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DZS (TLFP) Risk Analysis

Public companies are required to disclose risks that can affect the business and impact the stock. These disclosures are known as “Risk Factors”. Companies disclose these risks in their yearly (Form 10-K), quarterly earnings (Form 10-Q), or “foreign private issuer” reports (Form 20-F). Risk factors show the challenges a company faces. Investors can consider the worst-case scenarios before making an investment. TipRanks’ Risk Analysis categorizes risks based on proprietary classification algorithms and machine learning. DZS disclosed 42 risk factors in its most recent earnings report. DZS reported the most risks in the “Finance & Corporate” category.

Risk Overview Q3, 2024

Source: the company's latest filing for the period ended Sep 30, 2024, filed Nov 12, 2024

Risk Distribution
42Risks
Sector Avg.Finance & CorporateTech & InnovationLegal & RegulatoryProductionAbility to SellMacro & Political
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy

Risk Change Over Time

DZS disclosed risks per quarterNo. of Risks3940414243Q4Q4Q12024Q2Q3Showing: Q3, 2024
Risks removedRisks addedRisks changedDZS Risk Factors
No changes from previous report

Risk Highlights Q3, 2024

Main Risk Category
Finance & Corporate
With 11 Risks
Number of Disclosed Risks
42
No changes from last report
S&P 500 Average: 32
Recent Changes
1Risks added
0Risks removed
0Risks changed
Since Sep 2024
Number of Risk Changed
0
No changes from last report
S&P 500 Average: 1

Risk Word Cloud

due to the international nature of our business, political or economic changes or other factors in a specific country or region could harm our future revenue, costs and expenses, and financial condition.international nature of our businessfailure to comply with the u.s. foreign corrupt practices act and similar laws associated with our international activities could subject us to significant civil or criminal penalties.subject us to significant civilwe face supply chain risk, and our failure to estimate customer demand properly could result in excess or obsolete component inventories that could adversely affect our gross margins.adversely affect our gross marginsnatural disasters, public health crises, political crises, and other catastrophic events or other events outside of our control may damage our facilities or the facilities of third parties on which we depend, and could materially impact our supply chain and the operations of our customers and suppliers.materially impact our supply chainwe depend upon the development of new products and enhancements to existing products, and if we fail to predict and respond to emerging technological trends and customers' changing needs, our operating results and market share may suffer.respond to emerging technological trendsdecreased effectiveness of share-based compensation could adversely affect our ability to attract and retain employees.decreased effectiveness of share-based compensatiowe rely on the availability of third-party licenses.availability of third-party licensesdni owns a significant amount of our outstanding common stock and has the ability to exert significant influence or control over any matters that require stockholder approval, including the election of directors and the approval of certain transactions, and dni's interests may conflict with our interests and the interests of other stockholders.ability to exert significant influencethe long and variable sales cycles for our products could cause revenue and operating results to vary significantly from quarter to quarter.operating results to vary significantlywe rely on contract manufacturers for a portion of our manufacturing requirements.portion of our manufacturing requirements

Risk Factors Full Breakdown - Total Risks 42

Share Price & Shareholder Rights3 | 7.1%
  • Share Price & Shareholder Rights - Risk 1
    Future issuances of additional equity securities could result in dilution of existing stockholders' equity ownership.

    We may determine from time to time to issue additional equity securities to raise additional capital, to support growth, or, as we have in recent years, to make acquisitions. Further, we may issue stock options, grant restricted stock awards or other equity awards to retain, compensate and/or motivate our employees and directors. In January 2024, November 2022 and January 2021, we also raised approximately $10.0 million, $30.8 million and $59.5 million, respectively, in separate equity offerings. In addition, in connection with the EdgeCo Loan Agreement and the Warrant Agreement, the Company issued a warrant to EdgeCo to subscribe for 6,100,000 shares of Common Stock at an exercise price of $1.84 per share. These issuances of our securities diluted the voting and economic interests of existing stockholders, and any future issuances of our securities could also dilute the voting and economic interests of existing stockholders.

  • Share Price & Shareholder Rights - Risk 2
    There is a limited public market of our common stock.

    There is a limited public market for our common stock. The average daily trading volume in our common stock during the 12 months ended December 31, 2023 was approximately 245,000 shares per day. We cannot provide assurances that a more active trading market will develop or be sustained. As a result of low trading volume in our common stock, the purchase or sale of a relatively small number of shares of our common stock could result in significant price fluctuations and it may be difficult for holders to sell their shares without depressing the market price of our common stock. DNI, our largest stockholder, owned approximately 9.1 million shares of our common stock as of December 31, 2023 and such shares are registered with the SEC for resale. These shares are eligible for resale without restriction as to volume limitations. Our stock price could suffer a significant decline as a result of any sudden increase in the number of shares sold in the public market or market perception that the increased number of shares available for sale will exceed the demand for our common stock.

  • Share Price & Shareholder Rights - Risk 3
    DNI owns a significant amount of our outstanding common stock and has the ability to exert significant influence or control over any matters that require stockholder approval, including the election of directors and the approval of certain transactions, and DNI's interests may conflict with our interests and the interests of other stockholders.

