1 

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF TEXAS

SHERMAN DIVISION

JASON SHIM, Individually and on 

behalf of all others similarly situated,

Plaintiff,

v. 

DZS INC., CHARLES DANIEL VOGT, and 

MISTY KAWECKI, 

Defendants.

Case No: 4:23-cv-0549

CLASS ACTION COMPLAINT FOR 

VIOLATIONS OF THE FEDERAL 

SECURITIES LAWS

JURY TRIAL DEMANDED

Plaintiff Jason Shim (“Plaintiff”), individually and on behalf of all other persons 

similarly situated, by Plaintiff’s undersigned attorneys, for Plaintiff’s complaint against 

Defendants (defined below), alleges the following based upon personal knowledge as to 

Plaintiff and Plaintiff’s own acts, and information and belief as to all other matters, based upon, 

among other things, the investigation conducted by and through his attorneys, which included, 

among other things, a review of the Defendants’ public documents, public filings, wire and 

press releases published by and regarding DZS Inc. (“DZS” or the “Company”), and 

information readily obtainable on the Internet. Plaintiff believes that substantial evidentiary 

support will exist for the allegations set forth herein after a reasonable opportunity for 

discovery. 

NATURE OF THE ACTION

1. This is a class action on behalf of persons or entities who purchased or otherwise

acquired publicly traded DZS securities between March 10, 2023 and May 31, 2023, inclusive

(the “Class Period”). Plaintiff seeks to recover compensable damages caused by Defendants’ 

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violations of the federal securities laws under the Securities Exchange Act of 1934 (the 

“Exchange Act”).

JURISDICTION AND VENUE 

2. The claims asserted herein arise under and pursuant to Sections 10(b) and 20(a) 

of the Exchange Act (15 U.S.C. §§ 78j(b) and 78t(a)) and Rule 10b-5 promulgated thereunder 

by the SEC (17 C.F.R. § 240.10b-5). 

3. This Court has jurisdiction over the subject matter of this action pursuant to 28

U.S.C. § 1331, and Section 27 of the Exchange Act (15 U.S.C. §78aa). 

4. Venue is proper in this judicial district pursuant to 28 U.S.C. § 1391(b) and 

Section 27 of the Exchange Act (15 U.S.C. § 78aa(c)) as the alleged misstatements entered and 

the subsequent damages took place in this judicial district. 

5. In connection with the acts, conduct and other wrongs alleged in this complaint, 

Defendants (defined below), directly or indirectly, used the means and instrumentalities of 

interstate commerce, including but not limited to, the United States mails, interstate telephone 

communications and the facilities of the national securities exchange.

PARTIES

6. Plaintiff, as set forth in the accompanying certification, incorporated by reference 

herein, purchased DZS securities during the Class Period and was economically damaged 

thereby. 

7. Defendant DZS purports to be a “global provider of access and optical 

networking infrastructure and cloud software solutions that enable the emerging hyperconnected, hyper-broadband world and broadband experiences. The Company provides a wide 

array of reliable, cost-effective networking technologies and software to a diverse customer 

base.” 

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8. Defendant DZS is incorporated in Delaware and its head office is located at 5700 

Tennyson Parkway Suite 400, Plano, Texas, 75024. DZS securities trade on NASDAQ under 

the ticker symbol “DZSI.”

9. Defendant Charles Daniel Vogt (“Vogt”) has served as the Company’s President 

and Chief Executive Officer (“CEO”) since August 2020. 

10. Defendant Misty Kawecki (“Kawecki”) has served as the Company’s Chief 

Financial Officer since 2021.

11. Defendants Vogt and Kawecki are collectively referred to herein as the 

“Individual Defendants.”

12. Each of the Individual Defendants:

(a) directly participated in the management of the Company;

(b) was directly involved in the day-to-day operations of the Company at the 

highest levels;

(c) was privy to confidential proprietary information concerning the 

Company and its business and operations;

(d) was directly or indirectly involved in drafting, producing, reviewing 

and/or disseminating the false and misleading statements and information 

alleged herein;

(e) was directly or indirectly involved in the oversight or implementation of 

the Company’s internal controls;

(f) was aware of or recklessly disregarded the fact that the false and 

misleading statements were being issued concerning the Company; 

and/or 

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(g) approved or ratified these statements in violation of the federal securities 

laws.

