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8-K - CURRENT REPORT - MINIM, INC. | zmtp_8k.htm |
Exhibit 99.1
Zoom Telephonics Reports 72% Increase in Fourth Quarter
Sales
Boston, MA, March 7,
2018 – Zoom Telephonics,
Inc. (“Zoom”) (OTCQB: ZMTP), a leading producer of
cable modems and other communication products, today reported
financial results for the fourth quarter and year ended December
31, 2017.
The
Company reported net sales of $8.9 million for the fourth quarter
ended December 31, 2017 (“Q4 2017”), up 72% from $5.1
million for the fourth quarter ended December 31, 2016 (“Q4
2016”). Zoom reported an adjustment for Q4 2017 of $831
thousand, including certain out of period charges, due primarily to
estimated sales taxes incurred due to inventory stored in Amazon
warehouses in a number of states. Zoom reported a net loss of $387
thousand, or $0.03 per share, for Q4 2017 compared to a net loss of
$990 thousand, or $0.07 per share, for Q4 2016. Excluding the
adjustment for the Amazon-related state sales tax liabilities, net
income was $444 thousand, or $0.03 per share.
Gross
profit was $3.2 million, or 36.6% of net sales in Q4 2017, compared
to $1.4 million, or 27.3% of net sales, in Q4 2016. The
increase in gross profit in Q4 2017 was primarily due to continued
growth in sales, especially for Motorola brand cable modems and
gateways. Gross margin percentage improved due to Q4 2017 sales
rising more rapidly than production salaries and other expenses,
and due to Q4 2016 gross margins being reduced 3.3% by a $171
thousand write-down of inventory due to negotiated cost reductions
for some purchased products.
Operating
expenses were $3.6 million, or 40.5% of net sales, in Q4 2017,
compared to $2.3 million, or 45.5% of net sales, in Q4 2016.
Selling expenses increased $235 thousand to $1.9 million from Q4
2016 to Q4 2017 due primarily to higher Motorola trademark
licensing costs and higher advertising expenses. General and
administrative expenses decreased $25 thousand to $280 thousand
from Q4 2016 to Q4 2017. Research and development expenses
increased $209 thousand to $577 thousand from Q4 2016 to Q4 2017
due primarily to increased new product certification expenses. An
adjustment of $831 thousand was reported for Amazon-related state
sales tax liabilities.
Zoom’s
net sales of $29.4 million for the fiscal year ended December 31,
2017 (“FY 2017”) were up 65.0% from $17.8 million for
the fiscal year ended December 31, 2016 (“FY 2016”).
This is the second consecutive year with sales growth of 65%. Zoom
reported a net loss of $1.4 million, or $0.09 per share, for FY
2017 compared to a net loss of $2.9 million, or $0.21 per share,
for FY 2016. Excluding the adjustment for the Amazon-related sales
tax liabilities, net loss was $0.5 million, or $0.04 per
share.
Gross profit was $10.2 million for FY 2017, up $4.9 million from
$5.4 million for FY 2016. Gross margin improved from 30.1% in FY
2016 to 34.8% in FY 2017 due to both product mix and to increases
in production volumes and manufacturing utilization.
1
Operating
expenses were $11.5 million, or 38.9% of net sales in FY 2017,
compared to $8.3 million, or 46.3% of net sales, in FY 2016.
Selling expenses increased $2.1 million to $7.2 million from FY
2016 to FY 2017 due primarily to increased advertising expenses and
Motorola trademark licensing costs. General and administrative
expenses decreased $108 thousand to $1.4 million from FY 2016 to FY
2017, primarily due to decreased legal and audit expenses. Research
and development expenses increased $422 thousand to $1.9 million
from FY 2016 to FY 2017, primarily due to new product certification
costs. As noted, a Q4 2017 adjustment was reported related to state
sales tax liabilities.
On
December 31, 2017 Zoom had $90 thousand drawn on a $3.0 million
line of credit, working capital of $2.6 million, and a current
ratio of 1.5.
