Minim (MINM) 10-Q 15 May 20 2020 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2020	May 14, 2020
Document And Entity Information
Entity Registrant Name	Zoom Telephonics, Inc.
Entity Central Index Key	0001467761
Document Type	10-Q
Document Period End Date	Mar. 31, 2020
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		21,434,328
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2020
Entity Interactive Data Current	Yes
Entity Incorporation State Country Code	DE
Entity File Number	0-53722

Condensed Balance Sheets (Unaud

Condensed Balance Sheets (Unaudited) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Current assets
Cash and cash equivalents	$ 27,611	$ 1,216,893
Restricted cash	550,000	150,000
Accounts receivable, net	5,946,867	4,070,576
Inventories	4,178,734	7,440,350
Prepaid expenses and other current assets	237,370	269,738
Total current assets	10,940,582	13,147,557
Other assets	345,000	349,335
Operating lease right-of-use assets, net	77,634	102,716
Equipment, net	281,051	303,099
Total assets	11,644,267	13,902,707
Current liabilities
Bank credit line	387,298	0
Accounts payable	2,776,811	5,024,529
Operating lease liabilities	77,634	102,716
Accrued other expenses	2,720,701	2,666,471
Total current liabilities	5,962,444	7,793,716
Total liabilities	5,962,444	7,793,716
Stockholders' equity
Common stock: authorized: 40,000,000 shares at $0.01 par value, Issued and outstanding: 21,276,762 shares at March 31, 2020 and 20,929,928 shares at December 31, 2019	212,767	209,299
Additional paid-in capital	46,817,573	46,496,330
Accumulated deficit	(41,348,517)	(40,596,638)
Total stockholders' equity	5,681,823	6,108,991
Total liabilities and stockholders' equity	$ 11,644,267	$ 13,902,707

Condensed Balance Sheets (Una_2

Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares	Mar. 31, 2020	Dec. 31, 2019
Stockholders Equity
Common stock, par value	$ .01	$ 0.01
Common stock, authorized	40,000,000	40,000,000
Common stock, issued	21,276,762	20,929,928
Common stock, outstanding	21,276,762	20,929,928

Condensed Statement of Operatio

Condensed Statement of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Income Statement [Abstract]
Net sales	$ 11,955,603	$ 8,010,089
Cost of goods sold	8,860,385	5,591,772
Gross profit	3,095,218	2,418,317
Operating expenses:
Selling	2,354,243	2,447,513
General and administrative	827,939	567,799
Research and development	652,752	482,403
Total	3,834,934	3,497,715
Operating income (loss)	(739,716)	(1,079,398)
Other income (expense):
Interest income	314	35
Interest expense	(5,712)	(32,217)
Other, net	(449)	(1,750)
Total other income (expense)	(5,847)	(33,932)
Income (loss) before income taxes	(745,563)	(1,113,330)
Income taxes (benefit)	6,316	7,788
Net income (loss)	$ (751,879)	$ (1,121,118)
Net income (loss) per share:
Basic and diluted	$ (0.04)	$ (0.07)
Basic and diluted weighted average common and common equivalent shares	21,080,179	16,137,598

Condensed Consolidated Statemen

Condensed Consolidated Statements of Stockholders' Equity - USD ($)	Common Stock	Additional Paid In Capital	Accumulated Deficit	Total
Beginning Balance, Shares at Dec. 31, 2018	16,124,681
Beginning Balance, Amount at Dec. 31, 2018	$ 161,247	$ 41,035,936	$ (37,320,838)	$ 3,876,345
Net income (loss)			(1,121,118)	(1,121,118)
Stock option exercise, Shares	37,500
Stock option exercise, Amount	$ 375	4,725		5,100
Stock based compensation		175,012		175,012
Ending Balance, Shares at Mar. 31, 2019	16,162,181
Ending Balance, Amount at Mar. 31, 2019	$ 161,622	41,215,673	(38,441,956)	2,935,339
Beginning Balance, Shares at Dec. 31, 2019	20,929,928
Beginning Balance, Amount at Dec. 31, 2019	$ 209,299	46,496,330	(40,596,638)	6,108,991
Net income (loss)			(751,879)	(751,879)
Stock option exercise, Shares	346,834
Stock option exercise, Amount	$ 3,468	194,190		197,658
Stock based compensation		127,053		127,053
Ending Balance, Shares at Mar. 31, 2020	21,276,762
Ending Balance, Amount at Mar. 31, 2020	$ 212,767	$ 46,817,573	$ (41,348,517)	$ 5,681,823

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Operating activities:
Net income (loss)	$ (751,879)	$ (1,121,118)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	59,399	78,203
Amortization of right-of-use assets	25,082	120,902
Stock based compensation	127,053	175,012
Provision for (recovery of) accounts receivable allowances	(4,203)	1,943
Provision for inventory reserves	0	23,957
Changes in operating assets and liabilities:
Accounts receivable	(1,872,088)	(430,021)
Inventories	3,261,616	1,421,071
Prepaid expenses and other assets	32,368	312,542
Operating lease liabilities	(25,082)	(129,831)
Accounts payable and accrued expenses	(2,193,488)	(713,268)
Net cash provided by (used in) operating activities	(1,341,222)	(260,608)
Investing activities:
Certification costs incurred and capitalized	(20,000)	(135,000)
Purchases of plant and equipment	(13,016)	0
Net cash provided by (used in) investing activities	(33,016)	(135,000)
Financing activities:
Net proceeds from (payments to) bank credit lines	387,298	380,112
Proceeds from stock option exercises	197,658	5,100
Net cash provided by (used in) financing activities	584,956	385,212
Net change in cash	(789,282)	(10,396)
Cash, cash equivalents, and restricted cash at beginning of period	1,366,893	125,982
Cash and cash equivalents at end of period	577,611	115,586
Supplemental disclosures of cash flow information:
Cash paid during the period for: Interest	5,712	32,217
Cash paid during the period for: Income taxes	6,316	7,788
Total Cash	$ 577,611	$ 125,982