13. DZS is liable for the acts of the Individual Defendants and its employees under 

the doctrine of respondeat superior and common law principles of agency because all of the 

wrongful acts complained of herein were carried out within the scope of their employment. 

14. The scienter of the Individual Defendants and other employees and agents of the 

Company is similarly imputed to DZS under respondeat superior and agency principles. 

15. Defendant DZS and the Individual Defendants are collectively referred to herein 

as “Defendants.”

SUBSTANTIVE ALLEGATIONS

Materially False and Misleading

Statements Issued During the Class Period

16. The Class Period begins on March 10, 2023, when DZS filed with the SEC its 

Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Annual

Report”). Attached to the 2022 Annual Report were certifications pursuant to the SarbanesOxley Act of 2002 (“SOX”) signed by Defendants Vogt and Kawecki attesting to the accuracy of 

any material changes to the Company’s internal control over financial reporting, and the 

disclosure of all fraud.

17. The 2022 Annual Report, in pertinent part, contained the following disclosure 

about its internal controls over financial reporting, which materially understated the extent of the 

Company’s issues: 

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures designed to provide reasonable 

assurance that information required to be disclosed in our reports filed or 

submitted pursuant to the Securities Exchange Act of 1934 (the “Exchange Act”) 

is recorded, processed, summarized and reported within the time periods specified 

in the SEC’s rules and forms, and that such information is accumulated and 

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communicated to our management, including our Chief Executive Officer and 

Chief Financial Officer, as appropriate to allow for timely decisions regarding 

required disclosures. In designing and evaluating the disclosure controls and 

procedures, management recognizes that any controls and procedures, no matter 

how well designed and operated, can provide only reasonable assurance of 

achieving the desired control objectives, and management applies its judgment in 

evaluating the cost-benefit relationship of possible controls and procedures.

As required by Rule 13a-15(b) of the Exchange Act, we conducted an evaluation 

of the effectiveness of the design and operation of our disclosure controls and 

procedures as of December 31, 2022, the end of the period covered by this Annual 

Report on Form 10-K. Our management, including our Chief Executive Officer 

and our Chief Financial Officer, supervised and participated in the evaluation. 

They concluded that our disclosure controls and procedures were not effective 

as of December 31, 2022, due to a material weakness in internal control over 

financial reporting described below in Management’s Report on Internal 

Control Over Financial Reporting. 

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal 

control over financial reporting to provide reasonable assurance regarding the 

reliability of our financial reporting and the preparation of financial statements for 

external purposes in accordance with generally accepted accounting principles. 

Management assessed the effectiveness of our internal control over financial 

reporting as of December 31, 2022, the end of the period covered by this Annual 

Report on Form 10-K. In making this assessment, management used the criteria 

established in Internal Control - Integrated Framework (2013) issued by the 

Committee of Sponsoring Organizations of the Treadway Commission. 

A material weakness is a deficiency, or a combination of deficiencies, in internal 

control over financial reporting, such that there is a reasonable possibility that a 

material misstatement of the Company's annual or interim consolidated and 

combined financial statements will not be prevented or detected on a timely basis.

In the fourth quarter of 2022, the Company entered a significant sales agreement 

with an existing customer which was subject to unique delivery terms. In 

reviewing the accounting for the revenue transaction, our management 

identified a deficiency in the effectiveness of a control intended to properly 

document and review relevant facts in connection with revenue recognition 

related to such transaction. Accordingly, a material error was detected in 

recorded revenue in our 2022 preliminary consolidated financial statements as a 

result of this misapplication of U.S. GAAP. The December 31, 2022 consolidated 

financial statements included in this Annual Report on Form 10-K and in our 

earnings press release filed on February 16, 2023 with our Current Report on 

Form 8-K have been corrected prior to issuance. 

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As a result of the above material weakness, management has concluded that, as of 

December 31, 2022, our internal control over financial reporting was not 

effective. 

The effectiveness of our internal control over financial reporting as of December 

31, 2022 has been audited by Ernst & Young LLP, an independent registered 

public accounting firm, and Ernst & Young LLP has issued a report on our 

internal control over financial reporting, which is included herein.

18. By indicating that the prior incident of improper revenue recognition was due to 

“unique delivery terms”, rather than its ongoing lack of effective internal controls, the Company 

materially understated the likelihood that further incidents of improper revenue recognition 

would occur. 

19. On May 8, 2023, the Company filed with the SEC a press release on Form 8-K 

announcing its 1Q23 financial results. It stated, in pertinent part, the following: 

[The Company] today announced financial results for its first quarter ended March 31, 

2023.

