Zoom Technologies Inc. (ZOOM, Financial) filed Quarterly Report for the period ended 2010-06-30.
Zoom Technologies Inc. has a market cap of $51.3 million; its shares were traded at around $5.5734 with a P/E ratio of 8.6 and P/S ratio of 0.2.
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 the issuance of 1,342,599 unregistered shares of the Company's common stock ("Payment Shares"). The price 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 $42,876,873 for the quarter ended June 30, 2010, a decrease of 19% or $10,256,588 as compared to $53,133,461 in the corresponding quarter in 2009. The decrease of revenues in the second quarter of 2010 as compared to the corresponding quarter in 2009 was mainly due to a portion of our activities for our OEM customers had shifted to "consignment manufacturing" where the components were provided to us by the customers and we were not required to purchase such materials. Effects on revenues and profitability under the consignment arrangement would be a) lower revenue figures since there would be no pass-through from the cost of components and revenues would only be the processing fee charged to the customers, b) unaffected earnings since our processing fee is based on the complexity in manufacturing and not directly related to the cost of materials, and c) higher margins. The percentage of "consignment EMS" revenue out of total EMS revenue for the 2nd quarter of 2010 as compared to the previous quarter was 14.2% versus 6.2%. Our revenues for the first six months of 2010 were $93,856,142 or an increase of 15% from $81,950,018 from the same six months of 2009.
For the quarter ended June 30, 2010 our cost of sales was $38,297,116 or 89.3% of revenues, while cost of sales for the corresponding quarter in 2009 was $49,973,216 or 94.1% of revenues. The reduction in cost of sales as a percentage of revenues was mainly due to a proportionally higher amount of "consignment manufacturing" activities as explained above. For the six months ended June 30, 2010, our cost of sales was $85,098,131 or 90.7% of revenues as compared to $76,105,167 or 92.9% of revenues for the corresponding six-month period in 2009.
Net cash provided by operating activities for the six months ended June 30, 2010 was $8,398,522 compared to net cash used in operating activities for the 2009 period of $3,337,741. In the first six months of 2010, operational use of funds included an increase in accounts receivable of $7,946,728 and advances made to related parties of $8,330,669 and a decrease in accounts payable of $505,074; while offset by a significant reduction in advances to suppliers of $17,813,105 and an increase in accrued expenses and other current liabilities of $1,499,698.
Net cash provided by financing activities was $1,652,200 in the first six months of 2010 which included proceeds from short-term loans of $18,127,923, proceeds from notes payable of $497,457, receipts from related parties in the amount of $10,921,930, and cash from the issuance of common shares of $1,058,839. During this period, there was an outflow due to advance to related parties of $4,932,483 and repayment of short-term loans of $13,167,982 and also an outflow of $10,933,479 for repayment of borrowing from related parties.
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Zoom Technologies Inc. has a market cap of $51.3 million; its shares were traded at around $5.5734 with a P/E ratio of 8.6 and P/S ratio of 0.2.
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 the issuance of 1,342,599 unregistered shares of the Company's common stock ("Payment Shares"). The price 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 $42,876,873 for the quarter ended June 30, 2010, a decrease of 19% or $10,256,588 as compared to $53,133,461 in the corresponding quarter in 2009. The decrease of revenues in the second quarter of 2010 as compared to the corresponding quarter in 2009 was mainly due to a portion of our activities for our OEM customers had shifted to "consignment manufacturing" where the components were provided to us by the customers and we were not required to purchase such materials. Effects on revenues and profitability under the consignment arrangement would be a) lower revenue figures since there would be no pass-through from the cost of components and revenues would only be the processing fee charged to the customers, b) unaffected earnings since our processing fee is based on the complexity in manufacturing and not directly related to the cost of materials, and c) higher margins. The percentage of "consignment EMS" revenue out of total EMS revenue for the 2nd quarter of 2010 as compared to the previous quarter was 14.2% versus 6.2%. Our revenues for the first six months of 2010 were $93,856,142 or an increase of 15% from $81,950,018 from the same six months of 2009.
For the quarter ended June 30, 2010 our cost of sales was $38,297,116 or 89.3% of revenues, while cost of sales for the corresponding quarter in 2009 was $49,973,216 or 94.1% of revenues. The reduction in cost of sales as a percentage of revenues was mainly due to a proportionally higher amount of "consignment manufacturing" activities as explained above. For the six months ended June 30, 2010, our cost of sales was $85,098,131 or 90.7% of revenues as compared to $76,105,167 or 92.9% of revenues for the corresponding six-month period in 2009.
Net cash provided by operating activities for the six months ended June 30, 2010 was $8,398,522 compared to net cash used in operating activities for the 2009 period of $3,337,741. In the first six months of 2010, operational use of funds included an increase in accounts receivable of $7,946,728 and advances made to related parties of $8,330,669 and a decrease in accounts payable of $505,074; while offset by a significant reduction in advances to suppliers of $17,813,105 and an increase in accrued expenses and other current liabilities of $1,499,698.
Net cash provided by financing activities was $1,652,200 in the first six months of 2010 which included proceeds from short-term loans of $18,127,923, proceeds from notes payable of $497,457, receipts from related parties in the amount of $10,921,930, and cash from the issuance of common shares of $1,058,839. During this period, there was an outflow due to advance to related parties of $4,932,483 and repayment of short-term loans of $13,167,982 and also an outflow of $10,933,479 for repayment of borrowing from related parties.
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