1. Summary of Significant Accou

1. Summary of Significant Accounting Policies	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	Basis of Presentation The accompanying condensed consolidated financial statements (the “financial statements”) are unaudited. However, the condensed consolidated balance sheet as of December 31, 2019 was derived from audited financial statements. In the opinion of management, the accompanying financial statements include all necessary adjustments to present fairly the condensed consolidated financial position, results of operations and cash flows of Zoom Telephonics, Inc. (the “Company” or “Zoom”). 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 accompanying financial statements have been prepared assuming that the Company will continue as a going concern and contemplates continuity of operations, realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company’s ability to continue as a going concern is contingent upon, among other factors, the Company’s ability to generate sufficient cash flow from operations, decrease operating costs, obtain additional equity or debt financing and comply with the financial and other covenants contained in the Company’s Financing Agreement, as amended, with Rosenthal & Rosenthal, Inc. as described in Note 7. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The 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, 2019 included in the Company's 2019 Annual Report on Form 10-K for the year ended December 31, 2019. Subsequent Events Due to requirements of the United States Department of Homeland Security, and resulting from the continued 25% tariff on imports from China, the Company was required to commit to a $250 thousand letter of credit in April 2020. The Company applied for and received approval for a SBA Paycheck Protection Plan Loan with Primary Bank under the CARES Act. The loan from the US government in the amount of $0.6 million was approved in mid-April and funded in late April 2020. 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. The Company has evaluated subsequent events from March 31, 2020 through the date of this filing and other than above events, has determined that there are no other such events requiring recognition or disclosure in the financial statements. Sales Tax The Company has a state sales tax liability stemming from the Company’s ‘Fulfilled By Amazon’ sales agreement which allows Amazon to warehouse the Company’s inventory throughout a number of states. Sales tax is collected in states where the Company is required to collect and the Company is registered in each of these states. Sales and Use Tax filings are completed and filed and tax remitted back to the states is consistent with the individual state filing requirements. Changes to state sales tax regulations are monitored to stay current with the law. As of March 31, 2020, approximately $51 thousand of the original state sales tax liability remains open. The additional liability of approximately $36 thousand relates to sales tax that has been collected and not yet remitted to the respective states. Revenue Recognition Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. ● Identification of the contract, or contracts, with a customer — ● Identification of the performance obligations in the contract — ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, the Company satisfies a performance obligation ● The Company has a present right to payment ● The customer has legal title to the goods ● The Company has transferred physical possession of the goods ● The customer has the significant risks and rewards of ownership of the goods ● The customer has accepted the goods The Company has concluded that transfer of control substantively transfers to the customer upon shipment or delivery, depending on the delivery terms of the purchase agreement. Other considerations of Topic 606 include the following: ● Warranties ● Returned Goods ● Price protection ● Volume Rebates and Promotion Programs Accounts receivable, net: March 31, 2020 December 31, 2019 Gross accounts receivable $ 6,218,898 $ 4,346,810 Allowance for doubtful accounts (272,031 ) (276,234 ) Total accounts receivable, net $ 5,946,867 $ 4,070,576 Accrued other expenses: March 31, 2020 December 31, 2019 Audit, legal, payroll $ 242,219 $ 256,966 Royalty costs 1,275,000 1,125,000 Sales and use tax 86,796 148,836 Sales allowances * 879,916 901,196 Other 236,770 234,473 Total accrued other expenses $ 2,720,701 $ 2,666,471 * A related inventory contract asset stemming from the sales return reserve of $399 thousand and $376 thousand is included within inventories on the accompanying condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, respectively. Company revenues are primarily from the selling of products that are shipped and billed. Consistent with the revenue recognition accounting standard, revenues are recognized when control is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Sales are earned at a point in time through ship-and-bill performance obligations. Regarding disaggregated revenue disclosures, as previously noted, the Company’s business is controlled as a single operating segment that consists of the manufacture and sale of Internet access and other communications-related products. Most of the Company’s transactions are very similar in nature, contract, terms, timing, and transfer of control of goods. Disaggregated revenue by distribution channel for three months ended: Through : March 31, 2020 March 31, 2019 Retailers $ 10,974,290 $ 7,227,364 Distributors 597,529 529,391 Other 383,784 253,334 Total $ 11,955,603 $ 8,010,089 Disaggregated revenue by product for three months ended: March 31, 2020 March 31, 2019 Cable Modems & gateways $ 11,170,010 $ 7,073,277 Other 785,593 936,812 Total $ 11,955,603 $ 8,010,089 Revenue is recognized when obligations under the terms of a contract with customers are satisfied. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the products. Based on the nature of the Company’s products and customer contracts, the Company has not recorded any deferred revenue. Any agreements with customers that could impact revenue such as rebates or promotions are recognized in the period of agreement. Amended and Restated Certificate of Incorporation On July 25, 2019, the Company filed a Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company which increased the number of authorized common shares from 25,000,000 to 40,000,000. Recently Issued Accounting Standards In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, " Financial Instruments Credit Losses —Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU 2019-12 “ Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

