Minim (MINM) 10-Q 14 Nov 13 2013 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2013
Document And Entity Information	'
Entity Registrant Name	'Zoom Telephonics, Inc.
Entity Central Index Key	'0001467761
Document Type	'10-Q
Document Period End Date	30-Sep-13
Amendment Flag	'false
Current Fiscal Year End Date	'--12-31
Is Entity a Well-known Seasoned Issuer?	'No
Is Entity a Voluntary Filer?	'No
Is Entity's Reporting Status Current?	'Yes
Entity Filer Category	'Smaller Reporting Company
Entity Common Stock, Shares Outstanding	7,982,704
Document Fiscal Period Focus	'Q3
Document Fiscal Year Focus	'2013

Condensed_Balance_Sheets_Unaud

Condensed Balance Sheets (Unaudited) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Current assets	'	'
Cash and cash equivalents	$50,795	$195,704
Marketable securities	20,000	44,000
Accounts receivable, net of allowances of $557,259 at September 30, 2013 and $811,897 at December 31, 2012	1,395,758	1,966,334
Inventories	2,548,349	2,630,386
Prepaid expenses and other current assets	196,793	261,688
Total current assets	4,211,695	5,098,112
Equipment, net	51,812	26,045
Total assets	4,263,507	5,124,157
Current liabilities	'	'
Bank debt	292,465	910,807
Accounts payable	1,059,649	931,607
Accrued expenses	297,081	379,841
Total current liabilities	1,649,195	2,222,255
Total liabilities	1,649,195	2,222,255
Stockholders' equity	'	'
Common stock, $0.01 par value: Authorized - 25,000,000 shares; issued - 7,982,704 shares at September 30, 2013 and 6,973,704 shares at December 31, 2012	79,827	69,737
Additional paid-in capital	34,172,186	33,904,003
Accumulated deficit	-31,707,119	-31,170,788
Accumulated other comprehensive income (loss)	69,418	98,950
Total stockholders' equity	2,614,312	2,901,902
Total liabilities and stockholders' equity	$4,263,507	$5,124,157

Condensed_Balance_Sheets_Unaud1

Condensed Balance Sheets (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Assets	'	'
Accounts receivable allowances	$557,259	$811,897
Stockholders Equity	'	'
Common stock, par value	$0.01	$0.01
Common stock, authorized	25,000,000	25,000,000
Common stock, issued	7,982,704	6,973,704

Condensed_Statement_of_Operati

Condensed Statement of Operations and Comprehensive Income (Loss) (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Income Statement [Abstract]	'	'	'	'
Net sales	$2,547,028	$3,434,693	$8,363,646	$11,243,415
Cost of goods sold	1,907,052	2,575,397	5,985,468	8,475,112
Gross profit	639,976	859,296	2,378,178	2,768,303
Operating expenses:	'	'	'	'
Selling	334,756	431,587	1,157,515	1,458,609
General and administrative	313,723	294,710	1,007,603	908,457
Research and development	225,820	266,783	697,938	848,788
Total	874,299	993,080	2,863,056	3,215,854
Operating profit (loss)	-234,323	-133,784	-484,878	-447,551
Other income (expense):	'	'	'	'
Interest income	7	13	33	94
Other, net	-16,625	-20,003	-48,751	-29,588
Total other income (expense), net	-16,618	-19,990	-48,718	-29,494
Income (loss) before income taxes	-250,941	-153,774	-533,596	-477,045
Income taxes (benefit)	1,207	795	2,734	2,652
Net income (loss)	-252,148	-154,569	-536,330	-479,697
Other comprehensive income (loss):	'	'	'	'
Foreign currency translation adjustments	2,527	7,079	-5,532	12,085
Unrealized gain (loss) for the period	-12,800	-12,800	-24,000	-11,880
Net comprehensive income (loss)	($262,421)	($160,290)	($565,862)	($479,492)
Basic and diluted net income (loss) per share	($0.03)	($0.02)	($0.07)	($0.07)
Weighted average common and common equivalent shares:	'	'	'	'
Basic and diluted	7,517,012	6,973,704	7,155,472	6,973,704

