- Published: 17 November 2009
- Written by Editor
Zoom Technologies Reports Third Quarter 2009 Financial Results
Zoom Technologies, Inc. (NASDAQ:ZOOM)- Highlights:
-- Quarterly revenue increased 204% year over year to $55.29 million
-- Quarterly net income increased 138% year over year to $1.73 million
-- Full year 2009 revenue guidance increased to between $185 and $195 million
-- Full year 2010 net income guidance in the range of $10.75 to $11.25 million on adjusted basis
-- Continued listing on Nasdaq, under ticker "ZOOM" following share exchange with Gold Lion Holdings Ltd.
-- Entered into an agreement with China Telecom to distribute LEIMONE mobile phones
Zoom Technologies, Inc. (NASDAQ:ZOOM ) a leading China based manufacturer of mobile phones and other mobile electronic products, reported financial results for the third quarter ended September 30, 2009.
Mr. Lei Gu, Chairman and Chief Executive Officer of Zoom Technologies, commented, "We are delighted to report another quarter of tremendous year over year growth and our first financial results as a public company. The third quarter marks our listing on the Nasdaq following the share exchange with Gold Lion Holding Ltd. Our ability to accomplish this transaction and subsequent $10 million private placement during such a challenging macroeconomic environment reflects our strong growth prospects for 2010 and beyond. We are extremely pleased, as a newly traded public company, to attract quality institutional investors and execute this transaction."
For the third quarter of 2009, Zoom reported net revenue of $55.29 million, up 204% over $18.16 million for the third quarter 2008, and up 4.06% sequentially from $53.13 million in the second quarter 2009. Net income for the third quarter of 2009 was $1.73 million as compared to net income of $0.73 million for the third quarter of 2008. The robust revenue growth was driven by strong demand from our EMS customers and supported by healthy macroeconomic conditions in China.
Gross profit for the third quarter 2009 rose 55.0% to $3.03 million, compared to $1.95 million for the third quarter of 2008. Gross profit as a percentage of revenue for the third quarter of 2009 was 5.5%, compared to 10.8% for the same period of the prior year. The compression in gross margins is due to the competitive pricing necessary to capture a significant increase in business activities.
For the first nine months of 2009, Zoom reported net revenue of $137.24 million, up 234% over $41.14 million for the first nine months of 2008. Net income for the nine months ended September 30, 2009 was $4.35 million compared to net income of $1.73 million for the first nine months of 2008.
Mr. Gu continued, "Also during the third quarter, we were extremely excited to establish a distribution agreement with China Telecom, one of the top mobile phone operators in China. The distribution of our LEIMONE mobile phones demonstrates our capabilities in product development and the strength of the LEIMONE brand name in China. We believe our alliance with China Telecom will continue to facilitate the expansion of our high-quality products in the China market. We believe we are now poised to grow with the rapidly expanding China mobile phone market, pursue additional projects, and produce mobile products for top tier Chinese mobile phone companies. Additionally, the diversity of our product offering combined with our sound execution and delivery in challenging market conditions further improves our market position in China. Thus far, Zoom Technologies has delivered its LEIMONE phones to the Shanghai, Tianjin, Liaoning, Gangsu, Yunnan and Jiangxi Provinces."
The company upwardly revised its full year 2009 revenue guidance to between $185 million and $195 million and net income to between $6.0 million and $6.2 million, as compared to previous guidance of $145 million and $155 million in revenue and $5.9 million and $6.1 million in net income.
Looking ahead, Mr. Gu commented, "The funds raised from the recently completed private placement allows us to add new manufacturing lines for 3G mobile phones, expand our capacity and continue to fuel our growth in the China handset market. With this increased production, we now expect full year 2010 net income to be in the range of $10.75 million to $11.25 million on an adjusted basis, which is prior to deductions from non-cash equity based compensation charges."
Conference Call Details
The dial-in numbers are +1-877-407-9039 for US domestic callers and +1-201-689-8470 for international callers. After the live webcast, the replay will remain available on Zoom's website through December 16, 2009. In addition, a telephonic replay of the call will be available through November 30, 2009. The replay dial-in numbers are +1-877-660-6853 for US domestic callers and +1-201-612-7415 for international callers. The account number to access the replay is 3055 and the conference ID number is 337711.
About Zoom Technologies, Inc.
