10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

[ x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 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 Number 000-54333

XCELMOBILITY INC.
(Exact name of registrant as specified in its charter)

Nevada	98-0561888
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification Number)

303 Twin Dolphins Drive, Suite 600, Redwood City, CA, 94065
(Address of principal executive offices) (Zip Code)

(650) 632-4210
(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 of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
[ x ] Yes        [   ] No

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)
[ x ] Yes        [   ] No

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	[   ] Accelerated filer	[   ] Non-accelerated filer	[ x ] Smaller reporting
		(Do not check if smaller	company
		reporting company)

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding as of November 8, 2012
Common stock, $.001 par value	60,000,000

1

XCELMOBILITY INC.

FORM 10-Q

INDEX
		PAGE
PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements
	Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011 (unaudited)	5
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2012 and 2011 (unaudited)	6
	Condensed Consolidated Statement of Cash Flows for the nine months ended September 30, 2012 and 2011 (unaudited)	7
	Notes to Unaudited Consolidated Condensed Financial Statements (unaudited)	8-26
Item 2.	Management’s Discussion and Analysis of Financial Conditions and Results of Operations	27
Item 3.	Qualitative and Quantitative Disclosures About Market Risk	31
Item 4.	Controls and Procedures	31
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	34
Item 3.	Defaults Upon Senior Securities	34
Item 4.	Mine Safety Disclosures	34
Item 5.	Other Information	34
Item 6.	Exhibits	34
Signatures		36

2

FORWARD-LOOKING STATEMENTS

     This Report on Form 10-Q contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Reference is made in particular to the description of our plans and objectives for future operations, assumptions underlying such plans and objectives, and other forward-looking statements included in this report. Such statements may be identified by the use of forward-looking terminology such as “may,” “will,” “expect,” “believe,” “estimate,” “anticipate,” “intend,” “continue,” or similar terms, variations of such terms or the negative of such terms. Such statements are based on management’s current expectations and are subject to a number of factors and uncertainties, which could cause actual results to differ materially from those described in the forward-looking statements. Such statements address future events and conditions concerning, among others, capital expenditures, earnings, litigation, regulatory matters, liquidity and capital resources, and accounting matters. Actual results in each case could differ materially from those anticipated in such statements by reason of factors such as future economic conditions, changes in consumer demand, legislative, regulatory and competitive developments in markets in which we operate, results of litigation, and other circumstances affecting anticipated revenues and costs, and the risk factors set forth in our Annual Report on Form 10-K filed on March 30, 2012.

     As used in this Form 10-Q, “we,” “us,” and “our” refer to XcelMobility Inc., which is also sometimes referred to as the “Company.”

YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS

     The forward-looking statements made in this report on Form 10-Q relate only to events or information as of the date on which the statements are made in this report on Form 10-Q. Except as required by law, we undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, after the date on which the statements are made or to reflect the occurrence of unanticipated events. You should read this report and the documents that we reference in this report, including documents referenced by incorporation, completely and with the understanding that our actual future results may be materially different from what we expect or hope.

3

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

INDEX TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

	Page
Condensed Consolidated Balance Sheets as of September 30, 2012 and December 31, 2011 (unaudited).	5
Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2012 and 2011 (unaudited).	6
Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2012 and 2011 (unaudited)	7
Notes to Unaudited Consolidated Condensed Financial Statements (unaudited)	8-26

4

XCELMOBILITY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)

		September 30,			December 31,
		2012			2011
ASSETS
Current Assets:
Cash and cash equivalents	$	238,900		$	615,200
Trade accounts receivable		19,200			-
Other receivables, net of allowance for doubtful accounts of $3,500 and $3,500, respectively		5,600			5,400
Inventory		300			-
Prepaid expenses		9,000			8,800
Advances to suppliers		3,400			-
Total Current Assets		276,400			629,400
Property and Equipment, net of accumulated depreciation of $58,900 and $44,400, respectively		93,700			66,200
TOTAL ASSETS	$	370,100		$	695,600
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current Liabilities:
Accounts payable	$	105,500		$	41,400
Other payables and accrued expenses		32,300			44,700
Deferred revenue		161,900			290,500
Convertible notes		63,000			-
Total Current Liabilities		362,700			376,600
Convertible notes		1,050,000			900,000
Accrued interest		56,900			18,300
Deferred revenue		20,700			10,700
Total Liabilities		1,490,300			1,305,600
Commitments and Contingencies (Note 11)
Shareholders’ Deficit:
Preferred stock, $0.001 par value, 20,000,000 shares authorized; no shares issued and outstanding September 30, 2012 and December 31, 2011		-			-
Common stock, $0.001 par value, 100,000,000 shares authorized; 60,000,000 issued and outstanding September 30, 2012 and December 31, 2011		60,000			60,000
Additional paid in capital		161,100			72,200
Accumulated deficit		(1,373,700	)		(772,900	)
Accumulated other comprehensive income		32,400			30,700
Total Shareholders’ Deficit		(1,120,200	)		(610,000	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	370,100		$	695,600

The accompanying notes are an integral part of the condensed consolidated financial statements

5

XCELMOBILITY INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(UNAUDITED)

		For the Three Months Ended						For the Nine Months Ended
		September 30,						September 30,
		2012			2011			2012		2011
Revenue	$	72,000			4,100		$	198,800		43,300
Cost of Revenue		4,000			200			11,900		2,400
Gross Profit		68,000			3,900			186,900		40,900
Operating Expenses:
Selling expense		6,100			5,100			35,400		15,400
General and administrative expense		262,500			178,000			823,200		220,600
Total Operating Expenses		268,600			183,100			858,600		236,000
Loss from Operations		(200,600	)		(179,200	)		(671,700	)	(195,100	)
Other Income (Expense):
Interest income		100			100			800		100
Interest expense		(14,200	)		(5,400	)		(38,700	)	(5,400	)
Other income (expense)		89,600			13,000			108,800		12,800
Total Other Income		75,500			7,700			70,900		7,500
Loss Before Taxes		(125,100	)		(171,500	)		(600,800	)	(187,600	)
Income tax expense		-			-			-		-
Loss from continuing operation	$	(125,100	)		(171,500	)	$	(600,800	)	(187,600	)
Discontinued Operation:
Income from discontinued operation		-			23,000			-		27,100
(Loss) Gain on disposal of interest in subsidiary		-			(4,800	)		-		4,100
Net income from discontinued operation		-			18,200			-		31,200
Net Loss		(125,100	)		(153,300	)		(600,800	)	(156,400	)
Less: income attributable to non-controlling interest		-			-			-		1,600
Net loss attributable to XcelMobility	$	(125,100	)		(153,300	)	$	(600,800	)	(158,000	)
Net Loss		(125,100	)		(153,300	)		(600,800	)	(156,400	)
Foreign currency translation adjustment		(600	)		5,500			1,700		10,200
Comprehensive loss		(125,700	)		(147,800	)		(599,100	)	(146,200	)
Less: Comprehensive Income attributable to
Non-controlling interest					-			-		1,400
Comprehensive loss attributable to XcelMobility		(125,700	)		(147,800	)		(599,100	)	(144,800	)
Basic and diluted loss per share attributable to
XcelMobility shareholders:
Continuing Operation	$	-		$	-		$	(0.01	)	-
Discontinued Operation		-			-			-		-
Basic and diluted loss per share attributable to
XcelMobility shareholders:	$	-		$	-		$	(0.01	)	-
Basic and diluted weighted average number of shares outstanding		60,000,000			67,888,043			60,000,000		74,393,407

