UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current
Report Pursuant
to
Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported) May 11, 2020
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ZOOM TELEPHONICS, INC.
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(Exact Name Of Registrant As Specified In Its Charter)
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Delaware
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(State or Other Jurisdiction of Incorporation)
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000-53722
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04-2621506
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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225 Franklin Street, Boston, MA
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02110
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(Address of Principal Executive Offices)
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(Zip Code)
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(617) 423-1072
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(Registrant’s Telephone Number, Including Area
Code)
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(Former Name or Former Address, if Changed Since Last
Report)
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Check
the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant
under any of the following provisions (see General Instruction A.2.
below):
[
]
Written
communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[
]
Soliciting material
pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[
]
Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR 240.14d-2(b))
[
]
Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR 240.13e-4(c))
Securities
registered pursuant to Section 12(b) of the Act: None.
Indicate
by check mark whether the registrant
is an emerging growth company as defined in in Rule 405 of
the Securities Act of 1933 (§230.405 of this chapter) or Rule
12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of
this chapter).
Emerging
growth company ☐
If an
emerging growth company, indicate by checkmark if the registrant
has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act.
☐
Item 2.02 Results of Operations
and Financial Condition
On
May 11, 2020, Zoom Telephonics, Inc. (the “Company”)
issued a press release announcing its financial results for the
quarter ended March 31, 2020. A copy of the press release is
attached hereto as Exhibit 99.1 and is incorporated herein in
its entirety by reference.
The
information furnished pursuant to Item 2.02 of this Current Report
on Form 8-K and in Exhibit 99.1 shall not be deemed to be
“filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, is not subject to the
liabilities of that section and is not deemed incorporated by
reference in any filing of the Company’s under the Securities
Act of 1933, as amended, except as otherwise expressly stated in
such filing.
Except
for historical information contained in the press release attached
as an exhibit hereto, the press release contains forward-looking
statements which involve certain risks and uncertainties that could
cause actual results to differ materially from those expressed or
implied by these statements. Please refer to the cautionary note in
the press release regarding these forward-looking
statements.
Item
5.02
Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of
Certain Officers.
On
May 11, 2020, Joseph L. Wytanis notified the Company of his
decision to step down from the positions of President and Chief
Executive Officer of the Company. Mr. Wytanis will serve as an
advisor to the Company’s Board of Directors. The
Company’s Board of Directors has formed a search committee to
fill the position.
Item
7.01
Regulation FD Disclosure.
On
May 11, 2020, the Company issued a press release announcing the
leadership transition described in Item 5.02 above. The press
release is furnished herewith as Exhibit 99.2 and is incorporated
herein by reference.
The
information furnished pursuant to Item 7.01 of this Current Report
on Form 8-K and in Exhibit 99.2 shall not be deemed to be
“filed” for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, is not subject to the
liabilities of that section and is not deemed incorporated by
reference in any filing of the Company’s under the Securities
Act of 1933, as amended, except as otherwise expressly stated in
such filing.
Item
9.01
Financial Statements and Exhibits .
(d) Exhibits.
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Exhibit Number
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Title
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Press
release of Zoom Telephonics, Inc., dated May 11, 2020, announcing its
financial results for the quarter ended March 31,
2020.
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Press
release of Zoom Telephonics, Inc., dated May 11, 2020, announcing
CEO transition.
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SIGNATURE
Pursuant to the
requirements of the Securities Exchange Act of 1934, the Registrant
has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
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ZOOM
TELEPHONICS, INC.
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Dated:
May 11, 2020
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By:
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/s/
JACQUELYN BARRY
HAMILTON
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Jacquelyn
Barry Hamilton
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Chief
Financial Officer
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EXHIBIT INDEX
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Exhibit Number
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Title
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Press
release of Zoom Telephonics, Inc., dated May 11, 2020, announcing its
financial results for the quarter ended March 31,
2020.
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Press
release of Zoom Telephonics, Inc., dated May 11, 2020, announcing
CEO transition.
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Zoom
Telephonics Reports Record Sales of $12 Million for Q1
2020;
Up 49.3% From Prior Year Quarter
Boston, MA, May 11, 2020 – Zoom Telephonics, Inc.
(“Zoom”) (OTCQB: ZMTP), a leading creator of cable
modems and other Internet access products, reported financial
results for its 2020 first quarter ended March 31,
2020.