“We
are experiencing dramatic growth due to the strong Motorola brand
and excellent execution,” said Frank Manning, Zoom’s
President and CEO. “We have designed and produced great
products, sold them with acumen through top retailers, and
supported our customers with skill and care from the USA. The
result is strong sales momentum, positive customer reviews, and
increased market share. We are continuing to expand our cable modem
line, and we successfully introduced our first 24x8 cable modem in
December 2017. Cable modems and gateways dominated our sales in
2017, and now we are starting to see sales momentum for routers and
MoCA Adapters due primarily to introduction of a new AC1700 router
and a new MoCA Adapter in December 2017. We are excited about our
product pipeline for 2018 and our prospects for growth in the US
and other countries.”
Mr.
Manning continued, “During the quarter we reported an
adjustment for a probable sales tax liability for some states where
Amazon warehouses store our consigned `Fulfilled By Amazon`
inventory. This is a complicated issue that many Amazon Seller
Central retailers are faced with. We have worked with experts on
state taxes to understand this issue and to record the expense and
liability appropriately; and the expense we are recording in Q4
2017 is our best estimate of our tax liability for sales from the
first day we started selling on Amazon in 2013 through December 31,
2017. We plan to commence having Amazon collect sales tax for
states where this is appropriate. Amazon started collecting sales
tax for us in Washington State in January 2018, and we have not
seen a negative impact on sales. We expect to incur up to $220
thousand in sales tax expense in Q1 2018, but minimal if any sales
tax expense in later quarters as Amazon will collect taxes for us
and we will pay them to the states.”
Conference Call
Zoom
has scheduled a conference call for Wednesday, March 7 at 5:00 p.m.
Eastern Time. You may access the conference call by dialing (866)
393-7958 if you are in the USA, and international callers may dial
(706) 643-5255. The conference ID is 2136919. A slide presentation
will accompany management’s remarks and may be accessed five
minutes before the conference call at www.zoomtel.com/SQ417.
Shortly after the conference call a recording of the call will be
available on Zoom’s website.
About Zoom Telephonics
Zoom Telephonics, Inc. designs, produces, markets,
and supports communication products under the Motorola and Zoom
brands. The Company’s worldwide licensing agreement with
Motorola includes cable modems and gateways, DSL modems and
gateways, cellular modems and routers and sensors, range extenders,
home powerline network products, and MoCA adapters. For more
information about Zoom and its products, please visit
www.zoomtel.com
or www.motorolanetwork.com.
MOTOROLA
and the Stylized M Logo are trademarks or registered trademarks of
Motorola Trademark Holdings, LLC and are used under
license.
###
2
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 certification and overall project delays,
budget overruns, 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.
Investor Relations Contact:
John Nesbett/Jennifer Belodeau
Institutional Marketing Services (IMS)
Phone: 203-972-9200
jnesbett@institutionalms.com
3
ZOOM TELEPHONICS, INC.
Condensed Consolidated Balance Sheets
In thousands of US dollars
(Unaudited)
|
12/31/17
|
12/31/16
|
|
|
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash
|
$229
|
$180
|
Accounts
receivable, net
|
2,230
|
2,498
|
Inventories,
net
|
5,202
|
4,927
|
Prepaid
expenses and other
|
578
|
652
|
|
|
|
Total
current assets
|
8,239
|
8,257
|
|
|
|
Property and equipment, net
|
162
|
176
|
|
|
|
Other assets
|
392
|
589
|
|
|
|
Total
assets
|
$8,793
|
$9,022
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
Bank
debt
|
$90
|
$1,307
|
Accounts
payable
|
3,527
|
2,502
|
Accrued
sales tax
|
831
|
––
|
Accrued
other expenses
|
1,173
|
1,052
|
|
|
|
Total
current liabilities
|
5,621
|
4,861
|
|
|
|
Total
liabilities
|
5,621
|
4,861
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
Common
stock and additional paid-in capital
|
40,418
|
40,041
|
|
|
|
Retained
earnings (accumulated deficit)
|
(37,246)
|
(35,880)
|
|
|
|
Total
stockholders’ equity
|
3,172
|
4,161
|
|
|
|
Total
liabilities and stockholders’ equity
|
$8,793
|
$9,022
|
4
ZOOM TELEPHONICS,
INC.