The accompanying notes are an integral part of the condensed consolidated financial statements

6

XCELMOBILITY INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)

		For the Nine Months Ended
		September 30,
		2012			2011
Cash Flows from Operating Activities:
Net loss	$	(600,800	)	$	(156,400	)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation		14,300			9,100
Stock compensation expenses		88,900			-
Gain on disposal of subsidiaries		-			(4,100	)
Investment income from equity investment in affiliate		-			(27,100	)
Changes in assets and liabilities:
Trade accounts receivable		(19,300	)		1,400
Other receivables and prepayment		(300	)		(10,300	)
Advances to suppliers		(3,400	)
Inventory		(300	)		-
Accounts payable		64,100			-
Accrued interest		38,700			5,400
Other payables and accrued expenses		(12,600	)		133,300
Deferred revenue		(120,300	)		32,800
Net Cash Used In Continuing Operating Activities		(551,000	)		(15,900	)
Net Cash Used In Discontinued Operating Activities		-			(500	)
Net Cash Used In Operating Activities		(551,000	)		(16,400	)
Cash Flows from Investing Activities:
Purchase of property, plant and equipment, net of value added tax refunds received		(41,500	)		(12,900	)
Cash acquired in CC Mobility and XcelMobility		-			193,900
Proceeds from disposal of ownership interest in affiliate		-			92,300
Net Cash ( Used In) Provided By Investing Activities		(41,500	)		273,300
Cash Flows from Financing Activities:
Proceeds from issuance of notes payable		213,000			400,000
Receipt of amount due from shareholder		-			32,300
Net Cash Provided By Financing Activities		213,000			432,300
Effect of Exchange Rate Changes on Cash and Cash Equivalents		3,200			2,600
Net Change in Cash and Cash Equivalents		(376,300	)		691,800
Cash and Cash Equivalents at Beginning of Period		615,200			8,800
Cash and Cash Equivalents at End of Period	$	238,900		$	700,600
Supplement Cash Flow Information
Cash paid during the period for interest	$	-		$	-
Cash paid during the period for income taxes	$	-		$	-
Convertible notes payable assumed from reverse merger	$	-		$	400,000

The accompanying notes are an integral part of the condensed consolidated financial statements

7

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

1. Organization and Nature of Business

XcelMobility Inc.
XcelMobility Inc. (a development stage company) (“Xcel” or the “Company”) was incorporated under the laws of the State of Nevada on December 27, 2007. Initial operations have included organization and incorporation, target market identification, marketing plans, and capital formation. The Company has generated no revenues since inception.

Share Cancellation
On August 11, 2011, Moses Carlo Supera Paez, a director and shareholder of the Company, surrendered 17,700,000 shares of common stock for cancellation. Further, on August 30, 2011, Mr. Paez surrendered an additional 7,350,000 shares of our common stock for cancellation and Mr. Jaime Brodeth, one of our former directors and a shareholder, surrendered 22,950,000 shares of our common stock for cancellation. As such, immediately prior to the Exchange Transaction as further discussed in detail later and after giving effect to the foregoing cancellations, the Company had 29,700,000 shares of common stock issued and outstanding. Immediately after the Exchange Transaction, the Company had 60,000,000 shares of common stock issued and outstanding.

CC Mobility Limited
CC Mobility Limited (“CC Mobility”), a company organized under the laws of Hong Kong, was formed on May 3, 2011 and has authorized capital of 10,000 shares with registered capital of HK$1,000 at HK$1 per share. At formation, CC Mobility Limited has issued 560 shares to CC Wireless Limited, a company organized under the laws of Hong Kong, and 440 shares to Sheen Ventures Limited, a company organized under the laws of Hong Kong. The Company is a holding company formed for the purpose of acquiring a target company to effect a reverse merger with a U.S. reporting company. The reverse merger was completed on August 30, 2011.

CC Power Investment Consulting Co. Ltd.
Shenzhen CC Power Investment Consulting Co. Ltd. (“CC Investment”), a wholly-owned subsidiary of CC Mobility, was incorporated on July 27, 2011 under the laws of the People’s Republic of China (“PRC”) as a wholly foreign owned limited liability company. The required registered capital is $2,000,000 and as of September 30, 2012, $400,000 of the registered capital has been contributed.

Shenzhen CC Power Corporation
Shenzhen CC Power Corporation (“CC Power”, the Company) is a Chinese enterprise organized in the PRC on March 13, 2003 in accordance with the Laws of the People’s Republic of China. The required registered capital of the Company was approximately $1,547,000 (RMB 10,000,000) and as of December 31, 2011, the Company has paid up approximately $346,000 (RMB2, 526,000). In March 2011, Mr. Ryan Ge sold his 5% ownership in CC Power to the other shareholder, Xili Wang (“CC Power Shareholder”). Ms. Wang holds 100% ownership interest in CC Power as of September 30, 2012 and December 31, 2011.

CC Power is primarily engaged in the research, development and commercialization of applications for mobile devices that access the Internet utilizing mobile phone networks. CC Power’s principal activity is the design, testing sale and support of software to support mobile internet applications on cellular phones, smart phones, tablets and mobile computers in China. The principal product designed and built by CC Power is its Mach 5 Accelerator. This product has been independently tested by all 3 mobile phone carriers in China and accesses the internet 5 times faster than with other mobile browsers. The speed of the Mach 5 browser enables CC Power to develop other mobile software that can leverage off the Mach 5 products speed of processing. In order to support CC Power products the Company has built a series of server locations throughout China. CC Power sells its products to corporations directly, to individual users via the company’s website and retail locations, through distribution agents and through all three mobile phone carriers in China.