2. Liquidity

2. Liquidity	3 Months Ended
	Mar. 31, 2020
Liquidity
Liquidity	The Company’s cash balance on March 31, 2020 was $577.6 thousand of which $550 thousand was restricted. This compares to $1.4 million on December 31, 2019 of which $150 thousand was restricted. On March 31, 2020, the Company had $387.3 thousand outstanding on its $4.0 million bank credit line, working capital of $5.0 million, and a current ratio of 1.8. The Company closed on a $5 million private placement and issued an aggregate of 4,545,455 shares on May 3, 2019, and in connection with the closing of the offering two designees of an investor in the private placement joined Zoom’s Board of Directors. The Company’s net losses of $3.3 million in 2019, $74 thousand in 2018, and recent quarterly loss of $752 thousand for the quarter ended March 31, 2020 along with cash used in operations of $1.5 million in 2019 and $1.3 million for the period ended March 31, 2020 have raised management concerns as to the Company’s ability to continue as going concern within one year from the date of filing these financial statements. The Company’s financial statements have been prepared assuming that the Company will continue as a going concern and contemplates continuity of operations, realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company’s ability to continue as a going concern is contingent upon, among other factors, the Company’s ability to generate sufficient cash flow from operations, decrease operating costs, obtain additional equity or debt financing and comply with the financial and other covenants contained in the Company’s Financing Agreement, as amended, with Rosenthal & Rosenthal, Inc. as described in Note 7. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In addition, the assessment of US tariffs and the COVID-19 pandemic has created potential disruptions to the Company’s operations. The 25% US tariffs assessed on products imported from China had a significant impact on cash and net loss for 2019 and the first quarter of 2020. In the first quarter of 2020, these tariffs were $1.5 million and were the primary reason for the Company recording a net loss of $752 thousand for the quarter. These tariffs will continue to have an impact on our financial performance until we have fully transitioned all of our production supply out of China. In late 2019, we made the decision to move our outsourced manufacturing operations from China to Vietnam, primarily to end the exposure to the trade-war imposed tariffs with China. While the COVID-19 pandemic caused delays in the original transition plan, the Company is working actively working with it primary outsourced development partner to establish manufacturing operations in Haiphong, Vietnam. The transition to Vietnam has begun, the Company has reached full production in Vietnam on one of its top models and expects to have all manufacturing of existing models fully transitioned to Vietnam by the end of June 2020. Zoom signed an agreement with Foxconn, one of the leading global outsourced manufacturers to the high-tech industry, to manufacture several of the new models the Company plans to introduce to the market during 2020. While the COVID-19 pandemic disrupted sales and production for a short period of time during mid-March 2020, the Company worked through the disruption. In mid-March 2020, sales initially decreased in response to a key distributor focusing its distribution logistics on essential healthcare products. The Company’s products, which are instrumental to businesses and consumers establishing remote and home-based offices, have since been designated as essential and are once again being offered and are selling at normal levels and certain models are currently selling above their average run rates before COVID-19 had a global impact on business and the economy. The Company continues to work closely with its manufacturing partners and distributors to ensure that the Company’s products remain consistently available for sale to end-users. The Company has implemented cost cutting measures to conserve cash, put a hold on all new hiring during 2020, and has given notice that it will not renew the same footprint of its headquarters office lease when it expires in June 2020, retaining just a few offices in the current co-work space office suite for research and testing purposes. During the COVID-19 pandemic, the Company’s work force continues to work remotely, and is continuing operations. We have negotiated extended and improved payment terms through the end of June 2020 with our primary outsourced manufacturing partner. On April 13, 2020, the Company entered into a sixth amendment to the Financing Agreement with Rosenthal & Rosenthal, Inc. This amendment increased the size of the Company’s revolving credit line to $4.0 million effective on the date of this amendment. The Company’s credit line has a maturity date of November 2020, and automatically renews from year to year unless cancelled under the terms of Financing Agreement, as amended. The Company entered into an extension of its networking product license agreement with Motorola through 2025 and also entered into a new license agreement with Motorola to sell consumer grade home security and monitoring products and to provide related services. The Company continues to develop new products and expects to introduce several new models to the market during 2020 and 2021. The Company’s ability to maintain adequate levels of liquidity depends in part on its ability to sell inventory on hand, to continue to manufacture and import more inventory to meet existing demand, and to collect related receivables. The Company continues to execute its plan to move the manufacture of its products to outside of China by the end of June 2020. The Company also continues to work with its distribution partners in North America to deliver inventory to its customers. The current environment is difficult, particularly due to the COVID-19 pandemic, and the outcome of these matters cannot be predicted with any certainty at this time and raises challenges to the Company’s ability to continue as a going concern. There can be no assurance that the Company’s ongoing efforts will continue to be successful.

3. Inventories

3. Inventories	3 Months Ended
	Mar. 31, 2020
Inventory Disclosure [Abstract]
Inventories	Inventories consist of : March 31, 2020 December 31, 2019 Materials $ 897,973 $ 911,054 Work in process 77,255 10,284 Finished goods 3,203,506 6,519,012 Total $ 4,178,734 $ 7,440,350 Finished goods includes consigned inventory of approximately $848 thousand at March 31, 2020 and approximately $1.8 million at December 31, 2019. The Company reviews inventory for obsolete and slow-moving products each quarter and makes provisions based on its estimate of the probability that the material will not be consumed or that it will be sold below cost. The provision for inventory reserves was negligible for both three months ended March 31, 2020 and 2019, respectively.

