FIEE 8-K 2020 - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

Current Report Pursuant

to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 11, 2020

ZOOM TELEPHONICS, INC.
(Exact Name Of Registrant As Specified In Its Charter)
Delaware
---
(State or Other Jurisdiction of Incorporation)
000-53722	04-2621506
---	---
(Commission File Number)	(I.R.S. Employer Identification No.)
225 Franklin Street, Boston, MA	02110
---	---
(Address of Principal Executive Offices)	(Zip Code)
(617) 423-1072
---
(Registrant’s Telephone Number, Including Area<br>Code)
(Former Name or Former Address, if Changed Since Last<br>Report)
---

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

[ ]

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[ ]

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

[ ]

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

[ ]

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant is an emerging growth company as defined in in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition

On May 11, 2020, Zoom Telephonics, Inc. (the “Company”) issued a press release announcing its financial results for the quarter ended March 31, 2020. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

The information furnished pursuant to Item 2.02 of this Current Report on Form 8-K and in Exhibit 99.1 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing of the Company’s under the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.

Except for historical information contained in the press release attached as an exhibit hereto, the press release contains forward-looking statements which involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Please refer to the cautionary note in the press release regarding these forward-looking statements.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

On May 11, 2020, Joseph L. Wytanis notified the Company of his decision to step down from the positions of President and Chief Executive Officer of the Company. Mr. Wytanis will serve as an advisor to the Company’s Board of Directors. The Company’s Board of Directors has formed a search committee to fill the position.

Item 7.01 Regulation FD Disclosure.

On May 11, 2020, the Company issued a press release announcing the leadership transition described in Item 5.02 above. The press release is furnished herewith as Exhibit 99.2 and is incorporated herein by reference.

The information furnished pursuant to Item 7.01 of this Current Report on Form 8-K and in Exhibit 99.2 shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, is not subject to the liabilities of that section and is not deemed incorporated by reference in any filing of the Company’s under the Securities Act of 1933, as amended, except as otherwise expressly stated in such filing.

Item 9.01 Financial Statements and Exhibits .

(d) Exhibits.

Exhibit Number	Title
99.1	Press<br>release of Zoom Telephonics, Inc., dated May 11, 2020, announcing its<br>financial results for the quarter ended March 31,<br>2020.
99.2	Press<br>release of Zoom Telephonics, Inc., dated May 11, 2020, announcing<br>CEO transition.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.

	ZOOM<br>TELEPHONICS, INC.
Dated:<br>May 11, 2020	By:	/s/<br>JACQUELYN BARRY<br>HAMILTON
		Jacquelyn<br>Barry Hamilton
		Chief<br>Financial Officer

EXHIBIT INDEX

Exhibit Number	Title
99.1	Press<br>release of Zoom Telephonics, Inc., dated May 11, 2020, announcing its<br>financial results for the quarter ended March 31,<br>2020.
99.2	Press<br>release of Zoom Telephonics, Inc., dated May 11, 2020, announcing<br>CEO transition.

zmtp_ex991

Exhibit 99.1

Zoom Telephonics Reports Record Sales of $12 Million for Q1 2020;

Up 49.3% From Prior Year Quarter

Boston, MA, May 11, 2020 – Zoom Telephonics, Inc. (“Zoom”) (OTCQB: ZMTP), a leading creator of cable modems and other Internet access products, reported financial results for its 2020 first quarter ended March 31, 2020.

First Quarter 2020 Financial Highlights

●

Net sales were $12 million, up 49% year over year

●

Gross profit was $3.1 million, up 28% year over year

●

Gross profit margin was 25.9%, down from 30.2% in prior year first quarter

●

GAAP net loss was $0.8 million, a 33% improvement year over year

●

Non-GAAP net income was $0.7 million after adjusting for tariff expenses of $1.5 million

First Quarter 2020 Business Overview

Overall, the company produced record sales of $12 million during the quarter, despite the significant economic disruptions resulting from the Covid-19 pandemic. This level of sales has not been seen in over a decade. Consumer demand for networking products was strong throughout the quarter, supported by substantial online shipping activity. Zoom was able to ensure continuity of supply through Covid-19 disruptions experienced in Asia as early as January 2020, and supply chain conditions can be characterized as “returning to normal” at present.

