Thanks for the heads-up! I was unable to get the audio replay to work on my computer. Based on the transcript, which has far too many missing (inaudible) words to completely follow, it appears Zoom made a conscious decision to default on Portables. It also appears Zoom may have been asked to make an additional investment for working capital and decided not to. At least the Baifen deal offers the prospect of taking future investment decisions out the hands of Zoom management - a good idea given the disastrous Zoom record.
I think Baifen is after: 1) the cash. 2) the NASDAQ listing 3) the rights to the name "Zoom"
As far as SpreadZoom and the new plant I expect (hope?) Zoom will eventually sell it. I would have liked to ask for clarification of the difference on the 10-Q (construction resumed) and 10-Q/A (contractor removed from premises) on the conference call.
Thanks for the update. I would have loved to ask about Portables. Did Zoom default because it did not have cash (hard to reconcile with the fact they ended the quarter with almost $2 million unrestricted cash) or did they conclude the 50% stake was no longer even worth $2 million. Does Zoom feel it was deceived over the Portables purchase? Is Zoom considering a lawsuit as mentioned in the (poorly worded) 10-Q or do they fear a lawsuit from Portables?
I was not aware Zoom was having a conference call until it was over. (Perhaps Zoom will consider giving more notice in the future).
I tried to listen to the replay last night but all I got was piano music after putting in the ID:18825421
Can anyone give me a summary of what was said?
Assume that SpreadZoom is worth nothing. (write-off intangibles+plant)
ZOOM still has something like $21 million book value - all in cash. This is $7 per share
ZOOM was trading below $3 because of management's poor track record. It was feared the $21 million would be frittered away by management. ZOOM has a long history of unprofitable investments culminating in the recent write-off of Portables.
I believe the "reverse merger" was a way to point this out. It is ZOOM's cash that may be acquired. The prospect (possibility?) that the cash will be invested by a management other than ZOOM's that was attractive.
If memory serves, Manning was a questioner on the last conference call. For sure he was on the one before.
Last time I checked, ZMTP had 80,000 (pre-split) ZOOM shares
The amended 10-Q changes this:
"The Court has executed on its ruling and the construction of the factory under SpreadZoom has resumed."
has been changed to:
"The Courts have executed on its ruling and removed the HUCG from the premises."
Without a conference call and with a response questions from investor relations unlikely, I guess we have no way of knowing what is happening with the factory. Does this mean the HUCG has been removed but construction has NOT resumed?
I am not so sure that Zoom "lost" Portables. Did they decided it was not worth paying 2 mln to keep a 50% share of Portables? Zoom alludes to a lawsuit in the 10-Q. Does Zoom feel it was deceived in the purchase? I suspect we will never know.
Note 25 of the 10Q shows SpeadZoom made $369,212 in Q3, Zoom's share= $ 174,895
Historically the phone business has been most profitable in Q3 I suspect this is the case now. I would be surprised to see annual SpreadZoom profits in the future.
Zoom's "Plan of Operation" (bottom of page 32 in 10-Q) states:
"During the next 12 months, Zoom, together with its subsidiaries, expects to take the following steps in connection with the development of our business and the implementation of our plan of operations:
Zoom will restructure itself towards investment in more high growth businesses."
On page 34 (under revenue) we get:
"The Company is restructuring its business and expects to consummate a transaction by investing in a high growth technology based businesses." (i.e. technology specified)
The company now has virtually no debt and $7 per share of cash. Given the numerous recent write-downs of past investments, I have no confidence in managements ability to invest the cash at a profit.
From Note 1:
"As of July 15, 2013, the Company was in default of the promissory note for $2,000,000 owed to Portables Unlimited, Inc. The promissory note was collateralized by the Company's ownership percentage in Portables. . As of the date of this report, the Company does not believe it is able to recover its control and investment. As a result, Zoom ceased to have a controlling interest in Portables and did not retain an investment in it on the date of default, _July 15, 2013, accordingly, the Company deconsolidated Portables' financial statements and recognized a loss of approximately $8.73 million during the quarter ended September 30, 2013 which includes a complete write off of its investment in Portables as of September 30, 2013. However, the Company may decide pursue legal remedies in the future if the Company deems such as action as necessary. The Company has reclassified all results of operations related to Portables prior to the write off as discontinued operations. Assets and liabilities related to Portables in comparative financial statements have been reclassified to assets and liabilities of discontinued operations."
The company ends the quarter with $1.8 million unrestricted cash yet defaults on a $2 million note incurring an almost $9 million loss. The company may decide (to) pursue legal remedies? What is going on here?
What is the nature of the legal case ZOOM might have?
Besides the grammatical error (lack of "to") the 10-Q is full of reference and date errors. It seems to have been done quickly with no proofreading (not that I am big on proofreading!). How does one get clarification on errors when there is no conference call and the company does not respond to emails?
I am surprised how well ZOOM has held up at the open - the old shares found support at 0.25 (2.50 on the new). Is it still there and who is buying?
A very brief read seems to indicate they have written off Portables. Would love to ask for more info on the conference call but I suspect they may not hold one. None has been announced yet, are they required to hold one?
Perhaps I was in too much of a hurry Friday.
Upon re-reading this it appears the Portables negotiations are NOT resolved. The filing states the company is in "ongoing" negotiation, This sounds like bad news to me also.
The purchase of PU has been marked by problems. Were the agreements poorly written? Is Zoom still in a cash squeeze after 3 months or is Zoom unhappy with some of the terms of the purchase? This should be a topic for the conference call.
As far as what is implied by the first paragraph (the sale) I have not a clue. Zoom continues its practice of poor shareholder communications.
As expected, as usual, the company will be late with Q3 results. Zoom did give a new excuse (the recent reverse split).
Of more interest the "significant change in results of operations" box was checked Yes. Zoom cites the (old news) of a delay in the Dec 31, 2012 sale closing and the (old news) of the Portables note default.
Presumably this means these two items have been resolved (otherwise there is no change). I expect this is most likely good news (but the resolution could also be bad news). Any ideas?
Text of filing explanation below:
"If so, attach an explanation of the anticipated change, both narratively and quantitatively, and, if appropriate, state the reasons why a reasonable estimate of the results cannot be made.
On December 31, 2012, the Company entered into a Share Purchase Agreement (the "SPA") with Beijing Zhumu Culture Communication Company, Ltd. (the "Purchaser"). Pursuant to the SPA, the Company agreed to sell (the "Subsidiary Sale") to the Purchaser all the equity interests the Company holds in its China based subsidiaries (except for SpreadZoom Technologies Co., Ltd.).
In addition, the Company is in ongoing negotiation with Portables Unlimited, Inc. in order to cure the default of the promissory note for $2,000,000 owed to Portables. If the Company is not able to cure the default, the Company's ownership interest in Portables Unlimited LLC could pass to Portables Unlimited, Inc.
The Company thus anticipates that the financial results for the quarterly period ended September 30, 2013 will differ from the corresponding period for the last fiscal year. "
I hope all my stocks do reverse splits!
What is going to happen when they file notice that Q3 results will be late? I suspect they (those buying) will not care. Late filing notice has to be by end of this week does it not? Last year NT 10-Q was filed November 14, 2012
Mine showed up via snail mail on Friday, Oct 18. I will vote by phone.
While it had limited useful information we do find out that ZOOM issued 560,000 shares in the third quarter through September 25. The stock did not trade above 0.50 during the period (low around 0.25).
Will have to wait further info on why the shares were issued, but it would be a great question for the next conference call to ask why they issue shares at these low prices (given book value of the company). Ask them to consider the message they are sending to shareholders when they issue at such low prices.