“Q1 revenue of $91 million resulted in an 18% increase year-over-year and 23% 

increase on a constant currency basis. While near-term macroeconomic conditions, 

slower than expected government disbursements, and timing with certain deployment 

schedules are impacting maximum growth potential, DZS continues to make 

encouraging progress in positioning the company to benefit from what will be a longterm secular growth trend,” said Charlie Vogt, President and CEO of DZS. “While we 

remain relentlessly focused on our customers and prospective customers, balancing 

our near-term investments to deliver revenue growth, gross margin expansion and 

sustainable earnings is our number one priority.”

CFO Misty Kawecki added, “Q1 revenue was within the guidance range of $90-100 

million. We continue to pull forward lower margin product shipments which comprise of 

higher component cost absorbed during the pandemic. Of our remaining RPOs of $304 

million and forecasted in-year revenue conversion, we anticipate that Q1 represents the 

low end of our gross margin outlook. Furthermore, our accelerated cost saving will 

translate into improved profitability during the second half of the year.”

Q1 2023 Financial Highlights

• Orders of $80 million compared to $101 million in Q1 2022

• Revenue of $91 million increased 18% compared to $77 million in Q1, 2022 and 

23% on a constant currency basis

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• Book-to-Bill ratio of 0.9

• $304 million of RPOs inclusive of backlog and deferred Software & Service Q1 

compared with $252 million at the end of Q1 2022

• GAAP gross margin of 32.8% compared to 32.8% compared to 34.8% in Q1 2022

• Adjusted gross margin (1) of 33.3% compared to 35.2% in Q2 2022

• GAAP operating expenses of $45 million compared to $30 million in Q1 2022

• Adjusted EBITDA (1) loss of $(4) million compared to $(0) million in Q1 2022

• Net income (loss): $(17) million GAAP; $(2) million adjusted (1) 

• Diluted Net income (loss) per share of $(0.55) on a GAAP basis compared to 

$(0.11) in Q1 2022

• Adjusted EPS (1) was a loss of $(0.06) compared to $(0.01) in Q1 2022

(1) Item represents a non-GAAP financial measure; see discussion below, as well as a 

reconciliation to the comparable GAAP measure in the financial tables in this 

earnings press release.

(Emphasis added). 

20. Then, on May 9, 2023, DZS filed with the SEC its Quarterly Report on Form 10-

Q for the Quarter ended March 31, 2023 (the “1Q23 Report”). Attached to the 1Q23 Report were 

certifications pursuant to SOX signed by Defendants Vogt and Kawecki attesting to the accuracy 

of any material changes to the Company’s internal control over financial reporting, and the 

disclosure of all fraud.

21. The 1Q23 Report provided the following, in pertinent part, regarding the 

Company’s net revenues and cash flows:

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22. Further, the 1Q23 Report contained the follow graph and additional information

regarding revenue recognition: 

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23. The 1Q23 Report contained the follow graph and additional information regarding 

the sources of its revenue, as well as revenue accrued through different segments of its business: 

24. The 1Q23 Report did not disclose the ongoing issues with the Company’s internal 

controls as it related to revenue recognition, instead focusing on prior issues where the errors had 

been corrected before issuance of financial statements to the public. The Company stated, in 

pertinent part, the following: 

Disclosure Controls and Procedures

We are required to maintain disclosure controls and procedures designed to 

provide reasonable assurance of achieving the objective that information required 

to be disclosed in our reports filed or submitted pursuant to the Exchange Act is 

recorded, processed, summarized and reported within the time periods specified in 

the SEC’s rules and forms and that such information is accumulated and 

communicated to our management, including our principal executive officer and 

principal financial officer, as appropriate to allow for timely decisions regarding 

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required disclosures. Our disclosure controls and procedures include those 

components of our internal control over financial reporting intended to provide 

reasonable assurance that transactions are recorded as necessary to permit 

preparation of financials in accordance with U.S. GAAP. In designing and 

evaluating the disclosure controls and procedures, management recognizes that 

any controls and procedures, no matter how well designed and operated, can 

provide only reasonable assurance of achieving the desired control objectives, and 

management applies its judgment in evaluating the cost-benefit relationship of 

possible controls and procedures.

