10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended:November 30, 2012

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

For the transition period from ____________ to _____________

Commission File No. 333-129388

REDTONE ASIA, INC. (Exact Name of Small Business Issuer as Specified in its Charter)
Nevada (State or Other Jurisdiction of Incorporation or Organization)	71-098116 (I.R.S. Tax I.D. No.)
Unit 15A, Plaza Sanhe, No. 121 Yanping Road, JingAn District 200042 Shanghai, PRC (Address of Principal Executive Offices)
(86) 61032230 (Registrant’s Telephone Number, Including Area Code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.   Yes  x     No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  o	Non-accelerated filer  o
Accelerated filer  o (do not check if smaller reporting company)	Smaller reporting company  x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  o    No  x

State the number of shares outstanding of each of the issuer’s classes of common equity, as of November 30, 2012, are as follows:

Class of Securities	Shares Outstanding
Common Stock, $0.0001 par value	282,315,325

Transitional Small Business Disclosure Format (check one): Yes o       No  x

REDtone Asia, Inc.

(Previously known as Hotgate Technology, Inc.)

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION		2
ITEM 1.	FINANCIAL STATEMENTS	2
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION	15
ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	21
ITEM 4T.	CONTROL AND PROCEDURES	22
PART II - OTHER INFORMATION		23
ITEM 1.	LEGAL PROCEEDINGS	23
ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	23
ITEM 3.	DEFAULTS UPON SENIOR SECURITIES	23
ITEM 4.	[REMOVED AND RESERVED]	23
ITEM 5.	OTHER INFORMATION	23
ITEM 6.	EXHIBITS	23
SIGNATURES		24

1

PART I – FINANCIAL INFORMATION

ITEM 1.                        FINANCIAL STATEMENTS

REDtone Asia, Inc.

(Previously known as Hotgate Technology, Inc.)

As of Quarter Ended November 30, 2012 (unaudited)

TABLE OF CONTENTS

Condensed Consolidated Balance Sheet as of November 30, 2012 (unaudited) and May 31, 2012 (Audited)	3
Condensed Consolidated Statements of Operations and Comprehensive Income for the Six months ended November 30, 2012 and November 30，2011 (unaudited)	4
Condensed Consolidated Statement of Cash Flows (unaudited) for the Six months ended November 30, 2012 and November 30，2011	5
Notes to the Condensed Consolidated Financial Statements (unaudited)	6–13

2

REDTONE ASIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	November 30, 2012		May 31, 2012
	(Unaudited)		(Audited)
Assets
Current assets
Cash and cash equivalents	$	3,386,374	$	3,520,248
Inventories		10,462		18,385
Accounts receivable		659,131		633,009
Tax recoverable		22,974		22,755
Other receivables and deposits		1,038,357		383,443
Total current assets		5,117,298		4,577,840
Property, plant and equipment, net		2,059,780		2,367,320
Intangible assets, net		1,622,677		1,680,972
Available-for-sale investment		318,733		315,689
Amount due from a related company		3,356,476		3,261,155
Goodwill		610,386		610,386
Total assets	$	13,085,350	$	12,813,362
Liabilities and stockholders’ equity
Liabilities
Current Liabilities
Deferred income	$	1,144,514	$	1,423,566
Accounts payable		1,188,073		715,078
Accrued expenses and other payables		546,404		576,331
Amount due to a related company		92,326		77,128
Taxes payable		567,958		450,700
Total current liabilities		3,539,275		3,242,803
Deferred tax liabilities		26,686		33,604
Total liabilities		3,565,961		3,276,407
Stockholders’ equity
Common stock, US$0.0001 par value , 300,000,000 shares authorized; 282,315,325 shares issued and outstanding		28,232		28,232
Additional paid in capital		7,726,893		7,726,893
Retained earnings		968,600		1,045,811
Accumulated other comprehensive income		795,664		736,019
Total stockholders’ equity		9,519,389		9,536,955
Total liabilities and stockholders’ equity	$	13,085,350	$	12,813,362

See accompanying notes to the condensed consolidated financial statements.

3

REDTONE ASIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME (UNAUDITED)

	Three months ended November 30,						Six months ended November 30,
	2012			2011			2012			2011
Revenue	$	1,511,465		$	3,032,897		$	3,612,860		$	4,186,589
Other income and gains		60,714			30,929			78,296			68,617
Service costs		(946,135	)		(2,130,938	)		(2,407,744	)		(2,570,805	)
Personnel cost		(204,861	)		(264,951	)		(429,211	)		(524,176	)
Depreciation expense		(161,343	)		(163,353	)		(322,397	)		(324,686	)
Amortization expense		(31,340	)		(31,267	)		(60,884	)		(60,670	)
Administrative and other expenses		(143,354	)		(328,775	)		(459,206	)		(614,092	)
Income before provision for income taxes		85,146			144,542			11,714			160,777
Provision for income taxes		(74,677	)		(72,237	)		(88,925	)		(121,082	)
Net income/(loss)	$	10,469		$	72,305		$	(77,211	)	$	39,695
Other comprehensive income
Gain on foreign currency translation		57,322			6,674			59,645			90,072
Total comprehensive income/(loss)	$	67,791		$	78,979		$	(17,566	)	$	129,767
Net income/(loss) per share, basic and diluted	$	0.00		$	0.00		$	(0.00	)	$	0.00
Weighted average number of shares		282,315,325			282,315,325			282,315,325			282,315,325

See accompanying notes to the condensed consolidated financial statements.

4

REDTONE ASIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Six months ended November 30,
	2012			2011
Cash flows from operating activities
Net income	$	(77,211	)	$	39,695
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Deferred tax		(7,204	)		(9,700	)
Amortization expense		60,884			60,670
Depreciation expense		322,397			324,686
Loss on disposal of property, plant and equipment		5,807			-
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable		(26,122	)		518,952
Decrease in inventories		7,923			70
(Increase)/decrease in other receivables and deposits		(654,914	)		95,416
(Increase)/decrease in tax recoverable		(219	)		61,517
(Decrease)/increase in deferred income		(279,052	)		25,149
Increase/(decrease) in accounts payable		472,995			(381,510	)
Increase in tax payables		117,258			146,159
(Decrease)/increase in accrued liabilities and other payables		(29,927	)		62,018
Net cash (used in)/provided by operating activities	$	(87,385	)	$	943,122
Cash flows from investing activities
Purchase of property, plant and equipment		(742	)		(69,064	)
Proceeds from disposal of property, plant and equipment		12,599			-
Increase in amount due from a related company		(95,321	)		(1,533,188	)
Purchase of available-for-sale investment		-			(790,361	)
Net cash used in investing activities	$	(83,464	)	$	(2,392,613	)
Cash flows from financing activities
Increase/(decrease) in amount due to related companies		15,198			(24,951	)
Net cash provided by/(used in) financing activities	$	15,198		$	(24,951	)
Net decrease in cash and cash equivalents		(155,651	)		(1,474,442	)
Effect of exchange rate changes on cash and cash equivalents		21,777			101,435
Cash and cash equivalents at beginning of period		3,520,248			4,580,189
Cash and cash equivalents at end of period	$	3,386,374		$	3,207,182
Cash paid for interest	$	-		$	-
Cash paid for income taxes	$	-		$	8,772

See accompanying notes to the condensed consolidated financial statements.

5

REDTONE ASIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

November 30, 2012

NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

REDtone Asia, Inc. and subsidiaries (the “Company”) are a group of companies in The People’s Republic of China (“PRC”). The principal activities of the Company are that of a Telecommunications provider for mobile, fixed and international gateway services. REDtone provides a wide range of telecommunication services, including prepaid and postpaid discounted call services to corporate customers and consumers as well as prepaid mobile air-time top up.

On March 25, 2011, Hotgate Technology, Inc. changed its name from Hotgate Technology, Inc. to REDtone Asia, Inc. and has a trading symbol on the OTCBB as “RTAS.”

As of November 30, 2012, details of the Company’s major subsidiaries are as follows:

Name	Domicile and date of incorporation	Effective ownership	Principal activities
Redtone Telecommunication (China) Limited (“Redtone China”)	Hong Kong May 26, 2005	100%	Investment holding
Redtone Telecommunications (Shanghai) Limited (“Redtone Shanghai”)	The PRC July, 26, 2005	100%	Provides technical support services to group companies
Shanghai Hongsheng Net Telecommunication Company Limited (“Hongsheng”)	The PRC November 29, 2006	100%#	Marketing and distribution of discounted call services to PRC consumer market
Shanghai Huitong Telecommunication Company Limited (“Huitong”)	The PRC March, 26, 2007	100%#	Marketing and distribution of IP call and discounted call services in the PRC
Shanghai Jiamao E-Commerce Company Limited (“Jiamao”)	The PRC March 21, 2008	100%#	Marketing and distribution of products on the internet
Nantong Jiatong Investment Consultant Co., Ltd (“Nantong Jiatong”)	The PRC May 17, 2011	100%#	Investment holding
Shanghai QianYue Business Administration Co., Ltd. (“QBA”)	The PRC December 12, 2008	100%#	Provides prepaid shopping-card services in the PRC

# - Variable interest entities. See also Footnote 14.

NOTE 2 – PRINCIPLES OF CONSOLIDATION

The unaudited interim financial statements of the Company and the Company’s subsidiaries (see Note 1) for the three months and six months ended November 30, 2012 and 2011 have been prepared pursuant to the rules & regulations of the SEC. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however the Company believes that the following disclosures are adequate to make the information presented not misleading. All significant intercompany balances and transactions have been eliminated. The functional currency for the majority of the Company’s operations is in Chinese Renminbi (“RMB”), while the reporting currency is U.S. Dollar.

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the Company’s financial position as of November 30, 2012, the results of its operations and cash flows for the three months and six months ended November 30, 2012 and 2011.

6

The results of operations for the three months and six months ended November 30, 2012 are not necessarily indicative of the results for a full year period.

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company maintains bank accounts in mainland China and Hong Kong.

(b) Fair Value of Financial Instruments

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, other receivables and deposits, tax recoverable, amount due from/(to) related parties, accounts payable, accrued expenses and other payables, and taxes payable.

The estimated fair value amounts have been determined by the Company, using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented, due to the short maturities of these instruments.

(c) Revenue recognition

The Company has adopted a revenue recognition policy for each type of operation according to ASC 605-45.