4. Commitments and Contingencie

4. Commitments and Contingencies	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Commitments and Contingencies	(a) 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 reviews the status of its legal proceedings and records a provision for a liability when it is considered probable that both a liability has been incurred and the amount of the loss can be reasonably estimated. This review is updated periodically as additional information becomes available. If either or both of the criteria are not met, the Company reassesses whether there is at least a reasonable possibility that a loss, or additional losses, may be incurred. If there is a reasonable possibility that a loss may be incurred, the Company discloses the estimate of the amount of the loss or range of losses, that the amount is not material, or that an estimate of the loss cannot be made. The Company expenses its legal fees as incurred. On January 23, 2020, William Schulze filed a complaint, and subsequently filed an amended complaint on April 3, 2020 (collectively the “Schulze Complaint”) as lead plaintiff on behalf of purchasers of Zoom modems in a putative class action lawsuit against Zoom in the U.S. District Court for the District of Massachusetts. The Schulze Complaint alleges that Zoom modems were sold as new despite containing refurbished parts. The Company is preparing to file its answer to the Schulze Complaint and intends to vigorously defend itself against these claims. The Company does not have any other pending or outstanding material legal proceedings beyond that referenced above. (b) Commitments In May 2015, Zoom entered into a License Agreement with Motorola Mobility LLC (the “License Agreement”). The License Agreement provides Zoom with an exclusive license to use certain trademarks owned by Motorola Trademark Holdings, LLC. for the manufacture, sale and marketing of consumer cable modem products in the United States and Canada through certain authorized sales channels. In August 2016, Zoom entered into an amendment to the License Agreement with Motorola Mobility LLC (the “2016 Amendment”). The 2016 Amendment expands Zoom’s exclusive license to use the Motorola trademark to a wide range of authorized channels worldwide, and expands the license from cable modems and gateways to also include consumer routers, WiFi range extenders, home powerline network adapters, and access points. In August 2017, Zoom entered into an amendment to the License Agreement with Motorola Mobility LLC (the “2017 Amendment”). The 2017 Amendment expands Zoom’s exclusive license to use the Motorola trademark to a wide range of authorized channels worldwide, and expands the license from cable modems, gateways, consumer routers, WiFi range extenders, home powerline network adapters, and access points to also include MoCa adapters, and cellular sensors. The License Agreement, as amended, has a five-year term beginning January 1, 2016 through December 31, 2020 and increased the minimum royalty payments as outlined below. In March 2020, Zoom entered into an amendment to the License Agreement with Motorola Mobility LLC. The 2020 Amendment expands Zoom’s exclusive license to use the Motorola trademark to a wide range of authorized channels worldwide, including Service Provider Channels. The License Agreement, as amended, has a ten-year term beginning January 1, 2016 through December 31, 2025 and modified the minimum royalty payments as outlined below. In connection with the License Agreement, the Company has committed to reserve a certain percentage of wholesale prices for use in advertising, merchandising and promotion of the related products. Additionally, the Company is required to make quarterly royalty payments equal to a certain percentage of the preceding quarter’s net sales with minimum annual royalty payments as follows: Year ending December 31, 2020 $ 5,100,000 2021 $ 4,300,000 2022 $ 4,300,000 2023 $ 4,300,000 2024 $ 4,300,000 2025 $ 4,300,000 Royalty expense under the License Agreement was $1,275,000 for the first quarter of 2020 and $1,125,000 for the first quarter of 2019, and is included in selling expense on the accompanying condensed consolidated statements of operations. Due to requirements of the United States Department of Homeland Security, and resulting from the continued 25% tariff on imports from China, the Company was required to commit to a $150 thousand letter of credit in July 2019, a $400 thousand letter of credit in January 2020, and a $250 thousand letter of credit in April 2020, to secure a bond on the import of these products. These funds will be reported as restricted cash, consistent with accounting reporting guidance.

