Tinho Union Holding Group entered into a non-binding letter of intent to acquire Zoom Technologies, Inc. (Nasdaq:ZOOM) in a reverse merger transaction on January 13, 2014. In connection with the transaction, Zoom Technologies, Inc. issued its 9.4 million new common shares at ($8.6505) CNY 52.71 per share to the shareholders of Tinho Union Holding Group. Upon closing of the transaction, the current shareholders of Tinho Union Holding Group would own approximately 75% of Zoom Technologies, Inc. ownership interest. According to the letter of intent, 4.68 million shares that are to be issued will be held in escrow and will be released upon Tinho's achievement of certain earnings targets. Pursuant to the agreement, 50% of the Escrow shares will be released once Tinho reaches a net income of not less than CNY 50 million for 2013 and 50% of the Escrow Shares will be released once Tinho reaches a net income of not less than CNY 68 million for 2014. If the net income for the 2013 fiscal year is more than CNY 25 million but less than CNY 50 million, then 50% of the escrow Shares will be cancelled proportionally to the extent of the shortfall. If the net income for the 2013 fiscal year is under CNY 25 million, then 50% of the escrow shares will be cancelled. If the net income for the 2014 fiscal year is more than CNY 50 million but less than CNY 68 million, then 50% of the escrow shares will be cancelled proportionally to the extent of the shortfall. If the net income for the 2014 fiscal year is under CNY 50 million, then 50% of the escrow shares will be cancelled. The LOI also contains a binding exclusivity clause, which will commence on January 15, 2014, pursuant to which Zoom Technologies and Tinho have committed to obtaining the approval of the transaction during the exclusivity period. The letter of intent provides exclusivity until the earlier of: June 30, 2014; the time that Tinho Union Holding Group and Zoom Technologies, Inc. agree in writing not to pursue the acquisition; or execution of a definitive agreement, provided, that Zoom Technologies, Inc. shall be allowed to consider other acquisition proposals that may be superior to terms of the acquisition.

The parties are subject to a $1 million (CNY 6.1 million) penalty for any material breach of the definitive agreement that makes the closing of the acquisition impracticable. In the event that either party (or their Board of Directors, as applicable) fails to approve the acquisition during the exclusivity period for reasons other than material breach of the LOI or the definitive agreement, dissatisfaction with the outcomes of due diligence, or failure of any closing conditions outside of a party's control, such party shall be subject to a break-up fee of $2 million (CNY 12.2 million). Additionally, Tinho shall not be subject to any break-up fee in the event that Zoom is no longer listed on the Nasdaq Capital Market and Zoom is deemed by Nasdaq to be subject to Nasdaq's seasoning rules.

The transaction is subject to execution of a definitive agreement, Tinho conducting an audit on its financial statements for the years ended December 31, 2013, 2012, and 2011, Zoom obtaining a fairness opinion from an independent investment bank, Zoom at the time of closing will have unrestricted cash of not less than $27 million (CNY 164.5 million) whose use requires a majority vote of Zoom's independent Directors shareholder approval by Tinho Union Holding Group and Zoom Technologies, Inc, governmental, regulatory and third party requisite approvals and consents, including the completion of any U.S. Securities and Exchange Commission and other closing conditions, the terms and conditions of the transaction must be acceptable to both Zoom and Tinho and approved by each of their respective Boards of Directors, results of the due diligence being satisfactory, the Chief Executive Officer of Zoom and its Board of Directors resigning from their positions with Zoom effective as of the closing without any parachute or termination payments being due or payable to them, Designees of shareholders of Tinho being appointed, as of closing, as the Chief Executive Officer and the Board of Directors of Zoom, no material adverse change in the business, subsidiaries, operations, prospects or financial condition of Zoom or Tinho, unless waived by the other part. Zoom's independent Board members voted in favor of entering into a LOI with Tinho because it believed the terms and conditions offered by Tinho's shareholders were considered superior to those offered by Baifen. The acquisition is expected to close by June 30, 2014. Maxim Group LLC acted as the financial advisor to Zoom Technologies, Inc. Ellenoff Grossman & Schole LLP acted as legal advisor for Zoom Technologies, Inc. The currency conversion was done through www.oanda.com as at January 13, 2014.

Tinho Union Holding Group cancelled the acquisition of Zoom Technologies, Inc. (Nasdaq:ZOOM) in a reverse merger transaction on June 30, 2014. The letter of intent expired on its terms and no definitive agreement or transaction has been entered into with Tinho.