As required by Rule 13a-15(b) under the Exchange Act, we conducted an 

evaluation of the effectiveness of our disclosure controls and procedures as of 

March 31, 2023, the end of the period covered by this Quarterly Report on Form 

10-Q. The evaluation was done under the supervision and with the participation 

of management, including our principal executive officer and principal 

financial officer. In the course of the evaluation of our disclosure controls and 

procedures, our principal executive officer and principal financial officer 

concluded that, because a material weakness in the Company’s internal control 

over financial reporting existed at December 31, 2022 and had not been 

remediated by the end of the period covered by this Quarterly Report on Form 

10-Q, the Company’s disclosure controls and procedures were not effective as 

of March 31, 2023. This material weakness in the Company’s internal control 

over financial reporting and the Company’s remediation efforts are described 

below.

Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal 

control over financial reporting, such that there is a reasonable possibility that a 

material misstatement of the Company's annual or interim consolidated and 

combined financial statements will not be prevented or detected on a timely basis.

In the fourth quarter of 2022, the Company entered a significant sales agreement 

with an existing customer which was subject to unique delivery terms. In 

reviewing the accounting for the revenue transaction, our management 

identified a deficiency in the effectiveness of a control intended to properly 

document and review relevant facts in connection with revenue recognition 

related to such transaction. Accordingly, a material error was detected in 

recorded revenue in our 2022 preliminary consolidated financial statements as a 

result of this misapplication of U.S. GAAP. The December 31, 2022 consolidated 

financial statements included in the 2022 Form 10-K filed on March 10, 2023 

and in our earnings press release filed on February 16, 2023 with our Current 

Report on Form 8-K were corrected prior to issuance.

Remediation Plan

Management has begun implementing a remediation plan to reassess the design 

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of our controls and modify our processes related to the accounting for 

significant revenue transactions as well as enhancing monitoring and oversight 

controls in the application of accounting guidance related to such transactions. 

The remediation plan includes the following: 

•Training with operational personnel to ensure potential unique revenue 

transactions are identified and communicated to accounting personnel in advance 

so the accounting for such transactions can be evaluated and business terms 

addressed as necessary; 

•Implementing specific review procedures designed to enhance our revenue 

recognition controls;

•Strengthening our revenue recognition control with improved documentation 

standards, technical oversight and training. 

We currently plan to have our enhanced review procedures and documentation 

standards in place and operating in the first half of fiscal 2023.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that 

occurred during our last fiscal quarter that have materially affected, or are 

reasonably likely to materially affect, our internal control over financial reporting.

(Emphasis added). 

25. The statements contained in ¶¶ 16-24 were materially false and/or misleading 

because they misrepresented and failed to disclose the following adverse facts pertaining to the 

Company’s business, operations and prospects, which were known to Defendants or recklessly 

disregarded by them. Specifically, Defendants made false and/or misleading statements and/or 

failed to disclose that: (1) DZS’ financial statements from March 31, 2023 to the present 

included certain errors; (2) as a result, DZS would need to restate its previously filed quarterly 

financial statement for the period ending March 31, 2023; (3) the Company had ongoing 

undisclosed issues with its internal controls over financial reporting; and (4) as a result, 

Defendants’ statements about its business, operations, and prospects, were materially false and 

misleading and/or lacked a reasonable basis at all relevant times.

THE TRUTH EMERGES 

26. On June 1, 2023, before the market opened, the Company announced that it would 

restate its financial statements from May 9, 2023, to the present, stating the following, in 

pertinent part, in its current report filed with the SEC on Form 8-K:

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Item 4.02 Non-Reliance on Previously Issued Financial Statements or a Related 

Audit Report or Completed Interim Review

On May 31, 2023, the Audit Committee (the “Audit Committee”) of the Board of 

Directors of DZS Inc. (the “Company”), in consultation with the Company’s 

management, determined that the Company’s previously issued unaudited condensed 

consolidated financial statements as of and for the three months ended March 31, 2023 

(the “Subject Period”) contained an accounting error relating to the timing of revenue 

recognition with respect to two customer projects for the Subject Period. The value of 

the revenue to be restated is approximately $15 million, of which the Company 

anticipates the majority will be recognized during the three months ending June 30, 

2023 and the three months ending September 30, 2023. As a result of this error, the 

Audit Committee determined that the Company’s unaudited condensed consolidated 

financial statements for the Subject Period should no longer be relied upon and should 

be restated. Similarly, any previously issued or filed reports, press releases, earnings 

releases, investor presentations or other communications of the Company describing the 

Company’s financial results or other financial information relating to the Subject Period 

should no longer be relied upon.