5. Lease Obligations

5. Lease Obligations	3 Months Ended
	Mar. 31, 2020
Leases [Abstract]
Lease Obligations	In June 2016, the Company signed a three-year sub-lease agreement for 11,480 square feet on the 28th floor of 99 High Street, Boston, MA 02110. The lease for this facility expired on June 30, 2019. The Company signed a twelve-month lease agreement for offices at 225 Franklin Street, Boston, MA and completed the move to this location on June 28, 2019. The lease has an automatic renewal option provision and renews unless cancelled under the terms of the agreement. The lease for these offices expires on June 30, 2020. The Company has elected to apply the short-term lease exception under ASC 842 which does not require the recognition of an operating lease liability or right-of-use asset on the condensed consolidated balance sheet in relation to the lease at 225 Franklin Street. Rent expense was $127.2 for the first quarter of 2020 and $109.2 thousand for the first quarter of 2019. The Company performs most of the final assembly, testing, packaging, warehousing and distribution at a production and warehouse facility in Tijuana, Mexico. In November 2014, the Company signed a one-year lease with five one-year renewal options thereafter for an 11,390 square foot facility in Tijuana, Mexico. In September 2015, Zoom extended the term of the lease from December 1, 2015 through November 30, 2018. In September 2015, Zoom also signed a new lease for additional space in the adjacent building, which doubled its capacity. The term of this lease was from March 1, 2016 through November 30, 2018. The Company currently has signed a lease extension to stay in the existing facilities through at least November 30, 2020. Rent expense was $26.6 thousand for both the first quarter of 2020 and the first quarter of 2019. The Company also has a lease for approximately 1,550 square feet in Boston, MA that expired on October 31, 2019 and has been renewed for an additional 12 -month period starting November 1, 2019. The Company has another one-year lease signed in December 2019 for approximately 1,500 square feet in Boston. The Company has elected to apply the short-term lease exception for both of these leases under ASC 842 which does not require the recognition of an operating lease liability or right-of-use asset on the condensed consolidated balance sheet in relation to this lease. Rent expense for these leases was approximately $35.7 thousand for the first quarter of 2020 and $18.0 thousand for the first quarter of 2019. At inception of a lease the Company determines whether that lease meets the classification criteria of a finance or operating lease. Some of the Company’s lease arrangements contain lease components (e.g., minimum rent payments) and non-lease components (e.g., maintenance, labor charges, etc.). The Company generally accounts for each component separately based on the estimated standalone price of each component. As of March 31, 2020, the Company's estimated future minimum committed rental payments, excluding executory costs, under the operating leases described above to their expiration or the earliest possible termination date, whichever is sooner, were $452 thousand for 2020. There are no future minimum committed rental payments that extend beyond 2020. Operating Leases Operating leases are included in operating lease right-of-use assets, operating lease liabilities, and long-term operating lease liabilities on the condensed consolidated balance sheets. These assets and liabilities are recognized at the commencement date based on the present value of remaining lease payments over the lease term using the Company’s secured incremental borrowing rates or implicit rates, when readily determinable. Based on the Company's financial position and ability to obtain financing at the time ASC 842 was adopted, 10% was considered by management to be a reasonable incremental borrowing rate when calculating the present value of remaining lease payments over the lease term. Short-term operating leases, which have an initial term of 12 months or less, are not recorded on the balance sheet. Lease expense for operating leases is recognized on a straight-line basis over the lease term. Lease expense is included in general and administrative expenses on the condensed consolidated statements of operations. The following table presents information about the amount and timing of the Company’s operating leases as of March 31, 2020. March 31, 2020 Maturity of Lease Liabilities Lease Payments 2020 (remaining) $ 79,670 Less: Imputed interest (2,036 ) Present value of operating lease liabilities $ 77,634 Balance Sheet Classification Operating lease liabilities $ 77,634 Other Information Weighted-average remaining lease term for operating leases 0.75 Weighted-average discount rate for operating leases 10.0 % Cash Flows Upon adoption of the new lease standard, the Company recorded a lease liability in the amount of $420,899, right-of-use assets of $395,565, and reclassified deferred rent of $25,334 as a reduction of the right-of-use assets. During the three months-ended March 31, 2020, the operating lease liability was reduced by $25,082 and we recorded amortization of our right-of-use assets of $25,082. Supplemental cash flow information and non-cash activity related to our operating leases are as follows: Three Months Ended March 31, 2020 2019 Operating cash flow information: Amounts included in measurement of lease liabilities $ 26,557 $ 135,617 Non-cash activities Right-of-use assets obtained in exchange for lease obligations $ 0 $ 395,565

6. Customer and Vendor Concentr

6. Customer and Vendor Concentrations	3 Months Ended
	Mar. 31, 2020
Risks and Uncertainties [Abstract]
Customer and Vendor Concentrations	The Company sells its products primarily through high-volume retailers and distributors, Internet service providers, value-added resellers, 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 companies account for a substantial portion of the Company’s revenues. In the first quarter of 2020, two companies accounted for 10% or greater individually and 86% in the aggregate of the Company’s total net sales. At March 31, 2020, two companies with an accounts receivable balance of 10% or greater individually accounted for a combined 73% of the Company’s accounts receivable. In the first quarter of 2019, two companies accounted for 10% or greater individually and 81% in the aggregate of the Company’s total net sales. At March 31, 2019, three companies with an accounts receivable balance of 10% or greater individually accounted for a combined 67% of the Company’s 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 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. The Company participates in the PC peripherals industry, which is characterized by aggressive pricing practices, continually changing customer demand patterns and rapid technological developments. The Company's operating results could be adversely affected should the Company be unable to successfully anticipate customer demand accurately; manage its product transitions, inventory levels and manufacturing process efficiently; distribute its products quickly in response to customer demand; differentiate its products from those of its competitors or compete successfully in the markets for its new products. The Company depends on many third-party suppliers for key components contained in its product offerings. For some of these components, the Company may only use a single source supplier, in part due to the lack of alternative sources of supply. During the first quarter of 2020, the Company had two suppliers that provided 99% of the Company's purchased inventory. During the first quarter of 2019, the Company had one supplier that provided 99% of the Company's purchased inventory.

