Minim (MINM) 10-Q 14 Nov 14 2014 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2014
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-14
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	'2014

Condensed_Balance_Sheets_Unaud

Condensed Balance Sheets (Unaudited) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Current assets	'	'
Cash and cash equivalents	$206,416	$55,393
Accounts receivable, net of allowances of $444,039 at September 30, 2014 and $640,456 at December 31, 2013	1,997,928	1,674,812
Inventories	1,425,747	1,714,081
Prepaid expenses and other current assets	258,726	225,152
Total current assets	3,888,817	3,669,438
Equipment, net	49,577	51,025
Total assets	3,938,394	3,720,463
Current liabilities	'	'
Bank debt	689,375	318,318
Accounts payable	698,477	693,546
Accrued expenses	276,261	322,410
Total current liabilities	1,664,113	1,334,274
Total liabilities	1,664,113	1,334,274
Stockholders' equity	'	'
Common stock, $0.01 par value: Authorized - 25,000,000 shares; issued and outstanding - 7,982,704 shares at June 30, 2014 and December 31, 2013, respectively	79,827	79,827
Additional paid-in capital	34,189,475	34,177,779
Accumulated deficit	-32,357,142	-32,235,772
Accumulated other comprehensive income (loss)	362,121	364,355
Total stockholders' equity	2,274,281	2,386,189
Total liabilities and stockholders' equity	$3,938,394	$3,720,463

Condensed_Balance_Sheets_Unaud1

Condensed Balance Sheets (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Assets	'	'
Accounts receivable allowances	$444,039	$640,456
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	7,982,704
Common stock, outstanding	7,982,704	7,982,704

Condensed_Statement_of_Operati

Condensed Statement of Operations and Comprehensive Income (Loss) (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Income Statement [Abstract]	'	'	'	'
Net sales	$3,404,026	$2,547,028	$9,191,073	$8,363,646
Cost of goods sold	2,479,624	1,907,052	6,534,514	5,985,468
Gross profit	924,402	639,976	2,656,559	2,378,178
Operating expenses:	'	'	'	'
Selling	352,900	334,756	1,060,736	1,157,515
General and administrative	257,645	313,723	788,307	1,007,603
Research and development	265,393	225,820	864,272	697,938
Total	875,938	874,299	2,713,315	2,863,056
Operating profit (loss)	48,464	-234,323	-56,754	-484,878
Other income (expense):	'	'	'	'
Interest income	7	7	23	33
Other, net	-24,306	-16,625	-58,800	-48,751
Total other income (expense), net	-24,299	-16,618	-58,777	-48,718
Income (loss) before income taxes	24,165	-250,941	-115,531	-533,596
Income taxes (benefit)	1,797	1,207	5,839	2,734
Net income (loss)	22,368	-252,148	-121,370	-536,330
Other comprehensive income (loss):	'	'	'	'
Foreign currency translation adjustments	-4,339	2,527	-2,234	-5,532
Unrealized gain (loss) for the period	0	-12,800	0	-24,000
Total comprehensive income (loss)	$18,029	($262,421)	($123,604)	($565,862)
Basic and diluted net income (loss) per share	$0	($0.03)	($0.02)	($0.07)
Weighted average common and common equivalent shares:	'	'	'	'
Basic and diluted	7,982,704	7,517,012	7,982,704	7,155,472

Condensed_Statements_of_Cash_F

Condensed Statements of Cash Flows (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Operating activities:	'	'
Net income (loss)	($121,370)	($536,330)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:	'	'
Depreciation and amortization	6,784	7,464
Stock based compensation	11,696	29,595
Provision for accounts receivable allowances	844	-7,149
Provision for inventory reserves	86,846	10,365
Changes in operating assets and liabilities:	'	'
Accounts receivable	-325,118	574,521
Inventories	201,488	71,672
Prepaid expenses and other assets	-34,085	63,178
Accounts payable and accrued expenses	-41,612	43,265
Net cash provided by (used in) operating activities	-214,527	256,581
Investing activities:	'	'
Additions to property, plant and equipment	-5,336	-33,232
Net cash provided by (used in) investing activities	-5,336	-33,232
Financing activities:	'	'
Net funds received from (paid to) bank credit lines	371,057	-618,343
Proceeds from stock rights offering (net of issuance costs)	0	248,678
Net cash provided by (used in) financing activities	371,057	-369,665
Effect of exchange rate changes on cash	-171	1,407
Net change in cash	151,023	-144,909
Cash and cash equivalents at beginning of period	55,393	195,704
Cash and cash equivalents at end of period	206,416	50,795
Supplemental disclosures of cash flow information:	'	'
Cash paid during the period for: Interest	58,201	51,610
Cash paid during the period for: Income taxes	$5,839	$2,734

1_Summary_of_Significant_Accou

1. Summary of Significant Accounting Policies	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Summary of Significant Accounting Policies	'
	The accompanying financial statements are unaudited. However, the condensed balance sheet as of December 31, 2013 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 Zoom Telephonics, Inc. (“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, 2014 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 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, 2013 included in the Company's 2013 Annual Report on Form 10-K.
	(a)  Reclassifications
	Certain reclassifications have been made to the prior year’s financial statements to conform to the 2014 presentation. The reclassifications relate to the presentation of changes in accounts receivable and inventory on the statements of cash flows. The reclassifications do not change the balance sheet, statement of operations or total cash flows from operations.

