Zoom Technologies Inc. (ZOOM, Financial) filed Quarterly Report for the period ended 2010-09-30.
Zoom Technologies Inc. has a market cap of $49.84 million; its shares were traded at around $3.84 with a P/E ratio of 4.04 and P/S ratio of 0.26.
On April 29, 2010, the Company executed a share exchange agreement (the "Nollec Agreement") to acquire 100% of the shares of Nollec Wireless Company Ltd., ("Nollec Wireless") a mobile phone and wireless communication design company located in Beijing, China. The consideration paid for Nollec Wireless was $10.96 million in cash and stock. The consideration agreed upon by the Company and the owners of Nollec Wireless is based on the appraised fair value. Pursuant to the Nollec Agreement, $1.37 million of the total consideration was to be paid in cash by the Company, of which $500,000 has been paid and $870,000 will be paid over a three-year period, and the balance of $9.59 million was paid by issuance of 1,342,599 unregistered shares of the Company's common stock ("Payment Shares"). The value of the Payment Shares was based on the weighted average closing price of Zoom shares as traded on Nasdaq for the 10 consecutive trading days prior and leading up to the day immediately before the date of the Agreement. The acquisition transaction closed on May 31, 2010.
Our revenues were $72,155,779 for the quarter ended September 30, 2010, an increase of 30.5% or $16,864,899 as compared to $55,290,880 in the corresponding quarter in 2009. The increase of revenues in the third quarter of 2010 as compared to the corresponding quarter in 2009 was mainly due to the sales of our own "Leimone" brand mobile phones. In the third quarter of 2010, we sold 232,167 units of our Leimone brand phones of which 62,468 were 3G handsets. Revenues from sales of our own branded products in the third quarter of 2010 were $14.0 million. For the nine-month period ended September 30, 2010, total units of Leimone brand phones sold were 359,950 of which 78,922 were 3G units, bringing in gross sales of $23.2 million. In the first nine months of 2009, we sold 39,682 units of our own brand phone for gross sales of $2.9 million.
Net cash provided by operating activities for the nine months ended September 30, 2010 was $15,617,350 compared to net cash used in operating activities for the 2009 period of $6,934,078. In the first nine months of 2010, operational use of funds included an increase in accounts receivable of $18,657,090, inventory of $190,735, prepaid expenses and other assets of $331,493 and a decrease in accounts payable of $64,483; while offset by a significant reduction in advances to suppliers of $20,227,972 and related parties of $1,787,828, and an increase in accrued expenses and other current liabilities of $1,816,417, while advance from customers was also increased by $271,692.
Net cash used for investing activities was $6,196,073 in the first nine months of 2010 which was primarily cash used as deposits in the amount of $9,941,004 for construction of the Company's new manufacturing facilities and investment of $500,000 for acquisition of a subsidiary; while cash provided by investing activities included a reduction in restricted cash of $2,159,503, the acquisition of a subsidiary brought in $1,491,630, and proceeds from notes receivable contributed $593,798.
40 Net cash used in financing activities was $8,905,947 in the first nine months of 2010 which included repayment on borrowing from related parties of $23,380,225, repayment on notes payable of $4,489,120, repayment on short- term loans of $25,130,273, and advance to related parties of 6,182,774. Financing activities also provided $1,044,833 from issuance of shares for cash, $28,064,338 from short-term loan proceeds, and $21,080,990 from related parties' receipts.
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Zoom Technologies Inc. has a market cap of $49.84 million; its shares were traded at around $3.84 with a P/E ratio of 4.04 and P/S ratio of 0.26.
