Science & Technology
Science and Technology
Science and Technology
Wed, May 12, 2010
Zoom Technologies Reports First Quarter 2010, Results Exceed Revenue and Net Income Guidance
BEIJING--(Marketwire - May 12, 2010) - Zoom Technologies, Inc. (
Quarterly Highlights: -- Net revenue increased 77% year over year to $50.98 million -- Net income grew 113% over last year to $1.90 million -- Sold $4.63 million of proprietary LEIMONE brand phones Guidance: -- Second Quarter 2010 net revenue between $56 and $62 million -- Second Quarter 2010 net income between $1.8 and $2.2 million -- Increased full year 2010 net revenue guidance between $250 and $270 million -- Increased full year 2010 net income guidance between $11.5 and $12.5 million
Zoom Technologies, Inc. (
Mr. Lei Gu, Chairman and Chief Executive Officer of Zoom Technologies, commented, "Our first quarter results exceeded our expectations and reflect the success of our business plans in the dynamic mobile phone industry in China. We reported another quarter of tremendous year over year revenue growth and are encouraged to start 2010 with a sequentially higher net income then in the historically strongest fourth quarter. Our strong position in the momentous and growing Chinese cell phone manufacturing market and the success of our own brand LEIMONE phones led to this exciting financial performance which we expect to continue going forward."
For the first quarter of 2010, Zoom reported net revenue of $50.98 million, up 77% over $28.82 million for the first quarter 2009. Against the seasonally slower first quarter, sales for the 2010 first quarter came in stronger than expected. The year over year revenue growth was primarily due to an increase in orders from domestic EMS customers and an increase in sales of Zoom's own branded LEIMONE phones. Net income for the first quarter ended March 31, 2010 was $1.90 million compared to net income of $0.89 million for the first quarter of 2009, and even surpassing the $1.89 million in the fourth quarter of 2009, which is historically our strongest quarter.
Gross profit for the first quarter 2010 was $4.18 million, up 56% from $2.68 million for the first quarter 2009 and up 62% from the fourth quarter 2009. Gross margin for the first quarter of 2010 was 8.2%, up from 6.0% for the full year 2009. The increase in gross margins for the first quarter 2010 compared to the full year 2009 is partially due to sales of Zoom's own brand phones which carry higher margins. Net margin for the first quarter 2010 was 3.7%, an increase from 3.2% in the first quarter of 2009.
Mr. Gu continued, "We are also delighted to have recently executed a share exchange agreement with Nollec Wireless Company which we expect to close by the end of May 2010. Nollec Wireless is capable of designing in any and all mobile phone platforms, and has experience in global launches and delivery of phone models. The acquisition of Nollec Wireless will strengthen Zoom's position in the mobile phone business due to Nollec's strong R&D background in all aspects of mobile phone design such as chipsets, electronic hardware design, application software development, mechanical design and system design. We are extremely excited that Nollec can contribute to develop new and more technologically advanced LEIMONE mobile phones including the Android OS phone expected to be released in the third quarter 2010."
Looking ahead, Mr. Gu remarked, "We will continue to focus on our mobile manufacturing business in 2010, as the market opportunity in China is in high demand and we are ready to take advantage of the foreseeable growth in China's mobile market. For the second quarter 2010, we expect net revenue to be between $56 and $62 million and net income is expected to in the range of $1.8 and $2.2 million. For the full year 2010, we are upwardly revising our guidance and now expect net revenue to be between $250 and $270 million and net income between $11.5 million to $12.5 million. We previously guided full year 2010 net revenue to be between $240 and $260 million, and net income to be between $10.5 and $11.5 million."
Conference Call Details
A conference call to review the results will begin at 9:00 a.m. US Eastern Time on May 12 (9:00 p.m. Beijing Time). The dial-in numbers are + 1-877-407-0789 for US domestic callers and + 1-201-689-8562 for international callers. A telephonic replay of the call will be available through May 26, 2010. 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 350350.
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 as well as its own brand under the brand name of Leimone. The company's products are both exported and sold domestically. For more information about Zoom Technologies please visit Zoom's corporate website at [ http://www.zoomleimone.com ].
Forward-Looking Statements
Certain statements in this press release may constitute "forward looking statements" that involve risks and uncertainties. These include statements about our expectations, plans, objectives, assumptions or future events, including our expansion in other 3G enabled mobile phones and the acquisition of Leimone Culture, which may require shareholder approval that cannot be assured. You should not place undue reliance on these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found in our periodic reports filed with the Securities and Exchange Commission. We undertake no obligation to publicly release revisions to these forward-looking statements to reflect future events or circumstances or reflect the occurrence of unanticipated events.
