Zoom Technologies Reports Second Quarter 2013 Results

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

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