2_Liquidity

2. Liquidity	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Liquidity	'
	Zoom’s cash balance on September 30, 2014 was $206 thousand, up $151 thousand from December 31, 2013.  A $371 thousand increase in bank debt and $288 thousand decrease in net inventory increased cash, and a $323 thousand increase in net accounts receivable and a net loss of $121 thousand decreased cash.
	On September 30, 2014 Zoom had bank debt of $689 thousand, an unused line of credit of $561 thousand, and working capital of $2.2 million. On December 31, 2013 we had working capital of $2.3 million including $55 thousand in cash and cash equivalents. Our current ratio at September 30, 2014 was 2.3 compared to 2.8 at December 31, 2013.
	On December 18, 2012, the Company entered into a Financing Agreement with Rosenthal & Rosenthal, Inc. (the “Financing Agreement”). The Financing Agreement provided 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 continues until November 30, 2014 and from year to year thereafter, unless sooner terminated by either party as specified in the Financing Agreement. The Lender shall have the right to terminate the Financing Agreement at any time by giving the Company sixty days’ prior written notice. Borrowings are secured by all of the Company assets including intellectual property. The Loan Agreement contained several covenants, including a requirement that the Company maintain tangible net worth of not less than $2.5 million and working capital of not less than $2.5 million. On March 25, 2014, the Company entered into an amendment to the Financing Agreement (the “Amendment”) with an effective date of January 1, 2013.  The Amendment clarified the definition of current assets in the Financing Agreement, reduced the size of the revolving credit line to $1.25 million, and revised the financial covenants so that Zoom is required to maintain tangible net worth of not less than $2.0 million and working capital of not less than $1.75 million.
	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 believes that its financial resources and line of credit are sufficient to fund operations for the foreseeable future if Zoom management's sales and operating profit expectations are met.

3_Inventories

3. Inventories	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Inventories	'
	Inventories consist of :	September 30,		December 31,
		2014		2013
	Materials	$	269,070	$	440,723
	Work in process		21,764		—
	Finished goods (including $82,700 and $304,500 held by customers at September 30, 2014 and December 31, 2013, respectively)		1,134,913		1,273,358
	Total	$	1,425,747	$	1,714,081

4_Contingencies

4. Contingencies	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Contingencies	'
	The Company is party to various lawsuits and administrative proceedings arising in the ordinary course of business. The Company evaluates such lawsuits and proceedings on a case-by-case basis, and its policy is to vigorously contest any such claims which it believes are without merit. The Company's management believes that the ultimate resolution of such matters will not materially and adversely affect the Company's business, financial position, results of operations or cash flows.
	On November 6, 2013, Innovative Wireless Solutions, LLC (“IWS”) filed a complaint against Zoom Telephonics alleging infringement of U.S. Patents Nos. 5,912,895, 6,327,264, and 6,587,473 all entitled “Information Network Access Apparatus and Methods of Communicating Information packets via Telephone Links.”  The Complaint asserts that Zoom sells products with “wireless access points and/or routers capable of connecting to an Ethernet network and an IEEE 802.11 wireless network to provide wireless Internet access.”  The case is in its early stages and discovery is ongoing.  Management is unable to reasonably estimate any potential outcome at this time.

5_Segment_and_Geographic_Infor

5. Segment and Geographic Information	9 Months Ended
	Sep. 30, 2014
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
		2014		Total			2013		Total			2014		Total			2013		Total
	North America	$	3,325,678		98	%	$	2,426,296		95	%	$	8,922,604		97	%	$	7,761,524		93	%
	UK		51,587		1	%		48,714		2	%		140,396		2	%		271,518		3	%
	All Other		26,761		1	%		72,018		3	%		128,073		1	%		330,604		4	%
	Total	$	3,404,026		100	%	$	2,547,028		100	%	$	9,191,073		100	%	$	8,363,646		100	%

6_Customer_Concentrations

6. Customer Concentrations	9 Months Ended
	Sep. 30, 2014
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 2014, three customers accounted for 72% of our total net sales with our largest customer accounting for 51% of our net sales. In the first nine months of 2014, three customers accounted for 73% of the Company’s total net sales with our largest customer accounting for 54% of our net sales. At September 30, 2014 three customers accounted for 88% of our gross accounts receivable, with our largest customer representing 65% of our gross accounts receivable. In the third quarter of 2013, three customers accounted for 68% of our net sales with our largest customer accounting for 47% of our net sales. In the first nine months of 2013, three customers accounted for 67% of our total net sales with our largest customer accounting for 49% of our net sales. At September 30, 2013 three customers accounted for 83% of our gross accounts receivable, with our largest customer representing 68% of our gross accounts receivable.
	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, 2014
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 valued the marketable securities at market value in the financial statements. In the fourth quarter of 2013, Zoom Technologies, Inc. announced a reverse merger resulting in a 10:1 split so that the 80,000 shares became 8,000 shares.  In December 2013 the Company sold all 8,000 shares of Zoom Technologies, Inc. stock. The Company received proceeds of $40 thousand and reported a realized loss of $273 thousand in 2013.

