UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to ______________
Commission File Number 0-18672
ZOOM TELEPHONICS, INC.
(Exact Name of Registrant as Specified in its Charter)
Canada 04-2621506
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
207 South Street, Boston, Massachusetts 02111
(Address of Principal Executive Offices in the U.S.) (Zip Code)
Registrant's Telephone Number, Including Area Code: (617) 423-1072
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [ X ] NO [ ]
The number of shares outstanding of the registrant's Common Stock, No Par
Value, as of November 10, 2000 was 7,838,827 shares.
<PAGE>
ZOOM TELEPHONICS, INC.
INDEX
Page
Part I. Financial Information
Item 1. Consolidated Balance Sheets as of September 30, 2000
and December 31, 1999 3
Consolidated Statements of Operations for the Three
Months and Nine Months Ending September 30, 2000 and 1999 4
Consolidated Statements of Cash Flows for the Nine
Months Ending September 30, 2000 and 1999 5
Notes to Consolidated Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9 - 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 12
Part II. Other Information
Item 1. Legal Proceedings. 13
Item 2. Changes in Securities and Use of Proceeds. 13
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Exhibit 10.1 Letter Agreement 15 - 16
Financial Data Schedule 17
<PAGE>
PART I - FINANCIAL INFORMATION
ZOOM TELEPHONICS, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<S> <C> <C>
09/30/00 12/31/99
(Unaudited) (Audited)
----------- ----------
Assets
------
Current assets:
Cash and cash equivalents $ 3,099,459 $ 7,218,500
Investment securities 2,057,143 3,189,074
Accounts receivable, net of reserves for
doubtful accounts, returns, and allowances of
$3,572,336 at 9/30/00 and $4,855,850 at 12/31/99 10,231,940 7,324,307
Inventories 16,556,530 12,388,866
Net deferred tax assets 5,382,951 3,968,970
Prepaid expenses and other current assets 508,760 560,869
---------- ----------
Total current assets 37,836,783 34,650,586
---------- ----------
Property, plant and equipment, net 4,576,538 4,211,921
Goodwill, net of accumulated amortization of
$1,621,905 at 9/30/00 and $1,005,273 at 12/31/99 3,281,777 3,898,410
Other assets 180,737 311,487
---------- ----------
Total assets $ 45,875,835 $ 43,072,404
========== ==========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 5,728,020 $ 2,703,729
Accrued expenses 2,052,420 2,373,817
---------- ----------
Total current liabilities 7,780,440 5,077,546
---------- ----------
Other non-current liabilities 397,179 480,775
---------- ----------
Total liabilities 8,177,619 5,558,321
---------- ----------
Stockholders' equity:
Common stock, no par value. Authorized 25,000,000
shares; issued and outstanding 7,836,952 shares
at September 30, 2000 and 7,560,296 shares at
December 31, 1999 28,087,266 25,780,231
Retained earnings 9,843,241 11,771,478
Accumulated other comprehensive loss (232,291) (37,626)
---------- ----------
Total stockholders' equity 37,698,216 37,514,083
---------- ----------
Total liabilities and stockholders'equity $ 45,875,835 $ 43,072,404
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ZOOM TELEPHONICS, INC.
Consolidated Statements of Operations
(Unaudited)
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ending Nine Months Ending
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Net sales $ 16,542,659 $ 18,195,655 $ 43,416,919 $ 45,420,621
Costs of goods sold 10,357,460 11,114,653 28,265,439 28,410,171
---------- ---------- ---------- ----------
Gross profit 6,185,199 7,081,002 15,151,480 17,010,450
---------- ---------- ---------- ----------
Operating expenses:
Selling 3,540,337 3,641,433 9,334,961 9,859,287
General and administrative 1,600,510 1,619,574 4,400,908 4,626,571
Research and development 1,255,801 1,546,310 4,661,511 4,855,994
---------- ---------- ---------- ----------
Total operating expenses 6,396,648 6,807,317 18,397,380 19,341,852
---------- ---------- ---------- ----------
Operating income (loss) (211,449) 273,685 (3,245,900) (2,331,402)
---------- ---------- ---------- ----------
Other income, net 136,181 96,784 419,250 490,846
---------- ---------- ---------- ----------
Income (loss) before
income taxes (benefit) (75,268) 370,469 (2,826,650) (1,840,556)
Income tax (benefit) expense (25,442) 275,641 (898,412) (530,991)
---------- ---------- ---------- ----------
Net income (loss) $ (49,826) $ 94,828 $ (1,928,238 $ (1,309,565)
========== ========== ========== ==========
Net loss per common share:
Basic $ (.01) $ .01 $ (.25) $ (.18)
========== ========== ========== ==========
Diluted $ (.01) $ .01 $ (.25) $ (.18)
========== ========== ========== ==========
Weighted average common and
common equivalent shares:
Basic 7,798,674 7,475,018 7,642,795 7,474,920
========== ========== ========== ==========
Diluted 7,798,674 7,541,438 7,642,795 7,474,920
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ZOOM TELEPHONICS, INC.
