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Zoom Technologies Reports First Quarter 2013 Results

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First Quarter 2013 Highlights:

  • Revenue for the first quarter of 2013 was $7.4 million a decrease of $8.7 million, or 54.2%, from $16.1 for the same quarter last year
  • Loss from continuing operations $1.1 million for the quarter compared to $0.6 million a year ago
  • Net loss of $1.5 million compared to net income of $0.5 million in same quarter last year
  • Net loss in the quarter resulted from a slow economy and the continued restructuring of the Company's business

BEIJING, May 20, 2013 (GLOBE NEWSWIRE) -- Zoom Technologies, Inc. (Nasdaq:ZOOM) (the "Company"), a holding company, through its subsidiary Portables Unlimited LLC ("Portables"), engages in the distribution of cellular service and products in the U.S. Today, ZOOM reported financial results for the first quarter ended March 31, 2013.

For the first quarter of 2013, ZOOM reported weak performance as a result of a sluggish economy and also that more desirable handsets did not arrive into the T-Mobile product line-up within the quarter. Management believes that operational results should noticeably improve after March 31, 2013 due to a combination of the availability of coveted models, including the iPhone5 in April 2013, and the roll out by T-Mobile of new pricing programs for cellular usage. Also, Zoom's internal restructuring should be completed within the first half of 2013, and the Company will be better positioned to return to profitability.

The Company's management devoted significant effort in the first quarter of 2013 to complete the sale of certain operating units to Beijing Zhumu Culture Communication Company, Ltd. as detailed in the Company's 8-K filing with the US SEC dated January 7, 2013. The completion of the sale of those operating units is still pending; however, management believes that the sale should be completed around the middle of 2013. As previously disclosed, ZOOM intends to use the proceeds from the sale of those operating units to acquire businesses in North America. Concurrently, management has been conducting initial diligence and valuation exercise on potential acquisition targets.

For the first quarter of 2013, ZOOM generated net revenue of $7.4 million from continuing operations, down 54.2% from $16.1 million as compared to the first quarter of 2012. The decline in revenue reflected the general economic conditions in the United States and the Company's lack of profit drivers in its product portfolio at the retail level in the U.S. The Company believes the introduction of new products and services in the second quarter of 2013 should bring a significant turnaround in top line revenue.

Net loss during the first quarter of 2013 was $1.5 million compared to net profit of $0.5 million in the same quarter of 2012. Again, these are the results of weak revenues, plus the on-going restructuring efforts. Approximately half of the 1st quarter losses were attributable to corporate overhead costs including about $200,000 in non-cash charges.

Mr. Lei Gu, Chairman & CEO of ZOOM issued the following mandate to his management team: "We need to work quickly to complete the sale of our assets, improve the results of our existing continuing operations, and invest in opportunities where we can add value to our acquisition targets. We must drive profits to our bottom line."

Conference Call Details

Zoom will review the first quarter 2013 results and discuss management's expectations for the remainder of 2013 on, Monday, May 20, 2013 at 6:00 p.m. ET (3:00 p.m. PT). The dial-in numbers are +1-855-500-8701 for US domestic callers and +65-6723-9385 for international callers, and then enter the access code (conference ID) 74393225. A replay of the conference call will be available through May 23, 2013. The replay dial-in numbers are +1 855-452-5696 for US domestic callers and +61-2-8199-0299 for international callers, and then enter access code 74393225.

About Zoom Technologies, Inc.

Zoom Technologies, Inc. through its subsidiary, Portables Unlimited LLC, operates an exclusive wholesale distributor business for T-Mobile products and services in the United States.

Forward-Looking Statements

Certain statements in this press release may constitute "forward looking statements" that involve risks and uncertainties. These include statements about our expectations, plans, objectives, assumptions or future events in which the outcome cannot be assured. You should not place undue reliance on these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission. We undertake no obligation to publicly release revisions to these forward-looking statements to reflect future events or circumstances or reflect the occurrence of unanticipated events.

ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
MARCH 31, DECEMBER 31,
2013 2012
ASSETS (Unaudited)
Current assets
Cash and equivalents $ 212,665 $ 430,746
Restricted cash 19,149,140 19,044,294
Accounts receivable, net 2,566,950 3,246,247
Inventories, net 446,416 928,881
Other receivables and prepaid expenses 4,232,796 4,514,434
Due from related parties 20,967,777 20,964,025
Current assets of discontinued operations, held for sale 175,950,575 144,751,290
Total current assets 223,526,319 193,879,917
Property, plant and equipment, net 2,392,429 2,376,639
Equipment deposit 35,249 35,249
Intangible assets 477,439 480,690
Long-term investments 11,660,368 11,912,956
Goodwill 27,031,492 27,031,492
TOTAL ASSETS $ 265,123,296 $ 235,716,943
LIABILITIES AND EQUITY
Current liabilities
Short-term loans 3,600,596 3,519,999
Accounts payable 4,964,714 6,409,278
Accrued expenses and other payables 3,983,448 3,814,647
Purchase deposit from buyer 8,740,490 8,740,490
Taxes payable 22,457 22,334
Due to related parties 8,152,524 9,889,037
Warrant liability 13,715 7,340
Current liabilities of discontinued operations 169,860,070 138,348,859
Total current liabilities 199,338,014 170,751,984
Long-term loans 1,863,897 --
Long-term notes payables 317,500 317,500
TOTAL LIABILITIES 201,519,411 171,069,484
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock: authorized 1,000,000 shares, par value $0.01 none issued and outstanding -- --
Common stock: authorized 60,000,000 shares, par value $0.01, 29,526,848 shares issued and 29,525,168 shares outstanding at March 31, 2013; 29,320,848 shares issued and 29,319,168 shares outstanding at December 31, 2012. 295,252 293,192
Treasury shares: 1,680 shares at cost (7,322) (7,322)
Additional paid-in capital 51,300,193 51,108,409
Statutory surplus reserve 702,539 702,539
Accumulated other comprehensive income 4,390,530 4,058,657
Accumulated deficit (5,561,303) (4,098,798)
TOTAL STOCKHOLDERS' EQUITY 51,119,889 52,056,677
Non-controlling interest 12,483,996 12,590,782
TOTAL LIABILITIES AND EQUITY $ 265,123,296 $ 235,716,943
ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31,
2013 2012
(Unaudited) (Unaudited)
Net revenues $ 7,365,230 $ 16,082,335
Cost of sales 5,893,746 13,338,448
Gross profit 1,471,484 2,743,887
Operating expenses:
Selling, general, and administrative expenses 2,098,166 2,470,904
Non-cash equity-based compensation 193,844 434,249
Total operating expenses 2,292,010 2,905,153
Loss from operations (820,526) (161,266)
Other income and (expenses)
Interest income -- 6
Interest expense (219,826) (111,117)
Change in fair value of warrants (6,375) (116,953)
Investment loss (252,588) --
Other income (expense), net 7,874 4,091
Other income (expense), net (470,915) (223,973)
   