First Quarter 2020 Financial Highlights
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Net
sales were $12 million, up 49% year over year
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Gross
profit was $3.1 million, up 28% year over year
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Gross
profit margin was 25.9%, down from 30.2% in prior year first
quarter
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GAAP
net loss was $0.8 million, a 33% improvement year over
year
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Non-GAAP
net income was $0.7 million after adjusting for tariff expenses of
$1.5 million
First Quarter 2020 Business Overview
Overall, the company produced record sales of $12 million during
the quarter, despite the significant economic disruptions resulting
from the Covid-19 pandemic. This level of sales has not been seen
in over a decade. Consumer demand for networking products was
strong throughout the quarter, supported by substantial online
shipping activity. Zoom was able to ensure continuity of supply
through Covid-19 disruptions experienced in Asia as early as
January 2020, and supply chain conditions can be characterized as
“returning to normal” at present.
The company expects to have completed the shifting of its
manufacturing operations to other locations by the end of the
second quarter, with the tariff expense declining to near zero by
early in the third quarter. After the quarter end, Zoom announced
the extension and expansion of its Motorola license. In addition to
the inclusion of new product families, the license agreement now
runs through 2025.
Zoom’s 2020 plan centers on an aggressive new product rollout
schedule that remains very much on track. The proliferation of
video-based communication services, due in part to so many people
working from home, is driving an increased emphasis on optimizing
home networks. The company is experiencing strong demand for its
already popular gateway products, which are available through
online shopping and brick and mortar platforms such as Amazon and
BestBuy.
As previously reported, the company has convened a search committee
to identify a CEO following the resignation of Joe
Wytanis.
First Quarter 2020 Financial Review
Zoom reported an increase in net sales of 49.3% to $12.0 million
for the first quarter ended March 31, 2020 up from $8.0 million for
the first quarter ended March 31, 2019. The increase in sales
resulted from robust demand in its ecommerce and retail
channels.
Gross profit was $3.1 million or 25.9% of net sales in the first
quarter of 2020, compared to $2.4 million or 30.2% of net sales for
the first quarter of 2019. Tariff expenses increased cost of goods
by $1.5 million in the first quarter of 2020, compared to $445
thousand in the first quarter of 2019. Excluding tariff expense,
gross profit margin in the first quarter of 2020 would have been
38.4%. The company also experienced one-time increased supply-chain
fulfillment costs brought on by Covid-19 disruptions in order to
assure the ability to satisfy customer demand.
Operating expenses were $3.8 million, compared to $3.5 million in
the year-ago quarter. The increase versus the prior year was
primarily due to increased General and Administrative expenses
incurred in support of Zoom’s product rollout and growth
strategy.
The company ended the quarter with $5.0 million of working capital
and a current ratio of 1.83x. Zoom had drawn $387 thousand on a
$3.0 million line of credit; with no long-term debt; and $5.7
million of stockholders’ equity.
Conference Call Details
The conference call for this quarter, which was previously
scheduled for Tuesday, May 12, 2020 – 10:00 a.m. ET, has been
cancelled. The company intends to issue its first quarter 2020
earnings in its Form 10-Q quarterly report, as planned on May 15,
2020.
About Zoom Telephonics
Zoom Telephonics, Inc. (“Zoom”) (OTCQB: ZMTP) is the
creator of innovative Internet access products that dependably
connect people to the information they need and the people they
love. Founded in 1977 in Boston, MA, the company now delivers cable
modems, routers, and other communications products under the
globally recognized Motorola brand. For more information about Zoom
and its products, please visit www.zoom.net and
www.motorolanetwork.com.
MOTOROLA and the Stylized M Logo are trademarks or registered
trademarks of Motorola Trademark Holdings, LLC and are used under
license.
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 increase in tariffs on
the Company's imports; potential difficulties and supply
interruptions from moving the manufacturing of most of the
Company’s products to Vietnam; potential changes in NAFTA;
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:
Jeremy Hellman, Vice-President
The Equity Group Inc.
