Zoom Technologies Inc. (ZOOM) filed Quarterly Report for the period ended 2012-03-31.
Zoom Tech Inc has a market cap of $26.2 million; its shares were traded at around $1.21 with a P/E ratio of 3.6 and P/S ratio of 0.1.
Highlight of Business Operations:Our revenues were $90,908,264 for the quarter ended March 31, 2012, an increase of $32,296,578 or 55.1% compared to $58,611,686 in the corresponding quarter in 2011. The increase of revenues in the first quarter of 2012 compared to the corresponding quarter in 2011 was mainly due to the increase in sales of whole phones including our own Leimone brand phones, by Profit Harvest and TCB Digital. In the first quarter of 2012, we sold 1.75 million whole phones of which 0.37 million units were Leimone brand phones, with 0.28 million units of those phones being 3G handsets compared to 0.81 million whole phones, of which 0.19 million units were Leimone brand phones, with .03 million units being 3G, for the same period in 2011. Revenue from sales of our own branded products in the first quarter of 2012 was $28.1 million as compared to $13.4 million for the same period in 2011.
Gross profit for the quarter ended March 31, 2012 declined by 3.0% to $6,155,558 compared to $6,348,870 for the corresponding same period in 2011. Gross profit as a percentage of revenues for the first quarter of 2012 was 6.8%, a decrease from 10.8% for the same period in 2011. The main reason for the decrease in gross margin is correlated with the decrease in gross margin as percentage of sales. The main factors driving such slim margins are a highly price sensitive mobile handset market and our early stage development of purchasing relationships with materials suppliers.
Sales and marketing expenses mainly represent salaries of sales personnel, and marketing and transportation costs; such expenses were $245,608 for the three months ended March 31, 2012 compared to $208,539 for the corresponding period in 2011. The higher amounts in this category for 2012 resulted from the significantly increased activities in the sales of our own brand products and also for support of our export business.
The Company's research and development expenditures for the three months ended March 31, 2012 and 2011 were $526,714 and $1,635,204 respectively. These costs were incurred by our Nollec Wireless subsidiary for developmental costs in mobile handset design and software integration. R&D expenditures decreased by $1,108,490, or -67.8%, as compared to the same period in the prior year. The decreases results from improved cost management and the reduction of extensive upfront R&D costs invested in 2011 in developing our own branded smart phones products targeted at the European and North American markets. We believe that costs related to development of these products will be steadier as percentage of revenue on a move forward basis and our investments in 2011 will begin to show returns for the Company in 2012 and beyond.
For the quarter ended March 31, 2012, the Company's net income was $641,885, a decrease of $1,144,928 or -64.1% from $1,786,813 for the corresponding period in 2011. Net income as a percentage of revenues, for the three months ended March 31, 2012 and 2011 were 0.7% and 3.0% respectively. The decline in gross margin as a percentage of revenue, as described above, was the main contributor to our decreased profitability in the short term as compared to our net income for the same period in the prior year; however, we believe that as we develop our purchasing power and relationships with our suppliers as part of our initiative to further develop our own branded phones, coupled with the returns expected from our previously expended R&D costs, will put our net income on an upward trend in 2012 and beyond.
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