Loss before income taxes and noncontrolling interest (1,291,441) (385,239)
Income taxes for continuing operations 2,250 --
Loss before noncontrolling interest from continuing operations (1,293,691) (385,239)
less: (Loss) income attributable to noncontrolling interest of continuing operations (151,873) 239,742
Loss attributable to Zoom Technologies, Inc. from continuing operations (1,141,818) (624,981)
Discontinued Operations:
(Loss) income from discontinued operations, net of tax (358,568) 1,087,685
less: Loss attributable to noncontrolling interest from discontinued operations (37,881) (62,228)
(Loss) income attributable to Zoom Technologies, Inc. from discontinued operations (320,687) 1,149,913
Net (loss) income attributable to Zoom Technologies, Inc. $ (1,462,505) $ 524,932
Basic and diluted loss per common share from continuing operations:
Basic $ (0.04) $ (0.03)
Diluted $ (0.04) $ (0.03)
Basic and diluted (loss) income per common share from discontinued operations:
Basic $ (0.01) $ 0.05
Diluted $ (0.01) $ 0.05
Basic and diluted (loss) income per common share
Basic $ (0.05) $ 0.02
Diluted $ (0.05) $ 0.02
Weighted average common shares outstanding:
Basic 29,467,946 23,958,988
Diluted 29,467,946 24,020,832
ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
FOR THE THREE MONTHS ENDED MARCH 31,
2013 2012
(Unaudited) (Unaudited)
Net (loss) income attributable to Zoom Technologies, Inc. $ (1,462,505) $ 524,932
Net (loss) income attributable to noncontrolling interest $ (189,754) $ 177,514
Other comprehensive income:
Foreign currency translation gain - Zoom Technologies, Inc. 331,873 309,578
Foreign currency translation gain - noncontrolling interest 82,968 21,273
Comprehensive (loss) income Zoom Technologies, Inc. $ (1,130,632) $ 834,510
Comprehensive (loss) income noncontrolling interest $ (106,786) $ 198,787
ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31,
2013 2012
(Unaudited) (Unaudited)
Cash flows from operating activities:
Loss before noncontrolling interest from continuing operations $ (1,293,691) $ (385,239)
Adjustments to reconcile loss including non-controlling interest to cash provided by (used in) operating activities:
Depreciation and amortization 75,024 94,297
Non-cash equity-based compensation 193,844 434,249
Provision on accounts receivable 45,000 9,047
Loss on investment in joint venture 252,588 --
Fair value adjustment on warrants 6,375 116,953
Changes in operating assets and liabilities:
Accounts receivable 634,297 (5,386,470)
Inventories 482,465 12,531
Advances to suppliers (33) 353,231
Prepaid expenses and other assets 144,239 (13,827)
Accounts payable (1,444,778) 976,077
Related parties-net (1,521,793) (2,738,781)
Accrued expenses and other current liabilities 306,338 4,648,599
Net cash used in operating activities (2,120,125) (1,879,333)
Cash flows from investing activities:
Purchase of property and equipment and other long-term assets (87,563) (111,865)
Net cash used in investing activities (87,563) (111,865)
Cash flows from financing activities:
Proceeds from loans 2,500,000 1,697,306
Repayment of loans (555,506) --
Receipt from related parties 45,080 215,751
Payments to related parties -- (125,000)
Net cash provided by financing activities 1,989,574 1,788,057
Effect of exchange rate changes on cash and cash equivalents 33 89
Net decrease in cash and equivalents (218,081) (203,052)
Cash and equivalents, beginning of period 430,746 214,684
Cash and equivalents, end of period $ 212,665 $ 11,632
SUPPLEMENTARY DISCLOSURES:
Interest paid $ 219,826 $ --
Income tax paid $ 2,250 $ --

CONTACT: Investor Contact: Lynn Wei Investor Relations Coordinator Zoom Technologies, Inc. +86-10-5935-9576 weilin@zoom.com www.zoom.com

Source:Zoom Technologies, Inc.