Condensed_Statements_of_Cash_F

Condensed Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Operating activities:	'	'
Net income (loss)	($536,330)	($479,697)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	'	'
Depreciation and amortization	7,464	4,218
Stock based compensation	29,595	34,107
Changes in operating assets and liabilities:	'	'
Accounts receivable	567,372	-470,802
Inventories	82,037	-418,941
Prepaid expenses and other assets	63,178	16,613
Accounts payable and accrued expenses	43,265	67,456
Net cash provided by (used in) operating activities	256,581	-1,247,046
Investing activities:	'	'
Purchases of property, plant and equipment	-33,232	-14,846
Net cash provided by (used in) investing activities	-33,232	-14,846
Financing activities:	'	'
Funds from bank debt	'	796,000
Net funds (to) from bank credit lines	-618,343	'
Proceeds from stock rights offering( net of issuance costs)	248,678	'
Net cash provided by (used in) financing activities	-369,665	796,000
Effect of exchange rate changes on cash	1,407	-152
Net change in cash	-144,909	-466,044
Cash and cash equivalents at beginning of period	195,704	644,365
Cash and cash equivalents at end of period	50,795	178,321
Supplemental disclosures of cash flow information:	'	'
Cash paid during the period for: Interest	51,610	28,028
Cash paid during the period for: Income taxes	$2,734	$2,035

1_Summary_of_Significant_Accou

1. Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Summary of Significant Accounting Policies	'
	The accompanying financial statements are unaudited. However, the condensed balance sheet as of December 31, 2012 was derived from audited financial statements. In the opinion of management, the accompanying financial statements include all adjustments to present fairly the financial position, results of operations and cash flows of the Company.  The adjustments are of a normal, recurring nature.
	The results of operations for the periods presented are not necessarily indicative of the results to be expected for the entire year. The Company has evaluated subsequent events from September 30, 2013 through the date of this filing and determined that there are no such events requiring recognition or disclosure in the financial statements.
	The condensed financial statements of Zoom Telephonics, Inc. (“the Company”) presented herein have been prepared pursuant to the rules of the Securities and Exchange Commission for quarterly reports on Form 10-Q and do not include all of the information and disclosures required by accounting principles generally accepted in the United States of America. These financial statements should be read in conjunction with the audited financial statements and notes thereto for the year ended December 31, 2012 included in the Company's 2012 Annual Report on Form 10-K.

2_Liquidity

2. Liquidity	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Liquidity	'
	Zoom’s cash and cash equivalents balance on September 30, 2013 was $51 thousand, down $145 thousand from December 31, 2012, as a $619 thousand decrease in bank debt and a net loss of $536 thousand were partially offset by Zoom’s $570 thousand decrease in net accounts receivable and $249 thousand in funds from the rights offering.
	On September 30, 2013 the Company had working capital of $2.6 million including $51 thousand in cash and cash equivalents.  On December 31, 2012 we had working capital of $2.9 million including $196 thousand in cash and cash equivalents. Our current ratio at September 30, 2013 was 2.6 compared to 2.3 at December 31, 2012.
	To conserve cash and manage our liquidity, we have implemented cost-cutting initiatives including the reduction of employee headcount and overhead costs. On September 30, 2013 we had a headcount of 27 compared to 32 as of September 30, 2012. We plan to continue to assess our cost structure as it relates to our revenues and cash position, and we may make further reductions if the actions are deemed appropriate.
	On April 10, 2012 Zoom entered into a Loan and Security Agreement with Silicon Valley Bank (the “Loan Agreement”). This Loan Agreement was filed with the SEC in an 8-K dated April 13, 2012. The Loan Agreement provided for up to $1 million of revolving credit, subject to a borrowing base formula and other terms and conditions as specified in the Loan Agreement. The Loan Agreement had a one year term which was set to expire April 9, 2013. Borrowings were secured by all of Zoom’s assets including Zoom’s intellectual property. Zoom terminated this loan with payment in full on December 19, 2012 in connection with a financing agreement with Rosenthal & Rosenthal, Inc.
	On December 18, 2012, Zoom entered into a Financing Agreement with Rosenthal & Rosenthal, Inc. (the “Financing Agreement”). This Financing Agreement was filed with the SEC in an 8-K dated December 21, 2012.  The Financing Agreement provides for up to $1.75 million of revolving credit, subject to a borrowing base formula and other terms and conditions as specified in the Financing Agreement. The Financing Agreement has a two year term. Borrowings are secured by all of Zoom’s assets including Zoom’s intellectual property. The Financing Agreement contains several covenants, including a requirement that our tangible net worth and working capital each be not less than $2,500,000.
	The Company is continuing to develop new products and to take other measures to increase sales.  Increasing sales typically results in increased inventory and higher accounts receivable, both of which reduce cash.  Zoom has two significant accounts who buy from Zoom on a consignment basis.  Consigned inventory tends to result in slow payment to Zoom, since Zoom is only paid after the consigned inventory is sold by Zoom’s customer.
	The Company has had recurring net losses and continues to experience negative cash flows from operations.  Management does not believe the Company has sufficient resources to fund its normal operations over the next 12 months unless sales or gross margin improves significantly or the Company raises capital. Additional financing may not be available on terms favorable to the Company, or at all.  If these funds are not available, the Company may not be able to execute its business plan or take advantage of business opportunities.  The ability of the Company to obtain such additional financing and to achieve its operating goals is uncertain.  In the event that the Company does not obtain additional capital or is not able to increase cash flow through the increase of sales, there is substantial doubt as to its ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