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<S> <C> <C>
Nine Months Ending September 30,
--------------------------------
2000 1999
---- ----
Cash flows from operating activities:
Net loss $ (1,928,238) $ (1,309,565)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 1,162,025 1,050,197
Deferred income taxes (914,187) (517,449)
Equity in losses of affiliates 120,000 -
Changes in operating assets and liabilities:
Accounts receivable (2,907,634) (1,178,115)
Inventories (4,167,664) (1,366,535)
Prepaid expenses and other assets 62,860 (55,989)
Accounts payable and accrued expenses 2,702,806 131,215
---------- ----------
Net cash used in operating activities (5,870,032) (3,246,241)
---------- ----------
Cash flows from investing activities:
Cash paid for the acquisition of Hayes, net of cash
acquired - (4,912,258)
Sale of investment securities 1,162,757 9,481,963
Additions to licenses - (40,000)
Additions to property, plant and equipment (993,518) (715,225)
---------- ----------
Net cash provided by (used in)
investing activities 169,239 3,814,480
---------- ----------
Cash flows from financing activities:
Exercise of nonqualified stock options 1,807,242 20,390
---------- ----------
Net cash provided by financing activities 1,807,242 20,390
---------- ----------
Effect of exchange rate changes on cash (225,490) (48,335)
---------- ----------
Net increase (decrease) in cash and cash equivalents (4,119,041) 540,294
Cash and cash equivalents, beginning of period 7,218,500 5,324,579
---------- ----------
Cash and cash equivalents, end of period $ 3,099,459 $ 5,864,873
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 0 $ 0
========== ==========
Income taxes $ 0 $ 0
========== ==========
Supplemental disclosures of non-cash operating activities:
Tax benefit from exercise of nonqualified
stock options $ 499,794 $ 2,645
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
ZOOM TELEPHONICS, INC.
Notes to Consolidated Financial Statements
(Unaudited)
(1) Basis of Presentation
The consolidated financial statements of Zoom Telephonics, Inc. (the
"Company") presented herein have been prepared pursuant to the rules of the
Securities and Exchange Commission for quarterly reports on Form 10-Q and do
not include all of the information and note disclosures required by generally
accepted accounting principles. These statements should be read in conjunction
with the consolidated financial statements and notes thereto for the year
ending December 31, 1999 included in the Company's 1999 Annual Report on Form
10-K.
The consolidated balance sheet as of September 30, 2000,the consolidated
statements of operations for the three months and nine months ending September
30, 2000 and 1999, and the consolidated statements of cash flows for the nine
months ending September 30, 2000 and 1999 are unaudited, but, in the opinion of
management, include all adjustments (consisting of normal, recurring
adjustments) necessary for a fair presentation of results for these interim
periods.
The results of operations for the periods presented are not necessarily
indicative of the results to be expected for the entire fiscal year ending
December 31, 2000.
