SOURCE: Zoom Telephonics, Inc.

Zoom Telephonics, Inc.

July 28, 2016 16:15 ET

Zoom® Telephonics Reports Results for the Second Quarter of 2016

BOSTON, MA--(Marketwired - Jul 28, 2016) - Zoom Telephonics, Inc. ("Zoom") (OTCQB: ZMTP), a leading producer of cable modems and other communications products, today reported financial results for the second quarter ended June 30, 2016 ("Q2 2016").

Zoom reported net sales of $3.98 million for Q2 2016, up 53.4% from $2.59 million for the quarter ended June 30, 2015 ("Q2 2015") and up 46.1% from $2.72 million for the quarter ended March 31, 2016 ("Q1 2016"). The sequential rise in sales from Q1 2016 to Q2 2016 was primarily due to increased sales for three Motorola brand products introduced by Zoom's MTRLC subsidiary in Q1 2016. 

Gross profit was 30.2% of net sales in Q2 2016, down from 32.9% in Q2 2015 and 30.7% in Q1 2016. The primary reason for the decline was a drop in some retail cable modem prices as well as the higher cost of goods associated with Motorola brand products.

Operating expenses were $2.17 million or 54.5% of net sales in Q2 2016 compared to $0.93 million or 35.9% of net sales in Q2 2015 and $1.56 million or 57.4% of net sales in Q1 2016. Q2 2016 operating expenses increased over Q2 2015 operating expenses primarily due to Motorola brand royalty payments which began in 2016, increases in personnel related to Motorola brand cable modems, increases in marketing and advertising costs to support Motorola brand products, and increased research and development expenses for certification of new Motorola products. Q2 2016 operating expenses increased over Q1 2016 operating expenses primarily due to increased Motorola brand royalty payments, increased advertising and promotion costs for Motorola brand products, and increased FCC and safety compliance costs for Zoom's new Motorola cable modem products.

Zoom reported a net loss of $972 thousand or $0.07 per share for Q2 2016, compared to a net loss of $106 thousand or $0.01 per share for Q2 2015 and a net loss of $728 thousand or $0.05 per share for Q1 2016. 

Zoom's cash balance on June 30, 2016 was $96 thousand. Zoom had $606 thousand outstanding in bank debt on a line of credit that was recently increased to $2.5 million. Zoom had working capital of $3.0 million and a current ratio of 1.8 on June 30, 2016.

"In Q2 2016 we continued a significant ramp in sales due to our Motorola brand cable modems," said Frank Manning, Zoom's President and CEO. "We are now shipping four major Motorola brand cable modem products, and these are being well received in the market. By the end of July 2016 we will have significantly more shelf space than we did at the end of June 2016. We will continue to push for higher revenues by increasing shelf space of our existing products, new product introductions, and significant advertising." 

Zoom has scheduled a conference call for Thursday, July 28 at 5:00 p.m. Eastern Time. You may access the conference call by dialing (866) 706-2128 if you are in the USA, and international callers may dial (706) 643-5255. The conference ID is 56338946. 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 modems and other communication products under the Motorola, Zoom, and Hayes® brands. 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's plans, expectations, and intentions. Actual results may be materially different from expectations as a result of known and unknown risks, including: 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 Consolidated Balance Sheets
 In thousands
 (Unaudited)
 
    6/30/16     12/31/15  
             
ASSETS            
             
Current assets:            
             
  Cash   $ 96     $ 1,847  
  Accounts receivable, net     2,003       1,079  
  Inventories, net     3,791       2,785  
  Prepaid expenses and other     963       381  
                   
    Total current assets     6,853       6,092  
                 
Property and equipment, net     185       205  
                 
Other assets     570       573  
                 
    Total assets   $ 7,608     $ 6,870  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
                 
Current liabilities:                
  Bank debt   $ 606     $ --  
  Accounts payable     2,391       1,423  
  Accrued expenses     902       293  
                   
    Total current liabilities     3,899       1,716  
                     
    Total liabilities     3,899       1,716  
                 
Stockholders' equity:                
                 
  Common stock and additional paid-in capital     38,356       38,100  
                   
  Retained earnings (accumulated deficit)     (34,647 )     (32,946 )
                   
    Total stockholders' equity     3,709       5,154  
                     
    Total liabilities and stockholders' equity   $ 7,608     $ 6,870  
 
 
ZOOM TELEPHONICS, INC.
Condensed Consolidated Statements of Operations
In thousands, except for per share data
(Unaudited)
 
    Three Months Ended     Six Months Ended  
    6/30/16     6/30/15     6/30/16     6/30/15  
                         
Net sales   $ 3,977     $ 2,592     $ 6,698     $ 5,652  
Cost of goods sold     2,776       1,740       4,663       3,843  
                                 
  Gross profit     1,201       852       2,035       1,809  
                                 
Operating expenses:                                
  Selling     1,300       384       2,046       793  
  General and administrative     413       254       882       503  
  Research and development     455       293       802       564  
    Total operating expenses     2,168       931       3,730       1,860  
                                   
  Operating profit (loss)     (967 )     (79 )     (1,695 )     (51 )
                                 
Other income (expense), net     (4 )     (23 )     (4 )     (46 )
                                 
  Income (loss) before income taxes     (971 )     (102 )     (1,699 )     (97 )
                                 
Income tax expense (benefit)     1       4       1       4  
                                 
  Net income (loss)   $ (972 )   $ (106 )   $ (1,700 )   $ (101 )
                                 
Earnings (loss) per share:                                
  Basic Earnings (loss) per share   $ (0.07 )   $ (0.01 )   $ (0.12 )   $ (0.01 )
  Diluted Earnings (loss) per share   $ (0.07 )   $ (0.01 )   $ (0.12 )   $ (0.01 )
                                 
                                 
Weighted average number of shares outstanding:                                
  Basic     13,722       7,997       13,661       7,991  
  Diluted     13,722       7,997       13,661       7,991  
                                 

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