization and Summary of S27
Organization and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Consolidated Subsidiaries | Consolidated Subsidiaries Details of the Company's consolidated subsidiaries as of December 31, 2017 and December 31, 2016 are as follows: Percentage of ownership (%) Location December 31, 2017 December 31, 2016 Dasan Network Solutions, Inc. (U.S. subsidiary) US 100 % 100 % Dasan Network Solutions, Inc. (Korean subsidiary) Korea 100 % 100 % DASAN Network Solutions Japan Co., Ltd. (formerly: HandySoft Japan Co., Ltd.) Japan 69.06 % 69.06 % DASAN Vietnam Co., Ltd Vietnam 100 % 100 % D-Mobile Taiwan 100 % N/A DASAN India India 99.99 % N/A |
Allowance for Sales Returns and Doubtful Accounts | Activity under the Company’s allowance for sales returns and doubtful accounts was comprised as follows (in thousands): Years ended December 31, 2017 2016 2015 Balance at beginning of year $ 1,143 $ 868 $ 136 Charged to revenue 1,387 466 767 Utilization/write offs (974 ) (149 ) — Exchange differences 135 (42 ) (35 ) Balance at end of year $ 1,691 $ 1,143 $ 868 |
Merger (Tables)
Merger (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Business Combinations [Abstract] | |
Business Acquisition, Purchase Consideration | The total purchase consideration is calculated as follows (in thousands): Shares Estimated Fair Value Shares of Legacy Zhone stock as of September 8, 2016 (1) 6,874 $ 40,902 Legacy Zhone stock options (1) 198 540 Total purchase consideration $ 41,442 (1) Amount presented has been adjusted to reflect the one-for-five reverse stock split effected on February 28, 2017. |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table summarizes the allocation of the fair value of the consideration transferred as of the acquisition date (in thousands): Fair Value as of December 31, 2016 Cash and cash equivalents $ 7,013 Accounts receivable 18,510 Inventory 16,456 Prepaid expenses and other current assets 2,191 Property and equipment 4,339 Other assets 125 Identifiable intangible assets 10,479 Goodwill 3,284 Accounts payable (11,021 ) Accrued and other liabilities (7,089 ) Other long-term liabilities (2,845 ) Total Indicated Fair Value of Assets $ 41,442 |
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 Developed technology 5 $ 3,060 Customer relationships 10 5,240 Backlog 1 2,179 Total Acquired Intangible Assets $ 10,479 |
Business Acquisition, Pro Forma Information | The following unaudited pro forma condensed combined financial information for the year ended December 31, 2016 and 2015 gives effect to the Merger as if it had occurred at the beginning of 2015. The unaudited pro forma condensed combined financial information has been included for comparative purposes only and is not necessarily indicative of what the combined Company's financial position or results of operations might have been had the Merger been completed as of the date 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). Years Ended December 31, (in thousands) 2016 2015 Pro forma total net revenue $ 202,321 $ 240,342 Pro forma net loss (29,514 ) (11,369 ) |
Balance Sheet Detail (Tables)
Balance Sheet Detail (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Balance Sheet Related Disclosures [Abstract] | |
Inventories | Balance sheet detail as of December 31, 2017 and 2016 is as follows (in thousands): 2017 2016 Inventories: Raw materials $ 12,671 $ 13,547 Work in process 2,150 3,705 Finished goods 10,523 13,780 $ 25,344 $ 31,032 |
Property and equipment, net | 2017 2016 Property and equipment, net: Furniture and fixtures $ 22,988 $ 20,040 Machinery and equipment 5,455 4,530 Leasehold improvements 3,647 3,573 Computers and software 621 411 Other 1,007 922 33,718 29,476 Less accumulated depreciation and amortization (27,584 ) (22,922 ) Less government grants (261 ) (266 ) $ 5,873 $ 6,288 |
Accrued and Other Liabilities | 2017 2016 Accrued and other liabilities (in thousands): Accrued warranty $ 931 $ 878 Accrued compensation 1,905 2,834 Other accrued expenses 8,338 4,284 $ 11,174 $ 7,996 |
Product Warranty Liability | The following table summarizes the activity related to the product warranty liability (in thousands): Balance at December 31, 2015 $ 441 Balance assumed with the Merger 652 Charged to cost of revenue 717 Claims and settlements (925 ) Foreign exchange impact (7 ) Balance at December 31, 2016 878 Charged to cost of revenue 723 Claims and settlements (695 ) Foreign exchange impact 25 Balance at December 31, 2017 $ 931 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | Goodwill as of December 31, 2017 and December 31, 2016 was as follows (in thousands): December 31, December 31, Beginning balance $ 3,977 $ 693 Goodwill from Merger — 2,820 Correction of errors — 464 Less: accumulated impairment — — Ending balance $ 3,977 $ 3,977 |
Schedule of Intangible Assets | Intangible assets as of December 31, 2017 and December 31, 2016 were as follows (in thousands): December 31, 2017 Gross Carrying Amount Accumulated Amortization Government Grant Net Developed Technology $ 3,060 $ (816 ) $ — $ 2,244 Customer Relationships 5,240 (699 ) — 4,541 Backlog 2,179 (2,179 ) — — Total intangible assets, net $ 10,479 $ (3,694 ) $ — $ 6,785 December 31, 2016 Gross Carrying Amount Accumulated Amortization Government Grant Net Developed Technology $ 3,060 $ (203 ) $ — $ 2,857 Customer Relationships 5,240 (321 ) — 4,919 Backlog 2,179 (1,236 ) — 943 Other 105 (34 ) (23 ) 48 Total intangible assets, net $ 10,584 $ (1,794 ) $ (23 ) $ 8,767 |
Expected Future Amortization | As of December 31, 2017 , expected future amortization expense for the years indicated was as follows (in thousands): Period Expected Amortization Expense 2018 $ 1,136 2019 1,136 2020 1,136 2021 932 2022 524 Thereafter 1,921 Total $ 6,785 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Short-term Debt | As of December 31, 2017 and December 31, 2016, the Company had an aggregate outstanding balance of $22.8 million and $17.6 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 (in thousands). As of December 31, 2017 Interest rate (%) Amount Industrial Bank of Korea Credit facility 2.89 ~ 3.26 $ 2,328 Industrial Bank of Korea Trade Finance 4.47 ~ 5.97 2,401 Shinhan Bank General loan 5.91 2,987 Shinhan Bank Trade finance 3.90 ~ 4.14 3,050 NongHyup Bank (Korea) Credit facility 2.83 ~ 3.42 860 The Export-Import Bank of Korea Export development loan 3.20 ~ 3.28 7,570 Mitsubishi Bank (Japan) SoftBank AR Factoring 1.58 1,872 Shinhan Bank (India) General loan 8.70-8.90 1,709 $ 22,777 As of December 31, 2016 Interest rate (%) Amount Industrial Bank of Korea Credit facility 2.16 - 2.76 $ 1,106 Shinhan Bank General loan 4.08 3,310 Shinhan Bank Trade finance 3.28 - 3.44 1,752 NongHyup Bank (Korea) Credit facility 1.92 - 2.66 482 KEB Hana Bank Comprehensive credit loan 2.79 3,501 The Export-Import Bank of Korea Export development loan 3.10 7,448 $ 17,599 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Stockholders' Equity Note [Abstract] | |
Summary of Stock Based Compensation Expense | The following table summarizes stock-based compensation expense for the year ended December 31, 2017 and 2016 (in thousands): Year ended December 31, 2017 2016 Compensation expense relating to employee stock options, restricted stock units and restricted stock $ 902 $ 336 |
Assumptions Used to Value Options Grants | The weighted average assumptions used to value option grants for the year ended December 31, 2017 and 2016 are as follows: Year ended December 31, 2017 2016 Expected term (years) 4.87 4.78 Expected volatility 81.32 % 79.70 % Risk free interest rate 1.92 % 1.14 % |
Option Activity under Stock Option Program | The following table sets forth the summary of option activity under the stock option program for the year ended December 31, 2016 (in thousands, except per share data): Options Outstanding Weighted Average Exercise Price (1) Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2015 — $ — Options assumed as part of the Merger 265 8.68 Granted 530 5.95 Canceled/Forfeited (8 ) 11.75 Exercised — — Outstanding as of December 31, 2016 787 6.84 8.56 $ 60 Vested and expected to vest at December 31, 2017 684 7.01 8.39 52 Vested and exercisable at December 31, 2016 233 8.34 5.85 14 The following table sets forth the summary of option activity under the stock option program for the year ended December 31, 2017 (in thousands, except per share data): Options Outstanding Weighted Average Exercise Price (1) Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Outstanding as of December 31, 2016 787 $ 6.84 Granted 733 6.01 Canceled/Forfeited (282 ) 6.57 Exercised (25 ) 4.91 Outstanding as of December 31, 2017 1,213 6.50 7.83 $ 3,586 Vested and expected to vest at December 31, 2017 1,213 6.50 7.83 3,586 Vested and exercisable at December 31, 2017 310 7.65 4.14 713 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Income (Loss) Per Share | The following table sets forth the computation of basic and diluted net income (loss) per share (in thousands, except per share data): Years ended December 31, 2017 2016 2015 Numerator: Net income (loss) attributable to DASAN Zhone Solutions, Inc. $ 1,071 $ (15,326 ) $ (3,339 ) Denominator: Weighted average number of shares outstanding: Basic (1) 16,383 11,637 9,314 Effect of dilutive securities: Stock options, restricted stock units and share awards 13 — — Diluted (1) 16,396 11,637 9,314 Net income (loss) per share attributable to DASAN Zhone Solutions Inc.: Basic (1) $ 0.07 $ (1.32 ) $ (0.36 ) Diluted (1) $ 0.07 $ (1.32 ) $ (0.36 ) (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 Loss Per Share Calculation | The following tables set forth potential common stock that is not included in the diluted net income (loss) per share calculation above because their effect would be anti-dilutive for the periods indicated (in thousands, except exercise price per share data): 2017 Weighted average option exercise price 2016 Weighted average Outstanding stock options, restricted stock units and unvested restricted shares 1,037 $ 8.93 796 $ 6.84 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Components of Income Tax Expense Applicable to Loss Before Income Taxes | The following is a summary of the components of income tax expense applicable to loss before income taxes (in thousands): Years ended December 31, 2017 2016 2015 Current: Federal $ (86 ) $ — $ — State 17 (9 ) — Foreign 912 88 318 Total current tax expense $ 843 $ 79 $ 318 Deferred: Federal $ (12 ) $ — $ — State — — — Foreign (2,903 ) 1,408 (86 ) Total deferred tax expense $ (2,915 ) $ 1,408 $ (86 ) Total tax expense $ (2,072 ) $ 1,487 $ 232 |