ZOOM TECHNOLOGIES, INC. UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND OTHER COMPREHENSIVE INCOME Three Months Ended March 31 -------------------------- 2010 2009 ------------ ------------ Net revenues $ 50,979,269 $ 28,816,557 Cost of sales (46,801,015) (26,131,951) ------------ ------------ Gross profit 4,178,254 2,684,606 Operating expenses: Sales and marketing expenses (44,076) (1,048,323) General and administrative expenses (904,641) (787,482) Non-cash equity-based compensation charges - options (369,659) - ------------ ------------ (1,318,376) (1,835,805) ------------ ------------ Income from operations 2,859,878 848,801 Other income (expenses) Interest income 187 154,170 Other income - 399,158 Interest expense (257,626) (320,907) Exchange loss (155) (24,903) Other expenses (14,853) (31,560) ------------ ------------ Total other income (expenses) (272,447) 175,958 ------------ ------------ Income before income taxes and noncontrolling interest 2,587,431 1,024,759 Income tax expense (548,126) (178,208) ------------ ------------ Income before noncontrolling interest 2,039,305 846,551 Less: Loss (income) attributable to noncontrolling interest (143,603) 44,781 ------------ ------------ Net income attributable to Zoom Technologies Inc 1,895,702 891,332 Other comprehensive income 388 16,660 ------------ ------------ Comprehensive income $ 1,896,090 $ 907,992 ============ ============ Basic and diluted income/(loss) per common share: Basic $ 0.21 $ 0.45 Diluted $ 0.20 $ 0.45 Weighted average common shares outstanding: Basic 8,903,851 1,978,478 ============ ============ Diluted 9,257,582 1,978,478 ============ ============ The accompanying notes are an integral part of these consolidated financial statements. ZOOM TECHNOLOGIES, INC. CONSOLIDATED BALANCE SHEETS March 31, December 31, 2010 2009 ------------ ------------ ASSETS (Unaudited) Current assets Cash and cash equivalents $ 334,784 $ 1,472,300 Restricted cash 12,975,234 11,993,214 Accounts receivable, net 18,907,576 16,835,074 Other receivables and prepaid expenses 294,629 311,808 Advance to suppliers 40,554,453 27,471,601 Inventories, net 1,472,718 1,534,989 Due from related parties 6,808,514 12,221,778 Deferred tax assets, net 450,611 504,222 ------------ ------------ Total current assets 81,798,519 72,344,986 Property, plant and equipment, net 5,269,029 5,673,923 Construction in progress 48,196 32,849 Goodwill 103,057 103,057 ------------ ------------ TOTAL ASSETS $ 87,218,801 $ 78,154,815 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term loans $ 20,962,245 $ 16,000,702 Notes payable 25,950,469 23,986,427 Accounts payable 1,669,082 2,439,925 Advance from customers 2,248,447 51,243 Dividends payable 579,673 579,579 Taxes payable 2,046,570 1,603,557 Accrued expenses and other payables 154,270 127,484 Due to related parties 2,904,878 5,245,415 ------------ ------------ Total current liabilities 56,515,634 50,034,332 ------------ ------------ TOTAL LIABILITIES 56,515,634 50,034,332 ------------ ------------ STOCKHOLDERS' EQUITY Common stock: authorized 25,000,000 shares, par value $0.01 Issued 8,982,314 shares and outstanding 8,980,634 shares; and Issued 8,780,988 shares and outstanding 8,779,308 shares at March 31, 2010 & December 31, 2009 respectively 89,806 87,793 Shares to be issued 4,900,526 592 Subscription receivable - (378) Deferred expenses (508,500) - Additional paid-in capital 14,238,719 14,309,538 Treasury shares: 1,680 shares at cost (7,322) (7,322) Statutory surplus reserve 665,064 633,378 Accumulated other comprehensive income 211,161 210,773 Retained earnings 8,118,495 6,254,479 ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 27,707,949 21,488,853 ------------ ------------ Noncontrolling interest 2,995,218 6,631,630 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 87,218,801 $ 78,154,815 ============ ============ The accompanying notes are an integral part of these consolidated financial statements. ZOOM TECHNOLOGIES, INC. UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31 -------------------------- 2010 2009 ------------ ------------ Cash flows from operating activities: Income including noncontrolling interest $ 2,039,305 $ 846,551 Adjustments to reconcile net income to cash used in operating activities: Depreciation and amortization 405,019 394,928 Non-cash equity-based compensation charges 369,659 - Provision for inventory obsolescence - 308,350 Provision for doubtful receivables - 39,882 Investment income - (3,245) Deferred tax assets 53,692 - Changes in operating assets and liabilities: Accounts receivable (1,636,001) 6,950,079 Inventories 62,518 77,581 Advances to suppliers 117,715 (11,541,642) Prepaid expenses and other assets 16,724 446,697 Accounts payable (771,267) (477,465) Advance from customers 2,197,215 5,238,238 Related parties-net (4,472,721) (3,627,940) Accrued expenses and other current liabilities 470,364 (107,897) ------------ ------------ Net cash used in operating activities (1,147,778) (1,455,883) ------------ ------------ Cash flows from investing activities: Restricted cash (980,100) (3,213,283) Purchase of property and equipment and other long-term assets (14,843) (23,333) ------------ ------------ Net cash used in investing activities (994,943) (3,236,616) ------------ ------------ Cash flows from financing activities: Issuance of shares for cash 170,490 - Proceeds from short-term loans 18,124,528 4,819,925 Advance to related parties (3,637,028) (7,351,115) Repayment on borrowing from related parties (10,074,820) - Proceeds from notes payable 1,960,199 6,426,566 Collection on advance to related parties 272 7,954,414 Receipt from related parties 7,629,484 108,119 Repayments on short-term loans (13,165,517) (4,819,925) ------------ ------------ Net cash provided by financing activities 1,007,608 7,137,984 ------------ ------------ Effect of exchange rate changes on cash & cash equivalents (2,403) 14,840 ------------ ------------ Net increase (decrease) in cash and cash equivalents (1,137,516) 2,460,325 Cash and cash equivalents, beginning balance 1,472,300 812,769 ------------ ------------ Cash and cash equivalents, ending balance $ 334,784 $ 3,273,094 ============ ============ SUPPLEMENTARY DISCLOSURES: Interest paid $ 292,422 $ 297,134 ============ ============ Income tax paid $ 5,945 $ - ============ ============ The accompanying notes are an integral part of these consolidated financial statements.