(2) Earnings Per Share
The reconciliation of the numerators and denominators of the basic and
diluted net loss per common share computations for the Company's reported net
loss is as follows:
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ending Nine Months Ending
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Basic:
Net income (loss) $ (49,826) $ 94,828 $ (1,928,238) $ (1,309,565)
Weighted average shares
outstanding 7,798,674 7,475,018 7,642,795 7,474,920
---------- ---------- ---------- ----------
Net income (loss) per $ (.01) $ .01 $ (.25) $ (.18)
share ========== ========== ========== ==========
Diluted:
Net income (loss) $ (49,826) $ 94,828 $ (1,928,238) $ (1,309,565)
Weighted average shares
outstanding 7,798,674 7,475,018 7,642,795 7,474,920
Net effect of dilutive
stock options based on
the Treasury stock
method using average
market price - 66,420 - -
Weighted average shares
outstanding 7,798,674 7,541,438 7,642,795 7,474,920
---------- ---------- ---------- ----------
Net income (loss) per
share $ (.01) $ .01 $ (.25) $ (.18)
========== ========== ========== ==========
</TABLE>
<PAGE>
Potential common shares for which inclusion would have the effect of
increasing diluted earnings per share (i.e., antidilutive) are excluded from
the computation. Options to purchase 505,381 and 14,153 shares of common stock
at September 30, 2000 and 1999, respectively, were outstanding, but not
included in the computation of diluted earnings per share as their effect would
be antidilutive.
(3) Inventories
<TABLE>
<S> <C> <C>
Inventories consist of the following: September 30, December 31,
2000 1999
---- ----
Raw materials $ 8,554,345 $ 6,590,232
Work in process 5,670,008 1,175,463
Finished goods 2,332,177 4,623,171
---------- ----------
$ 16,556,530 $ 12,388,866
========== ==========
</TABLE>
(4) Comprehensive Income
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income" establishes rules for the reporting and display of
comprehensive income and its components; however, it has no impact on the
Company's net income or shareholders' equity. SFAS No. 130 requires all changes
in equity from non-owner sources to be included in the determination of
comprehensive income (loss).
The components of comprehensive loss, net of tax, are as follows:
<TABLE>
<S> <C> <C> <C> <C>
Three Months Ending Nine Months Ending
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
Net income (loss) $ (49,826) $ 94,828 $ (1,928,238) $ (1,309,565)
Foreign currency
translation adjustment (266,313) (90,042) (225,490) (25,237)
Net unrealized holding
gain (loss) on investment
securities 20,765 (4,967) 30,825 (77,003)
-------- -------- ---------- ----------
Comprehensive loss $ (295,374) $ (181) $ (2,122,903) $ (1,411,805)
======== ======== ========== ==========
</TABLE>
(5) Bank Credit Facility
In July 2000 the Company secured a $5 million line of credit that expires
on July 14, 2003. The line of credit bears interest at the bank's prime rate
for funds withdrawn. The line of credit is secured by all of the assets of the
Corporation, except the real estate and contains certain financial and other
covenants. There were no balances under this line of credit at September 30,
2000. The Company is currently negotiating to substantially increase its
current line of credit and is also evaluating other sources of financing to
provide additional working capital in the fourth quarter of 2000 and in 2001
for the expected high volume production of new broadband cable modem and DSL
modem products. One potential source of financing that the Company is currently
evaluating is obtaining a mortgage from a bank, secured by the Company's owned
real estate in Boston, Massachusetts, in an amount equal to the lesser of $8
million or 60% of the appraised value of such owned real property in Boston,
Massachusetts. The Company expects the terms to include a 1% commitment fee, no
prepayment penalty, interest at the prime rate, and a 5 year term with payments
based on a twenty year direct reduction amortization. The Company can provide
no assurance that it will be able to increase its current line of credit or
obtain a mortgage on favorable terms, or at all.
(6) Segment and Geographic Information
The Company's operations are classified into one reportable segment.