The required adjustments were identified during a recent internal review of the 

transactions regarding the applicable customers.

As a result of the accounting error, the Company intends to (a) restate its unaudited 

condensed consolidated financial statements and the notes thereto with respect to the 

Subject Period in an amendment to the Company’s Quarterly Report on Form 10-Q for 

the three months ended March 31, 2023 (the “Amended 10-Q”) to be filed with the 

Securities and Exchange Commission (the “SEC”) and (b) amend, among other related 

disclosures, its Management’s Discussion and Analysis of Financial Condition and 

Results of Operations for the Subject Period in the Amended 10-Q. The adjustments to 

such financial statement items will be set forth through expanded disclosure in the 

financial statements included in the Amended 10-Q, including further describing the 

restatement and its impact on previously reported amounts.

Although the Company cannot at this time estimate when it will file its restated 

financial statements and the Amended 10-Q, it is diligently pursuing completion of the 

restatement and intends to make such filing as soon as reasonably practicable.

The description in this report of the accounting error, the required adjustments and the 

expected impacts of the restatement are preliminary, unaudited and subject to further 

change in connection with the ongoing review of the accounting error and the completion 

of the restatement. Accordingly, there can be no assurance that the actual effects of the 

restatement will be only as described above.

The Company’s management and the Audit Committee have discussed, and continue to 

discuss, the matters disclosed in this Item 4.02 with the Company’s independent 

registered public accounting firm, Ernst & Young LLP.

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(Emphasis added). 

27. Also on June 1, 2023, the Company posted a press release on its website entitled 

“DZS to Restate First Quarter 2023 Financial Statements and Updates Full Year 2023 

Guidance”. This press release was included in a second Form 8-K, which the Company filed 

with the SEC before market hours on June 1, 2023. It stated, in pertinent part: 

“[The Company] a global leader of access, optical and cloud-controlled software defined 

solutions, today announced that it will restate its previously issued financial statements 

for the first quarter of 2023, which ended March 31, 2023. The restatement relates to 

timing of revenue recognition with respect to two customer projects. The value of the 

revenue to be restated is approximately $15 million, of which the company anticipates 

the majority will be recognized during the second and third quarters of 2023. The 

associated customer relationships are in good standing, and the customers have begun 

paying the amounts due to the Company.

Full Year 2023 Guidance

“We are withdrawing the Q2 earnings guidance issued on May 8, 2023 and will 

provide updated Q2 guidance once we have clarity regarding the timing of the 

recognition for the restated Q1 revenue and adjusted EBITDA,” said Misty Kawecki, 

Chief Financial Officer of DZS. “The most significant of the two revenue restatements 

is with a long standing, highly valued customer. We are focused on completing the 

restatement process as quickly as practicable. At the end of March 2023, our total 

RPOs were valued at $304 million. We remain encouraged and optimistic about the 

second half of 2023 and into 2024 aligned with a strong sales pipeline and validated by 

numerous Tier I/II trials around the world. Finally, we are adjusting our full-year 

guidance, taking into consideration the risk that customers may take longer to deploy 

their current inventory. For additional information regarding our market opportunity, 

product portfolio and growth pillars, visit our investor relations page to view our 

investor day presentations.”

Full Year 2023

• Net revenue of approximately $370 million vs. approximately $400 million 

previously

• Adjusted gross margin (1) remains in a range of 35%-37%

• Adjusted operating expenses (1) of approximately $115 million vs. $115-120 

million previously

• Adjusted EBITDA (1) of approximately $15-22 million vs. $22-27 million 

previously

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(1) Item represents a non-GAAP financial measure; see discussion below, as well as 

a reconciliation to the comparable GAAP measure in the financial tables in this press 

release.

(Emphasis added). 

28. On this news, the price of DZS stock plummeted by $2.17 per share, or 36%, to 

close at $3.82 on June 1, 2023, on extremely high trading volume. The next day, the price of 

DZS stock declined another $0.42, or 10.8%, to close at $3.46. 

29. As a result of Defendants’ wrongful acts and omissions, and the precipitous 

decline in the market value of the Company’s common shares, Plaintiff and other Class 

members have suffered significant losses and damages.