As noted above, the primary purpose of CC Power is to develop software that allows user faster access to the Internet. CC Power’s primary focus is in the mobile Internet market, with a focus on providing software that significantly increases the speed that users of smartphones, tablets and laptops can access the Internet over cellular phone networks. CC Power also uses their technology to increase the speed at which users of Virtual Private Networks can access data from their networks.

8

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

1. Organization and Nature of Business - Continued

CC Power had 60% equity interest in Shenzhen Nanovision Technology Ltd. (“Nanovision”) as of December 31, 2010. On June 15, 2011, CC Power sold 25% of its ownership in Nanovision. In August 2011, CC Power sold its remaining 35% interest in Nanovision, after the disposition, CC Power has neither ownership nor involvement in Nanovision.

Share Exchange Agreement

On August 30, 2011, the Company completed a voluntary share exchange transaction with Shenzhen CC Power Corporation, CC Mobility Limited and the shareholders of CC Mobility (“Selling Shareholders”) pursuant to a Share Exchange Agreement dated July 5, 2011 (the “Exchange Agreement”). In accordance with the terms of Exchange Agreement, on the Closing Date, Xcel issued 30,300,000 shares of its common stock to the Selling Shareholders in exchange for 100% of the issued and outstanding capital stock of CC Mobility (the “Exchange Transaction”). As a result of the Exchange Transaction, there was a change of control in the Company as the Selling Shareholders of CC Mobility acquired 50.5% of Xcel’s issued and outstanding common stock, CC Mobility became Xcel’s wholly-owned subsidiary, and Xcel acquired the business and operations of CC Mobility and CC Power.

For accounting purposes, the merger transaction is being accounted for as a reverse merger. The transaction has been treated as a recapitalization of CC Mobility and its subsidiaries, with Xcel (the legal acquirer of CC Mobility and its subsidiaries) considered the accounting acquiree and CC Mobility whose management took control of Xcel (the legal acquire of CC Mobility) considered the accounting acquirer.

CC Power is owned by an individual but controlled by CC Investment through a series of contractual arrangements that transferred all of the benefits and responsibilities for the operations of CC Power to CC Investment. CC Investment accounts for CC Power as a Variable Interest Entity (“VIE”) under ASC 810 “Consolidation.” Accordingly, CC Investment consolidates CC Power’s results, assets and liabilities.

As a result of the Exchange Transaction, the organizational structure of the Company is as follows:

9

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries at September 30, 2012 and for the three and nine months ended September 30, 2012 and 2011 reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the financial position and results of operations of the Company for the periods presented. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2011. The Company follows the same accounting policies in the preparation of interim reports. The Company’s accounting policies used in the preparation of the accompanying financial statements conform to accounting principles generally accepted in the United States of America (“US GAAP”)

The functional currency is the Chinese Renminbi, however the accompanying condensed consolidated financial statements have been translated and presented in United States Dollars ($). All significant inter-company balances and transactions have been eliminated in consolidation.

All dollars are rounded to nearest hundred except for share data.

Reclassification

Cost of revenue –Cost of revenue totaled $300 and 29,300 for the three and nine months ended September 30, 2011 has been reclassified from cost of revenue to selling expense and general and administrative expense to conform to current presentation.

10

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

2. Summary of Significant Accounting Policies - Continued

Use of estimates

In preparing financial statements in conformity with US GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported periods. Actual results could differ from those estimates.

Significant Estimates

These financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to depreciation of property, plant and equipment, the valuation allowance for deferred taxes. It is reasonably possible that the above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods.

Variable Interest Entity

The accounts of CC Power have been consolidated with the accounts of the Company because CC Power is a variable interest entity with respect to CC Investment, which is a wholly-owned subsidiary of the Company. CC Investment entered into five agreements dated August 22, 2011 with CC Power Shareholder and with CC Power pursuant to which CC Investment provides CC Power with exclusive technology consulting and management services. In summary, the five agreements contain the following terms:

Entrusted Management Agreement. This agreement provides that CC Investment will provide exclusive management services to CC Power. Such management services include but are not limited to financial management, business management, marketing management, human resource management and internal control of CC Power. The Entrusted Management Agreement will remain in effect until the acquisition of all assets or equity of CC Power by CC Investment is complete (as more fully described in the Exclusive Purchase Option Agreement below).

Technical Services Agreement. This agreement provides that CC Investment will provide exclusive technical services to CC Power. Such technical services include but are not limited to software, computer system, data analysis, training and other technical services. CC Investment shall be entitled to charge CC Power service fees equivalent to CC Power’s total net income. The Technical Service Agreement will remain in effect until the acquisition of all assets or equity of CC Power by CC Investment is complete (as more fully described in the Exclusive Purchase Option Agreement below).

Exclusive Purchase Option Agreement. Under the Exclusive Purchase Option Agreement, the CC Power Shareholder granted CC Investment an irrevocable and exclusive purchase option to acquire CC Power’s equity and/or assets at a nominal consideration. CC Investment may exercise the purchase option at any time.

Loan Agreement. Under the Loan Agreement, CC Investment agreed to lend RMB 10,000,000 to the CC Power Shareholder, to be used solely for the operations of CC Power.

Equity Pledge Agreement. Under the Equity Pledge Agreement, the CC Power Shareholder pledged all of its equity interests in CC Power, including the proceeds thereof, to guarantee all of CC Investment’s rights and benefits under the Entrusted Management Agreement, the Technical Service Agreement, the Exclusive Purchase Option Agreement and the Loan Agreement. Prior to termination of this Equity Pledge Agreement, the pledged equity interests cannot be transferred without CC Investment’s prior consent. The CC Power Shareholder covenants to CC Investment that among other things, it will only appoint/elect the candidates for the directors of CC Power nominated by CC Investment.

11

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

2. Summary of Significant Accounting Policies - Continued

In sum, the agreements transfer to CC Investment all of the benefits and all of the risk arising from the operations of CC Power, as well as complete managerial authority over the operations of CC Power. Through these contractual arrangements, the Company has the ability to substantially influence CC Power’s daily operations and financial affairs, appoint its directors and senior executives, and approve all matters requiring board and/or shareholder approval. These contractual arrangements enable the Company to control CC Power and operate our business in the PRC through CC Investment. By reason of the relationship described in these agreements, CC Power is a variable interest entity with respect to CC Investment and CC Investment is considered the primary beneficiary of CC Power because the following characteristics identified in ASC 810-10-15-14 are present:

The holder of the equity investment in CC Power lacks the direct or indirect ability to make decisions about the entity’s activities that have a significant effect on the success of CC Power, having assigned their voting rights and all managerial authority to CC Investment. (ASC 810-10-15-14(b)(1)).