7. Credit Lines

7. Credit Lines	3 Months Ended
	Mar. 31, 2020
Line of Credit Facility [Abstract]
Credit Lines	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 continued until November 30, 2014 and automatically renews from year to year thereafter, unless sooner terminated by either party as specified in the Financing Agreement. The Lender has the right to terminate the Financing Agreement at any time by giving the Company 60 days’ prior written notice. 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 October 29, 2015, the Company entered into a second amendment to the Financing Agreement (the “Second Amendment”). Retroactive to October 1, 2015, the Second Amendment eliminated $2,500 in monthly charges for the Financing Agreement. Effective December 1, 2015, the Second Amendment reduces the effective rate of interest to 2.25% plus an amount equal to the higher of prime rate or 3.25%. On July 19, 2016, the Company entered into a third amendment to the Financing Agreement. The Amendment increased the size of the revolving credit line to $2.5 million effective as of date of the amendment. On September 1, 2016, the Company entered into a fourth amendment to the Financing Agreement. The Amendment increased the size of the revolving credit line to $3.0 million effective with the date of this amendment. On November 2, 2018, the Company entered into a fifth amendment to the Financing Agreement. The Amendment reduced the effective interest rate by 1 percentage point and reduced the annual facility fee by 0.25 percent. On April 13, 2020, the Company entered into a sixth amendment to the Financing Agreement. The Amendment increased the size of the revolving credit line to $4.0 million effective with the date of this amendment. The Company is required to calculate its covenant compliance on a quarterly basis and as of March 31, 2020, the Company was in compliance with both its working capital and tangible net worth covenants. At March 31, 2020, the Company’s tangible net worth was approximately $5.3 million, while the Company’s working capital was approximately $5.0 million. Loan availability is based on certain eligible receivables. Loan availability is based on eligible receivables less offsets, if any. Approximately $2.6 million was available on this credit line as of March 31, 2020, consisting of $3 million as 75% of eligible receivables, which is limited to the $3 million loan limit, less an offset of $51 thousand for state tax liabilities and further reduced by the $387 thousand outstanding bank debt balance as of March 31, 2020. The sales tax offset will be reduced as the sales tax liability is paid down.

8. Earnings (Loss) Per Share

8. Earnings (Loss) Per Share	3 Months Ended
	Mar. 31, 2020
Net income (loss) per share:
Earnings (Loss) Per Share	Basic earnings (loss) per share is calculated by dividing net income (loss) attributable to common stockholders by the weighted-average number of common shares, except for periods with a loss from operations. Diluted earnings (loss) per share reflects additional common shares that would have been outstanding if dilutive potential shares of common stock had been issued. Potential shares of common stock that may be issued by the Company include shares of common stock that may be issued upon exercise of outstanding stock options. Under the treasury stock method, the unexercised options are assumed to be exercised at the beginning of the period or at issuance, if later. The assumed proceeds are then used to purchase shares of common stock at the average market price during the period. Basic and diluted loss per common share for the three-month period ended March 31, 2020 was $0.04, and diluted loss per common share excludes the effects of 394,846 common share equivalents, since such inclusion would be anti-dilutive. Basic and diluted loss per common share for the three-month period ended March 31, 2019 was $0.07, and diluted loss per common share excludes the effects of 496,028 common share equivalents, since such inclusion would be anti-dilutive. The common share equivalents consist of common shares issuable upon exercise of outstanding stock options.

9. Related Party Disclosures

9. Related Party Disclosures	3 Months Ended
	Mar. 31, 2020
Related Party Transactions [Abstract]
Related Party Disclosures	On July 25, 2019, the Company entered into a Master Partnership Agreement with Minim Inc. (“Minim”), together with a related Statement of Work, License, Collaborative Agreement, Software/Service Availability Agreement and Software/Service Support Level Agreement (collectively, the “Partnership Agreement”). Under the Partnership Agreement, the Company will integrate Minim software and services into certain hardware products distributed by the Company, and Minim will be entitled to certain fees and a portion of revenue received from the end users of such services and software. The Company and Minim entered into an additional Statement of Work on December 31, 2019 providing for further integration of Minim services, with a monthly minimum payment of $5,000 payable by the Company to Minim starting in January 2020 for a period of thirty-six months and a requirement for Minim to purchase at least $90,000 of the Company’s hardware by December 2022. As of March 31, 2020, the Company has made payments of $10,000 on February 21, 2020, and $5,000 on March 12, 2020 to Minim under the Partnership Agreement. Jeremy Hitchcock, who serves as Executive Chairman of the Company’s Board of Directors, is the co-founder, Chief Executive Officer and a stockholder of Minim. During the fiscal year ended December 31, 2019, no payments were made by either the Company or Minim under the Partnership Agreement other than nominal payments, and no services were provided or expenses incurred in connection with the Partnership Agreement. As of December 31, 2019, no amounts were due from or to the Company under the Partnership Agreement.

