CORRECTION OF ERROR FOR ACCOUNTING OF PORTABLES UNLIMITED, LLC. - Note 22

12 Months Ended

Dec. 31, 2013

Correction Of Error For Accounting Of Portables Unlimited Llc. - Note 22

CORRECTION OF ERROR FOR ACCOUNTING OF PORTABLES UNLIMITED, LLC. - Note 22

NOTE 22 - CORRECTION OF ERROR FOR ACCOUNTING OF PORTABLES UNLIMITED, LLC.

On May 5, 2014, the Company concluded that the consolidated balance sheet, and related consolidated statement of operations and comprehensive income/(loss), stockholders' equity and statements of cash flows included in Form 10K Annual Report, dated April 15, 2013 (the "2012 Financials") will need to be restated as a result of the Company erroneous application of the consolidation method of accounting for its former 50.1% equity interest investment in Portables Unlimited, LLC ("Portables"). The Company's management determined during the fourth quarter of the year ended December 31, 2013 that the Company's former investment in Portables was incorrectly accounted for using the consolidation method and should instead have been accounted for using the equity method. The error resulted in an overstatement of the total assets, total liabilities, net revenues, cost of sales, operating expenses, and operating income in the previously filed consolidated financial statements. The Company did not demonstrate that it had unilateral control over the investment, but rather, the Company only exercised substantive participating rights; accordingly, the Company should have used the equity method of accounting to account for its former investment.

The following tables show the previously report amounts, the required adjustment and the currently restated amounts related to the Company financial position and results of operations at December 31, 2012 (as restated), and for the year then ended.

		December 31, 2012
		As Previously				As Currently
		Reported		Adjustment		Reported
Financial Position						(Restated)
Current assets	$	193,879,917	$	(5,149,774)	$	188,730,143
Non-current assets		41,837,026		(17,728,452)		24,108,574
Total assets		235,716,943		(22,878,226)		212,838,717
Current liabilities		170,751,984		(13,999,166)		156,752,818
Non-current liabilities		317,500		-		317,500
Total liabilities		171,069,484		(13,999,166)		157,070,318
Stockholders' equity		52,056,677		710,873		52,767,550
Non-controlling interest		12,590,782		(9,589,933)		3,000,849
Net equity		64,647,459		(8,879,060)		55,768,399

		For the Year Ended December 31, 2012
		As Previously				As Currently
		Reported		Adjustment		Reported
						(Restated)
Net revenues	$	49,773,552	$	(49,773,552)	$	-
Cost of sales		40,813,304		(40,813,304)		-
Gross profit		8,960,248		(8,960,248)		-
Total operating expenses		17,505,542		(7,215,081)		10,290,461
Loss from operations		(8,545,294)		(1,745,167)		(10,290,461)
Other (expense) income, net		(603,723)		1,321,120		717,397
Loss before income taxes for continuing operations		(9,149,017)		(424,047)		(9,573,064)
Income taxes for continuing operations		190,845		-		190,845
Loss from continuing operations		(9,339,862)		(424,047)		(9,763,909)
Discontinued Operations:
Loss from discontinued operations, net of tax		(11,178,671)		-		(11,178,671)
Loss on disposal, net tax		(11,860,025)		-		(11,860,025)
Loss from discontinued operations		(23,038,696)		-		(23,038,696)
Net loss	$	(32,378,558)	$	(424,047)	$	(32,802,605)
less: Income (loss) attributable to noncontrolling interest		73,953		(424,047)		(350,094)
Net loss attributable to Zoom Technologies, Inc.	$	(32,452,511)	$	-	$	(32,452,511)
Basic and diluted loss per common share
Basic	$	(11.96)	$	-	$	(11.96)
Diluted	$	(11.96)	$	-	$	(11.96)

These corrections will be made to applicable prior period financial information in future filings with the SEC including this filing.