Substantially all of the Company's operations and long-lived assets reside
primarily in the United States. The Company's domestic net sales and export
sales to Europe and other locations for the three months ending September 30,
2000 and 1999, respectively, and for the nine months ending September 30, 2000
and September 30, 1999, respectively, were comprised as follows:
<TABLE>
Three Months Three Months Nine Months Nine Months
Ending Ending Ending Ending
September % of September % of September % of September % of
30, 2000 Total 30, 1999 Total 30, 2000 Total 30, 1999 Total
<S> <C> <C> <C> <C> <C> <C> <C> <C>
North America $ 13,421,814 81% $ 13,427,158 74% $ 31,998,750 74% $ 33,346,362 73%
International 1,412,849 9% 2,587,984 14% 4,703,690 11% 7,791,726 17%
UK 1,707,996 10% 2,180,513 12% 6,714,479 15% 4,282,533 10%
---------- --- ---------- --- ---------- --- ---------- ---
Total $ 16,542,659 100% $ 18,195,655 100% $ 43,416,919 100% $ 45,420,621 100%
========== ==== ========== ==== ========== ==== ========== ====
</TABLE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Zoom Telephonics, Inc. ("Zoom" or the "Company") recorded net sales of
$16,542,659 and had a net loss of $49,826 for the third quarter ending
September 30, 2000 compared to net sales of $18,195,655 and net income of
$94,828 for the third quarter ending September 30, 1999. The loss per share was
$0.01 for the third quarter of 2000 versus net income per share of $0.01 for
the third quarter of 1999. The Company recorded net sales of $43,416,919 and a
net loss of $1,928,238 for the nine months ending September 30, 2000 compared
to net sales of $45,420,621 and had a net loss of $1,309,565 for the nine
months ending September 30, 1999. The loss per share was $0.25 for the first
nine months of 2000 versus a loss per share of $0.18 for the first nine months
of 1999.
Net sales for the third quarter ending September 30, 2000 were 9.1% lower
than net sales for the comparable period in the prior year. The overall
decrease was comprised of a 2% increase in North America non-OEM sales, a 54%
decrease in international non-OEM sales, and a 114% increase in worldwide OEM
sales. OEM sales were 9% of total sales in the third quarter of 2000, up from
4% in the third quarter of 1999, with the growth primarily due to a new
embedded modem. Zoom gained market share for dial-up modems at major U.S.
retailers tracked by PC Data, as Zoom's share of revenues went from 8.0% in the
third quarter of 1999 to 11.9% in third quarter of 2000.
Net sales for the nine months ending September 30, 2000 were 4.4% lower
than the comparable period in the prior year. The overall decrease was
comprised of a 4% decrease in North America non-OEM sales, a 19% decrease in
international non-OEM sales, and a 97% increase in worldwide OEM sales. OEM
sales were 8% of total sales in the third quarter of 2000, up from 4% in third
quarter of 1999, with the growth primarily due to a new embedded modem.
Gross profit as a percentage of net sales decreased to 37.4% for the three
months ending September 30, 2000 compared to 38.9% for the three months ending
September 30, 1999. Gross profit as a percentage of net sales decreased to
34.9% in the nine months ending September 30, 2000 compared to 37.5% in the
nine months ending September 30, 1999. The decrease in the three months and the
nine months ending September 30, 2000 was due primarily to the reduced
favorable impact of purchases of advantageously priced modem materials
purchased primarily in the second half of 1998 and the first half of 1999, the
overall reduction of modem selling prices, the increase in OEM sales as a
percentage of total sales, and the reduction in the required level of price
protection reserves. The favorable gross margin impact of the favorable
material prices is realized when units are sold. The favorable impact continued
to a lesser extent in the first nine months of 2000.
Selling expenses for the three months ending September 30, 2000 decreased
to $3,540,337 or 21.4% of net sales compared to $3,641,433 or 20.0% of net
sales for the three months ending September 30, 1999. Selling expenses for the
nine months ending September 30, 2000 decreased to $9,334,961 or 21.5% of net
sales compared to $9,859,287 or 21.7% of net sales for the nine months ending
September 30, 1999. The decreases were primarily due to lower total sales
volume and a higher mix of OEM sales, which lowered freight delivery costs and
other selling expenses.
General and administrative expenses remained relatively unchanged in
dollar terms at $1,600,510 or 9.7% of net sales for the three months ending
September 30, 2000 compared to $1,619,574 or 8.9% of net sales for the three
months ending September 30, 1999. General and administrative expenses decreased
to $4,400,908 or 10.1% of net sales for the nine months ending September 30,
2000 from $4,626,571 or 10.2% of net sales for the nine months ending September
30, 1999. The reduced expense was primarily due to reduced legal fees incurred
for defending the Company's trademarks.