3_Inventories

3. Inventories	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Inventories	'
	Inventories consist of :	September 30,		December 31,
		2013		2012
	Raw materials	$	628,778	$	720,113
	Work in process		134,264		––
	Finished goods (including $339,900 and $489,400 held by customers at September 30, 2013 and December 31, 2012, respectively)		1,785,307		1,910,273
	Total inventories	$	2,548,349	$	2,630,386

4_Contingencies

4. Contingencies	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Contingencies	'
	Zoom currently has one outstanding complaint against it.  On October 15, 2012, Telecomm Innovations LLC filed a complaint against Zoom Telephonics and also filed complaints against many other companies including various dial-up modem producers and many fax machine producers.  The only named Zoom product in the complaint was Zoom’s Model 3095 dial-up modem, and we believe that this product has a license through Conexant for the two patents mentioned in the complaint.  However, other Zoom dial-up modem products may be subject to the patents asserted in the complaint, and a small percentage of these did not use Conexant chipsets.  Telecomm Innovations has recently discovered that there was a gap in the chain of title for the asserted patents and it may not have had standing at the time the complaint was filed.  We expect Telecomm to dismiss the complaint and then refile the claim with a purported correction to the chain of title.

5_Segment_and_Geographic_Infor

5. Segment and Geographic Information	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Segment and Geographic Information	'
	The Company’s operations are classified as one reportable segment. The Company’s net sales by geographic region follow:
		Three Months					Three Months					Nine Months					Nine Months
		Ended					Ended					Ended					Ended
		September 30,		% of			September 30,		% of			September 30,		% of			September 30,		% of
		2013		Total			2012		Total			2013		Total			2012		Total
	North America	$	2,426,296		95	%	$	3,127,784		91	%	$	7,761,524		93	%	$	10,225,466		91	%
	UK		48,714		2	%		158,872		5	%		271,518		3	%		425,681		4	%
	All Other		72,018		3	%		148,037		4	%		330,604		4	%		592,268		5	%
	Total	$	2,547,028		100	%	$	3,434,693		100	%	$	8,363,646		100	%	$	11,243,415		100	%

6_Customer_Concentrations

6. Customer Concentrations	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Customer Concentrations	'
	The Company sells its products primarily through high-volume retailers and distributors, Internet service providers, value-added resellers, PC system integrators, and original equipment manufacturers ("OEMs"). The Company supports its major accounts in their efforts to offer a well-chosen selection of attractive products and to maintain appropriate inventory levels.
	Relatively few customers have accounted for a substantial portion of the Company’s revenues.  In the third quarter of 2013, three customers accounted for 68% of the Company’s total net sales. In the third quarter of 2012, three customers accounted for 64% of the Company’s total net sales. In the first nine months of 2013, three customers accounted for 67% of the Company’s total net sales. In the first nine months of 2012, three customers accounted for 65% of the Company’s total net sales. One customer accounted for 65% of net accounts receivable at September 30, 2013.
	The Company’s customers generally do not enter into long-term agreements obligating them to purchase products. The Company may not continue to receive significant revenues from any of these or from other large customers. A reduction or delay in orders from any of the Company’s significant customers, or a delay or default in payment by any significant customer, could materially harm the Company’s business and prospects. Because of the Company’s significant customer concentration, its net sales and operating income (loss) could fluctuate significantly due to changes in political or economic conditions, or the loss, reduction of business, or less favorable terms for any of the Company's significant customers.

7_Valuation_of_Marketable_Secu

7. Valuation of Marketable Securities	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Valuation of Marketable Securities	'
	In October 2010 Zoom Telephonics, Inc. entered into an agreement with Zoom Technologies, Inc. (Nasdaq: ZOOM) in which Zoom Telephonics transferred its rights to the zoom.com domain name and certain trademark rights in exchange for 80,000 shares of Zoom Technologies common stock.  These shares had trading restrictions that ended January 18, 2012.  The Company values the marketable securities at market value in the financial statements. The Company did not sell any Zoom Technologies shares in 2012 or the first nine months of 2013. The closing price of Zoom Technologies common stock decreased from $0.55 on December 31, 2012 to $0.25 on September 30, 2013.