Reconciliation of Expected Tax Expense (Benefit) to Actual Tax Expense (Benefit) | A reconciliation of the expected tax expense (benefit) to the actual tax expense is as follows (in thousands): Years ended December 31, 2017 2016 2015 Expected tax expense (benefit) at statutory rate (34%) $ (306 ) $ (4,644 ) $ (929 ) State taxes, net of Federal effect 4 (348 ) — Foreign rate differential (927 ) 391 328 Tax impact on US corporate income tax change 5,287 — — Valuation allowance (4,555 ) 7,004 218 Permanent differences 234 687 40 Tax credit carry-forwards (1,235 ) (896 ) (674 ) Tax on accumulated earnings from prior year — 29 1,348 Tax paid to overseas jurisdictions — 71 — Tax expense adjustments after tax return for prior period (574 ) (837 ) — Foreign currency translation — 124 — Other — (94 ) (99 ) Total tax expense $ (2,072 ) $ 1,487 $ 232 |
Components of Company's Deferred Tax Assets And Liabilities | Significant components of the Company’s deferred tax assets and liabilities as of December 31, 2017 and 2016 are as follows (in thousands): 2017 2016 Deferred tax assets: Net operating loss, capital loss, and tax credit carryforwards $ 11,945 $ 14,243 Reduction of gross deferred tax assets due to built-in loss limitation (678 ) (4,402 ) Fixed assets and intangible assets 2,158 3,775 Inventory and other reserves 3,516 4,573 Other 2,279 2,661 Gross deferred tax assets 19,220 20,850 Less valuation allowance (16,266 ) (20,850 ) Total net deferred tax assets $ 2,954 $ — |
Unrecognized Tax Benefit Reconciliation | A reconciliation of the beginning and ending unrecognized tax benefit amounts for 2017 and 2016 are as follows (in thousands): Balance at December 31, 2015 $ — Increases related to current year tax positions 77 Balance at December 31, 2016 77 Increases related to prior year tax positions 17 Increases related to current year tax positions 286 Balance at December 31, 2017 $ 380 |
Open Tax Years for Major Jurisdictions | The open tax years for the major jurisdictions are as follows: • Federal 2014 - 2017 • California and Canada 2013 - 2017 • Brazil 2012 - 2017 • Germany 2013 - 2017 • Japan 2012 - 2017 • Korea 2015 - 2017 • United Kingdom 2014 - 2017 • Vietnam 2016 - 2017 |
Non-Controlling Interests (Tabl
Non-Controlling Interests (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Noncontrolling Interest [Abstract] | |
Redeemable Noncontrolling Interest | Non-controlling interests were as follows (in thousands): Years Ended December 31, 2017 2016 Beginning non-controlling interests $ 416 $ 138 Acquisition of additional interest in a subsidiary — 277 Net income (loss) attributable to non-controlling interests 102 (2 ) Foreign currency translation adjustments (Other Comprehensive Income) 16 3 Ending non-controlling interests $ 534 $ 416 |
Related-Party Transactions (Tab
Related-Party Transactions (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Sales and purchases, cost of revenue, research and product development, selling, marketing, general and administrative and other income and expenses to and from related parties for the years ended December 31, 2017, 2016 and 2015 were as follows (in thousands): For the year ended December 31, 2017 Counterparty DNI direct ownership interest Sales Cost of revenue Manufacturing (Cost of revenue) Research and product development Selling, marketing, general and administrative Other expenses DNI (Parent Company) N/A $ 16,559 $ 14,020 $ — $ — $ 4,502 $ 223 Tomato Soft Ltd. 100% — — 140 246 — — Tomato Soft (Xi'an) Ltd. 100% — — — 448 37 — CHASAN Networks Co., Ltd. 100% — — 810 98 — — D-Mobile N/A 4,316 2,769 — — 427 — DASAN FRANCE 100% 2,168 2,006 — — 383 — HANDYSOFT, Inc. 17.63% 88 24 — — 6 4 J-Mobile Corporation 90.47% 8 — — — 132 — DASAN INDIA Private Limited N/A 8,245 6,461 — — 30 — Fine Solution 100% — — — — 4 — Solueta 27.21% — — — — — 3 $ 31,384 $ 25,280 $ 950 $ 792 $ 5,521 $ 230 For the year ended December 31, 2016 Counterparty DNI ownership interest Sales Cost of revenue Manufacturing (Cost of revenue) Research and product development Selling, marketing, general and administrative Other income Other expenses DNI (Parent Company) N/A $ 21,214 $ 18,173 $ — $ — $ 5,079 $ — $ 389 ABLE 61.99% 50 — — — — — — CHASAN Networks Co., Ltd. 100% — — 720 149 — — — DASAN France 100% 19 18 — — — — DASAN INDIA Private Limited 99.99% 2,710 2,080 — — — — — DMC 100% 1 1 — — — — — D-Mobile 100% 4,431 3,610 — — 421 — — DTS 81.56% — — — — — 1 — HANDYSOFT, Inc. 17.64% 155 136 — — — — J-Mobile Corporation 68.56% 54 — — — 634 25 — PANDA Media, Inc. 90% — — — — 2 — 1 Tomato Soft (Xi'an) Ltd. 100% — — — 750 — — — $ 28,634 $ 24,018 $ 720 $ 899 $ 6,136 $ 26 $ 390 For the year ended December 31, 2015 Counterparty DNI Ownership Interest Sales Cost of revenue Manufacturing (Cost of revenue) Research and product development Selling, marketing, general and administrative Other income Other expenses DNI (Parent Company) N/A $ 23,365 $ 19,822 $ — $ — $ 7,230 $ 24 $ 363 CHASAN Networks Co., Ltd. 100% — — 731 358 — — — DASAN RND Co., LTD 100% — — — — 605 — — D-Mobile 100% — — — — 91 — — HANDYSOFT, Inc. 17.64% 1,410 1,337 — — — — 184 J-Mobile Corporation 68.56% — — — — 1,511 15 — Tomato Soft (Xi'an) Ltd. 100% — — — 631 — — — $ 24,775 $ 21,159 $ 731 $ 989 $ 9,437 $ 39 $ 547 Balances of receivables and payables arising from sales and purchases of goods and services with related parties as of December 31, 2017 and 2016 were as follows (in thousands): As of December 31, 2017 Counterparty DNI Ownership Interest Account receivables Other receivables Deposits for lease* Long-term debt Accounts payable Other payables Accrued and other current liabilities** DNI (parent company) N/A $ 12,576 $ 93 $ 786 $ 6,800 $ 1,264 $ 1,859 $ 59 Tomato Soft Ltd. 100% — — — — — 18 — Tomato Soft (Xi'an) Ltd. 100% — — — — — 54 — D-Mobile 100% — — — — — — — ABLE 94.57% — — — — — — — DASAN France 100% 870 71 — — — — — HANDYSOFT, Inc. 17.63% 52 — — — — — — CHASAN Networks Co., Ltd. 100% — — — — 87 — — Solueta 100% — — — — — 25 — $ 13,498 $ 164 $ 786 $ 6,800 $ 1,351 $ 1,956 $ 59 As of December 31, 2016 Counterparty DNI Ownership Interest Account receivables Other receivables Deposits for lease* Long-term debt Accounts payable Other payables DNI (Parent Company) N/A $ 6,679 $ 171 $ 690 $ 6,800 $ 1,613 $ 7,028 ABLE 61.99% 53 — 9 — — — DASAN France 100% 23 — — — — — DASAN INDIA Private Limited 99.99% 2,606 — — — — — D-Mobile 100% 3,943 — — — — HANDYSOFT, Inc. 17.64% 2 — — — — — J-Mobile Corporation 68.56% 5 — — — — — Tomato Soft Ltd. 100% — — — — — 16 Tomato Soft (Xi'an) Ltd. 100% — — — — 70 63 $ 13,311 $ 171 $ 699 $ 6,800 $ 1,683 $ 7,107 * Included in other assets related to deposits for lease in the consolidated balance sheets as of December 31, 2017 and 2016. **Included in accrued and other liabilities in the consolidated balance sheet as of December 31, 2017. |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Estimated Future Lease Payments under All Non Cancelable Operating Leases | Estimated future lease payments under all non-cancellable operating leases with terms in excess of one year, including taxes and service fees, are as follows (in thousands): Minimum Future Lease Payments Year ending December 31: 2018 $ 3,794 2019 2,928 2020 2,844 2021 2,590 2022 2,664 Thereafter 8,423 Total minimum lease payments $ 23,243 |
Schedule of Guarantees Provided by Third Parties | The following table sets forth payment guarantees of the Company's indebtedness and other obligations as of December 31, 2017 that have been provided by third parties and DNI. DNI owns approximately 58% of the outstanding shares of our common stock. Guarantor Amount Guaranteed (in thousands) Description of Obligations Guaranteed DNI $ 3,584 Borrowings from Shinhan Bank DNI 1,792 Purchasing card from Shinhan Bank DNI 10,640 Letter of credit from Industrial Bank of Korea DNI 6,000 Letter of credit from NongHyup Bank DNI 560 Purchasing card from NongHyup Bank DNI 6,368 Borrowings from Export-Import Bank of Korea Industrial Bank of Korea 6,221 Letter of credit Industrial Bank of Korea 284 Letter of credit (local) NongHyup Bank 2,983 Letter of credit Shinhan Bank 330 Purchasing card Industrial Bank of Korea 1,806 Performance bonds KEB Hana Bank 34 Performance bonds State Bank of India 39 Performance bonds Seoul Guarantee Insurance Co. 594 Performance payment guarantee* $ 41,235 *The Company is responsible for the warranty liabilities generally for the period of two years regarding major product sales and have contracted surety insurance over part of the warranty liabilities. |
Enterprise Wide Information (Ta
Enterprise Wide Information (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Segment Reporting [Abstract] | |
Revenue by Geography | The following summarizes required disclosures about geographical concentrations and revenue by products and services (in thousands): Years ended December 31, 2017 2016 2015 Revenue by geography: United States $ 48,840 $ 16,872 $ 4,426 Canada 5,631 1,967 7 Total North America 54,471 18,839 4,433 Latin America 26,206 9,604 2,510 Europe, Middle East, Africa 30,768 13,611 9,383 Korea 81,533 77,979 114,676 Other Asia Pacific 54,136 30,271 8,194 Total International 192,643 131,465 134,763 Total $ 247,114 $ 150,304 $ 139,196 |