The company expects to have completed the shifting of its manufacturing operations to other locations by the end of the second quarter, with the tariff expense declining to near zero by early in the third quarter. After the quarter end, Zoom announced the extension and expansion of its Motorola license. In addition to the inclusion of new product families, the license agreement now runs through 2025.

Zoom’s 2020 plan centers on an aggressive new product rollout schedule that remains very much on track. The proliferation of video-based communication services, due in part to so many people working from home, is driving an increased emphasis on optimizing home networks. The company is experiencing strong demand for its already popular gateway products, which are available through online shopping and brick and mortar platforms such as Amazon and BestBuy.

As previously reported, the company has convened a search committee to identify a CEO following the resignation of Joe Wytanis.

First Quarter 2020 Financial Review

Zoom reported an increase in net sales of 49.3% to $12.0 million for the first quarter ended March 31, 2020 up from $8.0 million for the first quarter ended March 31, 2019. The increase in sales resulted from robust demand in its ecommerce and retail channels.

Gross profit was $3.1 million or 25.9% of net sales in the first quarter of 2020, compared to $2.4 million or 30.2% of net sales for the first quarter of 2019. Tariff expenses increased cost of goods by $1.5 million in the first quarter of 2020, compared to $445 thousand in the first quarter of 2019. Excluding tariff expense, gross profit margin in the first quarter of 2020 would have been 38.4%. The company also experienced one-time increased supply-chain fulfillment costs brought on by Covid-19 disruptions in order to assure the ability to satisfy customer demand.

Operating expenses were $3.8 million, compared to $3.5 million in the year-ago quarter. The increase versus the prior year was primarily due to increased General and Administrative expenses incurred in support of Zoom’s product rollout and growth strategy.

The company ended the quarter with $5.0 million of working capital and a current ratio of 1.83x. Zoom had drawn $387 thousand on a $3.0 million line of credit; with no long-term debt; and $5.7 million of stockholders’ equity.

Conference Call Details

The conference call for this quarter, which was previously scheduled for Tuesday, May 12, 2020 – 10:00 a.m. ET, has been cancelled. The company intends to issue its first quarter 2020 earnings in its Form 10-Q quarterly report, as planned on May 15, 2020.

About Zoom Telephonics

Zoom Telephonics, Inc. (“Zoom”) (OTCQB: ZMTP) is the creator of innovative Internet access products that dependably connect people to the information they need and the people they love. Founded in 1977 in Boston, MA, the company now delivers cable modems, routers, and other communications products under the globally recognized Motorola brand. For more information about Zoom and its products, please visit www.zoom.net and www.motorolanetwork.com.

MOTOROLA and the Stylized M Logo are trademarks or registered trademarks of Motorola Trademark Holdings, LLC and are used under license.

Forward Looking Statements

This release contains forward-looking information relating to Zoom’s plans, expectations, and intentions. Actual results may be materially different from expectations as a result of known and unknown risks, including: the potential increase in tariffs on the Company's imports; potential difficulties and supply interruptions from moving the manufacturing of most of the Company’s products to Vietnam; potential changes in NAFTA; the potential need for additional funding which Zoom may be unable to obtain; declining demand for certain of Zoom’s products; delays, unanticipated costs, interruptions or other uncertainties associated with Zoom’s production and shipping; Zoom’s reliance on several key outsourcing partners; uncertainty of key customers’ plans and orders; risks relating to product certifications; Zoom’s dependence on key employees; uncertainty of new product development, including certification and overall project delays, budget overruns, and the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated; costs and senior management distractions due to patent-related matters; and other risks set forth in Zoom’s filings with the Securities and Exchange Commission. Zoom cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Zoom expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in Zoom’s expectations or any change in events, conditions or circumstance on which any such statement is based.

Investor Relations Contact:

Jeremy Hellman, Vice-President

The Equity Group Inc.