The holder of the equity investment in CC Power lacks the obligation to absorb the expected losses of CC Power, having assigned to CC Investment all revenue and responsibility for all payables. (ASC 810-10-15-14(b)(2).

The holder of the equity investment in CC Power lacks the right to receive the expected residual returns of CC Power, having granted to CC Investment all revenue as well as an option to purchase the equity interests at a fixed price. (ASC 810-10-15-14(b)(3)).

Accordingly, the Company’s condensed consolidated financial statements reflect the results of operations, assets and liabilities of CC Power. The carrying amount and classification of CC Power’s assets and liabilities included in the Condensed Consolidated Balance Sheets are as follows:

		September 30,		December 31,
		2012		2011
Total current assets	$	215,300	$	326,600
Total assets		294,200		390,000
Total current liabilities		427,700		460,200
Total liabilities		448,500		470,900

Revenue recognition

Our source of revenues is from internet accelerator software, which includes new software license revenues and software plus hardware and maintenance arrangements. During the quarter ended September 30, 2012, we also have revenues derived from GPS system development and website development projects along with maintenance arrangements.

We evaluate revenue recognition based on the criteria set forth in FASB ASC 985-605, Software: Revenue Recognition and Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104, Revenue Recognition.

12

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

2. Summary of Significant Accounting Policies - Continued

Revenue Recognition for Software Products (Software Elements)

New software license revenues represent fees earned from granting customers licenses to download our software products that aim at improving the internet connection speed of the mobile phone, computers or servers. The basis for software license revenue recognition is substantially governed by the accounting guidance contained in ASC 985-605, Software-Revenue Recognition. For software license that do not require significant modification or customization of the underlying software, we recognize new software license revenues when: (1) we enter into a legally binding arrangement with a customer for the license of software; (2) we deliver the products; (3) the sale price is fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is probable. Revenues that are not recognized at the time of sale because the foregoing conditions are not met are recognized when those conditions are subsequently met.

Our software license arrangements do not include acceptance provisions, software license updates or product support contracts.

Revenue Recognition for Multiple-Element Arrangements – Software Products and Software Related Services (Software Arrangements)

We enter into arrangements with customers that purchase software related products that include one to three year product support service and a short training session (referred to as software related multiple-element arrangements). Such software related multiple-element arrangements include the sale of our software products, and product support contracts whereby software license delivery is followed by the subsequent delivery of the other elements. Our software license arrangements include acceptance provisions. We recognize revenue upon the receipt of written customer acceptance. The vast majority of our software license arrangements include software license updates and product support contracts. Software license updates provide customers with rights to unspecified software product upgrades during the term of the support period. Product support includes telephone access to technical support personnel or on-site support. For those software related multiple-element arrangements, we recognized revenue pursuant to ASC 985-605. Since we are unable to determine the fair value of the selling price for the undelivered elements in a multiple-element arrangement, which is the product support service and training, the entire arrangement consideration is deferred and is recognized ratably over the term of the arrangement, typically one year to three years.

Revenue Recognition for Multiple-Element Arrangements – Arrangements with Software and Hardware Elements

We also enter into multiple-element arrangements that may include a combination of our software installed in the hardware products we purchased from third parties and service offerings including purchased hardware , new software licenses, installation of the software in the hardware and one to three years product support. We adopted Accounting Standards Update (“ASU”) 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This guidance modifies the fair value requirements of FASB ASC subtopic 605-25, Revenue Recognition-Multiple Element Arrangements, by allowing the use of the “best estimate of selling price” in addition to vendor-specific objective evidence and third-party evidence for determining the selling price of a deliverable for non-software arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence, (b) third-party evidence, or (c) estimated selling price. In addition, the residual method of allocating arrangement consideration is no longer permitted. In such arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and to the hardware elements. We recognize the hardware element considerations upon delivery of the hardware. The consideration allocated to the software group which includes the software element and the product support is recognized in according to the software arrangements policy as described above.

Cost of Revenue

Cost of revenue primarily consists of business tax and surcharges on revenue.

13

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

2. Summary of Significant Accounting Policies - Continued

Credit risk

The Company may be exposed to credit risk from its cash and fixed deposits at bank. No allowance has been made for estimated irrecoverable amounts determined by reference to past default experience and the current economic environment.

14

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

2. Summary of Significant Accounting Policies - Continued

Accounts receivable

Accounts receivable consists of amounts due from customers. An allowance for doubtful accounts is established and determined based on management’s assessment of known requirements, aging of receivables, payment history, the customer’s current credit worthiness and the economic environment. As of September 30, 2012 and December 31, 2011, no allowance for doubtful accounts was deemed necessary based on management’s assessment.

Fair Value of Financial Instruments

FASB accounting standards require disclosing fair value to the extent practicable for financial instruments that are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.

For certain financial instruments, including cash, accounts payable, accruals and other payables, the carrying amounts approximate fair value because of the near term maturities of such obligations.

Patents

The Company has three patents as listed in the table below relating to its internet accelerator software products. Fees related to registering these patents were insignificant and have been expensed as incurred.

Patent	Register Number	Issued By
Mach5 Internet Acceleration Software V.6.0	2007SR09253	National Copyright Administration of PRC
Mach5 Enterprise Acceleration Software V.3.3	2009SR058767	National Copyright Administration of PRC
Mach5 Web Browser Software	2010SR001089	National Copyright Administration of PRC

Research and development and Software Development Costs

All research and development costs are expensed as incurred. Software development costs eligible for capitalization under ASC 985-20, Software-Costs of Software to be Sold, Leased or Marketed, were not material to our consolidated financial statements for the three and nine months ended September 30, 2012 and 2011. Research and development expenses amounted to $47,000 and $5,800 for three months ended September 30, 2012 and 2011, respectively, and were included in general and administrative expense. Research and development expenses amounted to $192,500 and $15,500 for nine months ended September 30, 2012 and 2011, respectively, and were included in general and administrative expense.

Comprehensive income

Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. For the Company, comprehensive income for the periods presented includes net income and foreign currency translation adjustments.