PLAINTIFF’S CLASS ACTION ALLEGATIONS

30. Plaintiff brings this action as a class action pursuant to Federal Rule of Civil 

Procedure 23(a) and (b)(3) on behalf of a class consisting of all persons other than defendants 

who acquired DZS securities publicly traded on NASDAQ during the Class Period, and who 

were damaged thereby (the “Class”). Excluded from the Class are Defendants, the officers and 

directors of DZS, members of the Individual Defendants’ immediate families and their legal 

representatives, heirs, successors or assigns and any entity in which Defendants have or had a 

controlling interest.

31. The members of the Class are so numerous that joinder of all members is 

impracticable. Throughout the Class Period, DZS securities were actively traded on NASDAQ. 

While the exact number of Class members is unknown to Plaintiff at this time and can be 

ascertained only through appropriate discovery, Plaintiff believes that there are hundreds, if not 

thousands of members in the proposed Class. 

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32. Plaintiff’s claims are typical of the claims of the members of the Class as all 

members of the Class are similarly affected by defendants’ wrongful conduct in violation of 

federal law that is complained of herein.

33. Plaintiff will fairly and adequately protect the interests of the members of the 

Class and has retained counsel competent and experienced in class and securities litigation. 

Plaintiff has no interests antagonistic to or in conflict with those of the Class.

34. Common questions of law and fact exist as to all members of the Class and 

predominate over any questions solely affecting individual members of the Class. Among the 

questions of law and fact common to the Class are:

• whether the Exchange Act was violated by Defendants’ acts as alleged herein;

• whether statements made by Defendants to the investing public during the Class 

Period misrepresented material facts about the business and financial condition 

of DZS;

• whether Defendants’ public statements to the investing public during the Class 

Period omitted material facts necessary to make the statements made, in light of 

the circumstances under which they were made, not misleading;

• whether the Defendants caused DZS to issue false and misleading filings during 

the Class Period;

• whether Defendants acted knowingly or recklessly in issuing false filings;

• whether the prices of DZS securities during the Class Period were artificially 

inflated because of the Defendants’ conduct complained of herein; and

• whether the members of the Class have sustained damages and, if so, what is the 

proper measure of damages.

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35. A class action is superior to all other available methods for the fair and efficient 

adjudication of this controversy since joinder of all members is impracticable. Furthermore, as 

the damages suffered by individual Class members may be relatively small, the expense and 

burden of individual litigation make it impossible for members of the Class to individually 

redress the wrongs done to them. There will be no difficulty in the management of this action as 

a class action.

36. Plaintiff will rely, in part, upon the presumption of reliance established by the 

fraud-on-the-market doctrine in that:

• DZS shares met the requirements for listing, and were listed and actively traded 

on NASDAQ, an efficient market;

• As a public issuer, DZS filed periodic public reports;

• DZS regularly communicated with public investors via established market 

communication mechanisms, including through the regular dissemination of 

press releases via major newswire services and through other wide-ranging 

public disclosures, such as communications with the financial press and other 

similar reporting services; 

• DZS’ securities were liquid and traded with moderate to heavy volume during 

the Class Period; and

• DZS was followed by a number of securities analysts employed by major 

brokerage firms who wrote reports that were widely distributed and publicly 

available.

37. Based on the foregoing, the market for DZS securities promptly digested current 

information regarding DZS from all publicly available sources and reflected such information in 

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the prices of the shares, and Plaintiff and the members of the Class are entitled to a presumption 

of reliance upon the integrity of the market.

38. Alternatively, Plaintiff and the members of the Class are entitled to the 

presumption of reliance established by the Supreme Court in Affiliated Ute Citizens of the State 

of Utah v. United States, 406 U.S. 128 (1972), as Defendants omitted material information in 

their Class Period statements in violation of a duty to disclose such information as detailed 

above. 

COUNT I

For Violations of Section 10(b) And Rule 10b-5 Promulgated Thereunder

Against All Defendants

39. Plaintiff repeats and realleges each and every allegation contained above as if 

fully set forth herein.

40. This Count is asserted against Defendants is based upon Section 10(b) of the 

Exchange Act, 15 U.S.C. § 78j(b), and Rule 10b-5 promulgated thereunder by the SEC. 

41. During the Class Period, Defendants, individually and in concert, directly or 

indirectly, disseminated or approved the false statements specified above, which they knew or 

deliberately disregarded were misleading in that they contained misrepresentations and failed to 

disclose material facts necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading. 

