CORRECTION OF ERROR FOR ACCOUNTING OF PORTABLES UNLIMITED LLC - Note 21

3 Months Ended

Mar. 31, 2014

Correction Of Error For Accounting Of Portables Unlimited Llc - Note 21

CORRECTION OF ERROR FOR ACCOUNTING OF PORTABLES UNLIMITED LLC - Note 21

NOTE 21 - 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 reported amounts, the required adjustment and the currently restated amounts related to the Company's results of operations for three months ended March 31, 2013 (as restated).

		For the Three Months Ended March 31, 2013
		As Previously				As Currently
		Reported		Adjustment		Reported
						(Restated)
Net revenues	$	7,365,230	$	(7,365,230)	$	-
Cost of sales		5,893,746		(5,893,746)		-
Gross profit		1,471,484		(1,471,484)		-
Total operating expenses		2,292,010		(1,637,860)		654,150
Loss from operations		(820,526)		166,376		(654,150)
Other (expense) income, net		(470,915)		(14,503)		(485,418)
Loss before income taxes for continuing operations		(1,291,441)		151,873		(1,139,568)
Income taxes for continuing operations		2,250		-		2,250
Loss from continuing operations		(1,293,691)		151,873		(1,141,818)
Discontinued Operations:
Loss from discontinued operations, net of tax		(358,568)		-		(358,568)
Loss on disposal, net tax		-		-		-
Loss from discontinued operations		(358,568)		-		(358,568)
Net loss	$	(1,652,259)	$	151,873	$	(1,500,386)
less: Income (loss) attributable to noncontrolling interest		(189,754)		151,873		(37,881)
Net loss attributable to Zoom Technologies, Inc.	$	(1,462,505)	$	-	$	(1,462,505)
Basic and diluted loss per common share
Basic	$	(0.50)	$	-	$	(0.50)
Diluted	$	(0.50)	$	-	$	(0.50)

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