2. Liquidity	3 Months Ended
Mar. 31, 2020
Liquidity
Liquidity	The Company’s cash balance on March 31, 2020 was $577.6 thousand of which $550 thousand was restricted. This compares to $1.4 million on December 31, 2019 of which $150 thousand was restricted. On March 31, 2020, the Company had $387.3 thousand outstanding on its $4.0 million bank credit line, working capital of $5.0 million, and a current ratio of 1.8. The Company closed on a $5 million private placement and issued an aggregate of 4,545,455 shares on May 3, 2019, and in connection with the closing of the offering two designees of an investor in the private placement joined Zoom’s Board of Directors. The Company’s net losses of $3.3 million in 2019, $74 thousand in 2018, and recent quarterly loss of $752 thousand for the quarter ended March 31, 2020 along with cash used in operations of $1.5 million in 2019 and $1.3 million for the period ended March 31, 2020 have raised management concerns as to the Company’s ability to continue as going concern within one year from the date of filing these financial statements. The Company’s financial statements have been prepared assuming that the Company will continue as a going concern and contemplates continuity of operations, realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company’s ability to continue as a going concern is contingent upon, among other factors, the Company’s ability to generate sufficient cash flow from operations, decrease operating costs, obtain additional equity or debt financing and comply with the financial and other covenants contained in the Company’s Financing Agreement, as amended, with Rosenthal & Rosenthal, Inc. as described in Note 7. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. In addition, the assessment of US tariffs and the COVID-19 pandemic has created 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 and the first quarter of 2020. In the first quarter of 2020, these tariffs were $1.5 million and were the primary reason for the Company recording a net loss of $752 thousand for the quarter. 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 pandemic caused delays in the original transition plan, the Company is working actively working with it primary outsourced development partner to establish manufacturing operations in Haiphong, Vietnam. The transition to Vietnam has begun, the Company has reached full production in Vietnam on one of its top models and expects to have all manufacturing of existing models fully transitioned to Vietnam by the end of June 2020. 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. While the COVID-19 pandemic disrupted sales and production for a short period of time during mid-March 2020, the Company worked through the disruption. In mid-March 2020, sales initially decreased in response to a key distributor focusing its distribution logistics on essential healthcare products. The Company’s 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. The Company continues to work closely with its manufacturing partners and distributors to ensure that the Company’s products remain consistently available for sale to end-users. The Company has implemented cost cutting measures to conserve cash, put a hold on all new hiring during 2020, and has given notice that it will not renew the same footprint of its headquarters office lease when it expires in June 2020, retaining just a few offices in the current co-work space office suite for research and testing purposes. During the COVID-19 pandemic, the Company’s work force continues to work remotely, and is continuing operations. We have negotiated extended and improved payment terms through the end of June 2020 with our primary outsourced manufacturing partner. On April 13, 2020, the Company entered into a sixth amendment to the Financing Agreement with Rosenthal & Rosenthal, Inc. This amendment increased the size of the Company’s revolving credit line to $4.0 million effective on the date of this amendment. The Company’s credit line has a maturity date of November 2020, and automatically renews from year to year unless cancelled under the terms of Financing Agreement, as amended. The Company entered into an extension of its networking product license agreement with Motorola through 2025 and also entered into a new license agreement with Motorola to sell consumer grade home security and monitoring products and to provide related services. The Company continues to develop new products and expects to introduce several new models to the market during 2020 and 2021. The Company’s ability to maintain adequate levels of liquidity depends in part on its ability to sell inventory on hand, to continue to manufacture and import more inventory to meet existing demand, and to collect related receivables. The Company continues to execute its plan to move the manufacture of its products to outside of China by the end of June 2020. The Company also continues to work with its distribution partners in North America to deliver inventory to its customers. The current environment is difficult, particularly due to the COVID-19 pandemic, and the outcome of these matters cannot be predicted with any certainty at this time and raises challenges to the Company’s ability to continue as a going concern. There can be no assurance that the Company’s ongoing efforts will continue to be successful.