Revenue by Products and Services | Years ended December 31, 2017 2016 2015 Revenue by products and services: Products $ 235,117 $ 142,238 $ 133,036 Services 11,997 8,066 6,160 Total $ 247,114 $ 150,304 $ 139,196 |
Revenue by Geographical Area | The Company's property and equipment, net of accumulated depreciation, were located in the following geographical areas as of December 31, 2017 and 2016 (in thousands): As of December 31, 2017 2016 United States $ 3,393 $ 4,094 Korea 1,633 1,455 Japan and Vietnam 810 739 Taiwan and India 37 — $ 5,873 $ 6,288 |
Quarterly Information (unaudi39
Quarterly Information (unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2017 | |
Quarterly Financial Information Disclosure [Abstract] | |
Quarterly Information | Year ended December 31, 2017 Q1 (1) Q2 (1) Q3 (1) Q4 (in thousands, except per share data) Net revenue $ 52,112 $ 59,941 $ 66,438 $ 68,623 Gross profit 17,792 19,189 22,073 22,315 Operating income (loss) (2,529 ) (803 ) 1,661 2,393 Net income (loss) (3,498 ) (874 ) 1,387 4,157 Net income (loss) attributable to non-controlling interest 249 (65 ) (12 ) (70 ) Net income (loss) attributable to DASAN Zhone Solutions, Inc. (3,747 ) (809 ) 1,399 4,227 Net income (loss) per share attributable to DASAN Zhone Solutions, Inc.: Basic $ (0.23 ) $ (0.05 ) $ 0.09 $ 0.26 Diluted $ (0.23 ) $ (0.05 ) $ 0.09 $ 0.26 Weighted-average shares outstanding: Basic 16,378 16,380 16,382 16,391 Diluted 16,378 16,380 16,382 16,445 Year ended December 31, 2016 Q1 Q2 Q3 (1) Q4 (1) (in thousands, except per share data) Net revenue $ 25,340 $ 34,252 $ 31,240 $ 59,472 Gross profit 4,611 9,002 9,300 18,034 Operating loss (4,341 ) (165 ) (5,114 ) (3,429 ) Net loss (3,761 ) (533 ) (4,789 ) (6,245 ) Net income (loss) attributable to non-controlling interest 6 33 (56 ) 15 Net loss attributable to DASAN Zhone Solutions, Inc. (3,767 ) (566 ) (4,733 ) (6,260 ) Net loss per share attributable to DASAN Zhone Solutions, Inc.: Basic $ (0.40 ) $ (0.06 ) $ (0.42 ) $ (0.38 ) Diluted $ (0.40 ) $ (0.06 ) $ (0.42 ) $ (0.38 ) Weighted-average shares outstanding: Basic 9,493 9,493 11,139 16,375 Diluted 9,493 9,493 11,139 16,375 (1) Results include the operating results of Legacy Zhone from and after September 9, 2016. |
Organization and Summary of S40
Organization and Summary of Significant Accounting Policies - Additional (Details) $ in Thousands | Feb. 28, 2017 | Sep. 09, 2016USD ($) | Dec. 31, 2017USD ($)customercountryshares | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($)shares | Sep. 30, 2016USD ($) | Jun. 30, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2017USD ($)customercountryshares | Dec. 31, 2016USD ($)customershares | Dec. 31, 2015USD ($)customer | Feb. 27, 2017shares | Sep. 08, 2016shares | Apr. 11, 2016 | Dec. 31, 2014USD ($) |
Significant Accounting Policies [Line Items] | |||||||||||||||||
Number of customers | customer | 1,000 | 1,000 | |||||||||||||||
Number of countries in which entity operates | country | 50 | 50 | |||||||||||||||
Pro forma net loss | $ 4,157 | $ 1,387 | $ (874) | $ (3,498) | $ (6,245) | $ (4,789) | $ (533) | $ (3,761) | $ 1,173 | $ (15,328) | $ (3,339) | ||||||
Accumulated deficit | (18,852) | (19,923) | (18,852) | (19,923) | |||||||||||||
Working capital | 62,300 | 62,300 | |||||||||||||||
Cash and cash equivalents | 17,475 | 17,893 | 17,475 | 17,893 | 9,095 | $ 6,007 | |||||||||||
Short-term debt | 19,790 | $ 17,599 | 19,790 | $ 17,599 | |||||||||||||
Credit facility, remaining borrowing capacity | $ 12,000 | $ 12,000 | |||||||||||||||
Stock split, conversion ratio | 0.2 | ||||||||||||||||
Common stock, shares authorized | shares | 36,000,000 | 36,000,000 | 36,000,000 | 36,000,000 | 180,000,000 | ||||||||||||
Common stock, issued (in shares) | shares | 16,410,000 | 16,375,000 | 16,410,000 | 16,375,000 | 81,900,000 | ||||||||||||
Common stock, outstanding (in shares) | shares | 16,410,000 | 16,375,000 | 16,410,000 | 16,375,000 | 81,900,000 | ||||||||||||
Impairment expenses, long-lived assets | $ 0 | $ 0 | $ 0 | ||||||||||||||
Minimum [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Product warranty term | 1 year | ||||||||||||||||
Product warranty, life | 1 year | ||||||||||||||||
Maximum [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Product warranty term | 5 years | ||||||||||||||||
Product warranty, life | 5 years | ||||||||||||||||
Foreign Countries [Member] | Accounts Receivable [Member] | Geographic Concentration Risk [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Percentage of revenue | 84.00% | 87.00% | |||||||||||||||
Merger Agreement with Dragon Acquisition Company [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Percent of voting interest acquired | 58.00% | 58.00% | |||||||||||||||
Percent of voting interest retained by existing shareholders | 42.00% | ||||||||||||||||
Business combination, consideration transferred | $ 41,442 | ||||||||||||||||
Common stock, outstanding (in shares) | shares | 6,874,000 | ||||||||||||||||
Dasan Network Solutions, Inc (DNS Korea) [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Cash and cash equivalents | $ 12,100 | $ 12,100 | |||||||||||||||
DASAN Networks, Inc. [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Short-term debt | 29,600 | 29,600 | |||||||||||||||
Revolving Credit Facility [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Credit facility, remaining borrowing capacity | $ 8,600 | $ 8,600 | |||||||||||||||
Three Major Customers [Member] | Net Revenue [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Number of customers | customer | 3 | ||||||||||||||||
Major Customer One [Member] | Net Revenue [Member] | Customer Concentration Risk [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Percentage of revenue | 16.00% | 26.00% | |||||||||||||||
Major Customer One [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Percentage of revenue | 20.00% | 13.00% | |||||||||||||||
Major Customer Two [Member] | Net Revenue [Member] | Customer Concentration Risk [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Percentage of revenue | 14.00% | 21.00% | |||||||||||||||
Major Customer Two [Member] | Accounts Receivable [Member] | Customer Concentration Risk [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Percentage of revenue | 11.00% | 10.00% | |||||||||||||||
Major Customer Three [Member] | Net Revenue [Member] | Customer Concentration Risk [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Percentage of revenue | 10.00% | 17.00% | |||||||||||||||
Four Major Customers [Member] | Net Revenue [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Number of customers | customer | 4 | ||||||||||||||||
Major Customer Four [Member] | Net Revenue [Member] | Customer Concentration Risk [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Percentage of revenue | 10.00% | ||||||||||||||||
Two Major Customers [Member] | Accounts Receivable [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Number of customers | customer | 2 | 2 | |||||||||||||||
D-Mobile [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Percent of voting interest acquired | 100.00% | 100.00% | |||||||||||||||
DASAN INDIA Private Limited [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Percent of voting interest acquired | 99.99% | 99.99% | |||||||||||||||
D-Mobile and DASAN India [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Business combination, consideration transferred | $ 800 | ||||||||||||||||
Related Party Payable Reclassification [Member] | |||||||||||||||||
Significant Accounting Policies [Line Items] | |||||||||||||||||
Accounts payable | $ 1,300 | 1,300 | |||||||||||||||
Other payables | $ 200 | $ 200 |
Organization and Summary of S41
Organization and Summary of Significant Accounting Policies - Subsidiary Ownership Percentages (Details) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Dasan Network Solutions, Inc. (DNS) [Member] | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Subsidiary ownership percent | 100.00% | 100.00% |
Dasan Network Solutions, Inc (DNS Korea) [Member] | ||
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 | 69.06% | 69.06% |
DASAN Vietnam Co., Ltd | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Subsidiary ownership percent | 100.00% | 100.00% |
D-Mobile [Member] | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Subsidiary ownership percent | 100.00% | |
DASAN INDIA Private Limited [Member] | ||
Subsidiary or Equity Method Investee [Line Items] | ||
Subsidiary ownership percent | 99.99% |
Organization and Summary of S42
Organization and Summary of Significant Accounting Policies - Allowance for Sales Returns and Doubtful Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Allowance for Doubtful Accounts Receivable and Sales Returns [Roll Forward] | |||
Balance at beginning of year | $ 1,143 | $ 868 | $ 136 |
Charged to revenue | 1,387 | 466 | 767 |
Utilization/write offs | (974) | (149) | 0 |
Exchange differences | 135 | (42) | (35) |
Balance at end of year | 1,691 | 1,143 | $ 868 |
Allowance for doubtful accounts | $ 900 | $ 800 |
Organization and Summary of S43
Organization and Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Furniture and Fixtures [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 3 years |
Furniture and Fixtures [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 4 years |
Machinery and Equipment [Member] | Minimum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 3 years |
Machinery and Equipment [Member] | Maximum [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 10 years |
Computer and Software [Member] | |
Property, Plant and Equipment [Line Items] | |
Property and Equipment | 3 years |
Merger - Additional (Details)
Merger - Additional (Details) - Merger Agreement with Dragon Acquisition Company [Member] - USD ($) $ / shares in Units, $ in Millions | Sep. 09, 2016 | Apr. 11, 2016 |
