8-K

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported) October 12, 2011

ZOOM TECHNOLOGIES, INC.
(Exact Name of Registrant as Specified in Charter)

 

Delaware	0-18672	51-0448969
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(I.R.S. Employer Identification Number)

Headquarters:
Sanlitun SOHO, Building A, 11th Floor
No.8 Worker Stadium North Road
Chaoyang District, Beijing, China 100027

U.S. office:
136 First Street
Nanuet, NY 10954

(Address of principal executive offices including zip code)

(917) 609-0333
(Registrant's telephone number, including area code)

Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.01 Completion of Acquisition or Disposition of Assets.

On October 12, 2011, Zoom Technologies, Inc. ("Zoom" or the "Company") and Zoom USA Holdings, Inc., a newly formed wholly-owned subsidiary of Zoom ("Zoom Sub") entered into a Securities Purchase Agreement to purchase from The Cellular Network Communications Group, Inc. ("CNCG") a 50% interest in Portables Unlimited LLC ("Portables"), an exclusive wholesale distributor of T-Mobile products in the United States. As consideration of the 50% interest in Portables, Zoom (i) issued an aggregate of 1,494,688 shares of Zoom common stock (the "Equity Consideration") to the principals of CNCG and (ii) through Zoom Sub, issued a promissory note in the principal amount of $500,000 payable to CNCG. The promissory note accrues interest at 2% per annum and matures three years from the date of issuance.

The Equity Consideration shall be held in escrow until the earlier of (i) the date that Portables provides to Zoom financial statements for Portables' third quarter ended September 30, 2011 or (ii) January 15, 2012.

In addition, Zoom Sub purchased an additional 5% interest in Portables for $750,000, to be paid within thirty days of the closing date.

Further, in connection with the transaction, Zoom assumed the responsibility for repaying certain indebtedness owed by Portables to T-Mobile USA, Inc. in the amount of $4,757,187.36 (the "T-Mobile Indebtedness"), and agreed to arrange for a $500,000 letter of credit in the name of Portables to secure obligations of Portables to T-Mobile. The T-Mobile Indebtedness is payable under the following schedule: $2,500,000 is due on November 10, 2011 (the "Initial Payment"), $1,400,000 is due on December 10, 2011 (the "Second Payment"), and the remaining $857,186.36 is due on December 20, 2011 (the "Final Payment"). If the Initial Payment and Second Payment are made in a timely manner, T-Mobile will waive the Final Payment. If the Final Payment is waived, Zoom agrees to pay other outstanding indebtedness of Portables in the amount of $4,500,000, less the amount of T-Mobile Indebtness paid off.

Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.

In connection with the acquisition of the 50% interest in Portables as described in Item 2.01 above, the Company, though it wholly owned subsidiary, Zoom Sub, issued a promissory date in the amount of $500,000 payable to CNCG. The promissory note accrues interest at 2% per annum and matures three years from the date of issuance.

Item 3.02 Unregistered Sale of Equity Security

As stated in Item 2.02 above, on October 12, 2011 the Company issued an aggregate of 1,494,688 shares of its common stock to the principals of CNCG as partial consideration for a 50% interest in Portables. The Company relied on the exemption from registration set forth in Section 4(2) of the Securities Act of 1933, as amended.

Item 8.01 Other Events

On October 12, 2011, the Company issued a press release announcing that the Company completed its acquisition of 55% interest of Portables Unlimited LLC.    A copy of the press release is attached hereto as Exhibit 99.1, which is hereby incorporated by reference.

Item 9.01 Financial Statements and Exhibits.

(a)    Financial Statements of Businesses Acquired

The financial statements with respect to the acquisition reported in Item 2.01 will be filed by an amendment to this report within 71 calendar days after the date this report was required to be filed.

(b)    Pro Forma Financial Information

The pro forma financial information with respect to the acquisition reported in Item 2.01 will be filed by an amendment to this report within 71 calendar days after the date this report was required to be filed.

(d)  Exhibits

Exhibit  No.	Description
4.1	Subordinated Note issued by Zoom USA Holdings, Inc. to CNCG in the amount of $500,000.
10.1	Securities Purchase Agreement dated as of October 11, 2011 by and among Zoom Technologies, Inc., Zoom USA Holdings, Inc., Portables Unlimited, LLC, and The Cellular Network Communications Group, Inc.
99.1	Press release, dated October 12, 2011.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

ZOOM TECHNOLOGIES, INC.