Revenue represents the invoiced value of services rendered and receivable during the year. Revenue is recognized when all of the following criteria are met:

-   Persuasive evidence of an arrangement exists;

-   Delivery has occurred or services have been rendered;

-   The seller’s price to the buyer is fixed or determinable; and

-   Collectability is reasonably assured.

Revenue recognition policy for each of the major products and services:

1. Discounted call services for consumer (EMS) as follows:

● Collaboration with China Tie Tong Telecommunications (“CTT”) – Redtone China is appointed as the sole distributor for EMS and will recognize revenue when airtime is utilized by the consumer and revenue is recognized on a net basis which is computed based on a fixed sharing ratio of the total airtime utilized by consumers after netting the direct traffic termination costs and incidental expenses. Redtone China’s role for Business Collaboration with CTT is as an “Agent” as Redtone China is the sole distributor for the EMS brand owned and controlled by CTT; and

● Collaboration with other telecommunication providers – Redtone China will act as a discounted consumer call Reseller whereby Redtone China determines the service and package specification and the pricing policy whereas China Unicom acts as a passive termination partner for call traffic. Redtone China will pay China Unicom solely based on call traffic termination by China Unicom at a prescribed rate (defined as traffic termination cost on the books of Redtone China). In this regard, Redtone China will recognize revenue when airtime is utilized by the consumer and the revenue recognized is the gross value of the call charges. Redtone China’s role for Business Collaboration with China Unicom is that of “Principal” as China Unicom is playing a passive role as the traffic termination partner while Redtone China is fully responsible for the entire management of the discounted call services

7

As this is a prepaid product, there is an expiration date for the product sold. If the airtime is not utilized by the expiration date, which is currently one year from the activation date, the product will be deemed to be expired and the revenue recognized at the time is the remaining gross value of the expired prepaid product.

2. Discounted call services for corporate consumers is as follows:

● Collaboration with CTT – the revenue recognized is the commission earned from distributing the discounted call services to corporate customers; and

● Collaboration with other telecommunication providers –the revenue recognized is the commission earned from distributing the discounted call services to corporate customers.

3. Reload services for prepaid mobile services – revenue recognized is the commission earned.

4. Prepaid shopping-card services – revenue recognized is the commission earned.

(d) Earnings per share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As of August 31, 2012 and August 31, 2011, there were no dilutive securities outstanding.

(e) Foreign currency translation

The accompanying consolidated financial statements are presented in United States dollars (US$). The functional currencies of the Company are the Hong Kong dollar (HK$) and the Renminbi (RMB), respectively. Capital accounts of the financial statements are translated into United States dollars from HK$ or RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the year. The translation rates are as follows:

	November 30, 2012		May 31, 2012		November 30, 2011
Year end RMB : US$ exchange rate		0.1594		0.1578		0.1570
Average yearly RMB : US$ exchange rate		0.1585		0.1585		0.1576
Year end HK$ : US$ exchange rate		0.1290		0.1288		0.1283
Average yearly HK$ : US$ exchange rate		0.1290		0.1288		0.1285

On July 21, 2005, the PRC changed its foreign currency exchange policy from a fixed RMB/US$ exchange rate into a flexible rate under the control of the PRC’s government.

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

8

(f) Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

-   Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

-   Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

-   Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

We measure the fair value of money market funds and equity securities based on quoted prices in active markets for identical assets or liabilities. All other financial instruments were valued based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

(g) Recent Accounting Pronouncements

New accounting rules and disclosure requirements may significantly impact the financial statements. We believe that there is no new accounting guidance adopted but not yet effective that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

NOTE 4 – CASH & CASH EQUIVALENTS

As of the balance sheet dates, cash & cash equivalents are summarized as follows:

	November 30, 2012		May 31, 2012
Cash and bank	$	559,211	$	868,462
Fixed deposits		2,827,163		2,651,786
Total	$	3,386,374	$	3,520,248

As of the balance sheet dates, the fixed deposits had a maturity term of less than three months.

NOTE 5 – AVAILABLE-FOR-SALE INVESTMENT

As of the balance sheet dates, available-for-sale investments are summarized as follows:

	November 30,2012		May 31, 2012
Investment in trust funds	$	318,733	$	315,689
Total	$	318,733	$	315,689

9

NOTE 6 –OTHER RECEIVABLES AND DEPOSITS

Other receivables and deposits as of the balance sheet dates are summarized as follows:

	November 30,2012		May 31, 2012
Deposits	$	275,927	$	117,718
Other receivables		762,430		265,725
Total	$	1,038,357	$	383,443

NOTE 7 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
At cost:
Computer and software	$	559,020	$	553,680
Telecommunication equipment		4,942,818		4,895,607
Furniture, fixtures and equipment		202,316		213,144
Motor vehicles		32,829		32,516
Leasehold improvement		34,900		33,912
		5,771,883		5,728,859
Less: Accumulated depreciation		(3,712,103)		(3,361,539)
Property, plant and equipment, net	$	2,059,780	$	2,367,320

Depreciation expense for the six months ended November 30, 2012 and 2011 amounted to $322,397 and $324,686, respectively.

NOTE 8 – INTANGIBLE ASSETS

Intangible assets of the Company consist primarily of licenses and software for the PRC operations.

Intangible assets as of the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
At cost:
Licenses and software	$	2,281,963	$	2,278,425
Less: Accumulated amortization		(659,286)		(597,453)
Intangible assets, net	$	1,622,677	$	1,680,972

Amortization expense for the six months ended November 30, 2012 and 2011 amounted to $60,884 and $60,670, respectively.

10

NOTE 9 – AMOUNT DUE FROM/(TO) RELATED COMPANIES

Redtone Technology Sdn. Bhd. was previously the holding company of Redtone Telecommunications (China) Ltd. Pursuant to the reverse acquisition by Redtone Asia, Inc., Redtone Technology Sdn. Bhd. is now a related company of Redtone Asia, both of which are subsidiaries of penultimate holding company by the name of Redtone International Berhad.

Amount due from a related company as of the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
Fellow subsidiary:
REDtone Technology Sdn. Bhd.	$	3,356,476	$	3,261,155
	$	3,356,476	$	3,261,155

The amount represents advances to the related company. As of the balance sheet dates, the amount is unsecured, non-interest bearing and is expected to be repaid within three to five years.

Amount due to a related company as of the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
Fellow subsidiary:
Redtone Telecommunications Sdn Bhd	$	92,326	$	77,128
	$	92,326	$	77,128

The amount due to the related company is unsecured, non-interest bearing and has no fixed repayment date.

NOTE 10 – ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables as of the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
Accrued expenses	$	344,950	$	373,129
Other payables		201,454		203,202
Total	$	546,404	$	576,331

NOTE 11 – DEFERRED INCOME

Deferred income consists of prepaid air-time sold which is yet to be utilized. The basis of revenue recognition for discounted call services is based on actual call charges made by end users. When calls are being made, the amount will be deducted from deferred income and recorded as revenue in the statement of income, net of call costs and expenses.

11

NOTE 12 – TAXES PAYABLE

Taxes payable at the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
Business tax payable	$	164,038	$	166,612
Income tax payable		381,487		283,880
Others		22,433		208
Total	$	567,958	$	450,700

Business tax represents PRC sales tax imposed upon the Company’s services provided in the PRC. Tax rates range from 3% to 5% depending on the nature of the taxable activities.

Income tax represents PRC income tax. The provision for PRC income tax is based on a statutory rate of 25% of the assessable income of the PRC subsidiaries as determined in accordance with the relevant income tax rules and regulations of the PRC.

NOTE 13 – PROVISION FOR INCOME TAXES

Income tax expense for the six months ended November 30, 2012 and 2011 are summarized as follows:

	Six months ended November 30, 2012		Six months ended November 30, 2011
Current – PRC income tax provision	$	96,129	$	130,782
Deferred income tax (income)/ provision		(7,204)		(9,700)
Total	$	88,925	$	121,082

A reconciliation of the expected tax with the actual tax expense is as follows:

	Six months ended November 30, 2012		Six months ended November 30, 2011
Income before provision for income taxes		11,714		160,777
Expected PRC income tax expense at statutory tax rate of 25%	$	2,929	$	40,194
Different tax rate for PRC/Hong Kong local authority		5,682		(11,754)
Expenses not deductible for tax		1,317		15,468
Utilization of tax loss brought forward		-		(9,380)
Tax loss not provided for deferred tax		78,997		86,554
Actual tax expense	$	88,925	$	121,082

 (i) All PRC subsidiaries are subject to PRC tax. The provision for PRC income tax is based on a statutory rate of 25% of the assessable income of the PRC subsidiaries as determined in accordance with the relevant income tax rules and regulations of the PRC.

12

(ii) VMS and Redtone China did not generate any assessable profits in Hong Kong and therefore are not subject to Hong Kong tax.

NOTE 14 – VARIABLE INTEREST ENTITIES (“VIEs”)

During six months ended November 30, 2012, Nantong Jiatong, Hongsheng, Huitong, QBA and Jiamao were VIEs of the Company.

Although the Company is not the shareholder of Nantong Jiatong, Hongsheng, Huitong, QBA and Jiamao, the Company has determined that it is the primary beneficiary of these entities, as the Company has 100% voting powers and is entitled to receive all the benefit from operations of these entities. Hence, these entities are identified as VIEs and are consolidated as if they are wholly-owned subsidiaries of the Company.

We did not identify any additional VIEs in which we hold a significant interest.

The total consolidated VIE assets and liabilities reflected on the Company’s balance sheet are as follows:

	November 30, 2012		May 31, 2012
Assets
Cash and cash equivalents	$	2,127,439	$	3,466,743
Inventories		10,462		18,385
Accounts receivable		659,131		633,009
Tax recoverable		22,974		22,755
Other receivables and deposits		890,054		237,490
Goodwill		610,386		610,386
Property, plant and equipment, net		342,179		454,875
Total assets (not include amount due from intra-group companies)	$	4,662,625	$	5,443,643
Liabilities
Deferred income	$	1,162,052	$	1,441,347
Accounts payable		1,167,590		694,626
Accrued expenses and other payables		423,122		467,246
Tax payables		100,322		44,424
Total liabilities	$	2,853,086	$	2,647,643

The statements of income of the consolidated VIEs for the six months ended November 30, 2012 and 2011 are as follows, and are included in the consolidated statements of income of the Company:

	Six months ended November 30, 2012		Six months ended November 30, 2011
Revenue	$	3,333,155	$	3,827,643
Other income and gains		45,359		45,321
Service costs		(2,391,397)		(2,484,147)
Administrative and other expenses		(195,650)		(425,885)
Personnel cost		(353,123)		(458,475)
Depreciation expense		(110,273)		(109,678)
Income before provision for income taxes (Not including service costs payable to intra-group companies)		328,071		394,779
Provision for income taxes		(53,238)		(14,366)
Net income	$	274,833	$	380,413

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NOTE 15 – COMMON STOCK

As of the balance sheet dates, the Company has a total of 300,000,000 shares of common shares authorized at US$0.0001 par value. As of the balance sheet dates, 282,315,325 shares were issued and outstanding, respectively.