Business Acquisition [Line Items] | ||
Percent of voting interest acquired | 58.00% | 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 | |
Merger related costs | $ 1.3 |
Merger - Estimated Purchase Con
Merger - Estimated Purchase Consideration (Details) shares in Thousands, $ in Thousands | Feb. 28, 2017 | Sep. 09, 2016USD ($) | Dec. 31, 2017shares | Feb. 27, 2017shares | Dec. 31, 2016shares | Sep. 08, 2016shares | Dec. 31, 2015shares |
Business Acquisition [Line Items] | |||||||
Shares issued in merger (in shares) | 16,410 | 81,900 | 16,375 | ||||
Shares issued in merger, fair value (in shares) | 1,213 | 787 | 0 | ||||
Stock split, conversion ratio | 0.2 | ||||||
Merger Agreement with Dragon Acquisition Company [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Shares issued in merger (in shares) | 6,874 | ||||||
Shares issued in merger, fair value (in shares) | 198 | ||||||
Stock options assumed in merger | $ | $ 40,902 | ||||||
Stock options assumed in merger, fair value | $ | 540 | ||||||
Total purchase consideration | $ | $ 41,442 |
Merger - Schedule of Assets Acq
Merger - Schedule of Assets Acquired and Liabilities Assumed (Details) (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Sep. 09, 2016 | Dec. 31, 2015 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 3,977 | $ 3,977 | $ 693 | |
Merger Agreement with Dragon Acquisition Company [Member] | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | 7,013 | |||
Accounts receivable | 18,510 | |||
Inventory | 16,456 | |||
Prepaid expenses and other current assets | 2,191 | |||
Property and equipment | 4,339 | |||
Other assets | 125 | |||
Identifiable intangible assets | 10,479 | $ 10,479 | ||
Goodwill | 3,284 | |||
Accounts payable | (11,021) | |||
Accrued and other liabilities | (7,089) | |||
Other long-term liabilities | (2,845) | |||
Total Indicated Fair Value of Assets | $ 41,442 |
Merger - Fair Value of Intangib
Merger - Fair Value of Intangible Assets Acquired (Details) - Merger Agreement with Dragon Acquisition Company [Member] - USD ($) $ in Thousands | Sep. 09, 2016 | Dec. 31, 2016 |
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Fair Value | $ 10,479 | $ 10,479 |
Developed Technology | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in Years) | 5 years | |
Fair Value | $ 3,060 | |
Customer Relationships | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in Years) | 10 years | |
Fair Value | $ 5,240 | |
Backlog | ||
Acquired Finite-Lived Intangible Assets [Line Items] | ||
Useful life (in Years) | 1 year | |
Fair Value | $ 2,179 |
Merger - Pro forma Information
Merger - Pro forma Information (Details) - Merger Agreement with Dragon Acquisition Company [Member] - USD ($) $ in Thousands | 4 Months Ended | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2016 | Dec. 31, 2015 | |
Merger Adjustments [Member] | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Pro forma total net revenue | $ 202,321 | $ 240,342 | |
Pro forma net loss | $ (29,514) | $ (11,369) | |
Zhone [Member] | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Pro forma total net revenue | $ 29,000 | ||
Pro forma net loss | $ (7,600) |
Cash and Cash Equivalents and49
Cash and Cash Equivalents and Restricted Cash (Textual) (Details) - USD ($) $ in Millions | Dec. 31, 2017 | Dec. 31, 2016 |
Cash and Cash Equivalents [Abstract] | ||
Restricted cash | $ 13.9 | $ 6.7 |
Balance Sheet Detail (Details)
Balance Sheet Detail (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Property, Plant and Equipment [Line Items] | |||
Depreciation and amortization associated with property and equipment and intangibles | $ 3,817 | $ 3,173 | $ 1,404 |
Warranty period from date of shipment | 5 years | ||
Property, Plant and Equipment [Member] | |||
Property, Plant and Equipment [Line Items] | |||
Depreciation and amortization associated with property and equipment and intangibles | $ 1,900 | $ 1,300 | $ 1,400 |
Balance Sheet Detail Inventorie
Balance Sheet Detail Inventories (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Inventory [Line Items] | ||
Raw materials | $ 12,671 | $ 13,547 |
Work in process | 2,150 | 3,705 |
Finished goods | 10,523 | 13,780 |
Inventories | 25,344 | 31,032 |
Collateral Pledged [Member] | ||
Inventory [Line Items] | ||
Inventories | $ 11,400 | $ 14,400 |
Balance Sheet Detail Property a
Balance Sheet Detail Property and Equipment, Net (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property and equipment, net: | ||
Furniture and fixtures | $ 22,988 | $ 20,040 |
Machinery and equipment | 5,455 | 4,530 |
Leasehold improvements | 3,647 | 3,573 |
Computers and software | 621 | 411 |
Other | 1,007 | 922 |
Property, Plant and Equipment, Gross, Total | 33,718 | 29,476 |
Less accumulated depreciation and amortization | (27,584) | (22,922) |
Less government grants | (261) | (266) |
Property and equipment, net | $ 5,873 | $ 6,288 |
Balance Sheet Detail Accrued an
Balance Sheet Detail Accrued and Other Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Balance Sheet Related Disclosures [Abstract] | |||
Accrued warranty | $ 931 | $ 878 | $ 441 |
Accrued compensation | 1,905 | 2,834 | |
Other accrued expenses | 8,338 | 4,284 | |
Accrued and other liabilities | $ 11,174 | $ 7,996 |
Balance Sheet Detail Product Wa
Balance Sheet Detail Product Warranty Liability (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Movement in Standard Product Warranty Accrual [Roll Forward] | ||
Beginning balance | $ 878 | $ 441 |
Balance assumed with the Merger | 652 | |
Charged to cost of revenue | 723 | 717 |
Claims and settlements | (695) | (925) |
Foreign exchange impact | 25 | (7) |
Ending balance | $ 931 | $ 878 |
Goodwill and Intangible Asset55
Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Beginning balance | $ 3,977 | $ 693 |
Goodwill from Merger | 0 | 2,820 |
Correction of errors | 0 | 464 |
Less: accumulated impairment | 0 | 0 |
Ending balance | $ 3,977 | $ 3,977 |
Goodwill and Intangible Asset56
Goodwill and Intangible Assets - Intangible assets, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | $ 10,479 | $ 10,584 | |
Accumulated Amortization | (3,694) | (1,794) | |
Government Grant | 0 | (23) | |
Intangible assets, net | 6,785 | 8,767 | |
Amortization expense, intangible assets | 1,900 | 1,800 | $ 10 |
Developed Technology | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 3,060 | 3,060 | |
Accumulated Amortization | (816) | (203) | |
Government Grant | 0 | 0 | |
Intangible assets, net | 2,244 | 2,857 | |
Customer Relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 5,240 | 5,240 | |
Accumulated Amortization | (699) | (321) | |
Government Grant | 0 | 0 | |
Intangible assets, net | 4,541 | 4,919 | |
Backlog | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 2,179 | 2,179 | |
Accumulated Amortization | (2,179) | (1,236) | |
Government Grant | 0 | 0 | |
Intangible assets, net | $ 0 | 943 | |
Other | |||
Finite-Lived Intangible Assets [Line Items] | |||
Gross Carrying Amount | 105 | ||
Accumulated Amortization | (34) | ||
Government Grant | (23) | ||
Intangible assets, net | $ 48 |
Goodwill and Intangible Asset57
Goodwill and Intangible Assets - Expected amortization expense (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Amortization expense, 2018 | $ 1,136 |
Amortization expense, 2019 | 1,136 |
Amortization expense, 2020 | 1,136 |
Amortization expense, 2021 | 932 |
Amortization expense, 2022 | 524 |
Amortization expense, thereafter | 1,921 |
Amortization expense, total | $ 6,785 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | Apr. 01, 2018 | Mar. 31, 2018 | Mar. 27, 2018 | Dec. 31, 2017 | Mar. 28, 2018 | Dec. 31, 2016 |
Line of Credit Facility [Line Items] | ||||||
Credit facility, remaining borrowing capacity | $ 12,000,000 | |||||
Debt | 22,777,000 | $ 17,599,000 | ||||
Short-term debt | 19,790,000 | 17,599,000 | ||||
WFB Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, maximum borrowing capacity | $ 25,000,000 | |||||
Credit facility, commitment fee on unused capacity, percentage | 0.25% | |||||
Credit facility, commitment as security for various letters of credit | $ 2,300,000 | |||||
Credit facility, remaining borrowing capacity | $ 9,200,000 | |||||
Credit facility, interest rate | 4.19% | |||||
Shinhan Bank, General Loan [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt | $ 2,987,000 | $ 3,310,000 | ||||
Interest rate, stated percentage | 5.91% | |||||
Short-term debt | $ 3,000,000 | |||||
Foreign Operations [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, commitment as security for various letters of credit | 3,200,000 | |||||
Letter of Credit [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, commitment as security for various letters of credit | 6,300,000 | |||||
Foreign Line of Credit [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Credit facility, commitment as security for various letters of credit | $ 12,300,000 | |||||
Subsequent Event [Member] | WFB Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, Liquidity Trigger Event | $ 5,000,000 | $ 10,000,000 | ||||
Subsequent Event [Member] | Shinhan Bank, General Loan [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Short-term debt | $ 3,000,000 | |||||
Scenario, Forecast [Member] | WFB Facility [Member] | ||||||
Line of Credit Facility [Line Items] | ||||||
Debt instrument, Liquidity Trigger Event | $ 10,000,000 |
Debt - Schedule of Short-Term D
Debt - Schedule of Short-Term Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Short-term Debt [Line Items] | ||
Debt | $ 22,777 | $ 17,599 |
Industrial Bank of Korea, Credit Facility [Member] | ||
Short-term Debt [Line Items] | ||
Debt | 2,328 | $ 1,106 |
Industrial Bank of Korea, Trade Finance [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 4.08% | |
Debt | $ 2,401 | |
Shinhan Bank, General Loan [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 5.91% | |
Debt | $ 2,987 | $ 3,310 |
