DZS Inc. filed SEC Form 8-K: Entry into a Material Definitive Agreement, Regulation FD Disclosure, Financial Statements and Exhibits
$DZSI
Telecommunications Equipment
Utilities
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): November 7, 2024
(Exact Name of Registrant as Specified in its Charter)
(State or Other Jurisdiction of Incorporation) | (Commission File No.) | (I.R.S. Employer Identification No.) | ||||||
(Address of Principal Executive Offices, Including Zip Code)
(469 ) 327-1531
(Registrant’s Telephone Number, Including Area Code)
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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Item 1.01 Entry Into a Material Definitive Agreement.
On November 7, 2024, NetComm Wireless Pty Ltd. ACN 002 490 486 (the “Company”), entered into a Business Sale Agreement (the “Business Sale Agreement”) with Lantronix, Inc., a Delaware corporation (the “Purchaser”). Pursuant to the Business Sale Agreement, the Company has agreed to sell, and the Purchaser has agreed to buy, the Company’s industrial internet of things business (the “IIoT Business”), for a cash purchase price of $6,500,000, less an amount equal to 70% of employee entitlements due to transferring employees (the “Purchase Price”). In connection with the acquisition of the IIoT Business, the Purchaser will assume as of the Closing certain liabilities associated with the IIoT Business and will make an offer of employment to all employees primarily engaged by the Company in the IIoT Business.
At the closing of the Company’s sale of the IIoT Business (the “Closing”), the Company will receive the Purchase Price. The Closing under the Business Sale Agreement is subject to the satisfaction and/or waiver of certain conditions precedent, including obtain counterparty consents to certain key commercial contracts.
The Business Sale Agreement contains standard warranties and indemnities for a transaction of this nature. The maximum aggregate liability of the Company for any breach of warranties has been capped at thirty-five percent (35%) of the Purchase Price, except for the breach of warranties related to certain fundamental warranties, which are capped at the Purchase Price.
In conjunction with the proposed sale of the IIoT Business, DZS Inc. (“DZS”) has entered into an agreement (the “EdgeCo Letter”) with EdgeCo, LLC, a Wyoming limited liability company (“EdgeCo”), whereby at the Closing EdgeCo will receive fifty percent (50%) of the Purchase Price as pre-payments of the EdgeCo Loans (as defined below). EdgeCo will release all liens that it holds on the assets being sold pursuant to the Business Sale Agreement. In accordance with the EdgeCo Letter, DZS will continue to pay interest on the EdgeCo Loans, including the principal balance pre-paid in connection with the sale of the IIoT Business, until the prepayment penalty under the EdgeCo Loans has been paid in full. “EdgeCo Loans” means (i) the Loan Agreement dated December 29, 2023 by and between DZS and EdgeCo and (ii) the Loan Agreement dated May 31, 2024 by and between DZS and EdgeCo.
The foregoing description of the Business Sale Agreement does not purport to be complete and is subject to, and qualified in its entirety by, the full text of the Business Sale Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report on Form 8-K (this “Current Report”) and is incorporated herein by reference.
This summary of the principal terms of the Business Sale Agreement and the copy of the Business Sale Agreement filed as Exhibit 2.1 have been included to provide investors with information regarding its terms. It is not intended to provide any other factual information about the Company, the Purchaser, DZS, or any of their respective subsidiaries or affiliates. In particular, the warranties contained in the Business Sale Agreement are qualified by written information and documents and written responses to confidential due diligence questions provided by the Company (together “Due Diligence Materials”) in connection with the signing of the Business Sale Agreement. These Due Diligence Materials contain information that qualifies and creates exceptions to the warranties set forth in the Business Sale Agreement (to the extent fairly disclosed under the Business Sale Agreement). Moreover, the warranties in the Business Sale Agreement were made as of specific dates, were made solely for the Business Sale Agreement and for the purposes of allocating risk between the parties to the Business Sale Agreement, rather than establishing matters as facts, are solely for the benefit of such parties, may be subject to qualifications or limitations agreed upon by such parties and may be subject to standards of materiality applicable to such parties that differ from those generally applicable to investors and reports and documents filed with the Securities and Exchange Commission (the “SEC”). Accordingly, investors are not third-party beneficiaries under the Business Sale Agreement and the warranties in the Business Sale Agreement, and any descriptions thereof, should not be relied on as characterizations of the actual state of facts or circumstances of the Company or the Purchaser. Moreover, information concerning the subject matter of such warranties may change after the date of the Business Sale Agreement, which subsequent information may or may not be fully reflected in the parties’ public disclosures.
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Current Report on Form 8-K contains forward-looking statements regarding future events and DZS’s future results that are subject to the safe harbors created under the Private Securities Litigation Reform Act of 1995. These statements reflect the beliefs and assumptions of DZS’s management as of the date hereof. Words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” variations of such words, and similar expressions are intended to identify forward-looking statements. Such statements include, but are not limited to, statements about the consummation and timing of the sale of the IIoT Business. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties and assumptions that are difficult to predict. DZS’s actual results could differ materially and adversely from those expressed in or contemplated by the forward-looking statements. Factors that could cause actual results to differ include, but are not limited to, those risk factors contained in the Company’s SEC filings available at www.sec.gov, including without limitation, DZS’s annual report on Form 10-K, quarterly reports on Form 10-Q and
subsequent filings. In addition, additional or unforeseen affects from the COVID-19 pandemic and the global economic climate may give rise to or amplify many of these risks. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. DZS undertakes no obligation to update or revise any forward-looking statements for any reason.
Item 7.01 Regulation FD Disclosure.
On November 7, 2024, DZS issued a press release regarding its plans to sell the industrial internet of things business. A copy of the press release is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated herein by reference.
In accordance with General Instruction B.2 of Form 8-K, the information set forth in this Item 7.01, including Exhibit 99.1, are deemed to be “furnished” and shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act and will not be incorporated by reference into any filing under the Securities Act or the Exchange Act, unless specifically identified therein as being incorporated therein by reference.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
| Exhibit No. | Description | |||||||
| 2.1* | ||||||||
| 99.1 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
* This filing excludes certain schedules and exhibits pursuant to Item 601(a)(5) of Regulation S-K, which the registrant agrees to furnish supplementally to the Securities and Exchange Commission upon request by the Commission: provided, however, that the registrant may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedules or exhibits so furnished.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: November 7, 2024 | DZS Inc. | |||||||
| By: | /s/ Justin Ferguson | |||||||
| Justin Ferguson | ||||||||
| Chief Legal Officer | ||||||||