1. Summary of Significant Acc_2

1. Summary of Significant Accounting Policies (Policies)	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Basis of Presentation	The accompanying condensed consolidated financial statements (the “financial statements”) are unaudited. However, the condensed consolidated balance sheet as of December 31, 2019 was derived from audited financial statements. In the opinion of management, the accompanying financial statements include all necessary adjustments to present fairly the condensed consolidated financial position, results of operations and cash flows of Zoom Telephonics, Inc. (the “Company” or “Zoom”). 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 accompanying financial statements have been prepared assuming that the Company will continue as a going concern and contemplates continuity of operations, realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company’s ability to continue as a going concern is contingent upon, among other factors, the Company’s ability to generate sufficient cash flow from operations, decrease operating costs, obtain additional equity or debt financing and comply with the financial and other covenants contained in the Company’s Financing Agreement, as amended, with Rosenthal & Rosenthal, Inc. as described in Note 7. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. The 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, 2019 included in the Company's 2019 Annual Report on Form 10-K for the year ended December 31, 2019.
Subsequent Events	Due to requirements of the United States Department of Homeland Security, and resulting from the continued 25% tariff on imports from China, the Company was required to commit to a $250 thousand letter of credit in April 2020. The Company applied for and received approval for a SBA Paycheck Protection Plan Loan with Primary Bank under the CARES Act. The loan from the US government in the amount of $0.6 million was approved in mid-April and funded in late April 2020. 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. The Company has evaluated subsequent events from March 31, 2020 through the date of this filing and other than above events, has determined that there are no other such events requiring recognition or disclosure in the financial statements.
Sales Tax	The Company has a state sales tax liability stemming from the Company’s ‘Fulfilled By Amazon’ sales agreement which allows Amazon to warehouse the Company’s inventory throughout a number of states. Sales tax is collected in states where the Company is required to collect and the Company is registered in each of these states. Sales and Use Tax filings are completed and filed and tax remitted back to the states is consistent with the individual state filing requirements. Changes to state sales tax regulations are monitored to stay current with the law. As of March 31, 2020, approximately $51 thousand of the original state sales tax liability remains open. The additional liability of approximately $36 thousand relates to sales tax that has been collected and not yet remitted to the respective states.
Revenue Recognition	Revenue recognition is evaluated through the following five steps: (i) identification of the contract, or contracts, with a customer; (ii) identification of the performance obligations in the contract; (iii) determination of the transaction price; (iv) allocation of the transaction price to the performance obligations in the contract; and (v) recognition of revenue when or as a performance obligation is satisfied. ● Identification of the contract, or contracts, with a customer — ● Identification of the performance obligations in the contract — ● Determination of the transaction price ● Allocation of the transaction price to the performance obligations in the contract ● Recognition of revenue when, or as, the Company satisfies a performance obligation ● The Company has a present right to payment ● The customer has legal title to the goods ● The Company has transferred physical possession of the goods ● The customer has the significant risks and rewards of ownership of the goods ● The customer has accepted the goods The Company has concluded that transfer of control substantively transfers to the customer upon shipment or delivery, depending on the delivery terms of the purchase agreement. Other considerations of Topic 606 include the following: ● Warranties ● Returned Goods ● Price protection ● Volume Rebates and Promotion Programs Accounts receivable, net: March 31, 2020 December 31, 2019 Gross accounts receivable $ 6,218,898 $ 4,346,810 Allowance for doubtful accounts (272,031 ) (276,234 ) Total accounts receivable, net $ 5,946,867 $ 4,070,576 Accrued other expenses: March 31, 2020 December 31, 2019 Audit, legal, payroll $ 242,219 $ 256,966 Royalty costs 1,275,000 1,125,000 Sales and use tax 86,796 148,836 Sales allowances * 879,916 901,196 Other 236,770 234,473 Total accrued other expenses $ 2,720,701 $ 2,666,471 * A related inventory contract asset stemming from the sales return reserve of $399 thousand and $376 thousand is included within inventories on the accompanying condensed consolidated balance sheets as of March 31, 2020 and December 31, 2019, respectively. Company revenues are primarily from the selling of products that are shipped and billed. Consistent with the revenue recognition accounting standard, revenues are recognized when control is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods and services. Sales are earned at a point in time through ship-and-bill performance obligations. Regarding disaggregated revenue disclosures, as previously noted, the Company’s business is controlled as a single operating segment that consists of the manufacture and sale of Internet access and other communications-related products. Most of the Company’s transactions are very similar in nature, contract, terms, timing, and transfer of control of goods. Disaggregated revenue by distribution channel for three months ended: Through : March 31, 2020 March 31, 2019 Retailers $ 10,974,290 $ 7,227,364 Distributors 597,529 529,391 Other 383,784 253,334 Total $ 11,955,603 $ 8,010,089 Disaggregated revenue by product for three months ended: March 31, 2020 March 31, 2019 Cable Modems & gateways $ 11,170,010 $ 7,073,277 Other 785,593 936,812 Total $ 11,955,603 $ 8,010,089 Revenue is recognized when obligations under the terms of a contract with customers are satisfied. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the products. Based on the nature of the Company’s products and customer contracts, the Company has not recorded any deferred revenue. Any agreements with customers that could impact revenue such as rebates or promotions are recognized in the period of agreement.
Amended and Restated Certificate of Incorporation	On July 25, 2019, the Company filed a Certificate of Amendment to the Amended and Restated Certificate of Incorporation of the Company which increased the number of authorized common shares from 25,000,000 to 40,000,000.
Recently Accounting Standards	In June 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-13, " Financial Instruments Credit Losses —Measurement of Credit Losses on Financial Instruments In December 2019, the FASB issued ASU 2019-12 “ Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes

1. Summary of Significant Acc_3

1. Summary of Significant Accounting Policies (Tables)	3 Months Ended
	Mar. 31, 2020
Accounting Policies [Abstract]
Reclassification of accounts receivable allowances to accrued other expenses	March 31, 2020 December 31, 2019 Gross accounts receivable $ 6,218,898 $ 4,346,810 Allowance for doubtful accounts (272,031 ) (276,234 ) Total accounts receivable, net $ 5,946,867 $ 4,070,576 Accrued other expenses: March 31, 2020 December 31, 2019 Audit, legal, payroll $ 242,219 $ 256,966 Royalty costs 1,275,000 1,125,000 Sales and use tax 86,796 148,836 Sales allowances * 879,916 901,196 Other 236,770 234,473 Total accrued other expenses $ 2,720,701 $ 2,666,471
Disaggregation of revenue	Through : March 31, 2020 March 31, 2019 Retailers $ 10,974,290 $ 7,227,364 Distributors 597,529 529,391 Other 383,784 253,334 Total $ 11,955,603 $ 8,010,089 Disaggregated revenue by product for three months ended: March 31, 2020 March 31, 2019 Cable Modems & gateways $ 11,170,010 $ 7,073,277 Other 785,593 936,812 Total $ 11,955,603 $ 8,010,089