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ITEM 2.                      MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report contains forward-looking statements within the meaning of the federal securities laws. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,” “REDtone believes,” “management believes” and similar language. The forward-looking statements are based on the current expectations of RTAS and are subject to certain risks, uncertainties and assumptions, including those set forth in the discussion under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report. The actual results may differ materially from results anticipated in these forward-looking statements. We base the forward-looking statements on information currently available to us, and we assume no obligation to update them.

Investors are also advised to refer to the information in our filings with the Securities and Exchange Commission, specifically Forms 10-KSB, 10-QSB and 8-K, in which we discuss in more detail various important factors that could cause actual results to differ from expected or historic results. It is not possible to foresee or identify all such factors. As such, investors should not consider any list of such factors to be an exhaustive statement of all risks and uncertainties or potentially inaccurate assumptions.

Except as otherwise indicated by the context, references in this Form 10-Q to “RTAS,” “we,” “us,” “our,” “the Registrant”, “our Company,” or “the Company” are to REDtone Asia, Inc., a Nevada corporation and its consolidated subsidiaries. Unless the context otherwise requires, all references to (i) “BVI” are to British Virgin Islands; (ii) “PRC” and “China” are to the People’s Republic of China; (iii) “U.S. dollar,” “$” and “US$” are to United States dollars; (iv) “RMB” are to Yuan Renminbi of China; (v) “RM” are to Malaysian Ringgit; (vi) “Securities Act” are to the Securities Act of 1933, as amended; and (vii) “Exchange Act” are to the Securities Exchange Act of 1934, as amended.

Business Overview

We are principally involved in the business of offering discounted call services for end users and paperless reload services for prepaid mobile air-time reload for end users in Shanghai covering all three major telecommunication operators namely China Mobile, China Unicom and China Telecom.   The Company is also venturing into third party payment solutions for the e-commerce industry in China.

Critical Accounting Policies and Estimates

Our financial statements and related public financial information are based on the application of accounting principles generally accepted in the United States (“US GAAP”). US GAAP requires the use of estimates; assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenues and expenses amounts reported. These estimates can also affect supplemental information contained in our external disclosures including information regarding contingencies, risk and financial condition. We believe our use of estimates and underlying accounting assumptions adhere to GAAP and are consistently and conservatively applied. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances. Actual results may differ materially from these estimates under different assumptions or conditions. We continue to monitor significant estimates made during the preparation of our financial statements.

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We believe the following is among the most critical accounting policies that impact our consolidated financial statements. We suggest that our significant accounting policies, as described in our condensed consolidated financial statements in the Summary of Significant Accounting Policies, be read in conjunction with this Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Company has adopted a revenue recognition policy for each type of operation according to ASC 605-45.

Revenue represents the invoiced value of services rendered and receivable during the year. Revenue is recognized when all of the following criteria are met:

-   Persuasive evidence an arrangement exists;

-   Delivery has occurred or services have been rendered;

-   The seller’s price to the buyer is fixed or determinable; and

-   Collectability is reasonably assured.

Revenue recognition policy for each of the major products and services:

1. Discounted call services for consumer (EMS) as follows:

● Collaboration with China Tie Tong Telecommunications (“CTT”) – Redtone China is appointed as the sole distributor for EMS and will recognize revenue when airtime is utilized by the consumer and revenue is recognized on a net basis which is computed based on a fixed sharing ratio of the total airtime utilized by consumers after netting the direct traffic termination costs and incidental expenses. Redtone China’s role for Business Collaboration with CTT is as an “Agent” as Redtone China is the sole distributor for the EMS brand owned and controlled by CTT; and

● Collaboration with other telecommunication providers – Redtone China will act as a discounted consumer call Reseller whereby Redtone China determines the service and package specification and the pricing policy whereas China Unicom acts as a passive termination partner for call traffic. Redtone China will pay China Unicom solely based on call traffic termination by China Unicom at a prescribed rate (defined as traffic termination cost on the books of Redtone China). In this regard, Redtone China will recognize revenue when airtime is utilized by the consumer and the revenue recognized is the gross value of the call charges. Redtone China’s role for Business Collaboration with China Unicom is that of “Principal” as China Unicom is playing a passive role as the traffic termination partner while Redtone China is fully responsible for the entire management of the discounted call services

As this is a prepaid product, there is an expiration date for the product sold. If the airtime is not utilized by the expiration date, which is currently one year from the activation date, the product will be deemed to be expired and the revenue recognized at the time is the remaining gross value of the expired prepaid product.

2. Discounted call services for corporate consumers is as follows:

● Collaboration with CTT – the revenue recognized is the commission earned from distributing the discounted call services to corporate customers; and

● Collaboration with other telecommunication providers –the revenue recognized is the commission earned from distributing the discounted call services to corporate customers.

3. Reload services for prepaid mobile services – revenue recognized is the commission earned.

4. Prepaid shopping-card services – revenue recognized is the commission earned.

Recent Accounting Pronouncements

The Company does not expect that the adoption of any recent accounting pronouncements will have any material impact on its financial statements.

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Year-to-date Results of Operations

Year-to-date Results for Six-month period ended November 30, 2012 as Compared to period ended November 30, 2011

The following table summarizes the results of our operations during the six-month periods ended November 30, 2012 and November 30，2011, and associated percentage changes for comparisons purposes.

	6-month ended
	Nov 30, 2012			Nov 30, 2011			+/-		% changes
Revenue	$	3,612,860		$	4,186,589		(573,729	)		-14%
Other income and gains		78,296			68,617		9,679			14%
Service costs		(2,407,744	)		(2,570,805	)	163,061			-6%
Personnel cost		(429,211	)		(524,176	)	94,965			-18%
Depreciation expense		(322,397	)		(324,686	)	2,289			-1%
Amortization expense		(60,884	)		(60,670	)	(214	)		0%
Administrative and other expenses		(459,206	)		(614,092	)	154,886			-25%
Income before provision for income taxes		11,714			160,777		(149,063	)		-93%
Provision for income taxes		(88,925	)		(121,082	)	32,157			-27%
Net loss/ gain	$	(77,211	)	$	39,695		(116,906	)		-295%

Revenues

The Company generated revenue of $3,612,860 in the first 6 months of the fiscal year ending May 31, 2013, this represents a 14% decrease in revenue as compared to the preceding year’s corresponding period. This is the first drop since the Company embarked on the discounted call services business in year 2008. The reasons for the decrease in the revenue are mainly due to:

(i)   Intense price competition from the Telecommunication market; and

(ii)   Change of business strategy in QBA

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Service Costs

Service costs reduced by $163,061 or 6% in the first six months of the fiscal year 2013. The lower margins are caused by the fixed monthly sunk costs.

Personnel costs

Personnel expenses totaled $429,211, represent an 18% or $94,965 reduction as compared to the preceding year’s corresponding period, mainly due to workforce reduction.

Amortization and depreciation expenses

Amortization and depreciation expenses totaled $383,281, marginally reduction compared to the preceding year’s corresponding period.

Administrative and other expenses

General and administrative expenses totaled $459,206 represents a decrease of 25% or $154,886 as compared to the preceding year’s corresponding period.  QBA’s office is relocated to HQ’s building and this resulted in a reduction in total office expenses.  

Provision for taxes

Provision for taxes made for the first six months is $88,925

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Quarterly Results of Operations

2nd Quarter Results for period ended November 30, 2012 as Compared to period ended November 30, 2011

The following table summarizes the 2nd quarter results of our operations during the three month periods ended November 30, 2012 and November 30，2011, and associated percentage changes for comparisons purposes.

	Three months ended
	Nov 30, 2012			Nov 30, 2011				+/-		% changes
Revenue	$	1,511,465		$	3,032,897		$	(1,521,432	)		-50%
Other income and gains		60,714			30,929			29,785			96%
Service costs		(946,135	)		(2,130,938	)		1,184,803			-56%
Personnel cost		(204,861	)		(264,951	)		60,090			-23%
Depreciation expense		(161,343	)		(163,353	)		2,010			-1%
Amortization expense		(31,340	)		(31,267	)		(73	)		0%
Administrative and other expenses		(143,354	)		(328,775	)		185,421			-56%
Income before provision for income taxes		85,146			144,542			(59,396	)		-41%
Provision for income taxes		(74,677	)		(72,237	)		(2,440	)		3%
Net gain	$	10,469		$	72,305		$	(61,836	)		-86%

Revenues

The Company generated revenue of $1,511,465 in the second quarter of the fiscal year ending May 31, 2013, represents a 50% decrease as compared to the preceding year’s corresponding quarters. This is the first drop since the Company embarked on the discounted call services business in year 2008. The reasons for the decrease in the revenue are mainly due to:

(i)           intense price competition in Telecommunication market; and

(ii)           Change of business strategy in QBA

Service Costs

Service costs reduced by $1,184,803 or 56% in the second quarter of the fiscal year 2013. The decrease is in parallel with the drop in revenue.

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Personnel costs

Personnel expenses totaled $204,861, represents a 23% or $60,090 reduction as compared to the preceding year’s corresponding quarters, mainly due to workforce reduction.

Amortization and depreciation expenses

Amortization and depreciation expenses totaled $192,683, marginally reduction compared to the preceding year’s corresponding quarter.

Administrative and other expenses

General and administrative expenses totaled $143,354 represents a decrease of 56% or $185,421 as compared to the preceding year’s corresponding quarters. QBA’s office is relocated to HQ’s building and this resulted in a reduction in total office expenses. 

Provision for taxes

Provision for taxes made for the current quarter was $74,677.

Liquidity and Capital Resources

Cash

Our cash balance at November 30, 2012 was $3,386,374, representing a decrease of $133,874 compared to our cash balance of $3,520,248 at May 31, 2012.