Research and development expenses decreased to $1,255,801 for the three
months ended September 30, 2000 compared to $1,546,310 for the three months
ending September 30,1999. R&D expenses as a percentage of net sales decreased
from 8.5% for the three months ending September 30, 1999 to 7.6% for the three
month ending September 30, 2000. The reduced expense was primarily due to lower
personnel costs in the third quarter ending September 30, 2000.
Research and development expenses decreased to $4,661,511 for the nine
months ending September 30, 2000 from $4,855,994 for the nine months ending
September 30, 1999. R&D expenses as a percentage of net sales remained
unchanged at 10.7% for the first nine months of 1999 and 2000. The reduced
expense was primarily the result of lower personnel costs in the third quarter
ending September 30, 2000.
Liquidity and Capital Resources
At September 30, 2000, the Company had cash and cash equivalents of
$3,099,459 compared to $7,218,500 at December 31, 1999, a decrease of
$4,119,041. At September 30, 2000, the company had working capital of
$30,056,343, compared to $29,573,037 at 12/31/99.
The Company has an unused secured $5 million line of credit that expires
in 2003. The line of credit bears interest at the bank's prime rate for funds
withdrawn. The line of credit contains certain financial and other covenants.
In addition, the line of credit is secured by all of the assets of the
Corporation, except the real property. No amounts were outstanding under this
line of credit as of November 13, 2000.
Operating activities used $5,870,032 in cash during the first nine months
of 2000 compared to $3,246,241 for the comparable prior period. Cash was
negatively impacted by the net loss of $1,928,238, a $4,167,664 increase in
inventories, a $2,907,634 increase in accounts receivable, and a $914,187
increase in deferred income taxes. Cash was positively impacted by a $2,702,806
increase in accounts payable and accrued expenses, a $62,860 decrease in
prepaid expenses and other assets, non-cash expenses for depreciation and
amortization of $1,162,025, and a $120,000 non-cash loss in an investment in
affiliates.
During the first nine months of 2000, cash flow from investing activities
included the sale of investment securities of $1,162,757, additions to
property, plant, and equipment of $993,518, compared to $715,225 for the
comparable prior period. The Company currently does not have any significant
capital commitments, and it anticipates that it will continue with modest
investments in equipment and in improvements to its facilities during the
remainder of fiscal 2000. The Company is, however, currently considering the
purchase of additional real estate in Boston, Massachusetts to replace its
current manufacturing facility, which it leases pursuant to a lease that is due
to expire in October 2001. The purchase price for the real property is expected
to be approximately $9 million, of which the Company would finance up to $
7,000,000, which would be secured by a mortgage on the acquired property.
During the first nine months of 2000, the Company received cash from
financing activities of $1,807,242 from the exercise of nonqualified stock
options by employees and outside directors, compared to $20,390 for the
comparable prior period.
As a result of the build up of inventory and the resulting use of cash,
the Company now believes that its existing cash, together with funds generated
from operations and current available sources of financing, will not be
sufficient to fund the Company's operations for the rest of 2000. The Company
is currently negotiating to substantially increase its current line of credit
and is also evaluating other potential sources of financing. One potential
source of financing that the Company is currently evaluating is obtaining a
mortgage from a bank, secured by the Company's owned real estate in Boston,
Massachusetts, in an amount of approximately $8 million. The Company expects
the terms to include a 1% commitment fee, no prepayment penalty, interest at
the prime rate, and a five year term with payments based on a twenty year
direct reduction amortization. The Company can provide no assurance that it
will be able to increase its current line of credit or obtain a mortgage or
other financing on favorable terms, or at all.
Recently Issued Accounting Standards
In June of 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Standards No. 133 ("SFAS 133"), "Accounting for
Derivative Instruments and Hedging Activities," which is effective for all
fiscal quarters of fiscal years beginning after June 15, 1999. It requires that
an entity recognize all derivatives as either assets or liabilities in the
statement of financial position and measure those instruments at fair value. In
July of 1999, the FASB issued Statement of Financial Standards No. 137 ("SFAS
137"), "Accounting for Derivative Instruments and Hedging Activities - Deferral
of the Effective Date of FASB Statement No. 133," which defers the effective
date to all fiscal quarters of fiscal years beginning after June 15, 2000. The
Company has not yet evaluated the effects of this change on its operations. The
Company will adopt SFAS 133 as required for its first quarterly filing of the
fiscal year 2001.