Zoom Technologies is a holding company with subsidiaries that engage in the manufacturing, research and development, and sale of electronic and telecommunication products for 3rd generation mobile phones, wireless communication circuitry, and related software products. Zoom Technologies' subsidiary, Jiangsu Leimone, owns a majority stake of TCB Digital, which offers highly customized and high quality Electronic Manufacturing Service (EMS) for Original Equipment Manufacturer (OEM) customers and also designs and manufactures its own brand of mobile phones under the Leimone brand.
Forward-Looking Statements
This release contains forward-looking information relating to Zoom's plans, expectations, projections and intentions. Actual results may be materially different from expectations and projections as a result of known and unknown risks, many of which may be beyond our control, including the risks set forth in Zoom's filings with the Securities and Exchange Commission. Zoom cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Zoom expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in Zoom's expectations and projections or any change in events, conditions or circumstance on which any such statement is based.
ZOOM TECHNOLOGIES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE LOSS
Three months ended Nine months ended
September 30 September 30
---------------------------- ----------------------------
2009 2008 2009 2008
------------- ------------- ------------- -------------
Net revenues $ 55,290,880 $ 18,163,651 $ 137,240,898 $ 41,144,293
Cost of sales (52,262,849) (16,210,431) (128,412,782) (35,786,102)
------------- ------------- ------------- -------------
Gross profit 3,028,031 1,953,220 8,828,116 5,358,191
Operating
expenses:
Sales and
marketing
expenses (36,431) (30,375) (1,320,422) (234,584)
General and
administrative
expenses (255,122) (214,637) (1,183,095) (1,287,855)
Research and
development
expenses - - - (866,681)
------------- ------------- ------------- -------------
(291,553) (245,012) (2,503,517) (2,389,120)
------------- ------------- ------------- -------------
Income from
operations 2,736,478 1,708,208 6,324,599 2,969,071
Other income
(expenses)
Equity in
earnings in
investee - 33 - 3,174
Interest
income 113,219 34,418 278,765 140,184
Other income 12,340 2,892 437,658 2,892
Interest
expense (380,096) (433,335) (1,032,605) (1,209,282)
Exchange loss (1,126) 65,832 (30,317) (106,264)
Other
expenses (63,688) (9,554) (132,461) (23,061)
------------- ------------- ------------- -------------
(319,351) (339,714) (478,960) (1,192,357)
------------- ------------- ------------- -------------
Income before
income taxes
and non-
controlling
interests 2,417,127 1,368,494 5,845,639 1,776,714
Income tax
expense (653,741) (268,526) (1,252,323) (345,403)
------------- ------------- ------------- -------------
Income before
noncontrolling
interests and
discontinued
operations 1,763,386 1,099,968 4,593,316 1,431,311
Loss from
discontinued
operation - (2,559) - (245,363)
------------- ------------- ------------- -------------
Income before
noncontrolling
interests 1,763,386 1,097,409 4,593,316 1,185,948
Less: Net
income
attributable
to
noncontrolling
interests (29,330) (367,536) (239,163) (472,267)
------------- ------------- ------------- -------------
Net income 1,734,056 729,873 4,354,153 713,681
Other
comprehensive
income/(loss) 10,817 (381,315) 26,524 607,899
------------- ------------- ------------- -------------
Comprehensive
income $ 1,744,873 $ 348,558 $ 4,380,677 $ 1,321,580
============= ============= ============= =============
Basic and
diluted
income/(loss)
per commom
share:
Basic $ 0.39 $ 0.17 $ 1.02 $ 0.17
Diluted 0.39 0.17 1.02 0.17
Weighted
average common
shares
outstanding:
Basic 4,397,763 4,225,219 4,283,366 4,225,219
============= ============= ============= =============
Diluted 4,397,763 4,225,219 4,283,366 4,225,219
============= ============= ============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
ZOOM TECHNOLOGIES, INC.
