3. LIQUIDITY	12 Months Ended
Dec. 31, 2019
Liquidity
LIQUIDITY	The Company’s cash balance on December 31, 2019 was $1.2 million compared to $126 thousand on December 31, 2018. On December 31, 2019, the Company had no bank debt on an available asset-based credit line of $3.0 million, working capital of $5.4 million, and a current ratio of 1.7. The Company closed on a $5 million private placement and issued an aggregate of 4,545,455 shares on May 3, 2019, and soon after the closing of the offering Jeremy Hitchcock and Jonathan Seelig joined Zoom’s Board of Directors. The Company’s net losses of $3.3 million in 2019 and $74k in 2018, along with cash used in operations of $1.5 million in 2019 and $1.8 million in 2018 have raised management concerns as to the Company’s ability to continue as going concern. Adding to that is recent impact of COVID-19 and its 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. 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 outbreak caused delays in the original transition plan, we are actively working with our primary outsourced development partner to establish manufacturing operations in Haiphong, Vietnam. The transition to Vietnam has begun, we have reached full production in Vietnam on one of our top models and expect to have all manufacturing of existing models fully transitioned to Vietnam by the end of June 2020. This will save the company approximately $500,000 per month in tariff cost, plus release an additional $800,000 in restricted cash over the next year related to performance bonds required to be posted related to the tariffs. The company is also further diversifying its relationships with outsourced manufacturers. 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. The Company has implemented cost cutting measures to conserve cash, put a hold on all new hiring during 2020, and has given notice that we will not renew the same footprint of our headquarters office lease when it expires in June 2020, retaining just a few offices in our current co-work space office suite for research and testing purposes. Our work force continues to work remotely and we are continuing operations. We have negotiated improved payment terms with our primary outsourced manufacturing partner. The Company has been approved by Rosenthal & Rosenthal for an expansion of our revolving working capital line of credit from $3 to $4 million. We signed an extension of our networking product license agreement with Motorola through 2025 and we also signed a new license agreement with Motorola to sell consumer grade home security and monitoring products and to provide related services, We continue to develop new products and are on track to introduce several new models to the market during 2020 and 2021. While the COVID-19 outbreak disrupted sales and production for a short period of time during mid-March 2020, we worked through the disruption. In mid-March, sales initially decreased in response to a key distributor focusing its distribution logistics on essential healthcare products. Our 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. We continue to work closely with our manufacturing partners and our distributors to ensure that our products remain consistently available for sale to end-users. Our sales throughout the first quarter of 2020 were tracking higher the level booked in the fourth quarter of 2019 except for the short-term reduction we experienced in the middle of March. The current environment is difficult, but with the steps the Company has taken and continues to take, as noted above, management expects to maintain acceptable levels of liquidity to meet its obligations as they become due and for at least twelve months from the date of issuance of the Company’s filing of this Annual Form 10-K with the Securities and Exchange Commission, thus mitigating substantial doubt about the Company’s ability to continue as a going concern during this time.

3. LIQUIDITY

12 Months Ended

Dec. 31, 2019

The Company’s cash balance on December 31, 2019 was $1.2 million compared to $126 thousand on December 31, 2018. On December 31, 2019, the Company had no bank debt on an available asset-based credit line of $3.0 million, working capital of $5.4 million, and a current ratio of 1.7.

The Company closed on a $5 million private placement and issued an aggregate of 4,545,455 shares on May 3, 2019, and soon after the closing of the offering Jeremy Hitchcock and Jonathan Seelig joined Zoom’s Board of Directors.

The Company’s net losses of $3.3 million in 2019 and $74k in 2018, along with cash used in operations of $1.5 million in 2019 and $1.8 million in 2018 have raised management concerns as to the Company’s ability to continue as going concern. Adding to that is recent impact of COVID-19 and its 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. 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 outbreak caused delays in the original transition plan, we are actively working with our primary outsourced development partner to establish manufacturing operations in Haiphong, Vietnam. The transition to Vietnam has begun, we have reached full production in Vietnam on one of our top models and expect to have all manufacturing of existing models fully transitioned to Vietnam by the end of June 2020. This will save the company approximately $500,000 per month in tariff cost, plus release an additional $800,000 in restricted cash over the next year related to performance bonds required to be posted related to the tariffs. The company is also further diversifying its relationships with outsourced manufacturers. 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.

The Company has implemented cost cutting measures to conserve cash, put a hold on all new hiring during 2020, and has given notice that we will not renew the same footprint of our headquarters office lease when it expires in June 2020, retaining just a few offices in our current co-work space office suite for research and testing purposes. Our work force continues to work remotely and we are continuing operations. We have negotiated improved payment terms with our primary outsourced manufacturing partner. The Company has been approved by Rosenthal & Rosenthal for an expansion of our revolving working capital line of credit from $3 to $4 million. We signed an extension of our networking product license agreement with Motorola through 2025 and we also signed a new license agreement with Motorola to sell consumer grade home security and monitoring products and to provide related services, We continue to develop new products and are on track to introduce several new models to the market during 2020 and 2021. While the COVID-19 outbreak disrupted sales and production for a short period of time during mid-March 2020, we worked through the disruption. In mid-March, sales initially decreased in response to a key distributor focusing its distribution logistics on essential healthcare products. Our 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. We continue to work closely with our manufacturing partners and our distributors to ensure that our products remain consistently available for sale to end-users. Our sales throughout the first quarter of 2020 were tracking higher the level booked in the fourth quarter of 2019 except for the short-term reduction we experienced in the middle of March.

The current environment is difficult, but with the steps the Company has taken and continues to take, as noted above, management expects to maintain acceptable levels of liquidity to meet its obligations as they become due and for at least twelve months from the date of issuance of the Company’s filing of this Annual Form 10-K with the Securities and Exchange Commission, thus mitigating substantial doubt about the Company’s ability to continue as a going concern during this time.