2. Liquidity

3 Months Ended

Mar. 31, 2020

The Company’s cash balance on March 31, 2020 was $577.6 thousand of which $550 thousand was restricted. This compares to $1.4 million on December 31, 2019 of which $150 thousand was restricted. On March 31, 2020, the Company had $387.3 thousand outstanding on its $4.0 million bank credit line, working capital of $5.0 million, and a current ratio of 1.8.

The Company closed on a $5 million private placement and issued an aggregate of 4,545,455 shares on May 3, 2019, and in connection with the closing of the offering two designees of an investor in the private placement joined Zoom’s Board of Directors.

The Company’s net losses of $3.3 million in 2019, $74 thousand in 2018, and recent quarterly loss of $752 thousand for the quarter ended March 31, 2020 along with cash used in operations of $1.5 million in 2019 and $1.3 million for the period ended March 31, 2020 have raised management concerns as to the Company’s ability to continue as going concern within one year from the date of filing these financial statements. The Company’s financial statements have been prepared assuming that the Company will continue as a going concern and contemplates continuity of operations, realization of assets and satisfaction of liabilities and commitments in the normal course of business. The Company’s ability to continue as a going concern is contingent upon, among other factors, the Company’s ability to generate sufficient cash flow from operations, decrease operating costs, obtain additional equity or debt financing and comply with the financial and other covenants contained in the Company’s Financing Agreement, as amended, with Rosenthal & Rosenthal, Inc. as described in Note 7. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

In addition, the assessment of US tariffs and the COVID-19 pandemic has created 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 and the first quarter of 2020. In the first quarter of 2020, these tariffs were $1.5 million and were the primary reason for the Company recording a net loss of $752 thousand for the quarter. 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 pandemic caused delays in the original transition plan, the Company is working actively working with it primary outsourced development partner to establish manufacturing operations in Haiphong, Vietnam. The transition to Vietnam has begun, the Company has reached full production in Vietnam on one of its top models and expects to have all manufacturing of existing models fully transitioned to Vietnam by the end of June 2020. 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.

While the COVID-19 pandemic disrupted sales and production for a short period of time during mid-March 2020, the Company worked through the disruption. In mid-March 2020, sales initially decreased in response to a key distributor focusing its distribution logistics on essential healthcare products. The Company’s 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. The Company continues to work closely with its manufacturing partners and distributors to ensure that the Company’s products remain consistently available for sale to end-users.

The Company has implemented cost cutting measures to conserve cash, put a hold on all new hiring during 2020, and has given notice that it will not renew the same footprint of its headquarters office lease when it expires in June 2020, retaining just a few offices in the current co-work space office suite for research and testing purposes. During the COVID-19 pandemic, the Company’s work force continues to work remotely, and is continuing operations. We have negotiated extended and improved payment terms through the end of June 2020 with our primary outsourced manufacturing partner.

On April 13, 2020, the Company entered into a sixth amendment to the Financing Agreement with Rosenthal & Rosenthal, Inc. This amendment increased the size of the Company’s revolving credit line to $4.0 million effective on the date of this amendment. The Company’s credit line has a maturity date of November 2020, and automatically renews from year to year unless cancelled under the terms of Financing Agreement, as amended.

The Company entered into an extension of its networking product license agreement with Motorola through 2025 and also entered into a new license agreement with Motorola to sell consumer grade home security and monitoring products and to provide related services. The Company continues to develop new products and expects to introduce several new models to the market during 2020 and 2021.

The Company’s ability to maintain adequate levels of liquidity depends in part on its ability to sell inventory on hand, to continue to manufacture and import more inventory to meet existing demand, and to collect related receivables. The Company continues to execute its plan to move the manufacture of its products to outside of China by the end of June 2020. The Company also continues to work with its distribution partners in North America to deliver inventory to its customers. The current environment is difficult, particularly due to the COVID-19 pandemic, and the outcome of these matters cannot be predicted with any certainty at this time and raises challenges to the Company’s ability to continue as a going concern. There can be no assurance that the Company’s ongoing efforts will continue to be successful.