16. SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2019

Subsequent Events [Abstract]

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 had to commit $400 thousand on a letter of credit in January, 2020 and another $250 thousand 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.

COVID-19 pandemic has had an impact on all areas of our company. Production has experienced delays, supply chain is disrupted, employees are working remotely. We are continuing operations, we have not laid off any employees, and we are taking steps necessary to operate under the restrictions currently placed on people and businesses. At this point, the extent to which COVID-19 may impact our financial condition or results of operations is uncertain.

In February 2020 Zoom entered into a manufacture supply agreement with Foxconn. Agreement outlines general manufacturing procedures, with specific terms as the product quantity, price, delivery per purchase requisition. The term of the agreement is three years, with one-year automatic renewals, subject to three-month cancellation notice.

In March 2020 Zoom entered into an amendment to the License Agreement with Motorola Mobility LLC (the “2020 Amendment”).  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, also extended the term through December 31, 2025.

In March 2020 Zoom entered into a License Agreement with Motorola Mobility LLC to sell consumer grade home security and monitoring products and provide related services (the “2020 License Agreement”).

In connection with the 2020 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,
	2021:	$	2,050,000
	2022:	$	2,300,000
	2023:	$	2,550,000
	2024:	$	2,800,000
	2025:	$	2,800,000

Other than above, Management of the Company has reviewed subsequent events from December 31, 2019 through the date of filing and has concluded that there were no other subsequent events requiring adjustment to or disclosure in these consolidated financial statements.