15

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

2. Summary of Significant Accounting Policies - Continued

Income taxes

Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred income tax liabilities or assets are recorded to reflect the tax consequences in future differences between the tax basis of assets and liabilities and the financial reporting amounts at each year end. A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized.

16

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

2. Summary of Significant Accounting Policies - Continued

Foreign currency translation

Assets and liabilities of the Company’s subsidiaries with a functional currency other than US$ are translated into US$ using period end exchange rates. Income and expense items are translated at the average exchange rates in effect during the period. Foreign currency translation differences are included as a component of Accumulated Other Comprehensive Income in Shareholders’ Equity.

The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements were as follows:

September 30, 2012
Balance sheet	RMB 6.3265 to US $1.00
Statement of operations and other comprehensive loss	RMB 6.3180 to US $1.00
September 30, 2011
Balance sheet	RMB 6.3952 to US $1.00
Statement of operations and other comprehensive loss	RMB 6.4972 to US $1.00
December 31, 2011
Balance sheet	RMB 6.3585 to US $1.00
Statement of operations and other comprehensive loss	RMB 6.4640 to US $1.00

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 USD at the rates used in translation.

Post-retirement and post-employment benefits

The Company contributes to a state pension plan in respect of its PRC employees. Other than the state pension plan, the Company does not provide any other post-retirement or post-employment benefits.

Statutory surplus reserve

In accordance with the relevant laws and regulations of the PRC and the articles of associations of the Company, CC Power is required to allocate 10% of its net income reported in the PRC statutory accounts, after offsetting any prior years’ losses, to the statutory surplus reserve, on an annual basis. When the balance of such reserve reaches 50% of the respective registered capital, any further allocation is optional.

The statutory surplus reserves can be used to offset prior years’ losses, if any, and may be converted into registered capital, provided that the remaining balances of the reserve after such conversion is not less than 25% of registered capital. The statutory surplus reserve is non-distributable.

Recently Issued Accounting Pronouncements

In December 2011, the FASB issued Accounting Standards Update 2011-11 (“ASU 2011-11”), Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 enhances disclosure requirements about the nature of an entity’s right to offset and related arrangements associated with its financial instruments and derivative instruments. The new guidance requires the disclosure of the gross amounts subject to rights of set-off, amounts offset in accordance with the accounting standards followed, and the related net exposure. The new guidance will be effective for us beginning January 1, 2013. Other than requiring additional disclosures, we do not anticipate material impacts on our financial statements upon adoption.

17

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

3. Going Concern

The Company has incurred significant continuing losses during the nine months ended September 30, 2012 and has an accumulated deficit at September 30, 2012. The Company has relied on its registered capital and issuance of convertible notes to fund operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. As of September 30, 2012, the Company had limited cash resources and management plans to continue its efforts to raise additional funds through debt or equity offerings which will be used to fund operations.

4. Property and Equipment, net

Property, plant and equipment, net consist of the following:

		September 30,			December 31,
		2012			2011
Equipment	$	128,500		$	86,900
Office equipment		13,800			13,500
Leasehold improvements		8,400			8,300
Software		1,900			1,900
		153,000			110,600
Less: Accumulated depreciation		(58,900	)		(44,400	)
Property and equipment, net	$	93,700		$	66,200

The depreciation expense was $5,200 and $1,000 for the three months ended September 30, 2012 and 2011, respectively. The depreciation expense was $14,300 and $9,100 for the nine months ended September 30, 2012 and 2011, respectively.

5. Equity Investment in Affiliated Company and Deconsolidation of Subsidiary

On June 15, 2011, CC Power sold 25% of its ownership in Nanovision to an unrelated party for RMB 250,000. After the disposition, CC Power retains 35% ownership interest in Nanovision as of June 30, 2011. The fair value of our 35% retained interest approximates the pro-rata share of the net asset value of Nanovision as of the date of disposal, which is approximately $35,000.

During the three months period ended September 30, 2011, despite CC Power has no continue involvement in the operation of Nanovision, it retains voting rights and 35% ownership interest in Nanovision and therefore has significant influence on Nanovision. As such, CC Power accounts for its investment in Nanovision under the equity method during the three months ended September 30, 2011.

Prior to the disposition of the 25% equity interest in Nanovision, CC Power held 60% equity interest in Nanovision. Up through June 15, 2011, Nanovision was consolidated with CC Power.

In August 2011, CC Power disposed its remaining 35% ownership interest in Nanovision to Xili Wang, sole shareholder of CC Power for proceeds totaled RMB 350,000. After the disposition, CC Power has no ownership interest and no involvement in Nanovision.

The results of operations for Nanovision for the three and nine months ended September 30, 2011, which includes the calibration panel sales segment and the technical consulting service segment, are reported as a discontinued operation.

18

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

5. Equity Investment in Affiliated Company and Deconsolidation of Subsidiary - Continued

The following are the summarized results of discontinued operations for Nanovision attributable to the Company for the three and nine months ended September 30, 2011.

		For the Three		For the Nine
		Months Ended		Months Ended
		September 30,		September 30,
		2011		2011
Net revenues	$	-		84,000
Total cost of sales and expenses		-		78,600
Investment income from equity investment in discontinued operation		23,000		23,000
Gain (loss) on disposal of discontinued operation		(4,800	)	4,100
Income before tax		18,200		32,500
Income tax (income)/expense		-		1,300
Gain from discontinued operation	$	18,200		31,200

As of September 30, 2012 and December 31, 2011, the Company has no ownership interest in Nanovision and therefore the balance sheet of the discontinued operations is not included in the condensed consolidated balance sheet of the Company.

6. Deferred Revenue

Deferred revenue represents deferred internet accelerator license revenue over the maintenance period of one to three years for our multiple element arrangements (Note 2).

In addition, deferred revenue includes two government grants for use in research and development related expenditures for periods through July 2014. The portion of the grants that has not been spent is deferred and recognize as other income as the funds are spent on research and development related expenditures.

