SOURCE: Zoom Technologies

November 16, 2009 16:00 ET

Zoom Technologies Reports Third Quarter 2009 Financial Results

BEIJING--(Marketwire - November 16, 2009) - 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 Information

  • 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