    As of December 31, 2023, DNI owned approximately 28.3% of the outstanding shares of our common stock, representing a significant amount of the votes entitled to be cast by the holders of our outstanding common stock at a stockholder meeting. Due to its significant ownership percentage of our common stock, DNI has the ability to substantially influence or control the outcome of any matter submitted for the vote of our stockholders, including the election of directors and the approval of certain transactions. The interests of DNI may conflict with the interests of our other stockholders or with holders of our indebtedness and may cause us to take actions that our other stockholders or holders of our indebtedness do not view as beneficial. DNI's large concentration of stock ownership may make it more difficult for a third party to acquire us or discourage a third party from seeking to acquire us. Any potential third-party acquirer would most likely need to negotiate any such transaction with DNI, and the interests of DNI with respect to such transaction may be different from the interests of our other stockholders or with holders of our indebtedness. Additionally, one of the Company's directors serves as an executive officer of DNI – Choon Yul Yoo is the Chief Operating Officer of DNI. Mr. Yoo owes fiduciary duties to us and, in addition, has duties to DNI. As a result, Mr. Yoo may face real or apparent conflicts of interest with respect to matters affecting both us and DNI. Also, Min Woo Nam, Chief Executive Officer and Chairman of the Board of Directors of DNI served as Chairman of the Board of Directors of DZS until his resignation from the DZS Board effective as of September 15, 2023.

Accounting & Financial Operations3 | 7.1%
Debt & Financing3 | 7.1%
Corporate Activity and Growth2 | 4.8%

See a full breakdown of risk according to category and subcategory. The list starts with the category with the most risk. Click on subcategories to read relevant extracts from the most recent report.

FAQ

What are “Risk Factors”?
Risk factors are any situations or occurrences that could make investing in a company risky. The Securities and Exchange Commission (SEC) requires that publicly traded companies disclose their most significant risk factors. This is so that potential investors can consider any risks before they make an investment. They also offer companies protection, as a company can use risk factors as liability protection. This could happen if a company underperforms and investors take legal action as a result. It is worth noting that smaller companies, that is those with a public float of under $75 million on the last business day, do not have to include risk factors in their 10-K and 10-Q forms, although some may choose to do so.
How do companies disclose their risk factors?
Publicly traded companies initially disclose their risk factors to the SEC through their S-1 filings as part of the IPO process. Additionally, companies must provide a complete list of risk factors in their Annual Reports (Form 10-K) or (Form 20-F) for “foreign private issuers”. Quarterly Reports also include a section on risk factors (Form 10-Q) where companies are only required to update any changes since the previous report. According to the SEC, risk factors should be reported concisely, logically and in “plain English” so investors can understand them.
How can I use TipRanks risk factors in my stock research?
Use the Risk Factors tab to get data about the risk factors of any company in which you are considering investing. You can easily see the most significant risks a company is facing. Additionally, you can find out which risk factors a company has added, removed or adjusted since its previous disclosure. You can also see how a company’s risk factors compare to others in its sector. Without reading company reports or participating in conference calls, you would most likely not have access to this sort of information, which is usually not included in press releases or other public announcements. A simplified analysis of risk factors is unique to TipRanks.
What are all the risk factor categories?
TipRanks has identified 6 major categories of risk factors and a number of subcategories for each. You can see how these categories are broken down in the list below. 1. Financial & Corporate Accounting & Financial Operations - risks related to accounting loss, value of intangible assets, financial statements, value of intangible assets, financial reporting, estimates, guidance, company profitability, dividends, fluctuating results. Share Price & Shareholder Rights – risks related to things that impact share prices and the rights of shareholders, including analyst ratings, major shareholder activity, trade volatility, liquidity of shares, anti-takeover provisions, international listing, dual listing. Debt & Financing – risks related to debt, funding, financing and interest rates, financial investments. Corporate Activity and Growth – risks related to restructuring, M&As, joint ventures, execution of corporate strategy, strategic alliances. 2. Legal & Regulatory Litigation and Legal Liabilities – risks related to litigation/ lawsuits against the company. Regulation – risks related to compliance, GDPR, and new legislation. Environmental / Social – risks related to environmental regulation and to data privacy. Taxation & Government Incentives – risks related to taxation and changes in government incentives. 3. Production Costs – risks related to costs of production including commodity prices, future contracts, inventory. Supply Chain – risks related to the company’s suppliers. Manufacturing – risks related to the company’s manufacturing process including product quality and product recalls. Human Capital – risks related to recruitment, training and retention of key employees, employee relationships & unions labor disputes, pension, and post retirement benefits, medical, health and welfare benefits, employee misconduct, employee litigation. 4. Technology & Innovation Innovation / R&D – risks related to innovation and new product development. Technology – risks related to the company’s reliance on technology. Cyber Security – risks related to securing the company’s digital assets and from cyber attacks. Trade Secrets & Patents – risks related to the company’s ability to protect its intellectual property and to infringement claims against the company as well as piracy and unlicensed copying. 5. Ability to Sell Demand – risks related to the demand of the company’s goods and services including seasonality, reliance on key customers. Competition – risks related to the company’s competition including substitutes. Sales & Marketing – risks related to sales, marketing, and distribution channels, pricing, and market penetration. Brand & Reputation – risks related to the company’s brand and reputation. 6. Macro & Political Economy & Political Environment – risks related to changes in economic and political conditions. Natural and Human Disruptions – risks related to catastrophes, floods, storms, terror, earthquakes, coronavirus pandemic/COVID-19. International Operations – risks related to the global nature of the company. Capital Markets – risks related to exchange rates and trade, cryptocurrency.