In December, 1999 the SEC issued Staff Accounting Bulletin No. 101 ("SAB
101"), Revenue Recognition in Financial Statements. SAB 101 provides guidance
for revenue recognition under certain circumstances. SAB 101 will have an
impact on the manner in which the Company records sales returns reserves. The
Company anticipates that the adoption of this Staff Accounting Bulletin, which
will be required to be adopted in the fourth quarter of 2000, will have a
material impact on the results of operations or financial position of the
Company.
ITEM 3. Quantitative and Qualitative Disclosures About Market Risk
The Company owns financial instruments that are sensitive to market risks
as part of its investment portfolio. The investment portfolio is used to
preserve the Company's capital until it is required to fund operations,
including the Company's research and development activities. None of these
market-risk sensitive instruments are held for trading purposes. The Company
does not own derivative financial instruments in its investment portfolio. The
investment portfolio contains instruments that are subject to the risk of a
decline in interest rates.
Investment Rate Risk - The Company's investment portfolio includes debt
instruments that are primarily United States government bonds and high grade
corporate bonds of less than three years in duration. These bonds are subject
to interest risk, and could decline in value if interest rates fluctuate. The
Company's investment portfolio also consists of certain commercial paper, which
is also subject to interest rate risk. Due to the short duration and
conservative nature of these instruments, the Company does not believe that it
has a material exposure to interest rate risk.
"Safe Harbor" Statement under the Private Securities Litigation Reform Act
of 1995
This report contains forward-looking information relating to Zoom's plans,
expectations and intentions, including without limitation the financial and
other contributions expected, in connection with the future impact of
advantageously negotiated modem materials, Zoom's increased market share in the
dial-up modem market, Zoom's production of its advanced cable and DSL modems
and other broadband Internet access solutions, its potential as a significant
player in the cable and DSL markets, Zoom's ability to ship broadband products
when demanded by customers, Zoom's anticipation to continue to make modest
investments in equipment and in improvements to its facilities during fiscal
year 2000, Zoom's purchase of real property for its manufacturing facilities,
Zoom's ability to increase its current line of credit, Zoom's ability to obtain
mortgage financing on its real estate in Boston, Massachusetts, and the
sufficiency of Zoom's cash, together with funds generated from operations and
available sources of financing, to fund the Company's operations .
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. - Legal Proceedings
There have been no material developments in the quarter ending September
30, 2000.
ITEM 2. - Changes in Securities and Use of Proceeds
Recent Sales of Unregistered Securities. On July 19, 2000, we sold 20,339
shares of our common stock to an executive officer for an aggregate
consideration of $203. These shares are subject to a restricted stock purchase
agreement pursuant to which the Company has the option to repurchase some or
all of these shares if the executive officer voluntarily resigns from the
Company or is terminated by the Company for cause. The shares were issued to
the executive officer in connection with his hiring as a vice president. The
Company did not register these securities under the Securities Act of 1933, as
amended, in reliance upon the exemptions from registration set forth in
Sections 3(b) and 4(2) of the Securities Act, relating to offers and sales by
an issuer not involving any public offering.
ITEM 6 - Exhibits and reports on Form 8-K
(a) Exhibit Description Page
10.1* Letter Agreement 15 - 17
27. Financial Data Schedule 18
* Compensation plan or agreement.
(b) Reports on Form 8-K
No reports on Form 8-K were filed by the Company during the
quarter ending September 30, 2000.
<PAGE>
ZOOM TELEPHONICS, INC.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ZOOM TELEPHONICS, INC.
Date: November 14, 2000 By: /s/ Frank Manning
Frank B. Manning, President
Date: November 14, 2000 By: /s/ Robert Crist
Robert Crist, Vice President
of Finance and Chief
Financial Officer(Principal
Financial and Accounting
Officer)