Shinhan Bank, Trade Finance [Member] | ||
Short-term Debt [Line Items] | ||
Debt | 3,050 | $ 1,752 |
Nonghyup Bank, Credit Facility [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 2.79% | |
Debt | 860 | $ 482 |
KEB Hana Bank Credit Loan [Member] | ||
Short-term Debt [Line Items] | ||
Debt | $ 3,501 | |
The Export-Import Bank of Korea, Export Development Loan [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 3.10% | |
Debt | $ 7,570 | $ 7,448 |
Mitsubishi Bank, SoftBank AR Factoring [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 1.58% | |
Debt | $ 1,872 | |
Shinhan Bank (India), General Loan [Member] | ||
Short-term Debt [Line Items] | ||
Debt | $ 1,709 | |
Minimum [Member] | Industrial Bank of Korea, Credit Facility [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 2.89% | 2.16% |
Minimum [Member] | Industrial Bank of Korea, Trade Finance [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 4.47% | |
Minimum [Member] | Shinhan Bank, General Loan [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 3.28% | |
Minimum [Member] | Shinhan Bank, Trade Finance [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 3.90% | 1.92% |
Minimum [Member] | Nonghyup Bank, Credit Facility [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 2.83% | |
Minimum [Member] | The Export-Import Bank of Korea, Export Development Loan [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 3.20% | |
Minimum [Member] | Shinhan Bank (India), General Loan [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 8.70% | |
Maximum [Member] | Industrial Bank of Korea, Credit Facility [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 3.26% | 2.76% |
Maximum [Member] | Industrial Bank of Korea, Trade Finance [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 5.97% | |
Maximum [Member] | Shinhan Bank, General Loan [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 3.44% | |
Maximum [Member] | Shinhan Bank, Trade Finance [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 4.14% | 2.66% |
Maximum [Member] | Nonghyup Bank, Credit Facility [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 3.42% | |
Maximum [Member] | The Export-Import Bank of Korea, Export Development Loan [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 3.28% | |
Maximum [Member] | Shinhan Bank (India), General Loan [Member] | ||
Short-term Debt [Line Items] | ||
Interest rate, stated percentage | 8.90% |
Executive Compensation (Details
Executive Compensation (Details) - USD ($) | Mar. 01, 2018 | Oct. 31, 2017 | Dec. 31, 2017 | Sep. 09, 2016 |
Co-Chief Executive Officer 1 | ||||
Officer Compensation [Line Items] | ||||
Executive compensation, bonus | $ 100,000 | |||
Officers' compensation | $ 400,000 | |||
Officer compensation, target bonus percent of annual salary | 100.00% | |||
Officer compensation, monthly housing allowance | $ 6,500 | |||
Officer compensation, relocation expenses | 30,000 | |||
Co-Chief Executive Officer 2 | ||||
Officer Compensation [Line Items] | ||||
Separate and release agreement | $ 300,000 | |||
Chief Financial Officer | ||||
Officer Compensation [Line Items] | ||||
Officers' compensation | $ 300,000 | |||
Stock option award to purchase | 130,000 | |||
Pro Forma [Member] | Chief Financial Officer | ||||
Officer Compensation [Line Items] | ||||
Officers' compensation | $ 150,000 | |||
Subsequent Event [Member] | Corporate Treasurer and Secretary | ||||
Officer Compensation [Line Items] | ||||
Separate and release agreement | $ 232,500 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) $ / shares in Units, $ in Thousands | Jan. 04, 2017USD ($)shares | Dec. 31, 2017USD ($)CompensationPlan$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($) | Jan. 01, 2018shares | Feb. 28, 2017shares | Feb. 27, 2017shares |
Stockholders Equity [Line Items] | |||||||
Common stock, shares authorized | 36,000,000 | 36,000,000 | 180,000,000 | ||||
Shares issued in merger (in shares) | 16,410,000 | 16,375,000 | 81,900,000 | ||||
Number of share-based compensation plans | CompensationPlan | 1 | ||||||
Compensation expense relating to employee stock options, restricted stock units and restricted stock | $ | $ 902 | $ 336 | $ 0 | ||||
Option exercise price | $ / shares | $ 3.90 | $ 4.08 | |||||
Closing stock price (in USD per share) | $ / shares | $ 9.26 | ||||||
Unrecognized compensation cost related to unvested stock based payments | $ | $ 3,200 | ||||||
Unrecognized compensation cost related to unvested stock based payments, weighted average recognition period | 2 years 9 months 18 days | ||||||
Minimum [Member] | |||||||
Stockholders Equity [Line Items] | |||||||
Expiration period of options | 7 years | ||||||
Maximum [Member] | |||||||
Stockholders Equity [Line Items] | |||||||
Expiration period of options | 10 years | ||||||
10 percent stockholder | |||||||
Stockholders Equity [Line Items] | |||||||
Minimum Stock Option Exercise Price Ten Percent Owners | 110.00% | ||||||
Compensation expense relating to employee stock options | |||||||
Stockholders Equity [Line Items] | |||||||
Compensation expense relating to employee stock options, restricted stock units and restricted stock | $ | $ 902 | $ 336 | |||||
Expected dividend yield | 0.00% | ||||||
2017 Plan [Member] | |||||||
Stockholders Equity [Line Items] | |||||||
Common stock, shares authorized | 600,000 | ||||||
Expiration period of options | 10 years | ||||||
Percentage of outstanding shares | 4.00% | ||||||
Maximum shares granted per individual | 4,000,000 | ||||||
Maximum cash paid from grants per individual | $ | $ 10,000 | ||||||
Common stock issued or transferred, maximum | 7,000,000 | ||||||
Subsequent Event [Member] | 2017 Plan [Member] | |||||||
Stockholders Equity [Line Items] | |||||||
Common stock, shares authorized | 656,410 |
Stockholders' Equity Assumption
Stockholders' Equity Assumptions used to Value Options Grants (Details) - Stock Options | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Share based Compensation Arrangement Assumptions Used to Estimate Fair Values of Share Options Granted [Line Items] | ||
Expected term | 4 years 10 months 13 days | 4 years 9 months 11 days |
Expected volatility | 81.32% | 79.70% |
Risk free interest rate | 1.92% | 1.14% |
Stockholders' Equity Stock Opti
Stockholders' Equity Stock Option Activity (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Options Outstanding | ||
Options outstanding at beginning of period (in options) | 787 | 0 |
Options assumed as part of the Merger (in options) | 265 | |
Granted (in options) | 733 | 530 |
Canceled/Forfeited (in options) | (282) | (8) |
Exercised (in options) | (25) | 0 |
Options outstanding at end of period (in options) | 1,213 | 787 |
Options outstanding vested and expected to vest at end of period | 1,213 | 684 |
Options outstanding vested and exercisable at end of period | 310 | 233 |
Weighted Average Exercise Price | ||
Options outstanding at beginning of period (in USD per share) | $ 6.84 | $ 0 |
Options assumed as part of the Merger (in USD per share) | 8.68 | |
Granted (in USD per share) | 6.01 | 5.95 |
Canceled/Forfeited (in USD per share) | 6.57 | 11.75 |
Exercised (in USD per share) | 4.91 | 0 |
Options outstanding at end of period (in USD per share) | 6.50 | 6.84 |
Vested and expected to vest at end of period (in USD per share) | 6.50 | 7.01 |
Vested and exercisable at end of period (in USD per share) | $ 7.65 | $ 8.34 |
Weighted Average Remaining Contractual Term (years) | ||
Stock options outstanding | 7 years 9 months 29 days | 8 years 6 months 22 days |
Vested and expected to vest ending balance | 7 years 9 months 29 days | 8 years 4 months 21 days |
Vested and exercisable ending balance | 4 years 1 month 21 days | 5 years 10 months 6 days |
Aggregate intrinsic value | ||
Options outstanding at beginning of period | $ 60 | |
Options outstanding at end of period | 3,586 | $ 60 |
Vested and expected to vest at end of period | 3,586 | 52 |
Vested and exercisable at end of period | $ 713 | $ 14 |
Net Income (Loss) Per Share Com
Net Income (Loss) Per Share Computation of Basic and Diluted Net Loss Per Share (Details) $ / shares in Units, shares in Thousands, $ in Thousands | Feb. 28, 2017 | Dec. 31, 2017USD ($)$ / sharesshares | Sep. 30, 2017USD ($)$ / sharesshares | Jun. 30, 2017USD ($)$ / sharesshares | Mar. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Sep. 30, 2016USD ($)$ / sharesshares | Jun. 30, 2016USD ($)$ / sharesshares | Mar. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2017USD ($)$ / sharesshares | Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | |||
Numerator: | |||||||||||||||
Net income (loss) attributable to DASAN Zhone Solutions, Inc. | $ | $ 4,227 | $ 1,399 | $ (809) | $ (3,747) | $ (6,260) | $ (4,733) | $ (566) | $ (3,767) | $ 1,071 | $ (15,326) | $ (3,339) | ||||
Denominator: | |||||||||||||||
Basic (in shares) | 16,391 | 16,382 | 16,380 | 16,378 | 16,375 | 11,139 | 9,493 | 9,493 | 16,383 | [1] | 11,637 | [1] | 9,314 | [1] | |
Effect of dilutive securities: | |||||||||||||||
Stock options and share awards (in shares) | 13 | 0 | 0 | ||||||||||||
Diluted (in shares) | 16,445 | 16,382 | 16,380 | 16,378 | 16,375 | 11,139 | 9,493 | 9,493 | 16,396 | [1] | 11,637 | [1] | 9,314 | [1] | |
Basic (in dollar per share) | $ / shares | $ 0.26 | $ 0.09 | $ (0.05) | $ (0.23) | $ (0.38) | $ (0.42) | $ (0.06) | $ (0.40) | $ 0.07 | [1] | $ (1.32) | [1] | $ (0.36) | [1] | |
Diluted (in dollar per share) | $ / shares | $ 0.26 | $ 0.09 | $ (0.05) | $ (0.23) | $ (0.38) | $ (0.42) | $ (0.06) | $ (0.40) | $ 0.07 | [1] | $ (1.32) | [1] | $ (0.36) | [1] | |
Class of Stock [Line Items] | |||||||||||||||
Stock split, conversion ratio | 0.2 | ||||||||||||||
[1] | (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. |
Net Income (Loss) Per Share Ant
Net Income (Loss) Per Share Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - Stock options and unvested restricted shares - $ / shares shares in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of loss per share calculation, shares | 1,037 | 796 |