8_Bank_Credit_Line

8. Bank Credit Line	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
Bank Credit Line	'
	On April 10, 2012 Zoom entered into a Loan and Security Agreement with Silicon Valley Bank (the “Loan Agreement”). This Loan Agreement was filed with the SEC in an 8-K dated April 13, 2012. The Loan Agreement provided for up to $1 million of revolving credit, subject to a borrowing base formula and other terms and conditions as specified in the Loan Agreement. The Loan Agreement had a one year term which was set to expire April 9, 2013. Borrowings were secured by all of Zoom’s assets including Zoom’s intellectual property. Zoom terminated this loan with payment in full on December 19, 2012 in connection with a financing agreement with Rosenthal & Rosenthal, Inc.
	On December 18, 2012, Zoom entered into a Financing Agreement with Rosenthal & Rosenthal, Inc. (the “Financing Agreement”). This Financing Agreement was filed with the SEC in an 8-K dated December 21, 2012.  The Financing Agreement provides for up to $1.75 million of revolving credit, subject to a borrowing base formula and other terms and conditions as specified in the Financing Agreement. The Financing Agreement has a two year term. Borrowings are secured by all of Zoom’s assets including Zoom’s intellectual property. The Financing Agreement contains several covenants, including a requirement that our tangible net worth and working capital each be not less than $2,500,000.
	On September 30, 2013 Zoom was in compliance with the covenants of the Financing Agreement with Rosenthal & Rosenthal, Inc.

9_Stockholders_Equity

9. Stockholder's Equity	9 Months Ended
	Sep. 30, 2013
Equity [Abstract]	'
9. Stockholder's Equity	'
	In June 2013, the Company distributed subscription rights to purchase shares of common stock at $0.28 per share. As a result of the offering, the Company received gross proceeds of $282,520 through the issuance of 1,009,000 shares of its Common Stock.

3_Inventories_Tables

3. Inventories (Tables)	9 Months Ended
	Sep. 30, 2013
Inventories Tables	'
Inventories consist	'
	Inventories consist of :	September 30,		December 31,
		2013		2012
	Raw materials	$	628,778	$	720,113
	Work in process		134,264		––
	Finished goods (including $339,900 and $489,400 held by customers at September 30, 2013 and December 31, 2012, respectively)		1,785,307		1,910,273
	Total inventories	$	2,548,349	$	2,630,386

5_Segment_and_Geographic_Infor1

5. Segment and Geographic Information (Tables)	9 Months Ended
	Sep. 30, 2013
Segment And Geographic Information Tables	'
Company's net sales by geographic region	'
		Three Months					Three Months					Nine Months					Nine Months
		Ended					Ended					Ended					Ended
		September 30,		% of			September 30,		% of			September 30,		% of			September 30,		% of
		2013		Total			2012		Total			2013		Total			2012		Total
	North America	$	2,426,296		95	%	$	3,127,784		91	%	$	7,761,524		93	%	$	10,225,466		91	%
	UK		48,714		2	%		158,872		5	%		271,518		3	%		425,681		4	%
	All Other		72,018		3	%		148,037		4	%		330,604		4	%		592,268		5	%
	Total	$	2,547,028		100	%	$	3,434,693		100	%	$	8,363,646		100	%	$	11,243,415		100	%

3_Inventories_Details

3. Inventories (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Inventories Details	'	'
Raw materials	$628,778	$720,113
Work in process	134,264	'
Finished goods (including $339,900 and $489,400 held by customers at September 30, 2013 and December 31, 2012, respectively)	1,785,307	1,910,273
Total inventories	$2,548,349	$2,630,386

3_Inventories_Details_Narrativ

3. Inventories (Details Narrative) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Inventories Details	'	'
Finished goods held by customer	$339,900	$489,400

5_Segment_and_Geographic_Infor2

5. Segment and Geographic Information (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
Revenues from External Customers and Long-Lived Assets [Line Items]	'	'	'	'
Net sales, amount	$2,547,028	$3,434,693	$8,363,646	$11,243,415
Net sales, % of total	100.00%	100.00%	100.00%	100.00%
NorthAmericaMember	'	'	'	'
Revenues from External Customers and Long-Lived Assets [Line Items]	'	'	'	'
Net sales, amount	2,426,296	3,127,784	7,761,524	10,225,466
Net sales, % of total	95.00%	91.00%	93.00%	91.00%
United Kingdom [Member]	'	'	'	'
Revenues from External Customers and Long-Lived Assets [Line Items]	'	'	'	'
Net sales, amount	48,714	158,872	271,518	425,681
Net sales, % of total	2.00%	5.00%	3.00%	4.00%
All Other [Member]	'	'	'	'
Revenues from External Customers and Long-Lived Assets [Line Items]	'	'	'	'
Net sales, amount	$72,018	$148,037	$330,604	$592,268
Net sales, % of total	3.00%	4.00%	4.00%	5.00%

6_Customer_Concentrations_Deta

6. Customer Concentrations (Details Narrative)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
			Three Customers	Three Customers
Major customer, % of sales	68.00%	64.00%	67.00%	65.00%