Condensed Consolidated Statements of Operations
In thousands of US dollars, except for per share data
(Unaudited)
|
Three Months Ended
|
Twelve Months Ended
|
||
|
12/31/17
|
12/31/16
|
12/31/17
|
12/31/16
|
|
|
|
|
|
Net sales
|
$8,862
|
$5,146
|
$29,418
|
$17,834
|
Cost of goods sold
|
5,615
|
3,739
|
19,177
|
12,467
|
|
|
|
|
|
Gross
profit
|
3,247
|
1,407
|
10,241
|
5,367
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Selling
|
1,903
|
1,668
|
7,244
|
5,188
|
General
and administrative
|
280
|
305
|
1,433
|
1,541
|
Research
and development
|
577
|
368
|
1,945
|
1,522
|
Sales
tax expenses
|
831
|
––
|
831
|
––
|
Total
operating expenses
|
3,591
|
2,341
|
11,453
|
8,251
|
|
|
|
|
|
Operating
profit (loss)
|
(344)
|
(934)
|
(1,212)
|
(2,884)
|
|
|
|
|
|
Other income (expense), net
|
(42)
|
(52)
|
(140)
|
(42)
|
|
|
|
|
|
Income
(loss) before income taxes
|
(386)
|
(986)
|
(1,352)
|
(2,926)
|
|
|
|
|
|
Income tax expense
|
1
|
4
|
15
|
7
|
|
|
|
|
|
Net
income (loss)
|
$(387)
|
$(990)
|
$(1,367)
|
$(2,933)
|
|
|
|
|
|
Earnings (loss) per share:
|
|
|
|
|
Basic
Earnings (loss) per share
|
$(0.03)
|
$(0.07)
|
$(0.09)
|
$(0.21)
|
Diluted
Earnings (loss) per share
|
$(0.03)
|
$(0.07)
|
$(0.09)
|
$(0.21)
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
Basic
|
15,114
|
14,460
|
14,917
|
13,908
|
Diluted
|
15,114
|
14,460
|
14,917
|
13,908
|
Reconciliation of Non-GAAP Financial Measures
|
|
|
|
|
GAAP
net income (loss)
|
$(387)
|
$(990)
|
$(1,367)
|
$(2,933)
|
Adjustment
for sales tax expense
|
$831
|
$––
|
$831
|
$––
|
Non-GAAP
adjusted net income (loss)
|
$444
|
$(990)
|
$(536)
|
$(2,933)
|
|
|
|
|
|
Non-GAAP Earnings (loss) per share:
|
|
|
|
|
Basic
Earnings (loss) per share
|
$0.03
|
$(0.07)
|
$(0.04)
|
$(0.21)
|
Diluted
Earnings (loss) per share
|
$0.03
|
$(0.07)
|
$(0.04)
|
$(0.21)
|
Weighted average number of shares outstanding:
|
|
|
|
|
Basic
|
15,114
|
14,460
|
14,917
|
13,908
|
Diluted
|
16,391
|
14,460
|
14,917
|
13,908
|
The
Company believes that the presentation of non-GAAP financial
measures, when presented together with the corresponding GAAP
financial measures, provide useful information to investors and
management regarding financial and business trends relating to its
results of operations. However, non-GAAP financial measures have
certain limitations in that they do not reflect the sales tax
expenses associated with adjustments related to the Company’s
sales through Amazon channels, which ultimately impact the
Company’s determination of net income (loss) in accordance
with GAAP.
5