8_Bank_Credit_Line

8. Bank Credit Line	9 Months Ended
	Sep. 30, 2014
Notes to Financial Statements	'
Bank Credit Line	'
	On December 18, 2012, the Company entered into a Financing Agreement with Rosenthal & Rosenthal, Inc. (the “Financing Agreement”). The Financing Agreement provided 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 continues until November 30, 2014 and from year to year thereafter, unless sooner terminated by either party as specified in the Financing Agreement. The Lender shall have the right to terminate the Financing Agreement at any time by giving the Company sixty days’ prior written notice. Borrowings are secured by all of the Company assets including intellectual property. The Loan Agreement contained several covenants, including a requirement that the Company maintain tangible net worth of not less than $2.5 million and working capital of not less than $2.5 million. On March 25, 2014, the Company entered into an amendment to the Financing Agreement (the “Amendment”) with an effective date of January 1, 2013.  The Amendment clarified the definition of current assets in the Financing Agreement, reduced the size of the revolving credit line to $1.25 million, and revised the financial covenants so that Zoom is required to maintain tangible net worth of not less than $2.0 million and working capital of not less than $1.75 million.
	On September 30, 2014 Zoom was in compliance with the covenants of the Financing Agreement with Rosenthal & Rosenthal, Inc.

3_Inventories_Tables

3. Inventories (Tables)	9 Months Ended
	Sep. 30, 2014
Inventories Tables	'
Inventories consist	'
	Inventories consist of :	September 30,		December 31,
		2014		2013
	Materials	$	269,070	$	440,723
	Work in process		21,764		—
	Finished goods (including $82,700 and $304,500 held by customers at September 30, 2014 and December 31, 2013, respectively)		1,134,913		1,273,358
	Total	$	1,425,747	$	1,714,081

5_Segment_and_Geographic_Infor1

5. Segment and Geographic Information (Tables)	9 Months Ended
	Sep. 30, 2014
Segment And Geographic Information Tables	'
Company's net sales by geographic region	'
	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
		2014		Total			2013		Total			2014		Total			2013		Total
	North America	$	3,325,678		98	%	$	2,426,296		95	%	$	8,922,604		97	%	$	7,761,524		93	%
	UK		51,587		1	%		48,714		2	%		140,396		2	%		271,518		3	%
	All Other		26,761		1	%		72,018		3	%		128,073		1	%		330,604		4	%
	Total	$	3,404,026		100	%	$	2,547,028		100	%	$	9,191,073		100	%	$	8,363,646		100	%

3_Inventories_Details

3. Inventories (Details) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Inventories Details	'	'
Raw materials	$269,070	$440,723
Work in process	21,764	0
Finished goods (including $78,500 and $304,500 held by customers at June 30, 2014 and December 31, 2013, respectively)	1,134,913	1,273,358
Total inventories	$1,425,747	$1,714,081

3_Inventories_Details_Narrativ

3. Inventories (Details Narrative) (USD $)	Sep. 30, 2014	Dec. 31, 2013
Inventories Details	'	'
Finished goods held by customer	$82,700	$304,500

5_Segment_and_Geographic_Infor2

5. Segment and Geographic Information (Details) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013	Sep. 30, 2014	Sep. 30, 2013
Revenues from External Customers and Long-Lived Assets [Line Items]	'	'	'	'
Net sales, amount	$3,404,026	$2,547,028	$9,191,073	$8,363,646
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	3,325,678	2,426,296	8,922,604	7,761,524
Net sales, % of total	98.00%	95.00%	97.00%	93.00%
United Kingdom [Member]	'	'	'	'
Revenues from External Customers and Long-Lived Assets [Line Items]	'	'	'	'
Net sales, amount	51,587	48,714	140,396	271,518
Net sales, % of total	1.00%	2.00%	2.00%	3.00%
All Other [Member]	'	'	'	'
Revenues from External Customers and Long-Lived Assets [Line Items]	'	'	'	'
Net sales, amount	$26,761	$72,018	$128,073	$330,604
Net sales, % of total	1.00%	3.00%	1.00%	4.00%

6_Customer_Concentrations_Deta

6. Customer Concentrations (Details Narrative)	9 Months Ended
	Sep. 30, 2014	Sep. 30, 2013
Major customer, % of sales	54.00%	'
Three Customers	'	'
Major customer, % of sales	73.00%	67.00%