3. Inventories (Tables)

3. Inventories (Tables)	3 Months Ended
	Mar. 31, 2020
Inventory Disclosure [Abstract]
Inventories	Inventories consist of : March 31, 2020 December 31, 2019 Materials $ 897,973 $ 911,054 Work in process 77,255 10,284 Finished goods 3,203,506 6,519,012 Total $ 4,178,734 $ 7,440,350

4. Commitments and Contingenc_2

4. Commitments and Contingencies (Tables)	3 Months Ended
	Mar. 31, 2020
Commitments and Contingencies Disclosure [Abstract]
Minimum annual royalty payments	2020 $ 5,100,000 2021 $ 4,300,000 2022 $ 4,300,000 2023 $ 4,300,000 2024 $ 4,300,000 2025 $ 4,300,000

5. Lease Obligations (Tables)

5. Lease Obligations (Tables)	3 Months Ended
	Mar. 31, 2020
Leases [Abstract]
Lease maturity	March 31, 2020 Maturity of Lease Liabilities Lease Payments 2020 (remaining) $ 79,670 Less: Imputed interest (2,036 ) Present value of operating lease liabilities $ 77,634 Balance Sheet Classification Operating lease liabilities $ 77,634 Other Information Weighted-average remaining lease term for operating leases 0.75 Weighted-average discount rate for operating leases 10.0 %
Supplemental cash flow information related to operating leases	Three Months Ended March 31, 2020 2019 Operating cash flow information: Amounts included in measurement of lease liabilities $ 26,557 $ 135,617 Non-cash activities Right-of-use assets obtained in exchange for lease obligations $ 0 $ 395,565

1. Summary of Significant Acc_4

1. Summary of Significant Accounting Policies (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Accounting Policies [Abstract]
Gross accounts receivable	$ 6,218,898	$ 4,346,810
Allowance for doubtful accounts	(272,031)	(276,234)
Total accounts receivable, net	5,946,867	4,070,576
Audit, legal, payroll	242,219	256,966
Royalty costs	1,275,000	1,125,000
Sales and use tax	86,796	148,836
Sales and allowances	879,916	901,196
Other	236,770	234,473
Total accrued other expenses	$ 2,720,701	$ 2,666,471

1. Summary of Significant Acc_5

1. Summary of Significant Accounting Policies (Details 1) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Revenues	$ 11,955,603	$ 8,010,089
Cable Modems & gateways
Revenues	11,170,010	7,073,277
Other
Revenues	785,593	936,812
Retailers
Revenues	10,974,290	7,227,364
Distributors
Revenues	597,529	529,391
Other
Revenues	$ 383,784	$ 253,334

3. Inventories (Details)

3. Inventories (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Materials	$ 897,973	$ 911,054
Work in process	77,255	10,284
Finished goods	3,203,506	6,519,012
Total inventories	$ 4,178,734	$ 7,440,350

3. Inventories (Details Narrati

3. Inventories (Details Narrative) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Finished goods held by customer	$ 848,000	$ 1,800,000

4. Commitments and Contingenc_3

4. Commitments and Contingencies (Details)	Mar. 31, 2020USD ($)
Future royalty payments for the year ending December 31,
2020	$ 5,100,000
2021	4,300,000
2022	4,300,000
2023	4,300,000
2024	4,300,000
2025	$ 4,300,000

5. Leases (Details)

5. Leases (Details) - USD ($)	Mar. 31, 2020	Dec. 31, 2019
Leases [Abstract]
2020 (remaining)	$ 79,670
Less: Imputed interest	(2,036)
Present value of operating lease liabilities	77,634
Operating lease liabilities	$ 77,634	$ 102,716
Weighted-average remaining lease term for operating leases	9 months
Weighted-average discount rate for operating leases	10.00%

5. Leases (Details 1)

5. Leases (Details 1) - USD ($)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Leases [Abstract]
Amounts included in measurement of lease liabilities	$ 26,557	$ 135,617
Right-of-use assets obtained in exchange for lease obligations	$ 0	$ 395,565

6. Customer and Vendor Concen_2

6. Customer and Vendor Concentrations (Details Narrative)	3 Months Ended
	Mar. 31, 2020	Mar. 31, 2019
Two Customers Percentage of Sales
Percent concentration	86.00%	81.00%
Two Customers Percentage of Receivables
Percent concentration	73.00%
Two Suppliers Percentage of Purchased Inventory
Percent concentration	99.00%
Three Customers Percentage of Receivables
Percent concentration		67.00%
One Supplier Percentage of Purchased Inventory
Percent concentration		99.00%

7. Credit Lines (Details Narrat

7. Credit Lines (Details Narrative)	Mar. 31, 2020USD ($)
Line of Credit Facility [Abstract]
Net worth	$ 5,300,000
Working capital	5,000,000
Line of credit	$ 2,600,000

Uncategorized Items - zmtp-2020

Label	Element	Value
Cash Equivalents, at Carrying Value	us-gaap_CashEquivalentsAtCarryingValue	$ 27,611
Cash Equivalents, at Carrying Value	us-gaap_CashEquivalentsAtCarryingValue	$ 115,586