Date: October 18, 2011 By:   /s/ Anthony K. Chan        Anthony K. Chan
       Chief Financial Officer and Secretary

Exhibit Index

Exhibit  No.	Description
4.1	Subordinated Note issued by Zoom USA Holdings, Inc. to CNCG in the amount of $500,000.      PDF
10.1	Securities Purchase Agreement dated as of October 11, 2011 by and among Zoom Technologies, Inc., Zoom USA Holdings, Inc., Portables Unlimited, LLC, and The Cellular Network Communications Group, Inc.      PDF
99.1	Press release, dated October 12, 2011.      PDF

EX-4.1

Exhibit 4.1

PROMISSORY NOTE

$500,000 October 11, 2011     

FOR VALUE RECEIVED, ZOOM USA HOLDINGS, INC. (the "Maker"), with an address at Sanlitum SOHO, Building A, No. 8 Workers Stadium North Road, Chaoyang District, Beijing, China 100027, promises to pay to the order of THE CELLULAR NETWORK COMMUNICATIONS GROUP, INC. (the "Payee"), with an address at 11-11 44^th Drive, Long Island City, New York 11101, or at such other place as the Payee may from time to time designate in writing, the principal sum of FIVE HUNDRED THOUSAND DOLLARS AND NO CENTS ($500,000). This promissory note (the "Note") shall bear interest at the rate of two percent (2%) per annum. This Note shall be payable quarterly with the initial payment due on the three (3) month anniversary of the date hereof and subsequent payments due on the same day of each subsequent quarter through October 11, 2014. An amortization schedule setting forth the amount of each such quarterly payment is attached hereto.

This Note is given as a portion of the purchase price for the CNCG Interest (as such term is defined in that certain Securities Purchase Agreement, of even date herewith, by and among Zoom Technologies, Inc., the Maker, Portables Unlimited, LLC and the Payee (the "Securities Purchase Agreement")) being sold pursuant to the Securities Purchase Agreement.

If any of the following events or conditions shall happen or occur (in any case, an "Event of Default"): (1) the default by the Maker in the due and punctual payment of any amount due hereunder and the continuance thereof for a period of ten (10) days following receipt of written notice of such default from the Payee; (2) the inability of the Maker, and/or the Maker's admission that it is unable, to pay its debts as they become due; (3) the application by the Maker for, or consent by the Maker to, the appointment of a receiver, trustee or liquidator of itself or of its property; (4) a general assignment by the Maker for the benefit of creditors; (5) the filing by the Maker of a voluntary petition in bankruptcy or a petition or an answer seeking reorganization or an arrangement with creditors; (6) the Maker having an involuntary petition in bankruptcy filed against it which is not dismissed, discharged or stayed within sixty (60) days; (7) the sale, exchange or other transfer of all or substantially all of the assets of the Maker, (8) the sale, exchange, issuance or other transfer of any interest in the Maker (whether equity or voting), (9) a change in control of the Maker, whether equity or voting; or (10) the Maker permanently ceasing to do business, then the Payee may, by written notice to the Maker, declare the entire unpaid amount of this Note then outstanding to be forthwith due and payable whereupon the same shall become forthwith due and payable.

Notwithstanding anything to the contrary contained in this Note, the rate of interest payable on this Note shall never exceed the maximum rate of interest permitted under applicable law.

This Note may not be waived, changed, modified or discharged orally, but only by an agreement in writing, signed by the party against whom enforcement of any waiver, change, modification or discharge is sought.

Should the indebtedness represented by this Note or any part thereof be collected at law or in equity, or in bankruptcy, receivership or any other court proceedings (whether at the trial or

appellate level), or should this Note be placed in the hands of any attorneys for collection upon the occurrence of an Event of Default, the Maker agrees to pay, in addition to all other amounts due and payable hereunder, all costs and expenses of collection, including reasonable attorneys' fees.

The Maker, for itself and its representatives, successors and assigns, expressly (a) waives presentment, demand, protest, notice of dishonor, notice of non-payment, notice of maturity, notice of protest, diligence in collection, and the benefit of any applicable exemptions, including, but not limited to, exemptions claimed under insolvency laws, and (b) consents that the Payee may release or surrender, exchange or substitute any property or other collateral or security now held or which may hereafter be held as security for the payment of this Note, and/or may extend the time for payment and/or otherwise modify the terms of payment of any part or the whole of the debt evidenced hereby.

If the Maker shall fail to pay any amounts due hereunder following an Event of Default hereunder, then the entire unpaid principal amount shall thereafter bear interest at the rate of eighteen percent (18%) per annum from the date of such Event of Default.

Notwithstanding any other provision of this Note, all payments made hereunder shall be applied first to interest and then to principal.

Any notice, demand or request relating to any matter set forth herein shall be in writing and shall be deemed effective when hand delivered, when mailed by registered or certified mail (postage prepaid, return receipt requested) or by overnight mail or courier, to the Maker or the Payee or other holder of this Note at its address stated herein or at such other address of which it shall have notified the party giving such notice in writing as aforesaid.

The Maker acknowledges and agrees that the obligations under this Note are unconditional and are not subject to any defense, counterclaim, or right of offset or setoff.

This Note may be prepaid in whole or in part without premium or penalty, provided that any such payment includes all interest accrued on the outstanding principal balance through the date of and including the date of such payment.

Maker hereby represents, warrants, certifies and declares that all acts, conditions and things required to be done and performed and to have happened precedent to the execution and delivery of this Note and to constitute this Note a legal, valid and binding obligation of Maker in accordance with its terms have been done, performed and have happened in compliance with all applicable laws.

