8-K

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) February 8, 2006

ZOOM TECHNOLOGIES, INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware

(State of Other Jurisdiction of Incorporation)

0-18672	51-044896
(Commission File Number)	(I.R.S. Employer Identification No.)

207 South Street, Boston, Massachusetts 02111

(Address of Principal Executive Offices) (Zip Code)

(617) 423-1072

(Registrant’s Telephone Number, Including Area Code)

(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 2.02 Results of Operations and Financial Condition

On February 8, 2006, the Company issued a press release announcing its financial results for the fourth quarter ended December 31, 2005. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated herein in its entirety by reference.

LIMITATION ON INCORPORATION BY REFERENCE. The information furnished in this Item 2.02 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS. Except for historical information contained in the press release attached as an exhibit hereto, the press release contains forward-looking statements which involve certain risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Please refer to the cautionary note in the press release regarding these forward-looking statements.

Item 9.01 Financial Statements and Exhibits

Exhibit Number	Description
99.1	Press release dated February 8, 2006 of Zoom Technologies, Inc. (the "Company") announcing its financial results for the fourth quarter ended December 31, 2005.

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.

Dated: February 9, 2006	ZOOM TECHNOLOGIES, INC.
	By:	/s/ Robert A. Crist
		Robert A. Crist, Chief Financial Officer

EX-99.1

Exhibit 99.1

Zoom Technologies Reports Results for the Fourth Quarter of 2005

Boston, MA, February 9, 2006 -Zoom Technologies, Inc. (Nasdaq: ZOOM), a leading manufacturer of modems and other data communication products, today reported net sales of $7.3 million for its fourth quarter ended December 31, 2005, down 13.2% from $8.4 million for the fourth quarter of 2004. Zoom’s net ADSL modem sales showed an 11% year over year growth to $4.6 million in the fourth quarter of 2005. Zoom reported a net loss of $0.9 million or $.09 per diluted share for the fourth quarter of 2005, compared to a net loss of $0.9 million or $.10 per diluted share for the fourth quarter of 2004.

Gross profit was $1.2 million or 16.9% of net sales in the fourth quarter of 2005, down from $2.0 million or 23.9% of net sales in the fourth quarter of 2004. The reduced gross profit resulted primarily from the reduction in sales and from lower gross margin on those sales. Gross margin was lower due the negative effect of manufacturing overhead spread over lower sales, the shift of Zoom’s product mix away from dial-up modems, Zoom’s highest margin product category, and the lower proportion of Zoom’s sales through retailers. Zoom’s retailer business typically provides higher margins and higher selling expenses than Zoom’s business through its distributor, service provider, and OEM customers.

Operating expenses were $2.2 million or 29.7% of net sales in the fourth quarter of 2005 compared to $3.0 million or 35.4% of net sales in the fourth quarter of 2004. Selling expenses dropped $0.4 million, primarily due to lower personnel costs, lower freight costs, and lower retailer-related selling expenses. General and administrative expenses dropped $0.1 million, primarily due to lower personnel costs partially offset by a $77 thousand increase in the bad debt reserve for a European customer. R&D expenses declined by $0.3 million, primarily due to lower personnel and government approval costs.

Zoom’s cash balance on December 31, 2005 was $9.1 million, down from $9.4 million on December 31, 2004. The $0.3 million reduction in cash was primarily due to a $2.1 million net loss for the year offset partially by a reduction in net accounts receivable of $0.7 million and an increase in accounts payable and accrued expenses of $0.6 million. Zoom’s December 31, 2005 balance sheet classifies the $4.9 million mortgage on its headquarters buildings as a current liability since the mortgage was fully due in January 2006. As previously reported, Zoom is in discussions with Wainwright Bank, the mortgage lender, to refinance all or a portion of the loan, and both parties have agreed that this mortgage balloon payment will be deferred while these discussions continue. There can be no assurance as to the outcome of these negotiations.

“We are encouraged by the growth in our DSL business, and by the fact that in Q4 our DSL sales were more than double our dial-up modem sales,” said Frank Manning, Zoom’s President and CEO. “We remain committed to a strong dial-up modem product line, but our product development focus is on DSL and voice over IP. We expect to make a number of exciting new product announcements in the coming months in these areas. Zoom has unusually strong VoIP expertise, and our goal for 2006 is to turn our technology leadership position into significant new VoIP revenues and customers.”