Phone: 212-836-9626

Email: [email protected]

ZOOM TELEPHONICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share data)

	Three Months Ended
	3/31/20	3/31/19
Net sales	$11,955	$8,010
Cost of goods sold	8,860	5,591
Gross<br>profit	3,095	2,419
Operating expenses:
Selling	2,354	2,448
General<br>and administrative	828	568
Research<br>and development	653	482
Total<br>operating expenses	3,835	3,498
Operating<br>profit (loss)	(740)	(1,079)
Other income (expense), net	(6)	(34)
Income<br>(loss) before income taxes	(746)	(1,113)
Income tax expense	6	8
Net<br>income (loss)	$(752)	$(1,121)
Earnings (loss) per share:
Basic<br>and diluted Earnings (loss) per share	$(0.04)	$(0.07)
Weighted average number of shares outstanding:
Basic<br>and diluted	21,080	16,138

ZOOM TELEPHONICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except share data)

	3/31/20	12/31/19
ASSETS
Current assets:
Cash<br>and cash equivalents	$28	$1,217
Restricted<br>Cash	550	150
Accounts<br>receivable, net	5,947	4,071
Inventories,<br>net	4,179	7,440
Prepaid<br>expenses and other	237	270
Total<br>current assets	10,941	13,148
Property and equipment, net	281	303
Operating lease right-of-use assets	78	103
Other assets	345	349
Total<br>assets	$11,644	$13,903
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank<br>debt	$387	$––
Accounts<br>payable	2,777	5,025
Operating<br>lease liabilities	78	103
Accrued<br>other expenses	2,720	2,666
Total<br>current liabilities	5,962	7,794
Long-term<br>operating leases	––	––
Total<br>liabilities	5,962	7,794
Stockholders’ equity:
Common<br>stock and additional paid-in capital	47,030	46,706
Retained<br>earnings (accumulated deficit)	(41,348) )	(40,597)
Total<br>stockholders’ equity	5,682	6,109
Total<br>liabilities and stockholders’ equity	$11,644	$13,903

zmtp_ex992

Exhibit 99.2

Zoom Telephonics Announces CEO Transition

Zoom Telephonics, Inc. (“Zoom”) (OTCQB: ZMTP), a leading creator of cable modems and other Internet access products, today announced that Joe Wytanis has stepped down from the position of CEO. To ensure a smooth transition, Wytanis will act as an advisor to the board. Zoom’s Board of Directors has formed a CEO search committee, led by Zoom Chairman Jeremy Hitchcock.

“I am extremely proud of the team’s accomplishments throughout my tenure,” said Wytanis. “As the demand for reliable home connectivity has never been higher, Zoom is on an exciting trajectory. We’ve seen outstanding growth in e-commerce and storefront retail, inspiring Zoom to focus its product development and marketing initiatives. Accordingly, we have decided Zoom needed leadership more specialized in those areas as I pursue career opportunities closer to my home location and in the cable MSO space. I look forward to my continued involvement.”

Joe Wytanis joined Zoom in 2018 as a veteran of the Cable Multi-Network Operator (MSO) industry, serving in executive roles at High Tech Associates, Flextronics, SMC Networks, and Cisco Systems.

“On behalf of the Board, I would like to thank Joe for his exceptional leadership,” said Hitchcock. “He has expertly leveraged the company’s strengths in manufacturing, supply chain management, and talent to unlock new growth opportunities, even in the face of Covid-19 challenges. We appreciate his participation in finding his successor and wish him much success in his future endeavors.”

This management announcement follows Zoom’s recent CFO appointment last quarter. In the past year, Zoom has bolstered the executive team for a new phase of expansion. Key hires include:

●

Jacquelyn Barry Hamilton, now Zoom CFO, formerly served as CFO at Modo Labs, Netcracker Technology, Intronis, and the Global Technology Division at Monster Worldwide.

●

Phil Stanhope, now Zoom CTO, formerly served as VP Technology Strategy, Dyn/Oracle and VP Engineering at Yottaa, Wimba, Aspen Technology, and Adesso Systems.

●

John Lauten, now Zoom SVP Operations, formerly served in operational leadership roles at SKULLY Technologies, TechCXO, FOX Factory, and Cisco.

Later today, Zoom Telephonics will be releasing Q1 2020 financial results. The earnings call previously scheduled for May 12, 2020 will be cancelled. For more information, visit http://www.zoomtel.com.