Weighted average exercise price of outstanding stock options and unvested restricted shares | $ 8.93 | $ 6.84 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes [Line Items] | |||
Change in deferred tax valuation allowance | $ 4,600 | $ 19,400 | |
Tax Cuts and Jobs Act of 2017, change in tax rate, deferred tax asset, provisional income tax expense | 5,300 | ||
Unrecognized tax benefits | 380 | $ 77 | $ 0 |
Federal | |||
Income Taxes [Line Items] | |||
Net operating loss carryforwards | 28,800 | ||
Research credit carry forward | 400 | ||
State | |||
Income Taxes [Line Items] | |||
Net operating loss carryforwards | 47,200 | ||
Research credit carry forward | 500 | ||
Foreign | |||
Income Taxes [Line Items] | |||
Research credit carry forward | $ 1,600 |
Income Taxes Components of Inco
Income Taxes Components of Income Tax Expense Applicable to Loss Before Income Taxes (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Current: | |||
Federal | $ (86) | $ 0 | $ 0 |
State | 17 | (9) | 0 |
Foreign | 912 | 88 | 318 |
Current Income Tax Expense (Benefit), Total | 843 | 79 | 318 |
Deferred: | |||
Federal | (12) | 0 | 0 |
State | 0 | 0 | 0 |
Foreign | (2,903) | 1,408 | (86) |
Total deferred tax expense | (2,915) | 1,408 | (86) |
Income tax provision/(benefit) | $ (2,072) | $ 1,487 | $ 232 |
Income Taxes Reconciliation of
Income Taxes Reconciliation of Expected Tax Expense (Benefit) to Actual Tax Expense (Benefit) (Additional Information) (Details) | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Tax benefit, statutory rate | 34.00% | 34.00% | 34.00% |
Income Taxes Reconciliation o69
Income Taxes Reconciliation of Expected Tax Expense (Benefit) to Actual Tax Expense (Benefit) (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Expected tax expense (benefit) at statutory rate (34%) | $ (306) | $ (4,644) | $ (929) |
State taxes, net of Federal effect | 4 | (348) | 0 |
Foreign rate differential | (927) | 391 | 328 |
Tax impact on US corporate income tax change | 5,287 | 0 | 0 |
Valuation allowance | (4,555) | 7,004 | 218 |
Permanent differences | 234 | 687 | 40 |
Tax credit carry-forwards | (1,235) | (896) | (674) |
Tax on accumulated earnings from prior year | 0 | 29 | 1,348 |
Tax paid to overseas jurisdictions | 0 | 71 | 0 |
Tax expense adjustments after tax return for prior period | (574) | (837) | 0 |
Foreign currency translation | 0 | 124 | 0 |
Other | 0 | (94) | (99) |
Income tax provision/(benefit) | $ (2,072) | $ 1,487 | $ 232 |
Income Taxes Components of Defe
Income Taxes Components of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Deferred assets: | ||
Net operating loss, capital loss, and tax credit carryforwards | $ 11,945 | $ 14,243 |
Reduction of gross deferred tax assets due to built-in loss limitation | (678) | (4,402) |
Fixed assets and intangible assets | 2,158 | 3,775 |
Inventory and other reserves | 3,516 | 4,573 |
Other | 2,279 | 2,661 |
Gross deferred tax assets | 19,220 | 20,850 |
Less valuation allowance | (16,266) | (20,850) |
Total net deferred tax assets | $ 2,954 | $ 0 |
Income Taxes Unrecognized Tax B
Income Taxes Unrecognized Tax Benefit Reconciliation (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits, beginning balance | $ 77 | $ 0 |
Increases related to current year tax positions | 286 | 77 |
Increases related to prior year tax positions | 17 | |
Unrecognized tax benefits, ending balance | $ 380 | $ 77 |
Income Taxes Open Tax Years for
Income Taxes Open Tax Years for Major Jurisdictions (Details) | 12 Months Ended |
Dec. 31, 2017 | |
Federal | Minimum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,014 |
Federal | Maximum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,017 |
California and Canada | Minimum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,013 |
California and Canada | Maximum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,017 |
Brazil | Minimum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,012 |
Brazil | Maximum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,017 |
Germany | Minimum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,013 |
Germany | Maximum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,017 |
Japan | Minimum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,012 |
Japan | Maximum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,017 |
Korea | Minimum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,015 |
Korea | Maximum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,017 |
United Kingdom | Minimum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,014 |
United Kingdom | Maximum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,017 |
Vietnam | Minimum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,016 |
Vietnam | Maximum [Member] | |
Income Taxes [Line Items] | |
Open tax years | 2,017 |
Non-Controlling Interests (Deta
Non-Controlling Interests (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Noncontrolling Interest [Abstract] | |||||||||||
Beginning Balances, Non-controlling interests | $ 416 | $ 138 | $ 416 | $ 138 | |||||||
Acquisition of additional interest in a subsidiary | 0 | 277 | |||||||||
Net income (loss) attributable to non-controlling interests | $ (70) | $ (12) | $ (65) | $ 249 | $ 15 | $ (56) | $ 33 | $ 6 | 102 | (2) | $ 0 |
Foreign currency translation adjustments (Other Comprehensive Income) | 16 | 3 | |||||||||
Ending Balances, Non-controlling interests | $ 534 | $ 416 | $ 534 | $ 416 | $ 138 |
Related-Party Transactions (Det
Related-Party Transactions (Details) ₩ in Billions | Mar. 27, 2018KRW (₩) | Mar. 27, 2018USD ($) | Jun. 23, 2017USD ($) | Feb. 29, 2016USD ($) | Sep. 30, 2017USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) | Sep. 09, 2016USD ($) |
Related Party Transaction [Line Items] | |||||||||
Interest expense, related party | $ 300,000 | $ 100,000 | |||||||
Research and product development | $ 35,437,000 | $ 25,396,000 | $ 21,331,000 | ||||||
D-Mobile [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Percent of voting interest acquired | 100.00% | ||||||||
DASAN INDIA Private Limited [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Percent of voting interest acquired | 99.99% | ||||||||
D-Mobile and DASAN India [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Business combination, consideration transferred | $ 800,000 | ||||||||
DASAN Networks, Inc. [Member] | Majority Shareholder | |||||||||
Related Party Transaction [Line Items] | |||||||||
Guarantee fee, percent | 0.90% | ||||||||
Tomato Soft (Xi'an) Ltd. [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Research and product development | $ 800,000 | ||||||||
J-Mobile [Member] | Affiliated Entity | |||||||||
Related Party Transaction [Line Items] | |||||||||
Interest rate, stated percentage | 6.90% | ||||||||
Loans receivable | $ 500,000 | ||||||||
Junior Lien [Member] | Term Loan [Member] | Unsecured Debt [Member] | DASAN Networks, Inc. [Member] | Majority Shareholder | Loan Agreement [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Credit facility, maximum borrowing capacity | $ 5,000,000 | ||||||||
Line of credit | $ 5,000,000 | ||||||||
Interest rate, stated percentage | 4.60% | ||||||||
Dasan Network Solutions, Inc. (DNS) [Member] | Junior Lien [Member] | DASAN Networks, Inc. [Member] | Majority Shareholder | Loan Agreement [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Origination of notes receivable from related parties | $ 1,800,000 | $ 1,800,000 | |||||||
Dasan Network Solutions, Inc. (DNS) [Member] | Junior Lien [Member] | Solueta [Member] | Affiliated Entity | Loan Agreement [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Interest rate, stated percentage | 4.60% | ||||||||
Origination of notes receivable from related parties | $ 3,500,000 | ||||||||
Dasan Network Solutions, Inc. (DNS) [Member] | Junior Lien [Member] | CHASAN Networks (Shenzhen) Co., Ltd. [Member] | Affiliated Entity | Loan Agreement [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Manufacturing and development fee, percent | 7.00% | ||||||||
Subsequent Event [Member] | Dasan Network Solutions, Inc. (DNS) [Member] | DASAN Networks, Inc. [Member] | Loan Agreement [Member] | |||||||||
Related Party Transaction [Line Items] | |||||||||
Interest rate, stated percentage | 4.60% | 4.60% | |||||||
Origination of notes receivable from related parties | ₩ 6.5 | $ 6,000,000 |
Related-Party Transactions - Sa
Related-Party Transactions - Sales and Purchases To and From Related Parties (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Related Party Transaction [Line Items] | |||
Sales | $ 31,382 | $ 28,634 | $ 24,775 |
Cost of revenue | 26,341 | 24,738 | 21,890 |
Sales And Purchases To And From Related Parties | |||
Related Party Transaction [Line Items] | |||
Sales | 31,384 | 28,634 | 24,775 |
Cost of revenue | 25,280 | 24,018 | 21,159 |
Manufacturing (Cost of revenue) | 950 | 720 | 731 |
Research and product development | 792 | 899 | 989 |
Selling, marketing, general and administrative | 5,521 | 6,136 | 9,437 |
Other income | 26 | 39 | |
Other expenses | 230 | 390 | 547 |
Sales And Purchases To And From Related Parties | Majority Shareholder | DASAN Networks, Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
Sales | 16,559 | 21,214 | 23,365 |
Cost of revenue | 14,020 | 18,173 | 19,822 |
Manufacturing (Cost of revenue) | 0 | 0 | 0 |
Research and product development | 0 | 0 | 0 |
Selling, marketing, general and administrative | 4,502 | 5,079 | 7,230 |
Other income | 0 | 24 | |
Other expenses | $ 223 | $ 389 | $ 363 |
Sales And Purchases To And From Related Parties | Affiliated Entity | Tomato Soft Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 100.00% | ||
Sales | $ 0 | ||
Cost of revenue | 0 | ||
Manufacturing (Cost of revenue) | 140 | ||
Research and product development | 246 | ||
