SOURCE: Zoom Telephonics, Inc.

Zoom Telephonics, Inc.

March 03, 2016 16:00 ET

Zoom Telephonics Reports Results for the Fourth Quarter of 2015

Groundwork Laid for Launch of Motorola Licensed Product Line in Q1 2016

BOSTON, MA--(Marketwired - Mar 3, 2016) -  Zoom Telephonics, Inc. ("Zoom") (OTCQB: ZMTP), a leading producer of cable modems and other communication products, today reported financial results for the fourth quarter and year ended December 31, 2015.

The Company reported net sales of $1.8 million for the fourth quarter ended December 31, 2015 ("Q4 2015"), compared to $2.7 million for the fourth quarter ended December 31, 2014 ("Q4 2014"). Zoom reported a net comprehensive loss of $724 thousand or $0.05 per share for Q4 2015 compared to a net comprehensive loss of $118 thousand for Q4 2014.

Gross profit was 27.8% of net sales in Q4 2015, compared to 30.8% of net sales in Q4 2014. In Q4 2015 gross profit was lower due to price protection allowances for customers' inventory, as Zoom lowered prices for some of its Zoom brand cable modems in response to competitors' price reductions for similar modems. Gross profit was also impacted by significant costs related to air shipments as Zoom flew its first Motorola brand products into its distribution facility for North America. 

Operating expenses were $1.2 million or 67.9% of net sales in Q4 2015, compared to $0.9 million or 33.9% of net sales in Q4 2014. Research and Development expenses increased $156 thousand to $424 thousand from Q4 2014 to Q4 2015 due primarily to increased testing and certification expenses for new products as well as increased personnel expenses. General and Administrative expenses increased $155 thousand to $419 thousand from Q4 2014 to Q4 2015 due primarily to increases in personnel expenses and in professional fees and expenses for opposing Charter's and Cablevision's anti-consumer-choice cable modem policies. Selling expenses decreased $25 thousand to $360 thousand from Q4 2014 to Q4 2015 due primarily to reductions in commissions and freight expenses due to decreased sales volume.

Zoom's net sales of $10.8 million for the fiscal year ended December 31, 2015 ("FY 2015") were down from $11.9 million for the fiscal year ended December 31, 2014 ("FY 2014"). Zoom reported a net loss of $833 thousand or $0.09 per share for FY 2015 compared to a net profit of $122 thousand or $0.02 per share for FY 2014. Gross profit was $3.4 million for FY 2015, down $89 thousand from $3.5 million for FY 2014. Gross margin improved to 31.5% in FY 2015 from 29.3% in FY 2014 as a result of reduced product costs for our core cable modem products. 

Operating expenses were $4.1 million or 38.4% of net sales in FY 2015, up from $3.6 million or 30.5% of net sales in FY 2014. Research and development expenses increased $209 thousand to $1.3 million from FY 2014 to FY 2015, primarily due to increased product development and personnel expenses. General and administrative expenses increased $177 thousand to $1.2 million from FY 2014 to FY 2015, primarily due to increased expenses for personnel and for Charter-related professional fees. Selling expenses increased $125 thousand to $1.6 million from FY 2014 to FY 2015 due primarily to increased advertising expenses.

Zoom's cash balance on December 31, 2015 was $1.85 million compared to $138 thousand on December 31, 2014. The Company raised $3.65 million in Q3 2015 from a $3.42 million private placement in September 2015 and a $229 thousand rights offering in July 2015. Zoom's cash balance was also augmented by a $697 thousand increase in accounts payable and a $732 thousand decrease in net accounts receivable. The net increase in cash was offset by a pay-down in the outstanding bank debt of $840 thousand, a $1.1 million increase in net inventory, and a year 2015 net loss of $833 thousand. On December 31, 2015 Zoom had no bank debt, an unused line of credit of $1.25 million, working capital of $4.4 million, and a current ratio of 3.6.

"In Q4 2015 we realized significant accomplishments in Motorola brand product development, production, and placement, but disappointing sales of Zoom brand products," said Frank Manning, Zoom's President and CEO. 

Mr. Manning continued, "Our legacy Zoom products saw decreased sales in Q4 2015 as Arris dropped the price of 8x4 cable modems, the highest volume cable modem category. Our Zoom brand product line is important, but over time we anticipate the product mix to shift as our new Motorola product line grows. Unfortunately Arris Motorola products remain in the sales channel creating some confusion, but we expect that the availability of these Arris Motorola products will ramp down to near zero by June 2016."

Mr. Manning concluded, "We now have three new Motorola brand products in the market at key retailers. Our cable modem focus in the coming months is on selectively and significantly expanding our Motorola brand product placements and revenues for our already shipping products and for exciting new cable modem/router products. We are also aggressively developing a line of AT&T and Verizon certified cellular products including cellular modems, routers, and multi-sensor products. These things all take time and careful execution, but generally we're pleased with our progress. We look forward to the time when Zoom has the only Motorola brand cable modems in the sales channel, since that should have a significant positive impact on our Company."