Highlight of Business Operations:
On November 30, 2007, Gold Lion and GD Industrial Company signed a share transfer agreement pursuant to which GD Industrial Company transferred 60% equity of Nantong Zong Yi Kechuang Digital Camera Technology Co., Ltd. for $10,273 to Gold Lion. In July 2008, the company's name was changed to Jiangsu Leimone Electronic Co., Ltd., or Jiangsu Leimone. In January 2008, Gold Lion invested $5,074,226 (HK$38,800,000) in Jiangsu Leimone to increase Gold Lion's ownership in Jiangsu Leimone to 80%. Pursuant to the share transfer agreement by and between Gold Lion and Nantong Zong Yi Investment Co., Ltd. dated November 26, 2008, Gold Lion acquired the remaining 20% equity interest of Jiangsu Leimone from Nantong Zong Yi Investment Co., Ltd. for cash consideration of $103,214 (HK$800,000). After this transaction, Gold Lion obtained 100% ownership of Jiangsu Leimone. Jiangsu Leimone is engaged in the R&D and production of electronic assemblies, 3G mobile handsets, wireless communication modules, GPS receivers and computer software.On April 29, 2010, the Company executed a share exchange agreement (the "Nollec Agreement") to acquire 100% of the shares of Nollec Wireless Company Ltd., ("Nollec Wireless") a mobile phone and wireless communication design company located in Beijing, China. The consideration paid for Nollec Wireless was $10.96 million in cash and stock. The consideration agreed upon by the Company and the owners of Nollec Wireless is based on the appraised fair value. Pursuant to the Nollec Agreement, $1.37 million of the total consideration was to be paid in cash by the Company, of which $500,000 has been paid and $870,000 will be paid over a three-year period, and the balance of $9.59 million was paid by issuance of 1,342,599 unregistered shares of the Company's common stock ("Payment Shares"). The value of the Payment Shares was based on the weighted average closing price of Zoom shares as traded on Nasdaq for the 10 consecutive trading days prior and leading up to the day immediately before the date of the Agreement. The acquisition transaction closed on May 31, 2010.
Our revenues were $72,155,779 for the quarter ended September 30, 2010, an increase of 30.5% or $16,864,899 as compared to $55,290,880 in the corresponding quarter in 2009. The increase of revenues in the third quarter of 2010 as compared to the corresponding quarter in 2009 was mainly due to the sales of our own "Leimone" brand mobile phones. In the third quarter of 2010, we sold 232,167 units of our Leimone brand phones of which 62,468 were 3G handsets. Revenues from sales of our own branded products in the third quarter of 2010 were $14.0 million. For the nine-month period ended September 30, 2010, total units of Leimone brand phones sold were 359,950 of which 78,922 were 3G units, bringing in gross sales of $23.2 million. In the first nine months of 2009, we sold 39,682 units of our own brand phone for gross sales of $2.9 million.
Net cash provided by operating activities for the nine months ended September 30, 2010 was $15,617,350 compared to net cash used in operating activities for the 2009 period of $6,934,078. In the first nine months of 2010, operational use of funds included an increase in accounts receivable of $18,657,090, inventory of $190,735, prepaid expenses and other assets of $331,493 and a decrease in accounts payable of $64,483; while offset by a significant reduction in advances to suppliers of $20,227,972 and related parties of $1,787,828, and an increase in accrued expenses and other current liabilities of $1,816,417, while advance from customers was also increased by $271,692.
Net cash used for investing activities was $6,196,073 in the first nine months of 2010 which was primarily cash used as deposits in the amount of $9,941,004 for construction of the Company's new manufacturing facilities and investment of $500,000 for acquisition of a subsidiary; while cash provided by investing activities included a reduction in restricted cash of $2,159,503, the acquisition of a subsidiary brought in $1,491,630, and proceeds from notes receivable contributed $593,798.
40 Net cash used in financing activities was $8,905,947 in the first nine months of 2010 which included repayment on borrowing from related parties of $23,380,225, repayment on notes payable of $4,489,120, repayment on short- term loans of $25,130,273, and advance to related parties of 6,182,774. Financing activities also provided $1,044,833 from issuance of shares for cash, $28,064,338 from short-term loan proceeds, and $21,080,990 from related parties' receipts.
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