This Note shall be governed by, and interpreted and construed in accordance with, the laws of the State of New York, excluding choice of law principles thereof.

The Maker acknowledges that it has been represented by counsel in connection with this Note. Accordingly, any rule or law or any legal decision that would require the interpretation of any claimed ambiguities in this Note against the party that drafted it has no application and is expressly waived by the Maker. The provisions of this Note shall be interpreted in a reasonable manner to give effect to the intent of the Maker and the Payee.

[Remainder of page intentionally left blank; signature page follows]

2

IN WITNESS WHEREOF, the Maker has duly executed this Promissory Note as of the day and year first above written.

ZOOM USA HOLDINGS, INC.

By: _____________________________________
Name:
Title:

3

EX-10.1 3 exh10-1.htm SECURITIES PURCHASE AGREEMENT DATED AS OF OCTOBER 11, 2011

Exhibit 10.1

EX-10.1

October 18, 2011 Exhibit 10.1

EX-99.1

Exhibit 99.1

PRESS RELEASE

ZOOM Acquires Portables Unlimited - Wholesale Distributor for T-Mobile USA

BEIJING, October 13, 2011 -- Zoom Technologies, Inc. (Nasdaq: ZOOM), a leading China-based manufacturer of mobile phones and related products, today announced it has signed a definitive agreement to acquire a 55% share of Portables Unlimited LLC ("Portables"), one of the largest exclusive wholesale distributors of T-Mobile products in the United States. Portables has direct access to more than 1,000 retail locations across twenty States selling T-Mobile products, including approximately 100 exclusive T-Mobile carrier locations. This strategic acquisition is the first of its kind for a China-based handset manufacturer to join forces with a US cellular distributor, allowing ZOOM distribution capability in the US market.

Established in 1999 and headquartered in Nanuet, New York where the current management will remain, Portables has grown to become one of T-Mobile's top sellers among its prepaid (Monthly 4G) wholesale distribution channel. Portables' daily interaction with customers can feed the most current market information to ZOOM for fine tuning its products particularly manufactured for the US market. Upon closing of the acquisition, ZOOM will establish its international headquarters in Portables' offices at 136 First Street, Nanuet, New York. "We are so excited about the opportunity to merge with a quality handset manufacturer that will enable Portables additional growth opportunities," said Raj Amar, CEO of Portables.

Portables, which has had a long-standing working relationship with T-Mobile for more than ten years, is a perfect partner for ZOOM. With the US cellular subscriber base almost saturated, revenue from phone sales becomes the most critical component for growth in the US mobile communication industry. "We are looking forward to the opportunity to grow our business and the strength this combined entity partnership can deliver," said Jonathan Blood, Senior Director National Dealer Programs, T-Mobile USA.

"This move is not only a fast track for us to enter the US market, but also will enable us to accurately target the right product at the right price, which is the key to a successful launch," stated Leo Gu, Chairman and CEO of Zoom Technologies, "Everyone at ZOOM is exuberant with the opportunities that this merger will bring, we will be working hard to unleash the full potential of this strategic combination, and we have the goal of expanding to 2,000 retail locations in the near future. I am confident that the knowledge and experience of both companies will result in the delivery of exceptional products to the US while opening new opportunities in other American markets as well."

Terms of the acquisition will be included in a filing with the SEC on Form 8-K. Maxim Group LLC served as exclusive financial advisor to ZOOM in connection with the transaction. Ellenoff Grossman & Schole LLP acted as counsel to ZOOM. Certilman Balin Adler & Hyman, LLP acted as counsel and Marks Paneth & Shron LLP acted as accountants and financial advisors for Portables.

About Zoom Technologies

Zoom Technologies is a holding Company with subsidiaries that engage in the manufacturing, research and development, and sale of electronic and telecommunication products for the latest generation mobile phones, wireless communication circuitry and related software products.

Zoom Technologies' subsidiary, Jiangsu Leimone, owns a majority stake of TCB Digital, which offers highly customized and high quality Electronic Manufacturing Service (EMS) for Original Equipment Manufacturer (OEM) customers as well as its Own Brand Manufacturing (OBM) under the ZOOM, LEIMONE and LONGTEL brand names. The Company's products are both exported and sold domestically in People's Republic of China.

Forward-Looking Statements

Certain statements in this press release may constitute "forward-looking statements" that involve risks and uncertainties. These include statements about our expectations, intentions, plans, objectives, assumptions or future events in which the outcome cannot be assured. You should not place undue reliance on these forward-looking statements. Information concerning factors that could cause our actual results to differ materially from these forward-looking statements can be found in Zoom Technologies' periodic reports filed with the Securities and Exchange Commission. We undertake no obligation to publicly release revisions to these forward-looking statements to reflect future events or circumstances or reflect the occurrence of unanticipated events, unless otherwise required by law.

Investor Contact:
Tina Xiao
Investor Relations Manager
Zoom Technologies, Inc.
+1 917-609-0333
tinaxiao@zoom.com
www.zoom.com