Deferred revenue included on the balance sheets as of September 30, 2012 and December 31, 2011 is as follow:

		September 30,		December 31,
		2012		2011
Deferred revenue:
Current	$	161,900	$	290,500
Non-current		20,700		10,700
Total	$	182,600	$	301,200

19

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

6. Deferred Revenue- Continued

The table below sets forth the deferred revenue activities during the nine months ended September 30, 2012 and 2011:

		For the nine months ended September 30,
		2012		2011
Deferred revenue, balance at beginning of period	$	301,200		44,400
Add: Payments received from customers during the nine months		94,700		15,000
Add: Government grant received during the nine months		95,000		(40,300	)
Less: government grant earned during the nine months		(111,200	)	73,500
Less: Revenue earned during the nine months		(197,100	)	(13,500	)
Deferred revenue, balance at end of period	$	182,600		79,100

7. Convertible Promissory Notes

Outstanding balances for the four convertible promissory notes as of September 30, 2012 and December 31, 2011 are as follow:

				Loan	Interest		September 30,		December 31,
Lender	Date of Note	Maturity Date		Amount	Rate (p.a.)		2012		2011
Vantage Associates SA	April 15, 2011	April 15, 2016	$	150,000	5%	$	150,000	$	150,000
Empa Trading Ltd.	June 5, 2011	June 5, 2016		100,000	5%		100,000		100,000
First Capital A.G.	July 14, 2011	July 14, 2016		150,000	5%		150,000		150,000
First Capital A.G.	September 9, 2011	September 9, 2016		200,000	5%		200,000		200,000
Vantage Associates SA	September 9, 2011	September 9, 2016		200,000	5%		200,000		200,000
Vantage Associates SA	October 27, 2011	October 27, 2016		50,000	5%		50,000		50,000-
First Capital A.G.	December 1, 2011	December 1, 2016		50,000	5%		50,000		50,000-
First Capital A.G.	January 23, 2012	January 23, 2017		50 000	5%		50,000		-
First Capital A.G.	April 25, 2012	April 25,2014		100,000	5%		100,000		-
Asher Enterprises, Inc.	July 27th, 2012	April 13th, 2013		63,000	8%		63,000		-
			$			$	1,113,000	$	900,000
					Less:
					Current portion		63,000		-
					Non-current portion	$	1,050,000	$	900,000

Interest expense for the three months ended September 30, 2012 and 2011 was $14,200 and $5,400, respectively. Interest expense for the nine months ended September 30, 2012 and 2011 was $38,700 and $5,400, respectively.

Except for the convertible promissory note issued to Asher Enterprises, Inc., all the convertible promissory notes (the “Notes”) are convertible upon the occurrence of the following events:

20

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

7. Convertible Promissory Notes- Continued

(1) At any time, prior to the maturity date, the Company and the holder of the notes may mutually agree on a date to convert in whole or in part the notes into shares of common stock of the Company on the following terms: Holder of the note will be issued share units comprising of one common share to be purchased at a price of $0.5, and one warrant that is convertible into one common share at a price of $1.00, and expires two years from the date of the Exchange Transaction is completed, and one warrant that is convertible into one common share at a price of $1.5, and expires three years from the date the Exchange Transaction is completed.

(2) Unless earlier converted into common stock mentioned above, if within twelve months of the date hereof the Company completes a Qualified Financing, as defined by the respective convertible promissory notes, the holder agrees to exchange the notes simultaneously with the initial closing of such Qualified Financing as follows:

21

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

7. Convertible Promissory Notes- Continued

(a) In the event of a debt Qualified Financing (“Qualified Debt Financing”), the Holder may at its option exchange in whole or in part this Note for a promissory note (or other evidence of indebtedness) in the same form and with the same terms and conditions as those issued in such Qualified Debt Financing and in a principal amount equal to the then outstanding Debt.

(b) In the event of an equity Qualified Financing (“Qualified Equity Financing”), the Holder may at its option convert the Debt into shares of capital stock of the same class and series and with the same rights, preferences and privileges as those issued in such Qualified Equity Financing, at a price per share equal to the purchase price paid by investors in such Qualified Equity Financing.

The convertible promissory note issued to Asher Enterprises, Inc., is convertible upon the occurrence of the following events:

1)

At any time during the period beginning on the date which is 180 days following the date of the convertible promissory note, which is July 27, 2012, and ending on the later of the maturity date and the date of payment in default, the remaining outstanding principal amount shall convert into fully paid and non-assessable shares of the company’s common stock. The conversion price shall equal the variable conversion price, which is 60% multiplied by the market price of the common stock, as defined in the promissory note agreement.

2)

In the event of a consolidation or merger with any other corporation (other than a merger in which the Company is the surviving corporation and its capital stock is unchanged), or asset sale, then the conversion price is subject to adjustment, as defined by the convertible promissory note agreement.

8. Income Tax

We are subject to income tax in the United States, Hong Kong and PRC.

The Company’s subsidiaries, CC Power and CC Investment are incorporated in PRC and are subjected to PRC enterprises income tax at the applicable tax rates on the taxable income as reported in their Chinese statutory accounts in accordance with the relevant enterprises income tax laws (“EIT Law”). The subsidiaries locate in Shenzhen, a special economic region, where companies are allowed to gradually phase into the 25% statutory tax rate. The Company’s statutory income tax rate was 22% and 20% for 2010 and 2009, respectively. For 2011 the statutory income tax rate is 24% and the rate will be 25% for 2012 and thereafter. The open tax years in PRC are 2009-2011.

CC Mobility is incorporated in Hong Kong and is subjected to Hong Kong corporate income tax at 16.5% statutory income tax rate. No Hong Kong profits tax has been provided in the financial statements, as the Company did not have any assessable profits for the three and nine months ended September 30, 2012 and 2011. The open tax year for CC Mobility in Hong Kong is 2011.

The Company has no income tax expense for the three and nine months ended September 30, 2012 and 2011 because it has incurred loss before tax from continuing operation.

The Company applied the provisions of ASC 740.10.50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. ASC 740.10.50 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. ASC 740.10.50 also provides guidance related to, among other things, classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the statements of operation. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.

22

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

8. Income Tax- Continued

The following table sets forth the components of deferred income taxes as of September 30, 2012 and December 31, 2011:

		September 30,			December 31,
		2012			2011
Deferred tax assets:
Net operating losses - U.S.	$	198,700		$	83,100
Net operating losses - PRC and Hong Kong		146,100			59,100
Deferred revenue		45,700			75,300
Allowance for doubtful accounts		900			900
		391,400			218,400
Valuation allowance		(391,400	)		(218,400	)
Deferred tax assets, net	$	-		$	-

As of September 30, 2012, the Company has net operating losses carry forward of $584,300 in the U.S. and $626,800 in Hong Kong and PRC available to offset future taxable income. They will begin to expire in 2030 and 2012, respectively. We provided for a full valuation allowance against the deferred tax assets of $391,400 on the expected future tax benefits from the net operating loss carry forwards as management believes it is more likely than not that these assets will not be realized in the future.