Cash Flow

	Six months ended
	Nov, 30 2012			Nov, 30 2011			+/-		% Changes
Net cash (used in)/provided by operating activities	$	(87,385	)	$	943,122		(1,030,507	)		N/A
Net cash used in investing activities	$	(83,464	)	$	(2,392,613	)	2,309,149			-97%
Net cash provided by/(used in) financing activities	$	15,198		$	(24,951	)	40,149			N/A
Net decrease in cash and cash equivalents (before effect of exchange rate changes on cash and cash equivalents)		(155,651	)		(1,474,442	)	1,318,791			-89%

Cash outflows from operations during the six months ended November 30, 2012 amounted to $87,385 as compared to cash inflow of $943,122 in the same period of 2011.

Our cash outflows in investing activities during the six months ended November 301, 2012 amounted to $83,464 as compared to cash outflows of $2,392,613 for the same period in 2011. The increase in cash outflow in the investing activities for the first six months in the preceding current quarter was primarily due to higher advances made to the holding company as well as higher investment in trust Fund in the preceding current quarter

The Company has cash inflows of $15,198 from financing activities for the six months ended November 30, 2012.   The cash flow changes for these two periods are mainly due to the repayment of amount due to related parties in the current quarter.

Working Capital

Our working capital recorded a surplus of $1,578,022 as of November 30, 2012.  This marginal increase in working capital is mainly due to the increase in accounts receivable and decrease in cash and cash equivalents.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to various market risks arising from adverse changes in market rates and prices, such as foreign exchange fluctuations and interest rates, which could impact our results of operations and financial position. We do not currently engage in any hedging or other market risk management tools, and we do not enter into derivatives or other financial instruments for trading or speculative purposes.

Foreign Currency Exchange Rate Risk

Fluctuations in the rate of exchange between the U.S. dollar and foreign currencies in Chinese Renminbi (“RMB”), Malaysian Ringgit (“RM”) and Hong Kong Dollar (“HK$”) could adversely affect our financial results. We expect that foreign currencies will continue to represent a similarly significant percentage of our sales in the future. Selling, marketing and administrative costs related to these sales are largely denominated in the same respective currency, thereby mitigating our transaction risk exposure. We therefore believe that the risk of a significant impact on our operating income from foreign currency fluctuations is not substantial. However, for sales not denominated in U.S. dollars, if there is an increase in the rate at which a foreign currency is exchanged for U.S. dollars, it will require more of the foreign currency to equal a specified amount of U.S. dollars than before the rate increase. In such cases and if we price our products in the foreign currency, we will receive less in U.S. dollars than we did before the rate increase went into effect. If we price our products in U.S. dollars and competitors price their products in local currency, an increase in the relative strength of the U.S. dollar could result in our price not being competitive in a market where business is transacted in the local currency. All of our sales and expenses denominated in foreign currencies are denominated in the RMB, RM and HK$. Our principal exchange rate risk therefore exists between the U.S. dollar and these currencies. Fluctuations from the beginning to the end of any given reporting period result in the re-measurement of our foreign currency-denominated receivables and payables, generating currency transaction gains or losses that impact our non-operating income/expense levels in the respective period and are reported in other (income) expense, net in our combined consolidated financial statements. We do not currently hedge our exposure to foreign currency exchange rate fluctuations. We may, however, hedge such exposure to foreign currency exchange rate fluctuations in the future.

Interest Rate Risk

Changes in interest rates may affect the interest paid (or earned) and therefore affect our cash flows and results of operations. However, we do not believe that this interest rate change risk is significant.

Inflation

Inflation has not had a material impact on the Company’s business in recent years.

Currency Exchange Fluctuations

The Company’s revenues and its expenses are denominated in RMB, RM and HK$. The value of these foreign currency-to-U.S. dollars may fluctuate and is affected by, among other things, changes in political and economic conditions. Since 1994, the conversion of RMB into foreign currencies, including U.S. dollars, has been based on rates set by the People’s Bank of China, which are set daily based on the previous day’s inter-bank foreign exchange market rates and current exchange rates on the world financial markets. Since 1994, the official exchange rate for the conversion of RMB to U.S. dollars had generally been stable and RMB had appreciated slightly against the U.S. dollar. However, on July 21, 2005, the Chinese government changed its policy of pegging the value of RMB to the U.S. dollar. Under the new policy, RMB may fluctuate within a narrow and managed band against a basket of certain foreign currencies. Recently there has been increased political pressure on the Chinese government to decouple the RMB from the United States dollar. At the recent quarterly regular meeting of People’s Bank of China, its Currency Policy Committee affirmed the effects of the reform on RMB exchange rate. Since February 2006, the new currency rate system has been operated; the currency rate of RMB has become more flexible while basically maintaining stable and the expectation for a larger appreciation range is shrinking. The Company has never engaged in currency hedging operations and has no present intention to do so.

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Concentration of Credit Risk

Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted. Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions as described below:

1. The Company’s business is characterized by new product and service development and evolving industry standards and regulations. Inherent in the Company’s business are various risks and uncertainties, including the impact from the volatility of the stock market, limited operating history, uncertain profitability and the ability to raise additional capital.

2. The Company’s revenue is deriving from China and Hong Kong. Changes in laws and regulations, or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our business, results of operations and financial condition.

3. If the Company is unable to derive any revenues from these countries, it would have a significant, financially disruptive effect on the normal operations of the Company.

ITEM 4T. CONTROL AND PROCEDURES

Evaluation of disclosure controls and procedures

As of November 30, 2012, the end of the period covered by this Form 10-Q, our management performed, under the supervision and with the participation of our principal executive officer and principal financial officer, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based on this evaluation, our principal executive officer and principal financial officer have concluded that, as of August 31, 2012, our disclosure controls and procedures were effective, in that they provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding disclosure.

Changes in internal controls

There were no material changes in the Company’s internal controls or in other factors that could materially affect these controls subsequent to the date of their evaluation. Disclosure controls and procedures are the Company’s controls and other procedures that are designed to ensure that information required to be disclosed in the reports that the Company files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. There were no changes in the Company’s internal control over financial reporting that occurred during the last quarter that has materially affected, or is reasonable likely to materially affect, the Company’s internal control over financial reporting.

Sarbanes - Oxley Act 404 compliance

The Company anticipates that it will be fully compliant with section 404 of the Sarbanes-Oxley Act of 2002 by the required date for non-accelerated filers and it is in the process of reviewing its internal control systems in order to be compliant with Section 404 of the Sarbanes Oxley Act. However, at this time the Company makes no representation that its systems of internal control comply with Section 404 of the Sarbanes-Oxley Act.

22

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The Company may from time to time be involved in various claims, lawsuits, and disputes with third parties, actions involving allegations of discrimination, or breach of contract actions incidental to the operation of its business. The Company is not currently involved in any such litigation that it believes could have a materially adverse effect on its financial condition or results of operations.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

There have been no unregistered sales of equity for the quarter ended November 30, 2012.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

There have been no material defaults for the quarter ended November 30, 2012.

ITEM 4. [REMOVED AND RESERVED]

ITEM 5. OTHER INFORMATION

The Company has evaluated for disclosure all subsequent events occurring through January 13, 2012, the date the financial statements were issued.

ITEM 6. EXHIBITS

The following exhibits are furnished as part of the Quarterly Report on Form 10-Q:

Exhibit Number	Description
31.1	Certification of Chief Executive Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Chief Financial Officer filed pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of Chief Financial Officer furnished pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

In accordance with the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated:  January 13, 2013	REDtone Asia, Inc.	Dated:  January 13, 2013	REDtone Asia, Inc.
By:	/s/ Chuan Beng Wei	By:	/s/ Hui Nooi Ng
Name:	Chuan Beng Wei	Name:	Hui Nooi Ng
Title:	Chief Executive Officer	Title:	Chief Financial Officer
	(Principal Executive Officer)		(Principal Financial Officer)

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EX-31.1

EXHIBIT 31.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER OF

REDTONE ASIA, INC.

PURSUANT TO § 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Chuan Beng Wei, certify that:

1.  I have reviewed this quarterly report on Form 10-Q for the period ended November 30, 2012 of REDtone Asia, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	January 13, 2012
By:	/s/ Chuan Beng Wei
Name:	Chuan Beng Wei
Title:	Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER OF

REDTONE ASIA, INC.

PURSUANT TO § 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Hui Nooi Ng, certify that:

1.  I have reviewed this quarterly report on Form 10-Q for the period ended November 30, 2012 of REDtone Asia, Inc.;

2.  Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.  Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.  The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.  The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)  All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	January 13, 2012
By:	/s/ Hui Nooi Ng
Name:	Hui Nooi Ng
Title:	Chief Financial Officer
	(Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER OF

REDTONE ASIA, INC.

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

§ 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of REDtone Asia, Inc. (the “Company”) on Form 10-Q for the period ended November 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Chuan Beng Wei, Chief Executive Officer of the Company, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, based on my knowledge, that:

1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	January 13, 2012
By:	/s/ Chuan Beng Wei
Name:	Chuan Beng Wei
Title:	Chief Executive Officer
	(Principal Executive Officer)

This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

EX-32.2

Exhibit 32.2

CERTIFICATION OF THE CHIEF FINANCIAL OFFICER OF

REDTONE ASIA, INC.

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

§ 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of REDtone Asia, Inc. (the “Company”) on Form 10-Q for the period ended November 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Hui Nooi Ng, Chief Financial Officer of the Company, do hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, based on my knowledge, that:

1)  The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)  The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date:	January 13, 2012
By:	/s/ Hui Nooi Ng
Name:	Hui Nooi Ng
Title:	Chief Financial Officer
	(Principal Financial Officer)

This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed filed by the Company for purposes of §18 of the Securities Exchange Act of 1934, as amended.

