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.
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ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS |
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| 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 |
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ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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| 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 |
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ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) |
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| 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 |
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ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS |
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| 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 | $ -- |