CONSOLIDATED BALANCE SHEETS
September 30, December 31,
2009 2008
------------- -------------
ASSETS (Unaudited)
Current assets
Cash and cash equivalents $ 2,472,305 $ 812,769
Restricted cash 11,992,512 8,753,757
Notes receivable 14,625 -
Accounts receivable, net 18,283,703 12,366,814
Other receivables, net of allowance for
doubtful accounts 189,414 1,119,881
Advance to suppliers 44,632,065 24,275,313
Inventories, net 1,987,107 3,742,046
Due from related parties 10,406,759 6,069,842
------------- -------------
Total current assets 89,978,490 57,140,422
Property, plant and equipment, net 6,058,026 7,054,892
Long-term investments 65,813 65,653
Due from related parties-long term - 247,294
Deferred tax assets 218,133 600,956
Goodwill 103,057 103,057
------------- -------------
TOTAL ASSETS $ 96,423,519 $ 65,212,274
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Short-term loans $ 22,288,522 $ 18,893,525
Notes payable 23,985,024 17,507,514
Accounts payable 2,792,249 3,580,720
Advance from customers 15,331,485 3,785,462
Dividends payable 579,545 578,142
Taxes payable 1,516,987 775,315
Accrued expenses and other payables 2,591,091 2,832,599
Due to related parties 10,916,446 5,161,169
------------- -------------
Total current liabilities 80,001,349 53,114,446
------------- -------------
Long-term loans - 1,167,168
TOTAL LIABILITIES 80,001,349 54,281,614
------------- -------------
STOCKHOLDERS' EQUITY
Common Stock: Authorized 25,000,000
shares, par value $0.01
Issued 6,209,477 shares and outstanding
6,207,797 shares at September 30,
2009; Issued 4,226,899 and 4,225,219
outstanding at December 31, 2008 62,078 42,252
Subscription receivable (8,240) -
Additional paid-in capital 4,374,809 3,518,363
Treasury shares, 1,680 shares at cost (7,322) (7,322)
Statutory surplus reserve 639,728 569,193
Accumulated other comprehensive income 270,149 243,625
Retained earnings 4,359,135 75,517
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 9,690,337 4,441,628
------------- -------------
Noncontrolling interests 6,731,833 6,489,032
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 96,423,519 $ 65,212,274
============= =============
The accompanying notes are an integral part of these consolidated
financial statements.
ZOOM TECHNOLOGIES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months ended
September 30 September 30
2009 2008
------------ ------------
Cash flows from operating activities:
Net income including noncontrolling interests $ 4,593,316 $ 1,185,948
Loss from discontinued operations
Adjustments to reconcile net income to cash
used by operating activities:
Depreciation and amortization 1,192,925 854,935
Provision for inventory obsolescence (247,296) 102,259
Provision for doubtful receivables 17,067 (42,969)
Investment income - (3,174)
Changes in operating assets and liabilities:
Deferred tax assets 384,006 (54,097)
Accounts receivable (5,909,296) (10,086)
Inventories 2,015,176 (1,506,973)
Advances to suppliers (20,283,253) (17,715,613)
Prepaid expenses and other assets 932,518 1,372,871
Accounts payable (860,014) 6,865,749
Advance from customers 11,528,554 3,948,777
Related parties-net (790,359) (2,001,545)
Accrued expenses and other current
liabilities 492,578 (950,658)
------------ ------------
Net cash used in operating activities (6,934,078) (7,954,576)
------------ ------------
Cash flows from investing activities:
Restricted cash (3,215,194) (4,618,186)
Cash paid for long-term investments - (9,019,803)
Purchase of property and equipment and other
long-term assets (115,765) (878,172)
Cash proceeds from notes receivable (14,615) -
------------ ------------
Net cash used in investing activities (3,345,574) (14,516,161)
------------ ------------
Cash flows from financing activities:
Proceeds from short-term loans 18,414,296 17,074,209
Advance to related parties (9,846,445) (4,628,900)
Repayment on borrowing from related parties (103,219) (14,672,455)
Proceeds from notes payable 6,430,389 8,904,599
Collection on advance to related parties 11,671,204 3,125,690
Receipt from related parties 1,615,775 28,182,961
Repayments on short-term loans (15,067,570) (17,821,474)
Repayments on long-term loan (1,169,162) -
------------ ------------
Net cash provided by financing activities 11,945,268 20,164,630
------------ ------------
Effect of exchange rate changes on cash & cash
equivalents (6,080) 355,121
------------ ------------
Net increase (decrease) in cash and cash
equivalents 1,659,536 (1,950,986)
Cash and cash equivalents, beginning balance 812,769 3,980,584
------------ ------------
Cash and cash equivalents, ending balance $ 2,472,305 $ 2,029,598
============ ============
SUPPLEMENTARY DISCLOSURE:
Interest paid $ 1,032,605 $ 1,199,377
============ ============
Income tax paid $ - $ 828,185
============ ============
The accompanying notes are an integral part of these consolidated
financial statements.
Contact:
Investor Contacts:
Anthony Chan
Chief Financial Officer
Zoom Technologies, Inc.
+1 510-396-5831
Email Contact
Joseph Villalta
Email Contact
Ashleigh Barreto
Email Contact
The Ruth Group
+1 646-536-7003/7028
Media Contact:
Jason Rando
The Ruth Group
+1-646-536-7025
Email Contact
