Note 1 - Organization and Principal Activities

12 Months Ended

May. 31, 2015

Notes

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. The Company also offers prepaid shopping card services.

The Company’s major subsidiaries during the years are illustrated 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”) 1, 2	The PRC November 29, 2006	100%		Marketing and distribution of discounted call services to PRC consumer market
Shanghai Huitong Telecommunication Company Limited (“Huitong”) 2	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”) 2	The PRC March 21, 2008	100%		Marketing and distribution of products on the internet
Nantong Jiatong Investment Consultant Co., Ltd (“Nantong Jiatong”) 2, 3	The PRC May 17, 2011	100%		Investment holding
Shanghai QianYue Business Administration Co., Ltd. ("QBA") 1, 2	The PRC December 12, 2008	100%		Provision of prepaid shopping-card services in the PRC
Shanghai Xin Chang Information Technology Company Limited (“Xin Chang”) 2	The PRC January 13, 2006	56%		Marketing and distribution of IP call and discounted call services in the PRC
VMS Technology Limited	Hong Kong September 14, 1998	100%		Trading of discounted call related equipment and provision of related services
RT Communications Ltd	BVI February 24, 2010	100%		Investment holding
Shanghai YuZhong Financial Information Service Co., Ltd (“YuZhong”) 2, 4	The PRC July 16, 2014	49.8%		Investment holding
Shanghai YuGuang Automobile Inspection Technology Co., Ltd (“YuGuang”) 2, 4	The PRC July 17, 2014		59.8%	Investment holding
Taizhou Haitai Motor Vehicle Inspection Co, Ltd. (“Haitai”) 2, 4	The PRC October 31, 2013		30.5%	Investment holding
Feng Cheng Motor Vehicle Inspection Co., Ltd. (“FengCheng”) 2, 4	The PRC November 30, 2012		30.5%	Provision of services for motor vehicle technical and emission inspection

1 - Disposed of during the year

2 - Variable interest entities

3 - Deregistered during the year

4 - Acquired/incorporated during the year

Nantong Jiatong, Hongsheng and QBA were disposed of July 25, 2014.  The related assets held for sale and liabilities as of May 31, 2014 are reclassified in the consolidated balance sheet, while the corresponding results for years ended May 31, 2015 (up to disposal date) and 2014, respectively, are reported as discontinued operations. See also Footnote 4.

Prior to disposal of Hongsheng, the Company transferred its equity interest in Xin Chang to Huitong. The statutory registration was completed in September 2014.

YuZhong, YuGuang, Haitai and FengCheng are new subsidiaries during the year. See also Footnote 5.