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Note 8 - Intangible Assets: Schedule of Intangible Assets and Goodwill (Details) (USD $)	Nov. 30, 2012	May 31, 2012
Capitalized Computer Software, Gross	$ 2,281,963	$ 2,278,425
Capitalized Computer Software, Accumulated Amortization	(659,286)	(597,453)
Intangible assets, net	$ 1,622,677	$ 1,680,972

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Note 13 - Provision For Income Taxes (Details)	3 Months Ended
	Nov. 30, 2012
Effective Income Tax Rate, Continuing Operations	25.00%

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Note 13 - Provision For Income Taxes: Income tax expense table (Details) (USD $)	3 Months Ended		6 Months Ended
	Nov. 30, 2012	Nov. 30, 2011	Nov. 30, 2012	Nov. 30, 2011
Income Tax Expense (Benefit), Continuing Operations			$ 96,129	$ 130,782
Deferred Income Tax Expense (Benefit)			(7,204)	(9,700)
Provision for income taxes	$ (74,677)	$ (72,237)	$ (88,925)	$ (121,082)

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Note 14 - Variable Interest Entities ("vies") (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Consolidated VIE assets and liabilities

	November 30, 2012		May 31, 2012
Assets
Cash and cash equivalents	$	2,127,439	$	3,466,743
Inventories		10,462		18,385
Accounts receivable		659,131		633,009
Tax recoverable		22,974		22,755
Other receivables and deposits		890,054		237,490
Goodwill		610,386		610,386
Property, plant and equipment, net		342,179		454,875
Total assets (not include amount due from intra-group companies)	$	4,662,625	$	5,443,643
Liabilities
Deferred income	$	1,162,052	$	1,441,347
Accounts payable		1,167,590		694,626
Accrued expenses and other payables		423,122		467,246
Tax payables		100,322		44,424
Total liabilities	$	2,853,086	$	2,647,643

Statements of income of the consolidated VIEs

	Six months ended November 30, 2012		Six months ended November 30, 2011
Revenue	$	3,333,155	$	3,827,643
Other income and gains		45,359		45,321
Service costs		(2,391,397)		(2,484,147)
Administrative and other expenses		(195,650)		(425,885)
Personnel cost		(353,123)		(458,475)
Depreciation expense		(110,273)		(109,678)
Income before provision for income taxes (Not including service costs payable to intra-group companies)		328,071		394,779
Provision for income taxes		(53,238)		(14,366)
Net income	$	274,833	$	380,413

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Note 5 - Available-for-sale Investment (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Available-for-sale investment

	November 30,2012		May 31, 2012
Investment in trust funds	$	318,733	$	315,689
Total	$	318,733	$	315,689

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Note 14 - Variable Interest Entities ("vies"): Statements of income of the consolidated VIEs (Details) (USD $)	6 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Variable Interest Entity Other Income and Gains	$ 45,359	$ 45,321
Variable Interest Entity Service Costs	(2,391,397)	(2,484,147)
Variable Interest Entity Administrative and Other Expenses	(195,650)	(425,885)
Variable Interest Entity Personnel Cost	(353,123)	(458,475)
Variable Interest Entity Depreciation Expense	(110,273)	(109,678)
Variable Interest Entity Income Before Provision For Income Taxes	328,071	394,779
Variable Interest Entity Provision For Income Taxes	(53,238)	(14,366)
Variable Interest Entity, Primary Beneficiary
Variable Interest Entity, Measure of Activity, Revenues	3,333,155	3,827,643
Net Income (Loss) Attributable to Noncontrolling Interest	$ 274,833	$ 380,413

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Note 9 - Amount Due From/(to) Related Companies: Amount Due To a Related Company Table (Details) (USD $)	Nov. 30, 2012	May 31, 2012
Amount due to a related company	$ 92,326	$ 77,128

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Note 7 - Property, Plant and Equipment: Property, Plant and Equipment Table (Details) (USD $)	Nov. 30, 2012	May 31, 2012
Finite-Lived Computer Software, Gross	$ 559,020	$ 553,680
Fixtures and Equipment, Gross	4,942,818	4,895,607
Furniture and Fixtures, Gross	202,316	213,144
Capitalized Costs, Support Equipment and Facilities	32,829	32,516
Leasehold Improvements, Gross	34,900	33,912
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	(3,712,103)	(3,361,539)
Property, plant and equipment, net	$ 2,059,780	$ 2,367,320

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Note 13 - Provision For Income Taxes: Reconciliation of the expected tax (Details) (USD $)	3 Months Ended		6 Months Ended
	Nov. 30, 2012	Nov. 30, 2011	Nov. 30, 2012	Nov. 30, 2011
(Loss)/income before provision for income taxes	$ 85,146	$ 144,542	$ 11,714	$ 160,777
Deferred Income Taxes and Other Liabilities, Noncurrent	2,929	40,194	2,929	40,194
Accumulated Other Comprehensive Income (Loss), Foreign Currency Translation Adjustment, Net of Tax	5,682	(11,754)	5,682	(11,754)
Income Tax Reconciliation, Nondeductible Expense			1,317	15,468
Utilization of tax loss brought forward		(9,380)		(9,380)
Tax loss not provided for deferred tax	78,997	86,554	78,997	86,554
Provision for income taxes	$ (74,677)	$ (72,237)	$ (88,925)	$ (121,082)

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Note 4 - Cash & Cash Equivalents

3 Months Ended

Nov. 30, 2012

Note 4 - Cash & Cash Equivalents:

Note 4 - Cash & Cash Equivalents

NOTE 4 – CASH & CASH EQUIVALENTS

As of the balance sheet dates, cash & cash equivalents are summarized as follows:

	November 30, 2012		May 31, 2012
Cash and bank	$	559,211	$	868,462
Fixed deposits		2,827,163		2,651,786
Total	$	3,386,374	$	3,520,248

As of the balance sheet dates, the fixed deposits had a maturity term of less than three months.

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Note 10 - Accrued Expenses and Other Payables: Accrued Expenses and Other Payables Table (Details) (USD $)	Nov. 30, 2012	May 31, 2012
Accrued Liabilities, Fair Value Disclosure	$ 344,950	$ 373,129
Other Accounts Payable and Accrued Liabilities	201,454	203,202
Accrued expenses and other payables	$ 546,404	$ 576,331

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Note 9 - Amount Due From/(to) Related Companies (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Amount Due From Related Company Table

	November 30, 2012		May 31, 2012
Fellow subsidiary:
REDtone Technology Sdn. Bhd.	$	3,356,476	$	3,261,155
	$	3,356,476	$	3,261,155

Amount Due To a Related Company Table

	November 30, 2012		May 31, 2012
Fellow subsidiary:
Redtone Telecommunications Sdn Bhd	$	92,326	$	77,128
	$	92,326	$	77,128

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Note 8 - Intangible Assets (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Schedule of Intangible Assets and Goodwill

	November 30, 2012		May 31, 2012
At cost:
Licenses and software	$	2,281,963	$	2,278,425
Less: Accumulated amortization		(659,286)		(597,453)
Intangible assets, net	$	1,622,677	$	1,680,972

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Note 12 - Taxes Payable: Schedule of taxes payable table (Details) (USD $)	Nov. 30, 2012	May 31, 2012
Sales and Excise Tax Payable, Current	$ 164,038	$ 166,612
Accrued Income Taxes	381,487	283,880
Other Notes Payable	22,433	208
Taxes payable	$ 567,958	$ 450,700

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Note 10 - Accrued Expenses and Other Payables (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Accrued Expenses and Other Payables Table

	November 30, 2012		May 31, 2012
Accrued expenses	$	344,950	$	373,129
Other payables		201,454		203,202
Total	$	546,404	$	576,331

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Note 12 - Taxes Payable (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Schedule of taxes payable table

	November 30, 2012		May 31, 2012
Business tax payable	$	164,038	$	166,612
Income tax payable		381,487		283,880
Others		22,433		208
Total	$	567,958	$	450,700

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Note 3 - Summary of Significant Accounting Policies

3 Months Ended

Nov. 30, 2012

Note 3 - Summary of Significant Accounting Policies:

Note 3 - Summary of Significant Accounting Policies

NOTE 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company maintains bank accounts in mainland China and Hong Kong.

(b) Fair Value of Financial Instruments

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, other receivables and deposits, tax recoverable, amount due from/(to) related parties, accounts payable, accrued expenses and other payables, and taxes payable.

The estimated fair value amounts have been determined by the Company, using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented, due to the short maturities of these instruments.

(c) Revenue recognition

The Company has adopted a revenue recognition policy for each type of operation according to ASC 605-45.

Revenue represents the invoiced value of services rendered and receivable during the year. Revenue is recognized when all of the following criteria are met:

-          Persuasive evidence of an arrangement exists;

-          Delivery has occurred or services have been rendered;

-          The seller’s price to the buyer is fixed or determinable; and

-          Collectability is reasonably assured.

Revenue recognition policy for each of the major products and services:

1. Discounted call services for consumer (EMS) as follows:

Collaboration with China Tie Tong Telecommunications (“CTT”) – Redtone China is appointed as the sole distributor for EMS and will recognize revenue when airtime is utilized by the consumer and revenue is recognized on a net basis which is computed based on a fixed sharing ratio of the total airtime utilized by consumers after netting the direct traffic termination costs and incidental expenses. Redtone China’s role for Business Collaboration with CTT is as an “Agent” as Redtone China is the sole distributor for the EMS brand owned and controlled by CTT; and

Collaboration with other telecommunication providers – Redtone China will act as a discounted consumer call Reseller whereby Redtone China determines the service and package specification and the pricing policy whereas China Unicom acts as a passive termination partner for call traffic. Redtone China will pay China Unicom solely based on call traffic termination by China Unicom at a prescribed rate (defined as traffic termination cost on the books of Redtone China). In this regard, Redtone China will recognize revenue when airtime is utilized by the consumer and the revenue recognized is the gross value of the call charges. Redtone China’s role for Business Collaboration with China Unicom is that of “Principal” as China Unicom is playing a passive role as the traffic termination partner while Redtone China is fully responsible for the entire management of the discounted call services

As this is a prepaid product, there is an expiration date for the product sold. If the airtime is not utilized by the expiration date, which is currently one year from the activation date, the product will be deemed to be expired and the revenue recognized at the time is the remaining gross value of the expired prepaid product.

2. Discounted call services for corporate consumers is as follows:

Collaboration with CTT – the revenue recognized is the commission earned from distributing the discounted call services to corporate customers; and

Collaboration with other telecommunication providers –the revenue recognized is the commission earned from distributing the discounted call services to corporate customers.

3. Reload services for prepaid mobile services – revenue recognized is the commission earned.

4. Prepaid shopping-card services – revenue recognized is the commission earned.

(d) Earnings per share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As of August 31, 2012 and August 31, 2011, there were no dilutive securities outstanding.

(e) Foreign currency translation

The accompanying consolidated financial statements are presented in United States dollars (US$). The functional currencies of the Company are the Hong Kong dollar (HK$) and the Renminbi (RMB), respectively. Capital accounts of the financial statements are translated into United States dollars from HK$ or RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the year. The translation rates are as follows:

	November 30, 2012	May 31, 2012	November 30, 2011
Year end RMB : US$ exchange rate	0.1594	0.1578	0.1570
Average yearly RMB : US$ exchange rate	0.1585	0.1585	0.1576
Year end HK$ : US$ exchange rate	0.1290	0.1288	0.1283
Average yearly HK$ : US$ exchange rate	0.1290	0.1288	0.1285

On July 21, 2005, the PRC changed its foreign currency exchange policy from a fixed RMB/US$ exchange rate into a flexible rate under the control of the PRC’s government.

