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Zoom Technologies Reports Second Quarter 2013 Results

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Second Quarter 2013 Highlights:

  • Revenue for the second quarter of 2013 was $6.76 million a decrease of $4.93 million, or 42.1%, from $11.69 million for the same quarter last year
  • Loss from continuing operations $0.44 million for the quarter compared to $0.78 million a year ago
  • Net loss of $2.73 million compared to net income of $0.77 million in same quarter last year
  • Net loss in the quarter resulted from the loss on disposal of certain discontinued operations

BEIJING, Aug. 20, 2013 (GLOBE NEWSWIRE) -- Zoom Technologies, Inc. (Nasdaq:ZOOM) (the "Company") is a holding company, and through its subsidiary Portables Unlimited LLC ("Portables"), engages in the exclusive distribution of T-Mobile USA branded cellular service and mobile products in the U.S. On August 19, 2013, after the close of the market, ZOOM filed its form 10Q with the U.S. Securities and Exchange Commission to report the Company's financial results for the second quarter ended June 30, 2013.

At the end of the second quarter of 2013, ZOOM showed improved operating results. New voice and data service plans, and installment payment plans for the sale of mobile phones rolled out by T-Mobile USA has led to the modification of the existing business model of Portables. Under the new plans, Portables has seen a general decrease in revenue, but a general increase in gross margin, especially on the commission received for the activation of service plans. The introduction of Apple iPhone5 to T-Mobile USA and Portables' product portfolio has brought positive results.

For the second quarter of 2013, ZOOM generated net revenue of $6.76 million from continuing operations, down 42.1% from $11.69 million as compared to the second quarter of 2012. As mentioned above, the modification of the business model has affected top line revenue; however, Portables has seen significant margin improvement.

Net loss during the first quarter of 2013 was $2.73 million compared to net profit of $0.77 million in the same quarter of 2012. These are the results of on-going restructuring efforts.

Mr. Lei Gu, Chairman & CEO of ZOOM had the following to say about the second quarter. "We are glad to see that the U.S. economy is growing and T-Mobile USA's renewed strategy is positively affecting Portables operating results. We also believe that the Portables management team has done a great job of trimming costs and improving margins. In China we need to continue to work quickly to complete the sales of our assets so that we can put more money to work in new opportunities."

Conference Call Details

Zoom will review the second quarter 2013 results and discuss management's expectations for the remainder of 2013 on Friday, August 23, 2013 at 8:30 a.m. ET (5:30 a.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) 34590516. A replay of the conference call will be available through August 26, 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 34590516.