Selling, marketing, general and administrative | 0 | ||
Other expenses | $ 0 | ||
Sales And Purchases To And From Related Parties | Affiliated Entity | Tomato Soft (Xi'an) Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 100.00% | 100.00% | 100.00% |
Sales | $ 0 | $ 0 | $ 0 |
Cost of revenue | 0 | 0 | 0 |
Manufacturing (Cost of revenue) | 0 | 0 | 0 |
Research and product development | 448 | 750 | 631 |
Selling, marketing, general and administrative | 37 | 0 | 0 |
Other income | 0 | 0 | |
Other expenses | $ 0 | $ 0 | $ 0 |
Sales And Purchases To And From Related Parties | Affiliated Entity | ABLE [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 61.99% | ||
Sales | $ 50 | ||
Cost of revenue | 0 | ||
Manufacturing (Cost of revenue) | 0 | ||
Research and product development | 0 | ||
Selling, marketing, general and administrative | 0 | ||
Other income | 0 | ||
Other expenses | $ 0 | ||
Sales And Purchases To And From Related Parties | Affiliated Entity | CHASAN Networks (Shenzhen) Co., Ltd. [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 100.00% | 100.00% | 100.00% |
Sales | $ 0 | $ 0 | $ 0 |
Cost of revenue | 0 | 0 | 0 |
Manufacturing (Cost of revenue) | 810 | 720 | 731 |
Research and product development | 98 | 149 | 358 |
Selling, marketing, general and administrative | 0 | 0 | 0 |
Other income | 0 | 0 | |
Other expenses | $ 0 | $ 0 | $ 0 |
Sales And Purchases To And From Related Parties | Affiliated Entity | DASAN France [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 100.00% | 100.00% | |
Sales | $ 2,168 | $ 19 | |
Cost of revenue | 2,006 | 18 | |
Manufacturing (Cost of revenue) | 0 | 0 | |
Research and product development | 0 | 0 | |
Selling, marketing, general and administrative | 383 | 0 | |
Other expenses | 0 | $ 0 | |
Sales And Purchases To And From Related Parties | Affiliated Entity | DASAN INDIA Private Limited [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 99.99% | ||
Sales | 8,245 | $ 2,710 | |
Cost of revenue | 6,461 | 2,080 | |
Manufacturing (Cost of revenue) | 0 | 0 | |
Research and product development | 0 | 0 | |
Selling, marketing, general and administrative | 30 | 0 | |
Other income | 0 | ||
Other expenses | 0 | $ 0 | |
Sales And Purchases To And From Related Parties | Affiliated Entity | DMC, Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 100.00% | ||
Sales | $ 1 | ||
Cost of revenue | 1 | ||
Manufacturing (Cost of revenue) | 0 | ||
Research and product development | 0 | ||
Selling, marketing, general and administrative | 0 | ||
Other income | 0 | ||
Other expenses | $ 0 | ||
Sales And Purchases To And From Related Parties | Affiliated Entity | D-Mobile [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 100.00% | 100.00% | |
Sales | 4,316 | $ 4,431 | $ 0 |
Cost of revenue | 2,769 | 3,610 | 0 |
Manufacturing (Cost of revenue) | 0 | 0 | 0 |
Research and product development | 0 | 0 | 0 |
Selling, marketing, general and administrative | 427 | 421 | 91 |
Other income | 0 | 0 | |
Other expenses | $ 0 | $ 0 | $ 0 |
Sales And Purchases To And From Related Parties | Affiliated Entity | DASAN RND Co, LTD [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 100.00% | ||
Sales | $ 0 | ||
Cost of revenue | 0 | ||
Manufacturing (Cost of revenue) | 0 | ||
Research and product development | 0 | ||
Selling, marketing, general and administrative | 605 | ||
Other income | 0 | ||
Other expenses | $ 0 | ||
Sales And Purchases To And From Related Parties | Affiliated Entity | DTS [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 81.56% | ||
Sales | $ 0 | ||
Cost of revenue | 0 | ||
Manufacturing (Cost of revenue) | 0 | ||
Research and product development | 0 | ||
Selling, marketing, general and administrative | 0 | ||
Other income | 1 | ||
Other expenses | $ 0 | ||
Sales And Purchases To And From Related Parties | Affiliated Entity | HANDYSOFT, Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 17.63% | 17.64% | 17.64% |
Sales | $ 88 | $ 155 | $ 1,410 |
Cost of revenue | 24 | 136 | 1,337 |
Manufacturing (Cost of revenue) | 0 | 0 | 0 |
Research and product development | 0 | 0 | 0 |
Selling, marketing, general and administrative | 6 | 0 | |
Other income | 0 | 0 | |
Other expenses | $ 4 | $ 0 | $ 184 |
Sales And Purchases To And From Related Parties | Affiliated Entity | J-Mobile [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 90.47% | 68.56% | 68.56% |
Sales | $ 8 | $ 54 | $ 0 |
Cost of revenue | 0 | 0 | 0 |
Manufacturing (Cost of revenue) | 0 | 0 | 0 |
Research and product development | 0 | 0 | 0 |
Selling, marketing, general and administrative | 132 | 634 | 1,511 |
Other income | 25 | 15 | |
Other expenses | $ 0 | $ 0 | $ 0 |
Sales And Purchases To And From Related Parties | Affiliated Entity | Fine Solution [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 100.00% | ||
Sales | $ 0 | ||
Cost of revenue | 0 | ||
Manufacturing (Cost of revenue) | 0 | ||
Research and product development | 0 | ||
Selling, marketing, general and administrative | 4 | ||
Other expenses | $ 0 | ||
Sales And Purchases To And From Related Parties | Affiliated Entity | Solueta [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 27.21% | ||
Sales | $ 0 | ||
Cost of revenue | 0 | ||
Manufacturing (Cost of revenue) | 0 | ||
Research and product development | 0 | ||
Selling, marketing, general and administrative | 0 | ||
Other expenses | $ 3 | ||
Sales And Purchases To And From Related Parties | Affiliated Entity | PANDA Media, Inc. [Member] | |||
Related Party Transaction [Line Items] | |||
DNI ownership interest | 90.00% | ||
Sales | $ 0 | ||
Cost of revenue | 0 | ||
Manufacturing (Cost of revenue) | 0 | ||
Research and product development | 0 | ||
Selling, marketing, general and administrative | 2 | ||
Other income | 0 | ||
Other expenses | $ 1 |
Related-Party Transactions - Ba
Related-Party Transactions - Balances of Receivables and Payables with Related Parties (Details) - Receivables And Payables With Related Parties [Member] - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | ||
Account receivables | $ 13,498 | $ 13,311 |
Other receivables | 164 | 171 |
Deposits for lease | 786 | 699 |
Long-term debt | 6,800 | 6,800 |
Accounts payable | 1,351 | 1,683 |
Other payables | 1,956 | 7,107 |
Accrued and other current liabilities | 59 | |
DASAN Networks, Inc. [Member] | Majority Shareholder | ||
Related Party Transaction [Line Items] | ||
Account receivables | 12,576 | 6,679 |
Other receivables | 93 | 171 |
Deposits for lease | 786 | 690 |
Long-term debt | 6,800 | 6,800 |
Accounts payable | 1,264 | 1,613 |
Other payables | 1,859 | $ 7,028 |
Accrued and other current liabilities | $ 59 | |
Tomato Soft Ltd. [Member] | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
DNI ownership interest | 100.00% | 100.00% |
Account receivables | $ 0 | $ 0 |
Other receivables | 0 | 0 |
Deposits for lease | 0 | 0 |
Long-term debt | 0 | 0 |
Accounts payable | 0 | 0 |
Other payables | 18 | $ 16 |
Accrued and other current liabilities | $ 0 | |
Tomato Soft (Xi'an) Ltd. [Member] | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
DNI ownership interest | 100.00% | 100.00% |
Account receivables | $ 0 | $ 0 |
Other receivables | 0 | 0 |
Deposits for lease | 0 | 0 |
Long-term debt | 0 | 0 |
Accounts payable | 0 | 70 |
Other payables | 54 | $ 63 |
Accrued and other current liabilities | $ 0 | |
D-Mobile [Member] | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
DNI ownership interest | 100.00% | 100.00% |
Account receivables | $ 0 | $ 3,943 |
Other receivables | 0 | 0 |
Deposits for lease | 0 | 0 |
Long-term debt | 0 | 0 |
Accounts payable | 0 | 0 |
Other payables | 0 | |
Accrued and other current liabilities | $ 0 | |
ABLE [Member] | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
DNI ownership interest | 95.00% | 61.99% |
Account receivables | $ 0 | $ 53 |
Other receivables | 0 | 0 |
Deposits for lease | 0 | 9 |
Long-term debt | 0 | 0 |
Accounts payable | 0 | 0 |
Other payables | 0 | $ 0 |
Accrued and other current liabilities | $ 0 | |
DASAN France [Member] | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
DNI ownership interest | 100.00% | 100.00% |
Account receivables | $ 870 | $ 23 |
Other receivables | 71 | 0 |
Deposits for lease | 0 | 0 |
Long-term debt | 0 | 0 |
Accounts payable | 0 | 0 |
Other payables | 0 | $ 0 |
Accrued and other current liabilities | $ 0 | |
HANDYSOFT, Inc. [Member] | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
DNI ownership interest | 18.00% | 17.64% |
Account receivables | $ 52 | $ 2 |
Other receivables | 0 | 0 |
Deposits for lease | 0 | 0 |
Long-term debt | 0 | 0 |
Accounts payable | 0 | 0 |
Other payables | 0 | $ 0 |
Accrued and other current liabilities | $ 0 | |
CHASAN Networks (Shenzhen) Co., Ltd. [Member] | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
DNI ownership interest | 100.00% | |
Account receivables | $ 0 | |
Other receivables | 0 | |
Deposits for lease | 0 | |
Long-term debt | 0 | |
Accounts payable | 87 | |
Other payables | 0 | |
Accrued and other current liabilities | $ 0 | |
Solueta [Member] | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
DNI ownership interest | 100.00% | |
Account receivables | $ 0 | |
Other receivables | 0 | |
Deposits for lease | 0 | |
Long-term debt | 0 | |
Accounts payable | 0 | |
Other payables | 25 | |
Accrued and other current liabilities | $ 0 | |
DASAN INDIA Private Limited [Member] | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
DNI ownership interest | 99.99% | |
Account receivables | $ 2,606 | |
Other receivables | 0 | |
Deposits for lease | 0 | |
Long-term debt | 0 | |
Accounts payable | 0 | |
Other payables | $ 0 | |
J-Mobile [Member] | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
DNI ownership interest | 68.56% | |
Account receivables | $ 5 | |
Other receivables | 0 | |
Deposits for lease | 0 | |
Long-term debt | 0 | |
Accounts payable | 0 | |
Other payables | $ 0 |
Commitments and Contingencies -