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

(f) Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

-          Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

-          Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

-          Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

We measure the fair value of money market funds and equity securities based on quoted prices in active markets for identical assets or liabilities. All other financial instruments were valued based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

(g) Recent Accounting Pronouncements

New accounting rules and disclosure requirements may significantly impact the financial statements. We believe that there is no new accounting guidance adopted but not yet effective that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

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Note 13 - Provision For Income Taxes (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Income tax expense table

	Six months ended November 30, 2012		Six months ended November 30, 2011
Current – PRC income tax provision	$	96,129	$	130,782
Deferred income tax (income)/ provision		(7,204)		(9,700)
Total	$	88,925	$	121,082

Reconciliation of the expected tax

	Six months ended November 30, 2012		Six months ended November 30, 2011
Income before provision for income taxes		11,714		160,777
Expected PRC income tax expense at statutory tax rate of 25%	$	2,929	$	40,194
Different tax rate for PRC/Hong Kong local authority		5,682		(11,754)
Expenses not deductible for tax		1,317		15,468
Utilization of tax loss brought forward		-		(9,380)
Tax loss not provided for deferred tax		78,997		86,554
Actual tax expense	$	88,925	$	121,082

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Note 8 - Intangible Assets (Details) (USD $)	3 Months Ended		6 Months Ended
	Nov. 30, 2012	Nov. 30, 2011	Nov. 30, 2012	Nov. 30, 2011
Amortization expense	$ (31,340)	$ (31,267)	$ (60,884)	$ (60,670)

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CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Nov. 30, 2012	May 31, 2012
Current assets
Cash and cash equivalents	$ 3,386,374	$ 3,520,248
Inventories	10,462	18,385
Accounts receivable	659,131	633,009
Tax recoverable	22,974	22,755
Other receivables and deposits	1,038,357	383,443
Total current assets	5,117,298	4,577,840
Property, plant and equipment, net	2,059,780	2,367,320
Intangible assets, net	1,622,677	1,680,972
Available-for-sale investment	318,733	315,689
Amount due from a related company	3,356,476	3,261,155
Goodwill	610,386	610,386
Total assets	13,085,350	12,813,362
Current Liabilities
Deferred income	1,144,514	1,423,566
Accounts payable	1,188,073	715,078
Accrued expenses and other payables	546,404	576,331
Amount due to a related company	92,326	77,128
Taxes payable	567,958	450,700
Total current liabilities	3,539,275	3,242,803
Deferred tax liabilities	26,686	33,604
Total liabilities	3,565,961	3,276,407
Stockholders' equity
Common stock, US$0.0001 par value , 300,000,000 shares authorized; 282,315,325 shares issued and outstanding	28,232	28,232
Additional paid in capital	7,726,893	7,726,893
Retained earnings	968,600	1,045,811
Accumulated other comprehensive income	795,664	736,019
Total stockholders' equity	9,519,389	9,536,955
Total liabilities and stockholders' equity	$ 13,085,350	$ 12,813,362

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Note 12 - Taxes Payable (Details)	3 Months Ended
	Nov. 30, 2012
Effective Income Tax Rate Reconciliation, at Federal Statutory Income Tax Rate	25.00%
Minimum
Business tax rate	3.00%
Maximum
Business tax rate	5.00%

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Note 1 - Organization and Principal Activities

3 Months Ended

Nov. 30, 2012

Note 1 - Organization and Principal Activities:

Note 1 - Organization and Principal Activities

NOTE 1 - ORGANIZATION AND PRINCIPAL ACTIVITIES

REDtone Asia, Inc. and subsidiaries (the “Company”) are a group of companies in The People’s Republic of China (“PRC”). The principal activities of the Company are that of a Telecommunications provider for mobile, fixed and international gateway services. REDtone provides a wide range of telecommunication services, including prepaid and postpaid discounted call services to corporate customers and consumers as well as prepaid mobile air-time top up.  

On March 25, 2011, Hotgate Technology, Inc. changed its name from Hotgate Technology, Inc. to REDtone Asia, Inc. and has a trading symbol on the OTCBB as “RTAS.”

As of November 30, 2012, details of the Company’s major subsidiaries are as follows:

Name	Domicile and date of incorporation	Effective ownership	Principal activities
Redtone Telecommunication (China) Limited (“Redtone China”)	Hong Kong May 26, 2005	100%	Investment holding
Redtone Telecommunications (Shanghai) Limited (“Redtone Shanghai”)	The PRC July, 26, 2005	100%	Provides technical support services to group companies
Shanghai Hongsheng Net Telecommunication Company Limited (“Hongsheng”)	The PRC November 29, 2006	100%#	Marketing and distribution of discounted call services to PRC consumer market
Shanghai Huitong Telecommunication Company Limited (“Huitong”)	The PRC March, 26, 2007	100%#	Marketing and distribution of IP call and discounted call services in the PRC
Shanghai Jiamao E-Commerce Company Limited (“Jiamao”)	The PRC March 21, 2008	100%#	Marketing and distribution of products on the internet
Nantong Jiatong Investment Consultant Co., Ltd (“Nantong Jiatong”)	The PRC May 17, 2011	100%#	Investment holding
Shanghai QianYue Business Administration Co., Ltd. (“QBA”)	The PRC December 12, 2008	100%#	Provides prepaid shopping-card services in the PRC

# - Variable interest entities. See also Footnote 14.

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Note 5 - Available-for-sale Investment: Available-for-sale investment (Details) (USD $)	Nov. 30, 2012	May 31, 2012
Investment in trust funds	$ 318,733	$ 315,689

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Note 1 - Organization and Principal Activities (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Major Subsidiaries Table

Name	Domicile and date of incorporation	Effective ownership	Principal activities
Redtone Telecommunication (China) Limited (“Redtone China”)	Hong Kong May 26, 2005	100%	Investment holding
Redtone Telecommunications (Shanghai) Limited (“Redtone Shanghai”)	The PRC July, 26, 2005	100%	Provides technical support services to group companies
Shanghai Hongsheng Net Telecommunication Company Limited (“Hongsheng”)	The PRC November 29, 2006	100%#	Marketing and distribution of discounted call services to PRC consumer market
Shanghai Huitong Telecommunication Company Limited (“Huitong”)	The PRC March, 26, 2007	100%#	Marketing and distribution of IP call and discounted call services in the PRC
Shanghai Jiamao E-Commerce Company Limited (“Jiamao”)	The PRC March 21, 2008	100%#	Marketing and distribution of products on the internet
Nantong Jiatong Investment Consultant Co., Ltd (“Nantong Jiatong”)	The PRC May 17, 2011	100%#	Investment holding
Shanghai QianYue Business Administration Co., Ltd. (“QBA”)	The PRC December 12, 2008	100%#	Provides prepaid shopping-card services in the PRC

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Note 6 -other Receivables and Deposits: Schedule of Accounts and Notes Receivable (Details) (USD $)	Nov. 30, 2012	May 31, 2012
Deposits	$ 275,927	$ 117,718
Other Receivables	762,430	265,725
Other receivables and deposits	$ 1,038,357	$ 383,443

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Note 4 - Cash & Cash Equivalents (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Cash and Cash Equivalents

	November 30, 2012		May 31, 2012
Cash and bank	$	559,211	$	868,462
Fixed deposits		2,827,163		2,651,786
Total	$	3,386,374	$	3,520,248

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Note 2 - Principles of Consolidation

3 Months Ended

Nov. 30, 2012

Note 2 - Principles of Consolidation:

Note 2 - Principles of Consolidation

NOTE 2 – PRINCIPLES OF CONSOLIDATION

The unaudited interim financial statements of the Company and the Company’s subsidiaries (see Note 1) for the three months and six months ended November 30, 2012 and 2011 have been prepared pursuant to the rules & regulations of the SEC. Certain information and disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such rules and regulations; however the Company believes that the following disclosures are adequate to make the information presented not misleading. All significant intercompany balances and transactions have been eliminated. The functional currency for the majority of the Company’s operations is in Chinese Renminbi (“RMB”), while the reporting currency is U.S. Dollar.

In the opinion of management, the accompanying condensed consolidated financial statements contain all adjustments, consisting only of normal recurring accruals, necessary for a fair presentation of the Company’s financial position as of November 30, 2012, the results of its operations and cash flows for the three months and six months ended November 30, 2012 and 2011.

The results of operations for the three months and six months ended November 30, 2012 are not necessarily indicative of the results for a full year period.

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CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $)	Nov. 30, 2012	May 31, 2012
Common Stock, par or stated value	$ 0.0001	$ 0.0001
Common Stock, shares authorized	300,000,000	300,000,000
Common Stock, shares issued	282,315,325	282,315,325
Common Stock, shares outstanding	282,315,325	282,315,325

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Note 12 - Taxes Payable

3 Months Ended

Nov. 30, 2012

Note 12 - Taxes Payable:

Note 12 - Taxes Payable

NOTE 12 – TAXES PAYABLE

Taxes payable at the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
Business tax payable	$	164,038	$	166,612
Income tax payable		381,487		283,880
Others		22,433		208
Total	$	567,958	$	450,700

Business tax represents PRC sales tax imposed upon the Company’s services provided in the PRC. Tax rates range from 3% to 5% depending on the nature of the taxable activities.

Income tax represents PRC income tax. The provision for PRC income tax is based on a statutory rate of 25% of the assessable income of the PRC subsidiaries as determined in accordance with the relevant income tax rules and regulations of the PRC.