Conference Call

Zoom has scheduled a conference call for Friday, March 4th at 9:00 a.m. Eastern Time. You may access the conference call by dialing (877) 706-2128 if you are in the USA, and international callers may dial (706) 643-5255. The conference ID is 59212197. Shortly after the conference call, a recording of the call will be available on Zoom's website at www.zoomtel.com/investor.

About Zoom Telephonics
Founded in 1977 in Boston, Zoom Telephonics, Inc. designs, produces, markets, and supports cable modems and other communication products. For more information about Zoom and its products, please see www.zoomtel.com.

MOTOROLA and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license.

Forward Looking Statements
This release contains forward-looking information relating to Zoom Telephonics' plans, expectations, and intentions. Actual results may be materially different from expectations as a result of known and unknown risks, including: risks relating to introduction and sale of our Motorola brand products; the potential need for additional funding which Zoom may be unable to obtain; declining demand for certain of Zoom's products; delays, unanticipated costs, interruptions or other uncertainties associated with Zoom's production and shipping; Zoom's reliance on several key outsourcing partners; uncertainty of key customers' plans and orders; risks relating to product certifications; Zoom's dependence on key employees; uncertainty of new product development, including budget overruns, project delays, and the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated; costs and senior management distractions due to patent-related matters; and other 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 or any change in events, conditions or circumstance on which any such statement is based.

   
   
ZOOM TELEPHONICS, INC.  
Condensed Balance Sheets  
In thousands  
(Unaudited)  
    12/31/15     12/31/14  
                 
ASSETS                
                 
Current assets:                
                 
  Cash   $ 1,847     $ 138  
  Accounts receivable, net     1,079       1,811  
  Inventories, net     2,785       1,725  
  Prepaid expenses and other     381       270  
                   
    Total current assets     6,092       3,944  
                 
Property and equipment, net     205       67  
                 
Other assets     573       --  
                 
    Total assets   $ 6,870     $ 4,011  
                 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Current liabilities:                
  Bank debt   $ --     $ 840  
  Accounts payable     1,423       727  
  Accrued expenses     293       285  
                   
    Total current liabilities     1,716       1,852  
                     
    Total liabilities     1,716       1,852  
                 
Stockholders' equity:                
                 
  Common stock and additional paid-in capital     38,100       34,272  
                   
  Retained earnings (accumulated deficit)     (32,946 )     (32,113 )
                   
    Total stockholders' equity     5,154       2,159  
                     
    Total liabilities and stockholders' equity   $ 6,870     $ 4,011  
                 
                 
                 
ZOOM TELEPHONICS, INC.  
Condensed Statements of Operations  
In thousands, except for per share data  
(Unaudited)  
   
    Three Months Ended     Twelve Months Ended  
    12/31/15     12/31/14     12/31/15     12/31/14  
                                 
Net sales   $ 1,771     $ 2,710     $ 10,790     $ 11,901  
Cost of goods sold     1,278       1,875       7,388       8,410  
                                 
  Gross profit     493       835       3,402       3,491  
                                 
Operating expenses:                                
  Selling     360       385       1,571       1,446  
  General and administrative     419       264       1,229       1,052  
  Research and development     424       269       1,342       1,133  
    Total operating expenses     1,203       918       4,142       3,631  
                                   
  Operating profit (loss)     (710 )     (83 )     (740 )     (140 )
                                 
Other income (expense), net     (12 )     328       (86 )     269  
                                 
  Income (loss) before income taxes     (722 )     245       (826 )     129  
                                 
Income tax expense     2       1       7       7  
                                 
  Net income (loss)   $ (724 )   $ 244     $ (833 )   $ 122  
                                 
Other comprehensive income (loss):                                
  Foreign currency translation adjustments     --       (1 )     --       (3 )
  Foreign currency translation recognition upon reclassification from accumulated other comprehensive income     --       (361 )     --       (361 )
                                   
  Net comprehensive income (loss)   $ (724 )   $ (118 )   $ (833 )   $ (242 )
                                 
Earnings (loss) per share:                                
  Basic Earnings (loss) per share   $ (0.05 )   $ 0.03     $ (0.09 )   $ 0.02  
  Diluted Earnings (loss) per share   $ (0.05 )   $ 0.03     $ (0.09 )   $ 0.02  
                                 
                                 
Weighted average number of shares outstanding:                                
  Basic     13,340       7,983       9,471       7,983  
  Diluted     13,340       7,983       9,471       7,983  

Contact Information

  • Company Contact:

    Zoom Telephonics
    Investor Relations
    207 South St
    Boston, MA 02111
    617-753-0897
    investor@zoomtel.com

    Investor Relations Contact:

    John Nesbett/Jennifer Belodeau
    Institutional Marketing Services (IMS)
    Phone: 203-972-9200
    jnesbett@institutionalms.com