Phone: 212-836-9626
Email: jhellman@equityny.com
ZOOM TELEPHONICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share
data)
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Net sales
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$11,955
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$8,010
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Cost of goods sold
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8,860
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5,591
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Gross
profit
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3,095
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2,419
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Operating expenses:
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Selling
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2,354
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2,448
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General
and administrative
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828
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568
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Research
and development
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653
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482
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Total
operating expenses
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3,835
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3,498
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Operating
profit (loss)
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(740)
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(1,079)
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Other income (expense), net
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(6)
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(34)
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Income
(loss) before income taxes
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(746)
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(1,113)
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Income tax expense
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6
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8
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Net
income (loss)
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$(752)
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$(1,121)
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Earnings (loss) per share:
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Basic
and diluted Earnings (loss) per share
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$(0.04)
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$(0.07)
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Weighted average number of shares outstanding:
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Basic
and diluted
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21,080
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16,138
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ZOOM TELEPHONICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
(in thousands, except share data)
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ASSETS
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Current assets:
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Cash
and cash equivalents
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$28
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$1,217
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Restricted
Cash
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550
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150
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Accounts
receivable, net
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5,947
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4,071
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Inventories,
net
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4,179
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7,440
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Prepaid
expenses and other
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237
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270
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Total
current assets
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10,941
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13,148
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Property and equipment, net
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281
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303
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Operating lease right-of-use assets
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78
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103
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Other assets
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345
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349
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Total
assets
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$11,644
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$13,903
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LIABILITIES AND STOCKHOLDERS’ EQUITY
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Current liabilities:
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Bank
debt
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$387
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$––
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Accounts
payable
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2,777
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5,025
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Operating
lease liabilities
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78
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103
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Accrued
other expenses
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2,720
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2,666
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Total
current liabilities
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5,962
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7,794
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Long-term
operating leases
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––
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––
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Total
liabilities
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5,962
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7,794
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Stockholders’ equity:
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Common
stock and additional paid-in capital
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47,030
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46,706
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Retained
earnings (accumulated deficit)
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(41,348) )
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(40,597)
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Total
stockholders’ equity
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5,682
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6,109
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Total
liabilities and stockholders’ equity
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$11,644
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$13,903
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Zoom Telephonics Announces CEO Transition
Zoom
Telephonics, Inc. (“Zoom”) (OTCQB: ZMTP), a leading
creator of cable modems and other Internet access products, today
announced that Joe Wytanis has stepped down from the position of
CEO. To ensure a smooth transition, Wytanis will act as an advisor
to the board. Zoom’s Board of Directors has formed a CEO
search committee, led by Zoom Chairman Jeremy
Hitchcock.
“I
am extremely proud of the team’s accomplishments throughout
my tenure,” said Wytanis. “As the demand for reliable
home connectivity has never been higher, Zoom is on an exciting
trajectory. We’ve seen outstanding growth in e-commerce and
storefront retail, inspiring Zoom to focus its product development
and marketing initiatives. Accordingly, we have decided Zoom needed
leadership more specialized in those areas as I pursue career
opportunities closer to my home location and in the cable MSO
space. I look forward to my continued
involvement.”
Joe
Wytanis joined Zoom in 2018 as a veteran of the Cable Multi-Network
Operator (MSO) industry, serving in executive roles at High Tech
Associates, Flextronics, SMC Networks, and Cisco
Systems.
“On
behalf of the Board, I would like to thank Joe for his exceptional
leadership,” said Hitchcock. “He has expertly leveraged
the company’s strengths in manufacturing, supply chain
management, and talent to unlock new growth opportunities, even in
the face of Covid-19 challenges. We appreciate his participation in
finding his successor and wish him much success in his future
endeavors.”
This
management announcement follows Zoom’s recent CFO appointment
last quarter. In the past year, Zoom has bolstered the executive
team for a new phase of expansion. Key hires include:
●
Jacquelyn Barry
Hamilton, now Zoom CFO, formerly served as CFO at Modo Labs,
Netcracker Technology, Intronis, and the Global Technology Division
at Monster Worldwide.
●
Phil Stanhope, now
Zoom CTO, formerly served as VP Technology Strategy, Dyn/Oracle and
VP Engineering at Yottaa, Wimba, Aspen Technology, and Adesso
Systems.
●
John Lauten, now
Zoom SVP Operations, formerly served in operational leadership
roles at SKULLY Technologies, TechCXO, FOX Factory, and
Cisco.
Later
today, Zoom Telephonics will be releasing Q1 2020 financial
results. The earnings call previously scheduled for May 12, 2020
will be cancelled. For more information, visit http://www.zoomtel.com.
About Zoom Telephonics
Zoom
Telephonics, Inc. (“Zoom”) (OTCQB: ZMTP) is the creator
of innovative Internet access products that dependably connect
people to the information they need and the people they love.
Founded in 1977 in Boston, MA, the company now delivers cable
modems, routers, and other communications products under the
globally-recognized Motorola brand. For more information about Zoom
and its products, please visit www.zoom.net
and www.motorolanetwork.com.
MOTOROLA
and the Stylized M Logo are trademarks or registered trademarks of
Motorola Trademark Holdings, LLC and are used under
license.
Investor Relations
Contact:
Jeremy
Hellman, Vice-President
The
Equity Group Inc.
Phone:
212-836-9626
Email:
jhellman@equityny.com