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Document and Entity Information	3 Months Ended
	Nov. 30, 2012
Document and Entity Information:
Entity Registrant Name	REDtone Asia Inc
Document Type	10-Q
Document Period End Date	Nov. 30, 2012
Amendment Flag	false
Entity Central Index Key	0001341319
Current Fiscal Year End Date	--05-31
Entity Common Stock, Shares Outstanding	282,315,325
Entity Filer Category	Smaller Reporting Company
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2013
Document Fiscal Period Focus	Q2

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Note 13 - Provision For Income Taxes

3 Months Ended

Nov. 30, 2012

Note 13 - Provision For Income Taxes:

Note 13 - Provision For Income Taxes

NOTE 13 – PROVISION FOR INCOME TAXES

Income tax expense for the six months ended November 30, 2012 and 2011 are summarized as follows:

	Six months ended November 30, 2012		Six months ended November 30, 2011
Current – PRC income tax provision	$	96,129	$	130,782
Deferred income tax (income)/ provision		(7,204)		(9,700)
Total	$	88,925	$	121,082

A reconciliation of the expected tax with the actual tax expense is as follows:

	Six months ended November 30, 2012		Six months ended November 30, 2011
Income before provision for income taxes		11,714		160,777
Expected PRC income tax expense at statutory tax rate of 25%	$	2,929	$	40,194
Different tax rate for PRC/Hong Kong local authority		5,682		(11,754)
Expenses not deductible for tax		1,317		15,468
Utilization of tax loss brought forward		-		(9,380)
Tax loss not provided for deferred tax		78,997		86,554
Actual tax expense	$	88,925	$	121,082

 (i) All PRC subsidiaries are subject to PRC tax. The provision for PRC income tax is based on a statutory rate of 25% of the assessable income of the PRC subsidiaries as determined in accordance with the relevant income tax rules and regulations of the PRC.

(ii) VMS and Redtone China did not generate any assessable profits in Hong Kong and therefore are not subject to Hong Kong tax.

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CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (UNAUDITED) (USD $)	3 Months Ended		6 Months Ended
	Nov. 30, 2012	Nov. 30, 2011	Nov. 30, 2012	Nov. 30, 2011
Revenue	$ 1,511,465	$ 3,032,897	$ 3,612,860	$ 4,186,589
Other income and gains	60,714	30,929	78,296	68,617
Service costs	(946,135)	(2,130,938)	(2,407,744)	(2,570,805)
Personnel cost	(204,861)	(264,951)	(429,211)	(524,176)
Depreciation expense	(161,343)	(163,353)	(322,397)	(324,686)
Amortization expense	(31,340)	(31,267)	(60,884)	(60,670)
Administrative and other expenses	(143,354)	(328,775)	(459,206)	(614,092)
Income before provision for income taxes	85,146	144,542	11,714	160,777
Provision for income taxes	(74,677)	(72,237)	(88,925)	(121,082)
Net income/(loss)	10,469	72,305	(77,211)	39,695
Other comprehensive income
Gain on foreign currency translation	57,322	6,674	59,645	90,072
Total comprehensive income/(loss)	$ 67,791	$ 78,979	$ (17,566)	$ 129,767
Net income/(loss) per share, basic and diluted	$ 0.00	$ 0.00	$ 0.00	$ 0.00
Weighted average number of shares	282,315,325	282,315,325	282,315,325	282,315,325

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Note 7 - Property, Plant and Equipment

3 Months Ended

Nov. 30, 2012

Note 7 - Property, Plant and Equipment:

Note 7 - Property, Plant and Equipment

NOTE 7 – PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
At cost:
Computer and software	$	559,020	$	553,680
Telecommunication equipment		4,942,818		4,895,607
Furniture, fixtures and equipment		202,316		213,144
Motor vehicles		32,829		32,516
Leasehold improvement		34,900		33,912
		5,771,883		5,728,859
Less: Accumulated depreciation		(3,712,103)		(3,361,539)
Property, plant and equipment, net	$	2,059,780	$	2,367,320

Depreciation expense for the six months ended November 30, 2012 and 2011 amounted to $322,397 and $324,686, respectively.

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Note 6 -other Receivables and Deposits

3 Months Ended

Nov. 30, 2012

Note 6 -other Receivables and Deposits:

Note 6 -other Receivables and Deposits

NOTE 6 –OTHER RECEIVABLES AND DEPOSITS

Other receivables and deposits as of the balance sheet dates are summarized as follows:

	November 30,2012		May 31, 2012
Deposits	$	275,927	$	117,718
Other receivables		762,430		265,725
Total	$	1,038,357	$	383,443

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Note 3 - Summary of Significant Accounting Policies (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Foreign Currency Transactions, Description

	November 30, 2012	May 31, 2012	November 30, 2011
Year end RMB : US$ exchange rate	0.1594	0.1578	0.1570
Average yearly RMB : US$ exchange rate	0.1585	0.1585	0.1576
Year end HK$ : US$ exchange rate	0.1290	0.1288	0.1283
Average yearly HK$ : US$ exchange rate	0.1290	0.1288	0.1285

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Note 14 - Variable Interest Entities ("vies")

3 Months Ended

Nov. 30, 2012

Note 14 - Variable Interest Entities ("vies"):

Note 14 - Variable Interest Entities ("vies")

NOTE 14 – VARIABLE INTEREST ENTITIES (“VIEs”)

During six months ended November 30, 2012, Nantong Jiatong, Hongsheng, Huitong, QBA and Jiamao were VIEs of the Company.

Although the Company is not the shareholder of Nantong Jiatong, Hongsheng, Huitong, QBA and Jiamao, the Company has determined that it is the primary beneficiary of these entities, as the Company has 100% voting powers and is entitled to receive all the benefit from operations of these entities. Hence, these entities are identified as VIEs and are consolidated as if they are wholly-owned subsidiaries of the Company.

We did not identify any additional VIEs in which we hold a significant interest.

The total consolidated VIE assets and liabilities reflected on the Company’s balance sheet are as follows:

	November 30, 2012		May 31, 2012
Assets
Cash and cash equivalents	$	2,127,439	$	3,466,743
Inventories		10,462		18,385
Accounts receivable		659,131		633,009
Tax recoverable		22,974		22,755
Other receivables and deposits		890,054		237,490
Goodwill		610,386		610,386
Property, plant and equipment, net		342,179		454,875
Total assets (not include amount due from intra-group companies)	$	4,662,625	$	5,443,643
Liabilities
Deferred income	$	1,162,052	$	1,441,347
Accounts payable		1,167,590		694,626
Accrued expenses and other payables		423,122		467,246
Tax payables		100,322		44,424
Total liabilities	$	2,853,086	$	2,647,643

The statements of income of the consolidated VIEs for the six months ended November 30, 2012 and 2011 are as follows, and are included in the consolidated statements of income of the Company:

	Six months ended November 30, 2012		Six months ended November 30, 2011
Revenue	$	3,333,155	$	3,827,643
Other income and gains		45,359		45,321
Service costs		(2,391,397)		(2,484,147)
Administrative and other expenses		(195,650)		(425,885)
Personnel cost		(353,123)		(458,475)
Depreciation expense		(110,273)		(109,678)
Income before provision for income taxes (Not including service costs payable to intra-group companies)		328,071		394,779
Provision for income taxes		(53,238)		(14,366)
Net income	$	274,833	$	380,413

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Note 10 - Accrued Expenses and Other Payables

3 Months Ended

Nov. 30, 2012

Note 10 - Accrued Expenses and Other Payables:

Note 10 - Accrued Expenses and Other Payables

NOTE 10 – ACCRUED EXPENSES AND OTHER PAYABLES

Accrued expenses and other payables as of the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
Accrued expenses	$	344,950	$	373,129
Other payables		201,454		203,202
Total	$	546,404	$	576,331

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Note 8 - Intangible Assets

3 Months Ended

Nov. 30, 2012

Note 8 - Intangible Assets:

Note 8 - Intangible Assets

NOTE 8 – INTANGIBLE ASSETS

Intangible assets of the Company consist primarily of licenses and software for the PRC operations.

Intangible assets as of the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
At cost:
Licenses and software	$	2,281,963	$	2,278,425
Less: Accumulated amortization		(659,286)		(597,453)
Intangible assets, net	$	1,622,677	$	1,680,972

Amortization expense for the six months ended November 30, 2012 and 2011 amounted to $60,884 and $60,670, respectively.

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Note 9 - Amount Due From/(to) Related Companies

3 Months Ended

Nov. 30, 2012

Note 9 - Amount Due From/(to) Related Companies:

Note 9 - Amount Due From/(to) Related Companies

NOTE 9 – AMOUNT DUE FROM/(TO) RELATED COMPANIES

Redtone Technology Sdn. Bhd. was previously the holding company of Redtone Telecommunications (China) Ltd. Pursuant to the reverse acquisition by Redtone Asia, Inc., Redtone Technology Sdn. Bhd. is now a related company of Redtone Asia, both of which are subsidiaries of penultimate holding company by the name of Redtone International Berhad.

Amount due from a related company as of the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
Fellow subsidiary:
REDtone Technology Sdn. Bhd.	$	3,356,476	$	3,261,155
	$	3,356,476	$	3,261,155

The amount represents advances to the related company. As of the balance sheet dates, the amount is unsecured, non-interest bearing and is expected to be repaid within three to five years.

Amount due to a related company as of the balance sheet dates are summarized as follows:

	November 30, 2012		May 31, 2012
Fellow subsidiary:
Redtone Telecommunications Sdn Bhd	$	92,326	$	77,128
	$	92,326	$	77,128

The amount due to the related company is unsecured, non-interest bearing and has no fixed repayment date.

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Note 11 - Deferred Income

3 Months Ended

Nov. 30, 2012

Note 11 - Deferred Income:

Note 11 - Deferred Income

NOTE 11 – DEFERRED INCOME

Deferred income consists of prepaid air-time sold which is yet to be utilized. The basis of revenue recognition for discounted call services is based on actual call charges made by end users. When calls are being made, the amount will be deducted from deferred income and recorded as revenue in the statement of income, net of call costs and expenses.

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Note 4 - Cash & Cash Equivalents: Cash and Cash Equivalents (Details) (USD $)	Nov. 30, 2012	May 31, 2012
Cash	$ 559,211	$ 868,462
Cash Reserve Deposit Required and Made	2,827,163	2,651,786
Cash and cash equivalents	$ 3,386,374	$ 3,520,248

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Note 15 - Common Stock (Details) (USD $)	Nov. 30, 2012	May 31, 2012
Common Stock, shares authorized	300,000,000	300,000,000
Common Stock, par or stated value	$ 0.0001	$ 0.0001
Common Stock, shares issued	282,315,325	282,315,325

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Note 3 - Summary of Significant Accounting Policies (Policies)

3 Months Ended

Nov. 30, 2012

Policies (Detail level 2):

(a) Cash and Cash Equivalents

(a) Cash and Cash Equivalents

The Company considers all highly liquid investments purchased with original maturities of three months or less to be cash equivalents. The Company maintains bank accounts in mainland China and Hong Kong.

(b) Fair Value of Financial Instruments

(b) Fair Value of Financial Instruments

The Company’s financial instruments primarily consist of cash and cash equivalents, accounts receivable, other receivables and deposits, tax recoverable, amount due from/(to) related parties, accounts payable, accrued expenses and other payables, and taxes payable.

