SOURCE: Zoom Technologies

January 26, 2010 09:11 ET

Zoom Technologies to Acquire Mobile Phone Content Provider Leimone Culture

BEIJING--(Marketwire - January 26, 2010) - Zoom Technologies, Inc. (NASDAQ: ZOOM) today announced the Company intends to acquire a Chinese handset mobile video and value-added service company, Beijing Leimone Shengtong Culture Development Company ("Leimone Culture"). Through the acquisition, Zoom Technologies will add ancillary business to its core activity of mobile phone Electronic Manufacturing Services (EMS) for Original Equipment Manufacturer (OEM) customers and manufacturing of its own brand "Leimone" mobile phones designed for the Chinese market and for export.

Founded in 2004, Leimone Culture was granted licenses by the State Administration of Radio Film and Television ("SARFT") to provide web-based broadcast audiovisual programs and to produce radio and television content for mobile devices. Leimone Culture has been the sole provider of mobile video services to China Mobile since 2005 and China Unicom since 2007. Seventy percent of Leimone Culture is owned by Zoom's largest shareholder, Chairman and CEO, Mr. Lei Gu. The remainder of Leimone Culture is owned by Mr. Guoli Zhang, a top level actor and director in China, and Mr. Feng Wei, founder of the Yongjin Group which is a well known private equity fund in China.

With the advent of 3G in mid-2009, Leimone Culture has captured revenues in the form of advertisements loaded onto new phones, sharing profits of value-added applications with the mobile operators, production of mobile short films, and web-based ad sales. Leimone Culture's annual gross sales in 2009 were Rmb 2.24m (approx. US$327,000), or an increase of 17 times as compared to 2008. Based on results from the fourth quarter of 2009 and current activities, the Company believes that Leimone Culture gross sales for 2010 are expected to reach Rmb 25m (approx. US$3.6 million) with net income of Rmb 10m (approx. US$1.5m). The growth rate of these value-added activities could significantly enhance Zoom Technologies' revenue stream.

Mr. Leo Gu, Chairman and CEO of Zoom Technologies, commented, "This is an important development for Zoom Technologies. We are excited to enter China's 3G mobile video network through Leimone Culture. We expect this transaction to contribute to our business going forward as we continue to build momentum. We are very optimistic about the future of Zoom Technologies and our Leimone brand."

Leimone Culture recently received additional investment from IDG (International Data Group) of the U.S. and from entertainment mogul Mr. Peter Lam (Chinese Pinyin: Lin Jian Yue) of Media Asia Entertainment Group of Hong Kong to enhance future growth.

Pursuant to Section 1.3 of the Share Exchange Agreement dated January 28, 2009 between Zoom, Gold Lion Holding LLC and Mr. Lei Gu, which shareholders of Zoom approved on September 8, 2009, Zoom has the option of purchasing Mr. Gu's shares of a list of companies controlled by him, and among these companies is Leimone Culture of which Mr. Gu owns 70%. On December 1, 2009, Zoom's board of directors approved of the acquisition of 100% of Leimone Culture, in the event the minority shareholders of Leimone Culture decides to sell their minority interests; details of the transaction are to be finalized in the first half of 2010. The purchase price of Leimone Culture will be not less than the higher of 49 million Rmb or a 9 times multiple of trailing 4 quarters' net income after tax of Leimone Culture.

About Zoom Technologies

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 as well as its Own Brand Manufacturing (OBM) under the brand name of Leimone. The company's products are both exported and sold domestically.

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