42. Defendants violated §10(b) of the 1934 Act and Rule 10b-5 in that they: 

• employed devices, schemes and artifices to defraud; 

• made untrue statements of material facts or omitted to state material facts 

necessary in order to make the statements made, in light of the 

circumstances under which they were made, not misleading; or 

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• engaged in acts, practices and a course of business that operated as a fraud 

or deceit upon plaintiff and others similarly situated in connection with 

their purchases of DZS securities during the Class Period.

43. Defendants acted with scienter in that they knew that the public documents and 

statements issued or disseminated in the name of DZS were materially false and misleading; 

knew that such statements or documents would be issued or disseminated to the investing 

public; and knowingly and substantially participated, or acquiesced in the issuance or 

dissemination of such statements or documents as primary violations of the securities laws. 

These defendants by virtue of their receipt of information reflecting the true facts of DZS, their 

control over, and/or receipt and/or modification of DZS’ allegedly materially misleading 

statements, and/or their associations with the Company which made them privy to confidential 

proprietary information concerning DZS, participated in the fraudulent scheme alleged herein.

44. Individual Defendants, who are the senior officers and/or directors of the 

Company, had actual knowledge of the material omissions and/or the falsity of the material 

statements set forth above, and intended to deceive Plaintiff and the other members of the Class, 

or, in the alternative, acted with reckless disregard for the truth when they failed to ascertain and 

disclose the true facts in the statements made by them or other DZS personnel to members of the 

investing public, including Plaintiff and the Class.

45. As a result of the foregoing, the market price of DZS securities was artificially 

inflated during the Class Period. In ignorance of the falsity of Defendants’ statements, Plaintiff 

and the other members of the Class relied on the statements described above and/or the integrity 

of the market price of DZS securities during the Class Period in purchasing DZS securities at 

prices that were artificially inflated as a result of Defendants’ false and misleading statements.

Case 4:23-cv-00549-SDJ Document 1 Filed 06/14/23 Page 19 of 24 PageID #: 19
20 

46. Had Plaintiff and the other members of the Class been aware that the market 

price of DZS securities had been artificially and falsely inflated by Defendants’ misleading 

statements and by the material adverse information which Defendants did not disclose, they 

would not have purchased DZS securities at the artificially inflated prices that they did, or at all. 

47. As a result of the wrongful conduct alleged herein, Plaintiff and other members 

of the Class have suffered damages in an amount to be established at trial.

48. By reason of the foregoing, Defendants have violated Section 10(b) of the 1934

Act and Rule 10b-5 promulgated thereunder and are liable to the plaintiff and the other members 

of the Class for substantial damages which they suffered in connection with their purchase of 

DZS securities during the Class Period.

COUNT II

Violations of Section 20(a) of the Exchange Act 

Against the Individual Defendants

49. Plaintiff repeats and realleges each and every allegation contained in the 

foregoing paragraphs as if fully set forth herein. 

50. During the Class Period, the Individual Defendants participated in the operation 

and management of DZS, and conducted and participated, directly and indirectly, in the conduct 

of DZS’ business affairs. Because of their senior positions, they knew the adverse non-public 

information about DZS’ false financial statements.

51. As officers and/or directors of a publicly owned company, the Individual 

Defendants had a duty to disseminate accurate and truthful information with respect to DZS’ 

financial condition and results of operations, and to correct promptly any public statements 

issued by DZS which had become materially false or misleading.

52. Because of their positions of control and authority as senior officers, the 

Individual Defendants were able to, and did, control the contents of the various reports, press 

Case 4:23-cv-00549-SDJ Document 1 Filed 06/14/23 Page 20 of 24 PageID #: 20
21 

releases and public filings which DZS disseminated in the marketplace during the Class Period 

concerning DZS’ results of operations. Throughout the Class Period, the Individual Defendants 

exercised their power and authority to cause DZS to engage in the wrongful acts complained of 

herein. The Individual Defendants therefore, were “controlling persons” of DZS within the 

meaning of Section 20(a) of the Exchange Act. In this capacity, they participated in the unlawful 

conduct alleged which artificially inflated the market price of DZS securities.

53. By reason of the above conduct, the Individual Defendants are liable pursuant to 

Section 20(a) of the Exchange Act for the violations committed by DZS. 