The estimated fair value amounts have been determined by the Company, using available market information or other appropriate valuation methodologies. However, considerable judgment is required in interpreting market data to develop estimates of fair value. Consequently, the estimates are not necessarily indicative of the amounts that could be realized or would be paid in a current market exchange.

As of the balance sheet dates, the estimated fair values of the financial instruments were not materially different from their carrying values as presented, due to the short maturities of these instruments.

(c) Revenue Recognition

(c) Revenue recognition

The Company has adopted a revenue recognition policy for each type of operation according to ASC 605-45.

Revenue represents the invoiced value of services rendered and receivable during the year. Revenue is recognized when all of the following criteria are met:

-          Persuasive evidence of an arrangement exists;

-          Delivery has occurred or services have been rendered;

-          The seller’s price to the buyer is fixed or determinable; and

-          Collectability is reasonably assured.

Revenue recognition policy for each of the major products and services:

1. Discounted call services for consumer (EMS) as follows:

Collaboration with China Tie Tong Telecommunications (“CTT”) – Redtone China is appointed as the sole distributor for EMS and will recognize revenue when airtime is utilized by the consumer and revenue is recognized on a net basis which is computed based on a fixed sharing ratio of the total airtime utilized by consumers after netting the direct traffic termination costs and incidental expenses. Redtone China’s role for Business Collaboration with CTT is as an “Agent” as Redtone China is the sole distributor for the EMS brand owned and controlled by CTT; and

Collaboration with other telecommunication providers – Redtone China will act as a discounted consumer call Reseller whereby Redtone China determines the service and package specification and the pricing policy whereas China Unicom acts as a passive termination partner for call traffic. Redtone China will pay China Unicom solely based on call traffic termination by China Unicom at a prescribed rate (defined as traffic termination cost on the books of Redtone China). In this regard, Redtone China will recognize revenue when airtime is utilized by the consumer and the revenue recognized is the gross value of the call charges. Redtone China’s role for Business Collaboration with China Unicom is that of “Principal” as China Unicom is playing a passive role as the traffic termination partner while Redtone China is fully responsible for the entire management of the discounted call services

As this is a prepaid product, there is an expiration date for the product sold. If the airtime is not utilized by the expiration date, which is currently one year from the activation date, the product will be deemed to be expired and the revenue recognized at the time is the remaining gross value of the expired prepaid product.

2. Discounted call services for corporate consumers is as follows:

Collaboration with CTT – the revenue recognized is the commission earned from distributing the discounted call services to corporate customers; and

Collaboration with other telecommunication providers –the revenue recognized is the commission earned from distributing the discounted call services to corporate customers.

3. Reload services for prepaid mobile services – revenue recognized is the commission earned.

4. Prepaid shopping-card services – revenue recognized is the commission earned.

(d) Earnings Per Share

(d) Earnings per share

Basic earnings per share is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. As of August 31, 2012 and August 31, 2011, there were no dilutive securities outstanding.

(e) Foreign Currency Translation

(e) Foreign currency translation

The accompanying consolidated financial statements are presented in United States dollars (US$). The functional currencies of the Company are the Hong Kong dollar (HK$) and the Renminbi (RMB), respectively. Capital accounts of the financial statements are translated into United States dollars from HK$ or RMB at their historical exchange rates when the capital transactions occurred. Assets and liabilities are translated at the exchange rates as of balance sheet date. Income and expenditures are translated at the average exchange rate of the year. The translation rates are as follows:

	November 30, 2012	May 31, 2012	November 30, 2011
Year end RMB : US$ exchange rate	0.1594	0.1578	0.1570
Average yearly RMB : US$ exchange rate	0.1585	0.1585	0.1576
Year end HK$ : US$ exchange rate	0.1290	0.1288	0.1283
Average yearly HK$ : US$ exchange rate	0.1290	0.1288	0.1285

On July 21, 2005, the PRC changed its foreign currency exchange policy from a fixed RMB/US$ exchange rate into a flexible rate under the control of the PRC’s government.

The RMB is not freely convertible into foreign currency and all foreign exchange transactions must take place through authorized institutions. No representation is made that the RMB amounts could have been, or could be, converted into US$ at the rates used in translation.

(f) Fair Value of Financial Instruments

(f) Fair Value of Financial Instruments

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:

-          Level 1—Valuations based on quoted prices for identical assets and liabilities in active markets.

-          Level 2—Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data.

-          Level 3—Valuations based on unobservable inputs reflecting our own assumptions, consistent with reasonably available assumptions made by other market participants. These valuations require significant judgment.

We measure the fair value of money market funds and equity securities based on quoted prices in active markets for identical assets or liabilities. All other financial instruments were valued based on quoted market prices of similar instruments and other significant inputs derived from or corroborated by observable market data.

(g) Recent Accounting Pronouncements

(g) Recent Accounting Pronouncements

New accounting rules and disclosure requirements may significantly impact the financial statements. We believe that there is no new accounting guidance adopted but not yet effective that is relevant to the readers of our financial statements. However, there are numerous new proposals under development which, if and when enacted, may have a significant impact on our financial reporting.

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Note 6 -other Receivables and Deposits (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Schedule of Accounts and Notes Receivable

	November 30,2012		May 31, 2012
Deposits	$	275,927	$	117,718
Other receivables		762,430		265,725
Total	$	1,038,357	$	383,443

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Note 14 - Variable Interest Entities ("vies"): Consolidated VIE assets and liabilities (Details) (USD $)	Nov. 30, 2012	May 31, 2012	Nov. 30, 2011	May 31, 2011
Cash and cash equivalents at beginning of period	$ 3,386,374	$ 3,520,248	$ 3,207,182	$ 4,580,189
Inventories	10,462	18,385
Accounts receivable	659,131	633,009
Other receivables and deposits	1,038,357	383,443
Goodwill	610,386	610,386
Property, plant and equipment, net	2,059,780	2,367,320
Total liabilities	3,565,961	3,276,407
Variable Interest Entity, Primary Beneficiary
Cash and cash equivalents at beginning of period	2,127,439	3,466,743
Inventories	10,462	18,385
Accounts receivable	659,131	633,009
Income Taxes Receivable	22,974	22,755
Other receivables and deposits	890,054	237,490
Goodwill	610,386	610,386
Property, plant and equipment, net	342,179	454,875
Variable Interest Entity, Consolidated, Carrying Amount, Assets	4,662,625	5,443,643
Deferred Revenue	1,162,052	1,441,347
Accounts Payable, Current	1,167,590	694,626
Accounts Payable and Other Accrued Liabilities, Current	423,122	467,246
Taxes Payable, Current	100,322	44,424
Total liabilities	$ 2,853,086	$ 2,647,643

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Note 9 - Amount Due From/(to) Related Companies: Amount Due From Related Company Table (Details) (USD $)	Nov. 30, 2012	May 31, 2012
Amount due from a related company	$ 3,356,476	$ 3,261,155

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) (USD $)	6 Months Ended
	Nov. 30, 2012	Nov. 30, 2011
Cash flows from operating activities
Net income	$ (77,211)	$ 39,695
Adjustments to reconcile net (loss)/income to net cash (used in)/provided by operating activities:
Deferred tax	(7,204)	(9,700)
Amortization expense	60,884	60,670
Depreciation expense	322,397	324,686
Loss on disposal of property, plant and equipment	5,807
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable	(26,122)	518,952
Decrease in inventories	7,923	70
(Increase)/decrease in other receivables and deposits	(654,914)	95,416
(Increase)/decrease in tax recoverable	(219)	61,517
(Decrease)/increase in deferred income	(279,052)	25,149
Increase/(decrease) in accounts payable	472,995	(381,510)
Increase in tax payables	117,258	146,159
(Decrease)/increase in accrued liabilities and other payables	(29,927)	62,018
Net cash (used in)/provided by operating activities	(87,385)	943,122
Cash flows from investing activities
Purchase of property, plant and equipment	(742)	(69,064)
Proceeds from disposal of property, plant and equipment	12,599
Increase in amount due from a related company	(95,321)	(1,533,188)
Purchase of available-for-sale investment		(790,361)
Net cash used in investing activities	(83,464)	(2,392,613)
Cash flows from financing activities
Increase/(decrease) in amount due to related companies	15,198	(24,951)
Net cash provided by/(used in) financing activities	15,198	(24,951)
Net decrease in cash and cash equivalents	(155,651)	(1,474,442)
Effect of exchange rate changes on cash and cash equivalents	21,777	101,435
Cash and cash equivalents at beginning of period	3,520,248	4,580,189
Cash and cash equivalents at end of period	3,386,374	3,207,182
Cash paid for interest
Cash paid for income taxes		$ 8,772

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Note 5 - Available-for-sale Investment

3 Months Ended

Nov. 30, 2012

Note 5 - Available-for-sale Investment:

Note 5 - Available-for-sale Investment

NOTE 5 – AVAILABLE-FOR-SALE INVESTMENT

As of the balance sheet dates, available-for-sale investments are summarized as follows:

	November 30,2012		May 31, 2012
Investment in trust funds	$	318,733	$	315,689
Total	$	318,733	$	315,689

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Note 7 - Property, Plant and Equipment (Tables)

3 Months Ended

Nov. 30, 2012

Tables/Schedules (Detail level 3):

Property, Plant and Equipment Table

	November 30, 2012		May 31, 2012
At cost:
Computer and software	$	559,020	$	553,680
Telecommunication equipment		4,942,818		4,895,607
Furniture, fixtures and equipment		202,316		213,144
Motor vehicles		32,829		32,516
Leasehold improvement		34,900		33,912
		5,771,883		5,728,859
Less: Accumulated depreciation		(3,712,103)		(3,361,539)
Property, plant and equipment, net	$	2,059,780	$	2,367,320

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Note 7 - Property, Plant and Equipment (Details) (USD $)	3 Months Ended		6 Months Ended
	Nov. 30, 2012	Nov. 30, 2011	Nov. 30, 2012	Nov. 30, 2011
Depreciation expense	$ (161,343)	$ (163,353)	$ (322,397)	$ (324,686)

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Note 15 - Common Stock

3 Months Ended

Nov. 30, 2012

Note 15 - Common Stock:

Note 15 - Common Stock

NOTE 15 – COMMON STOCK

As of the balance sheet dates, the Company has a total of 300,000,000 shares of common shares authorized at US$0.0001 par value. As of the balance sheet dates, 282,315,325 shares were issued and outstanding, respectively.