Commitments and Contingencies - Estimated Future Lease Payments under All Non-Cancelable Operating Leases (Details) $ in Thousands | Dec. 31, 2017USD ($) |
Operating leases | |
2,018 | $ 3,794 |
2,019 | 2,928 |
2,020 | 2,844 |
2,021 | 2,590 |
2,022 | 2,664 |
Thereafter | 8,423 |
Total minimum lease payments | $ 23,243 |
Commitments and Contingencies78
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended |
Sep. 30, 2016 | Dec. 31, 2017 | |
Commitments and Contingencies Disclosure [Line Items] | ||
Payment guarantees provided by third parties | $ 2.5 | |
Amount of non-cancellable purchase commitments | $ 8 | |
Purchase Commitment [Member] | ||
Commitments and Contingencies Disclosure [Line Items] | ||
Termination notice period | 30 days |
Commitments and Contingencies79
Commitments and Contingencies - Payment Guarantees to Third Parties (Details) | Dec. 31, 2017USD ($) |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | $ 2,500,000 |
Payment Guarantee [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 41,235,000 |
Payment Guarantee [Member] | NongHyup Bank [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 2,983,000 |
Payment Guarantee [Member] | Shinhan Bank [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 330,000 |
Payment Guarantee [Member] | KEB Hana Bank [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 34,000 |
Payment Guarantee [Member] | State Bank of India [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 39,000 |
Payment Guarantee [Member] | Seoul Guarantee Insurance Co. [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 594,000 |
Shinhan Bank, General Loan [Member] | Payment Guarantee [Member] | Dasan Network Solutions, Inc. (DNS) [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 3,584,000 |
Shinhan Bank, Purchasing Card [Member] | Payment Guarantee [Member] | Dasan Network Solutions, Inc. (DNS) [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 1,792,000 |
Industrial Bank of Korea, Letter of Credit [Member] | Payment Guarantee [Member] | Dasan Network Solutions, Inc. (DNS) [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 10,640,000 |
Nonghyp Bank, Letter of Credit [Member] | Payment Guarantee [Member] | Dasan Network Solutions, Inc. (DNS) [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 6,000,000 |
NongHyup Bank, Purchasing Card [Member] | Payment Guarantee [Member] | Dasan Network Solutions, Inc. (DNS) [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 560,000 |
Export-Import Bank of Korea, General Loan [Member] | Payment Guarantee [Member] | Dasan Network Solutions, Inc. (DNS) [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 6,368,000 |
Industrial Bank of Korea, Letter of Credit [Member] | Payment Guarantee [Member] | Industrial Bank of Korea [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 6,221,000 |
Industrial Bank of Korea, Letter of Credit, Local [Member] | Payment Guarantee [Member] | Industrial Bank of Korea [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | 284,000 |
Industrial Bank of Korea, Performance Bonds [Member] | Payment Guarantee [Member] | Industrial Bank of Korea [Member] | |
Guarantor Obligations [Line Items] | |
Payment guarantees provided by third parties | $ 1,806,000 |
Litigation (Details)
Litigation (Details) - USD ($) $ in Millions | 12 Months Ended | |
Dec. 31, 2018 | Dec. 31, 2017 | |
Loss Contingencies [Line Items] | ||
Royalty expense | $ 0.4 | |
Scenario, Forecast [Member] | ||
Loss Contingencies [Line Items] | ||
Royalty expense | $ 1 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2017 | Dec. 31, 2016 | |
Retirement Benefits [Abstract] | ||
Discretionary contribution made to 401(k) plan | $ 0 | $ 0 |
Defined contribution plan, employer contribution, percent of employees' gross pay, per quarter | 8.33% |
Enterprise Wide Information Rev
Enterprise Wide Information Revenue by Geography (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | $ 68,623 | $ 66,438 | $ 59,941 | $ 52,112 | $ 59,472 | $ 31,240 | $ 34,252 | $ 25,340 | $ 247,114 | $ 150,304 | $ 139,196 |
United States | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | 48,840 | 16,872 | 4,426 | ||||||||
Canada | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | 5,631 | 1,967 | 7 | ||||||||
North America | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | 54,471 | 18,839 | 4,433 | ||||||||
Latin America | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | 26,206 | 9,604 | 2,510 | ||||||||
Europe, Middle East, Africa | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | 30,768 | 13,611 | 9,383 | ||||||||
Korea | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | 81,533 | 77,979 | 114,676 | ||||||||
Asia Pacific | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | 54,136 | 30,271 | 8,194 | ||||||||
International | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | $ 192,643 | $ 131,465 | $ 134,763 |
Enterprise Wide Information R83
Enterprise Wide Information Revenue by Products and Services (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | $ 68,623 | $ 66,438 | $ 59,941 | $ 52,112 | $ 59,472 | $ 31,240 | $ 34,252 | $ 25,340 | $ 247,114 | $ 150,304 | $ 139,196 |
Products | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | 235,117 | 142,238 | 133,036 | ||||||||
Services | |||||||||||
Revenue from External Customer [Line Items] | |||||||||||
Net revenue | $ 11,997 | $ 8,066 | $ 6,160 |
Enterprise Wide Information Pro
Enterprise Wide Information Property and Equipment, Net of Accumulated Depreciation (Details) - USD ($) $ in Thousands | Dec. 31, 2017 | Dec. 31, 2016 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 5,873 | $ 6,288 |
United States | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 3,393 | 4,094 |
Korea | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 1,633 | 1,455 |
Japan and Vietnam | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | 810 | 739 |
Taiwan and India | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, net | $ 37 | $ 0 |
Quarterly Information (unaudi85
Quarterly Information (unaudited) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||||
Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 | Dec. 31, 2016 | Sep. 30, 2016 | Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2017 | Dec. 31, 2016 | Dec. 31, 2015 | ||||
Quarterly Financial Information Disclosure [Abstract] | ||||||||||||||
Net revenue | $ 68,623 | $ 66,438 | $ 59,941 | $ 52,112 | $ 59,472 | $ 31,240 | $ 34,252 | $ 25,340 | $ 247,114 | $ 150,304 | $ 139,196 | |||
Gross profit | 22,315 | 22,073 | 19,189 | 17,792 | 18,034 | 9,300 | 9,002 | 4,611 | 81,369 | 40,947 | 35,886 | |||
Operating income (loss) | 2,393 | 1,661 | (803) | (2,529) | (3,429) | (5,114) | (165) | (4,341) | 722 | (13,049) | (2,977) | |||
Net income (loss) | 4,157 | 1,387 | (874) | (3,498) | (6,245) | (4,789) | (533) | (3,761) | 1,173 | (15,328) | (3,339) | |||
Net income (loss) attributable to non-controlling interest | (70) | (12) | (65) | 249 | 15 | (56) | 33 | 6 | 102 | (2) | 0 | |||
Net income (loss) attributable to DASAN Zhone Solutions, Inc. | $ 4,227 | $ 1,399 | $ (809) | $ (3,747) | $ (6,260) | $ (4,733) | $ (566) | $ (3,767) | $ 1,071 | $ (15,326) | $ (3,339) | |||
Comprehensive loss | ||||||||||||||
Basic (in dollar per share) | $ 0.26 | $ 0.09 | $ (0.05) | $ (0.23) | $ (0.38) | $ (0.42) | $ (0.06) | $ (0.40) | $ 0.07 | [1] | $ (1.32) | [1] | $ (0.36) | [1] |
Diluted (in dollar per share) | $ 0.26 | $ 0.09 | $ (0.05) | $ (0.23) | $ (0.38) | $ (0.42) | $ (0.06) | $ (0.40) | $ 0.07 | [1] | $ (1.32) | [1] | $ (0.36) | [1] |
Weighted average shares outstanding used to compute basic and diluted net income (loss) per share (1) | ||||||||||||||
Basic (in shares) | 16,391 | 16,382 | 16,380 | 16,378 | 16,375 | 11,139 | 9,493 | 9,493 | 16,383 | [1] | 11,637 | [1] | 9,314 | [1] |
Diluted (in shares) | 16,445 | 16,382 | 16,380 | 16,378 | 16,375 | 11,139 | 9,493 | 9,493 | 16,396 | [1] | 11,637 | [1] | 9,314 | [1] |
[1] | (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. |
Subsequent Events (Details)
Subsequent Events (Details) ₩ in Billions | Apr. 01, 2018USD ($) | Mar. 31, 2018USD ($) | Mar. 27, 2018KRW (₩) | Mar. 27, 2018USD ($) | Feb. 29, 2016USD ($) | Sep. 30, 2017USD ($) | Mar. 28, 2018USD ($) | Dec. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 09, 2016 |
Subsequent Event [Line Items] | ||||||||||
Short-term debt | $ 19,790,000 | $ 17,599,000 | ||||||||
Shinhan Bank, General Loan [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Interest rate, stated percentage | 5.91% | |||||||||
Short-term debt | $ 3,000,000 | |||||||||
Majority Shareholder | Loan Agreement [Member] | Term Loan [Member] | Unsecured Debt [Member] | DASAN Networks, Inc. [Member] | Junior Lien [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Interest rate, stated percentage | 4.60% | |||||||||
Dasan Network Solutions, Inc. (DNS) [Member] | Majority Shareholder | Loan Agreement [Member] | DASAN Networks, Inc. [Member] | Junior Lien [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Origination of notes receivable from related parties | $ 1,800,000 | $ 1,800,000 | ||||||||
Subsequent Event [Member] | WFB Facility [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Debt instrument, Liquidity Trigger Event | $ 5,000,000 | $ 10,000,000 | ||||||||
Subsequent Event [Member] | Shinhan Bank, General Loan [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Short-term debt | $ 3,000,000 | |||||||||
Subsequent Event [Member] | Dasan Network Solutions, Inc. (DNS) [Member] | Loan Agreement [Member] | DASAN Networks, Inc. [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Origination of notes receivable from related parties | ₩ 6.5 | $ 6,000,000 | ||||||||
Interest rate, stated percentage | 4.60% | 4.60% | ||||||||
Scenario, Forecast [Member] | WFB Facility [Member] | ||||||||||
Subsequent Event [Line Items] | ||||||||||
Debt instrument, Liquidity Trigger Event | $ 10,000,000 |