Zoom has scheduled a conference call for Thursday, February 9th at 9:00 a.m. Eastern Time. You may access the conference call by dialing (800) 289-0436 for calls made within the United States and dialing (913) 981-5507 for calls made from outside the United States. The call will also be simulcast to stock analysts and other interested parties on Zoom’s website (www.zoom.com/Q4) and other financial and investor-oriented websites via the CCBN/StreetEvents network. Shortly after the conference call, a recording of the call will be available on Zoom’s website. For additional information, please contact Investor Relations, Zoom Technologies, 207 South Street, Boston, MA 02111, telephone (617) 423-1072, email investor@zoom.com, or visit Zoom’s website at www.zoom.com.

About Zoom Technologies

Zoom Technologies, Inc. designs, produces, markets, and supports communications products under the Zoom and Hayes^(R) brands, and provides voice over the Internet services under the Global Village brand. Zoom is headquartered in Boston, and its European sales and support center is in the UK. Zoom markets its products in over forty countries, and provides multi-lingual support from its offices in Boston, Florida, and the UK. For more information about Zoom and its products, please see www.zoom.com.

###

Forward Looking Statements

This release contains forward-looking information relating to Zoom’s plans, expectations, and intentions, including statements relating to Zoom’s DSL, VoIP, and other products and product developments, and Zoom’s goals and expectations for 2006, including its ability to turn its VoIP technology leadership position into significant new VoIP revenues and customers. Actual results may be materially different from expectations as a result of known and unknown risks, including: the uncertainty of market acceptance and growth of VoIP and of DSL modem markets; the uncertainty of Zoom’s ability to grow its sales or more successfully penetrate those markets; Zoom’s reliance on a relatively limited number of customers for sale of its DSL modems; Zoom’s increasing reliance on international sales; the uncertainty of the regulatory environment of VoIP products; uncertainty of new product development and introduction, including budget overruns, project delays, and the risk that newly introduced products may contain undetected errors or defects or otherwise not perform as anticipated; other delays in shipments of products; Zoom’s dependence on one or a limited number of suppliers for certain key components; rapid technological change; competition; changes in and other risks set forth in Zoom’s filings with the Securities and Exchange Commission. Moreover, Zoom cannot assure that it will be able to refinance all or a portion of its mortgage on favorable terms if at all. Zoom cautions readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Zoom expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Zoom’s expectations or any change in events, conditions or circumstance on which any such statement is based.

ZOOM TECHNOLOGIES, INC.

Consolidated Balance Sheets

In thousands

(Unaudited)

	Dec 31,			Dec 31,
	2005			2004
ASSETS
Current assets:
Cash	$	9,081		$	9,439
Accounts receivable, net		2,631			3,349
Inventories		5,073			5,031
Prepaid expenses and other current assets		301			530
Total current assets		17,086			18,349
Property and equipment, net		2,601			2,703
Total assets	$	19,687		$	21,052
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	3,141		$	2,007
Accrued expenses		788			1,275
Current portion of long-term debt		4,890			230
Total current liabilities		8,819			3,512
Long-term debt		—			4,872
Total liabilities		8,819			8,384
Stockholders’ equity:
Common stock and additional paid-in capital		31,109			30,662
Treasury stock		(7	)		(7	)
Accumulated other comprehensive income (loss)		393			523
Retained earnings (deficit)		(20,627	)		(18,510	)
Total stockholders’ equity		10,868			12,668
Total liabilities & stockholders’ equity	$	19,687		$	21,052

ZOOM TECHNOLOGIES, INC.

Consolidated Statements of Operations

In thousands, except for per share data

(Unaudited)

	Three Months Ended						Years Ended
	12/31/05			12/31/04			12/31/05			12/31/04
Net sales	$	7,282		$	8,386		$	25,551		$	31,412
Cost of goods sold		6,048			6,379			20,885			23,346
Gross profit		1,234			2,007			4,666			8,066
Operating expenses:
Selling		887			1,288			4,059			4,800
General and administrative		686			822			3,553			3,620
Research and development		589			862			2,699			2,927
Total operating expenses		2,162			2,972			10,311			11,347
Operating profit (loss)		(928	)		(965	)		(5,645	)		(3,281	)
Other income (expense), net		78			59			3,537			209
Income (loss) before income taxes		(850	)		(906	)		(2,108	)		(3,072	)
Income tax expense (benefit)		9			-			9			-
Net income (loss)	$	(859	)	$	(906	)	$	(2,117	)	$	(3,072	)
Basic earnings (loss) per share:
Earnings (loss) per share	$	(0.09	)	$	(0.10	)	$	(0.23	)	$	(0.36	)
Diluted earnings (loss) per share:
Earnings (loss) per share	$	(0.09	)	$	(0.10	)	$	(0.23	)	$	(0.36	)
Weighted average number of shares outstanding:
Basic		9,347			8,900			9,206			8,590
Diluted		9,347			8,900			9,206			8,590