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
JUNE
30,
2013
DECEMBER 31,
2012
(Unaudited)
ASSETS
Current assets
Cash and equivalents $ 748,788 $ 430,746
Restricted cash 19,438,865 19,044,294
Accounts receivable, net 3,344,299 3,246,247
Inventories, net 331,737 928,881
Other receivables and prepaid expenses 3,628,723 4,514,434
Due from related parties 21,026,927 20,964,025
Current assets of discontinued operations, held for sale 167,973,574 144,751,290
Total current assets 216,492,913 193,879,917
Property, plant and equipment, net 2,356,058 2,376,639
Equipment deposit 35,249 35,249
Intangible assets 474,189 480,690
Long-term investments 11,579,315 11,912,956
Goodwill 27,031,492 27,031,492
TOTAL ASSETS $ 257,969,216 $ 235,716,943
LIABILITIES AND EQUITY
Current liabilities
Short-term loans 3,608,772 3,519,999
Accounts payable 4,411,938 6,409,278
Accrued expenses and other payables 3,481,463 3,814,647
Purchase deposit from buyer 8,240,490 8,740,490
Taxes payable 22,797 22,334
Due to related parties 9,260,021 9,889,037
Warrant liability 4 7,340
Current liabilities of discontinued operations 164,848,005 138,348,859
Total current liabilities 193,873,490 170,751,984
Long-term loans 1,708,928 --
Long-term notes payables 320,000 317,500
TOTAL LIABILITIES 195,902,418 171,069,484
COMMITMENTS AND CONTINGENCIES
EQUITY
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 June 30, 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 51,752,013 51,108,409
Statutory surplus reserve 737,623 702,539
Accumulated other comprehensive income 4,837,092 4,058,657
Accumulated deficit (8,325,691) (4,098,798)
TOTAL STOCKHOLDERS' EQUITY 49,288,967 52,056,677
Non-controlling interest 12,777,831 12,590,782
TOTAL EQUITY 62,066,798 64,647,459
TOTAL LIABILITIES AND EQUITY $ 257,969,216 $ 235,716,943
ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTHS ENDED
JUNE 30,
SIX MONTHS ENDED
JUNE 30,
2013 2012 2013 2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net revenues $ 6,764,881 $ 11,691,462 $ 14,130,111 $ 27,773,797
Cost of sales 4,448,240 9,432,110 10,341,986 22,770,558
Gross profit 2,316,641 2,259,352 3,788,125 5,003,239
Operating expenses:
Selling, general, and administrative expenses 1,987,113 2,242,562 4,085,279 4,713,466
Non-cash equity-based compensation 451,821 837,310 645,665 1,271,559
Total operating expenses 2,438,934 3,079,872 4,730,944 5,985,025
Loss from operations (122,293) (820,520) (942,819) (981,786)
Other income and (expenses)
Interest income -- 5 -- 11
Interest expense (205,544) (185,137) (425,370) (296,254)
Change in fair value of warrants 13,711 350,323 7,336 233,370
Investment loss (81,053) -- (333,641) --
Other income (expense), net 315,224 16,427 323,098 20,518
Other income (expense), net 42,338 181,618 (428,577) (42,355)
Loss before income taxes and noncontrolling interest (79,955) (638,902) (1,371,396) (1,024,141)
Income taxes for continuing operations 107,267 -- 109,517 --
Loss before noncontrolling interest from continuing operations (187,222) (638,902) (1,480,913) (1,024,141)
less: Income attributable to noncontrolling interest of continuing operations 257,057 144,414 105,184 384,156
Loss attributable to Zoom Technologies, Inc. from continuing operations (444,279) (783,316) (1,586,097) (1,408,297)
Discontinued Operations:
(Loss) income from discontinued operations, net of tax (293,264) 1,602,881 (651,832) 2,690,566
less: Loss (income) attributable to noncontrolling interest from discontinued operations (74,863) 49,303 (112,744) (12,925)
(218,401) 1,553,578 (539,088) 2,703,491
Loss on disposal, net tax (2,066,624) -- (2,066,624) --
(Loss) income attributable to Zoom Technologies, Inc. from discontinued operations (2,285,025) 1,553,578 (2,605,712) 2,703,491
Net (loss) income attributable to Zoom Technologies, Inc. $ (2,729,304) $ 770,262 $ (4,191,809) $ 1,295,194
Basic and diluted loss per common share from continuing operations:
Basic $ (0.02) $ (0.03) $ (0.05) $ (0.06)
Diluted $ (0.02) $ (0.03) $ (0.05) $ (0.06)
Basic and diluted (loss) income per common share from discontinued operations:
Basic $ (0.08) $ 0.06 $ (0.09) $ 0.11
Diluted $ (0.08) $ 0.06 $ (0.09) $ 0.11
Basic and diluted (loss) income per common share
Basic $ (0.09) $ 0.03 $ (0.14) $ 0.05
Diluted $ (0.09) $ 0.03 $ (0.14) $ 0.05
Weighted average common shares outstanding:
Basic 29,525,168 26,191,186 29,496,715 25,075,087
Diluted 29,525,168 26,233,271 29,496,715 25,127,366
ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
THREE MONTHS ENDED
JUNE 30,
SIX MONTHS ENDED
JUNE 30,
2013 2012 2013 2012
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Net (loss) income attributable to Zoom Technologies, Inc. $ (2,729,304) $ 770,262 $ (4,191,809) $ 1,295,194
Net income (loss) attributable to noncontrolling interest $ 182,194 $ 193,717 $ (7,560) $ 371,231
Other comprehensive income:
Foreign currency translation gain - Zoom Technologies, Inc. 446,562 80,139 778,435 389,717
Foreign currency translation gain - noncontrolling interest 111,641 2,620 194,609 23,893
Comprehensive (loss) income Zoom Technologies, Inc. $ (2,282,742) $ 850,401 $ (3,413,374) $ 1,684,911
Comprehensive income noncontrolling interest $ 293,835 $ 196,337 $ 187,049 $ 395,124

ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED
JUNE 30,
2013 2012
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net (loss) income attributable to Zoom Technologies, Inc. $ (4,191,809) $ 1,295,194
Adjustments to reconcile net (loss) income attributable to Zoom Technologies Inc. to cash provided by (used in) operating activities:
(Loss) income attributable to noncontrolling interest of continuing operations 105,184 384,156
Loss attributable to noncontrolling interest from discontinued operations (112,744) (12,925)
Income (loss) attributable to Zoom Technologies, Inc. from discontinued operations 651,832 (2,690,566)
Depreciation and amortization 150,337 192,340
Non-cash equity-based compensation 645,665 1,271,559
Provision on accounts receivable 120,000 9,047
Loss on disposal 2,066,624 --
Loss on investment in joint venture 333,641 --
Fair value adjustment on warrants (7,336) (233,370)
Changes in operating assets and liabilities:
Accounts receivable (218,052) (1,236,873)
Inventories 597,144 (250,019)
Advances to suppliers (8,111) --
Prepaid expenses and other assets 1,056,213 7,908
Accounts payable (1,708,143) (3,758,700)
Related parties-net (369,652) 860,890
Accrued expenses and other current liabilities (494,775) 1,845,579
Net cash used in operating activities (1,383,982) (2,315,780)
Cash flows from investing activities:
Purchase of property and equipment and other long-term assets (123,256) (150,417)
Net cash used in investing activities (123,256) (150,417)
Cash flows from financing activities:
Proceeds from loans 2,500,000 2,043,055
Repayment of loans (702,299) --
Receipt from related parties 55,080 433,604
Payments to related parties (27,287) (155,177)
Net cash provided by financing activities 1,825,494 2,321,482
Effect of exchange rate changes on cash & equivalents (214) 139,022
Net increase (decrease) in cash and equivalents 318,042 (5,693)
Cash and equivalents, beginning of period 430,746 214,684
Cash and equivalents, end of period $ 748,788 $ 208,991
SUPPLEMENTARY DISCLOSURES:
Interest paid $ 1,441,267 $ 929,846
Income tax paid $ 109,517 $ 116,122

CONTACT: Investor Contact: Investor Relations Zoom Technologies, Inc. +86-10-5935-9576 ir@zoom.com

Source:Zoom Technologies, Inc.