The change in valuation allowance for the nine months ended September 30, 2012 and 2011 was an increase of $173,000 and an increase of $152,700, respectively.

The Company did not recognize any interest or penalties related to unrecognized tax benefits for the nine months ended September 30, 2012 and 2011.

9. Employee Benefits

The Company contributes to a state pension plan organized by municipal and provincial governments in respect of its employees in PRC. The compensation expense related to this plan was $2,000 and $1,500 for the three months ended September 30, 2012 and 2011, respectively. The compensation expense related to this plan was $4,600 and $3,600 for the nine months ended September 30, 2012 and 2011, respectively.

23

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

10. (Loss) earning per Share

Basic (loss) earning per share is computed on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the if-converted method for the convertible notes and preferred stock and the treasury stock method for warrants and options. The following table sets forth the computation of basic and diluted net loss per share:

		For The Three Months Ended						For The Nine Months Ended
		September 30,						September 30,
		2012			2011			2012			2011
Net (loss) available for common shareholders - basic	$	(125,100	)	$	(153,300	)	$	(600,800	)	$	(156,400	)
Interest expense on convertible notes		14,200			5,400			38,700			5,400
Net (loss) available for common shareholders - diluted	$	(110,900	)	$	(147,900	)	$	(562,100	)	$	(151,000	)
Weighted average outstanding shares of common stock – basic and diluted		60,000,000			67,888,043			60,000,000			74,393,407
Loss per share - basic and diluted:
Continuing Operations	$	-		$	-		$	(0.01	)	$	-
Discontinued Operations	$	-		$	-		$	-		$	-
	$	-		$	-		$	(0.01	)	$	-

11. Commitments and Contingencies

Operating commitments:

Operating commitment consists of the lease for office space under operating lease agreement which expired in August 2012 and the Company has renewed the lease for a one year period.

Operating lease agreement generally contains renewal options that may be exercised at the Company’s discretion after the completion of the terms. The Company’s obligations under operating lease are as follows:

Remainder of 2012	$	21,200
2013		63,700
Thereafter		-
Total minimum payment	$	84,900

The Company incurred rental expenses of $21,300 and $7,200 for the three months ended September 30, 2012 and 2011, respectively.

The Company incurred rental expenses of $63,800 and $18,900 for the nine months ended September 30, 2012 and 2011, respectively.

24

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

12. Concentrations, Risks, and Uncertainties

Customer Concentrations

The Company has the following concentrations of business with each customer constituting greater than 10% of the Company’s gross sales:

	For The Three Months Ended		For The Nine Months Ended
	September 30,		September 30,
	2012	2011	2012	2011
Customer A	82 %	*	90%	*
Customer B	*	89%	*	24%
Customer C	-	-	-	70%

* Constitutes less than 10% of the Company’s gross sales.

The Company has not experienced any significant difficulty in collecting its accounts receivable in the past and is not aware of any financial difficulties being experienced by its major customers.

13. Operating Risk

The Company’s operations are all carried out in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy.

The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

14. Unaudited Pro-Forma Financial Information

The accompanying unaudited pro forma financial information for the financial statements for the three and nine months ended September 30, 2011 present the historical financial information of the accounting acquirer. The pro forma financial information is presented for information purposes only. Such information is based upon the standalone historical results of each company and does not reflect the actual results that would have been reported had the acquisition been completed when assumed, nor is it indicative of the future results of operations for the combined enterprise.

25

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

XCELMOBILITY INC. AND SUBSIDIARIES

FOR THE PERIODS ENDED SEPTEMBER 30, 2012 AND 2011

(UNAUDITED)

14. Unaudited Pro-Forma Financial Information- Continued

The following represents pro forma revenue and earnings information for the three and nine months ended September 30, 2011 as if the acquisition of XcelMobility Inc. and the recapitalization had occurred on the beginning of each of the periods.

		Unaudited, Pro forma		Unaudited, Pro forma
		Three Months Ended		Nine Months Ended
		September 30,		September 30,
		2011		2011
Revenues	$	4,100	$	43,300
Net Profit (Loss) applicable to common shareholders	$	26,700	$	(400,700	)
Loss per share	$	-	$	(0.01	)
Weighted Average Shares Outstanding		60,000,000		60,000,000

The unaudited, pro forma information for the three and nine months ended September 30, 2011 depicted above reflect the impacts of expenses for a total of $300,000 incurred in connection with the recapitalization.

15. Related Party Transaction

Effective October 1, 2011 for a period of one year, the Company’s subsidiary, CC Mobility engaged the Company’s shareholder, CC Wireless Limited, to provide technical consultation for product R&D and business development. The monthly fee is determined periodically. During the three and nine months ended September 30, 2012, $14,100 and $42,700, respectively, of consulting fee were paid to CC Wireless Limited.

16. Restricted Stock to Director

On April 20, 2012, the Board of Directors of the Company appointed Jack Zwick as the independent director of the Company and granted to Mr. Zwick 360,000 shares of the Company’s common stock. The restricted stock shall vest with respect to 1/8 th of the total number of restricted stock per quarter from vesting commencement date of April 1, 2012 such that all restricted stock shall vest on January 1, 2013, subject to his continuous service. The fair value of the restricted stock on the grant date is $201,600.

On August 14, 2012, the Board of Directors of the Company granted 360,000 shares of the Company’s common stock to Gregory Tse for his service to serve as the Company’s independent director. The restricted stock shall vest with respect to 135,000 shares of Restricted Stock immediately, 45,000 shares on September 1, 2012, 45,000 shares on January 1, 2013, 45,000 shares on May 1, 2013, 45,000 shares on September 1, 2013, and the remaining 45,000 shares on January 1, 2014, subject to his continuous service. The fair value of the restricted stock on the grant date is $82,800.

The fair value of the restricted stock is recognized as stock based compensation over the service period. The shares have not been issued as of September 30, 2012.

During the three and nine months ended September 30, 2012, 45,000 and 270,000 shares were vested and stock based compensation expense totaled $25,200 and $88,800 were recorded, respectively.

17. Subsequent Events

The Company has no significant subsequent events from September 30, 2012 through the consolidated financial statements issue date of this report.

26

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

     The following discussion should be read in conjunction with our financial statements and notes thereto included elsewhere in this quarterly report. Forward-looking statements are statements not based on historical information and which relate to future operations, strategies, financial results, or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.