PRAYER FOR RELIEF

WHEREFORE, plaintiff, on behalf of himself and the Class, prays for judgment and 

relief as follows: 

(a) declaring this action to be a proper class action, designating plaintiff as Lead 

Plaintiff and certifying plaintiff as a class representative under Rule 23 of the Federal Rules of 

Civil Procedure and designating plaintiff’s counsel as Lead Counsel;

(b) awarding damages in favor of plaintiff and the other Class members against all 

defendants, jointly and severally, together with interest thereon; 

awarding plaintiff and the Class reasonable costs and expenses incurred in this action, 

including counsel fees and expert fees; and

(d) awarding plaintiff and other members of the Class such other and further relief as 

the Court may deem just and proper.

Case 4:23-cv-00549-SDJ Document 1 Filed 06/14/23 Page 21 of 24 PageID #: 21
22 

JURY TRIAL DEMANDED

Plaintiff hereby demands a trial by jury. 

Dated: June 14, 2023. Respectfully submitted, 

 COCHRAN LAW PLLC

 /s/ Stuart L. Cochran 

Stuart L. Cochran

 Texas Bar No.: 24027936 

 8140 Walnut Hill Ln., Suite 250 

 Dallas, Texas 75231 

 Telephone: (469) 333-3405 

 Facsimile: (469) 333-3406 

 stuart@scochranlaw.com

 

 Liaison Counsel for Plaintiff 

 THE ROSEN LAW FIRM, P.A.

 Laurence Rosen, Esq.

Phillip Kim, Esq.

275 Madison Avenue, 40th Floor 

New York, NY 10016 

Telephone: (212) 686-1060 

Fax: (212) 202-3827 

Email: lrosen@rosenlegal.com 

pkim@rosenlegal.com 

Counsel for Plaintiff

Case 4:23-cv-00549-SDJ Document 1 Filed 06/14/23 Page 22 of 24 PageID #: 22
Certification and Authorization of Named Plaintiff Pursuant to Federal

Securities Laws

The individual or institution listed below (the "Plaintiff") authorizes and, upon execution of the accompanying

retainer agreement by The Rosen Law Firm P.A., retains The Rosen Law Firm P.A. to file an action under the

federal securities laws to recover damages and to seek other relief against DZS Inc. The Rosen Law Firm P.A. will

prosecute the action on a contingent fee basis not to exceed one-third of the recovery and will advance all costs

and expenses. All payments of fees and expenses shall be made only after Court review and approval. The DZS

Inc. Retention Agreement provided to the Plaintiff is incorporated by reference herein and is effective, upon

execution and delivery by The Rosen Law Firm P.A.

First Name: Jason

Middle Initial:

Last Name: Shim

Mailing Address:

City:

State:

Zip Code:

Country:

Phone:

Email Address:

Plaintiff certifies that:

1. Plaintiff has reviewed a complaint and authorized its filing or the filing of an amended complaint.

2. Plaintiff did not acquire the security that is the subject of this action at the direction of plaintiff's counsel or in

order to participate in this private action or any other litigation under the federal securities laws.

3. Plaintiff is willing to serve as a representative party on behalf of a class, including providing testimony at

deposition and trial, if necessary.

4. Plaintiff represents and warrants that he/she/it is fully authorized to enter into and execute this certification.

5. Plaintiff will not accept any payment for serving as a representative party on behalf of the class beyond

Plaintiff's pro rata share of any recovery, except such reasonable costs and expenses (including lost

wages) directly relating to the representation of the class as ordered or approved by the court.

6. Plaintiff has made no transaction(s) during the Class Period in the debt or equity securities that are the

subject of this action except those set forth below:

Purchases:

Type of Security Buy Date # of Shares Price per Share

Common Stock 4/25/23 100 6.50

Sales:

Type of Security Sale Date # of Shares Price per Share

Common Stock

I have not sought to serve as a representative party on behalf of a class under the federal securities laws

during the last three years, except if set forth below.

1 / 2

5HGDFWHG

Case 4:23-cv-00549-SDJ Document 1 Filed 06/14/23 Page 23 of 24 PageID #: 23
Not applicable

I declare and certify under penalty of perjury, under the laws of the United States

of America, that the foregoing information is true and correct.

YES

By Signing below and submitting this certification form electronically, I intend to

sign and execute this certification pursuant to California Civil Code Section

1633.1, et seq. - and the Uniform Electronic Transactions Act and retain the

Rosen Law Firm, P.A. to proceed on Plaintiff's behalf, on a contingent fee basis.

YES

Date of signing: 06/12/2023 11:04:48 at Eastern Standard Time, USA

2 / 2

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