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Assets and Liabilities Held for Sale and Discontinued Operations
 6 Months Ended
Jun. 30, 2024
Discontinued Operations and Disposal Groups [Abstract]  
Assets and Liabilities Held for Sale and Discontinued Operations Assets and Liabilities Held for Sale and Discontinued Operations
During the first quarter of 2024, the Company made a strategic decision to divest certain entities in Asia with the intention, among other things, to focus its market strategy, technology and innovation on the Americas, EMEA and ANZ regions. On January 5, 2024, the Company and DZS California Inc. (“DZS California”), a wholly-owned subsidiary of the Company, entered into a Stock Purchase Agreement (the “Stock Purchase Agreement”) with DASAN Networks, Inc. (“DNI”). Pursuant to the Stock Purchase Agreement, DZS California sold to DNI all of the equity interests in DASAN Network Solutions, Inc., a Korean company (“DNS Korea”), D-Mobile Limited, a Taiwan company, DZS Vietnam Company Limited, a Vietnamese company, Dasan India Private Limited, an Indian company, and DZS Japan, Inc., a Japanese company (the “Asia Sale”). The purchase price for the divestiture consisted of $3.8 million cash, net of certain adjustments, and the elimination of approximately $34.3 million in debt and interest owed to DNI as of the transaction date. DNI also assumed all DNS Korea's debt obligations to foreign banks outstanding as of the transaction date. The Asia Sale closed on April 5, 2024.
As of June 30, 2024, DNI owns approximately 24.1% of the outstanding shares of the Company's common stock.
The disposition of the operations represented a major strategic shift in the business and met the criteria of discontinued operations. The Company has classified the assets and liabilities of the Asia business as held for sale as of December 31, 2023.
Income (loss) from discontinued operations, net of tax and the loss on the sale of discontinued operations, net of tax, of the Asia business, which is presented in total in the Unaudited Condensed Consolidated Statement of Comprehensive Income (Loss) for the three and six months ended June 30, 2024 and 2023, respectively, are as follows (in thousands):

Three Months Ended
June 30,		Six Months Ended
June 30,
2024202320242023
Net revenue$178 $29,725 $25,502 $55,171 
Cost of revenue (reversal) (a)(132)22,780 21,069 42,896 
Gross profit310 6,945 4,433 12,275 
Operating expenses (reversal) (a)(690)9,432 7,730 19,884 
Operating gain (loss) from discontinued operations1,000 (2,487)(3,297)(7,609)
Interest expense, net— (161)(981)(329)
Other income, net— 256 959 502 
Income (loss) from discontinued operations before income taxes1,000 (2,392)(3,319)(7,436)
Income tax benefit(471)(160)— (1,421)
Loss on sale of discontinued operations2,422 — 2,803 — 
Net loss from discontinued operations$(951)$(2,232)$(6,122)$(6,015)
(a)Includes reversal of previously recognized compensation cost for equity-based awards forfeited in conjunction with Asia Sale.
For each of the three and six months ended June 30, 2024, net revenue and cost of revenue from discontinued operations included $0.4 million and $0.3 million of related party transactions with DNI, respectively. For the three months ended June 30, 2023, net revenue and cost of revenue from discontinued operations each included $0.1 million related party transactions with DNI. For the six months ended June 30, 2023, net revenue and cost of revenue from discontinued operations included $0.3 million and $0.2 million of related party transactions with DNI, respectively.
The following table presents the amounts reported in the Unaudited Condensed Consolidated Balance Sheets as held for sale related to the APAC assets as of December 31, 2023 (in thousands).
December 31,
2023
Assets
Current assets:
Cash, cash equivalents and restricted cash$5,657 
Accounts receivable - trade, net of allowance for credit losses25,661 
Other receivables12,765 
Inventories49,114 
Prepaid expenses and other current assets1,178 
Total current assets of discontinued operations94,375 
Property, plant and equipment, net2,615 
Right-of-use assets from operating leases3,475 
Intangible assets, net419 
Other assets1,299 
Total assets of discontinued operations$102,183 
Liabilities
Current liabilities:
Accounts payable - trade$37,911 
Short-term debt – bank, trade facilities and secured borrowings19,633 
Contract liabilities1,041 
Operating lease liabilities1,858 
Accrued and other liabilities8,984 
Total current liabilities of discontinued operations69,427 
Long-term debt30,600 
Contract liabilities - non-current878 
Operating lease liabilities - non-current1,617 
Other long-term liabilities479 
Total liabilities of discontinued operations$103,001 
As of December 31, 2023, the held for sale liabilities included a total of $30.6 million of the related party borrowings from DNI. The respective borrowings were settled in conjunction with the Asia Sale.
Agreements with divested entities