Overview

     We were incorporated in the state of Nevada on December 27, 2007 under the name “Advanced Messaging Solutions, Inc.” On March 29, 2011, we amended our Articles of Incorporation to change our name from “Advanced Messaging Solutions, Inc.” to “XcelMobility Inc.” and we effected a 35-for-1 forward stock split of all of our issued and outstanding shares of common stock.

     On July 5, 2011, we entered into a voluntary share exchange agreement (the “Exchange Agreement”) with Shenzhen CC Power Corporation, a company organized under the laws of the People’s Republic of China (PRC) (“CC Power”), CC Mobility Limited, a company organized under the laws of Hong Kong (“CC Mobility”) and the shareholders of CC Mobility. As a result of the Exchange Transaction, CC Mobility became our wholly-owned subsidiary and we control the business and operations of CC Power.

     Through CC Mobility and CC Power, we are developing mobile applications directly for the mobile devices that utilize cellular networks to connect to the Internet and hardware/software products to increase the speed of Virtual Private Networks. Our strategy is global in scope, but we are focusing our efforts at this time on the large mobile markets of Asia. CC Power’s principal activity is the design, testing sale and support of software to support mobile Internet applications on cellular phones, smartphones, tablets and mobile computers in China. The principal product designed and built by CC Power is the Mach 5 Accelerator. This product has been independently tested by all 3 mobile phone carriers in China and accesses the Internet significantly faster than with other mobile browsers. The speed of the Mach 5 browser enables CC Power to develop other mobile software that can leverage off the Mach 5 product’s speed of processing. In order to support CC Power products, we have built a series of server locations throughout China. CC Power sells its products to corporations directly, to individual users via our website and retail locations, through distribution agents and through all three mobile phone carriers in China.

     In April 2012, we entered into an Exclusive Indonesian Supply Contract with ZTE Corp. (the “Supply Contract”). ZTE Corp. is a leading global provider and Original Equipment Manufacturer (OEM) of telecommunications equipment and network solutions. The Supply Contract provides that we will be the exclusive supplier of high speed USB modems for ZTE Corp. for sale in Indonesia. The initial order is for a minimum of 100,000 units with additional orders anticipated to follow once the initial test market is completed.

     In July 2012, we surpassed over 1.5 million subscribers in Asia. In August 2012, we signed a strategic partnership agreement with Tokyo-based Unified Communications, Inc. (“UCI”), which includes the launch of its Mach 5 LBS (Location Based Service). The Mach 5 LBS is slated to become a featured product and optional component of our Mach 5 browser accelerator product line and offers a GPS tracking-based platform that enables application developers to collect and review significant user analytics that offer major impacts for retail marketing.

     We are currently deriving revenue from the sale of licensing agreements, and we are increasing our revenues by expanding marketing efforts to broaden our product offering to include software sales directly to mobile device manufacturers and to provide application sales and enhanced products directly to consumers.

     Key factors affecting our results of operations include revenues, cost of revenues, operating expenses and income and taxation.

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Results of Operations

     The following discussion of the financial condition, results of operations, cash flows, and changes in our financial position should be read in conjunction with our audited consolidated financial statements and notes included in our Annual Report on Form 10-K filed on March 30, 2012.

Comparison of the Three Months Ended September 30, 2012 and 2011

Revenue

     Our revenue for the three months ended September 30, 2012 totaled US$72,000 an increase of 1656% from US$4,100 for the three months ended September 30, 2011. This increase in revenue was primarily due to an increase in revenue from paying subscribers for our internet accelerator software.

Cost of revenue

     Cost of revenue for the three months ended September 30, 2012 was US$4,000 and consists primarily of business tax and the related tax surcharges associated with our service contracts. Cost of revenue increased US$3,800, or 1900%, from US$200 for the three months ended September 30, 2011. This increase in cost of revenue was primarily due to an increase in revenue.

Gross profit

     Gross profit for the three months ended September 30, 2012 was US$68,000, an increase of US$64,100, or 1644% from US$3,900 for the three months ended September 30, 2011. This increase in gross profit was primarily due to increased revenue as noted above.

Operating Expenses

     Our operating expenses for the three months ended September 30, 2012 increased by US$85,500, or 47%, from the three months ended September 30, 2011. This increase in operating expenses was primarily due to an increase in R&D expenses, and daily operating expenses.

Other Income

     Other income of US$89,600 represents income recognized from the grant from the Science, Industry, Trade & Information Technology Commission of the Shenzhen Municipality.

Net income (loss)

     A net loss of US($125,100) resulted for the three months ended September 30, 2012 compared to net loss of US($153,300) for the three months ended September 30, 2011, an decrease of US$28,200. Our net loss decreased primarily due to increased Other income of $76,600 ( 2011:US$13,000 ).

Comprehensive income

     Our comprehensive income increased by US$22,100 from US$(147,800) for the three months ended September 30, 2011 to US$(125,700) for the three months ended September 30, 2012. The increase is primarily due to increased Other income as noted above.

Comparison of the Nine Months Ended September 30, 2012 and 2011

Revenue

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     Our revenue for the nine months ended September 30, 2012 totaled US$198,800, an increase of 359%% from US$43,300for the nine months ended September 30, 2011. This increase in revenue was primarily due to an increase in revenue from paying subscribers for our internet accelerator software and the fact that our revenue service contracts are ending.

Cost of revenue

     Cost of revenue for the nine months ended September 30, 2012 was US$11,900 and consists primarily of costs associated with our internet accelerator software. Cost of revenue increase US$9,500 or 396%, from US$2,400 for the nine months ended September 30, 2011. This increase in cost of revenue was primarily due to reduced marketing activities and related expenses associated with our internet accelerator software and decreased revenue.

Gross profit

     Gross profit for the nine months ended September 30, 2012 was US$186,900, an increase of US$146,000, or 357% from US$40,900 for the nine months ended September 30, 2011. This increase in gross profit was primarily due to increased revenue as noted above.

Operating Expenses

     Our operating expenses for the nine months ended September 30, 2012 increased by US$622,500, or 264% from the nine months ended September 30, 2011. This increase in operating expenses was primarily due to increased general and administrative expenses (2012: US$858,600; 2011: US$236,100. This primarily due to increase R&D cost and daily operating expenses.

Other Income

     Other income of US$70,900 represents income recognized from the grant from the Science, Industry, Trade & Information Technology Commission of the Shenzhen Municipality.

Net income (loss)

     A net loss of US$600,800 resulted for the nine months ended September 30, 2012 compared to net income of US$156,400 for the nine months ended September 30, 2011, an increase of US$444,400. Our net loss increased primarily due to significant increases in operating expenses and R&D expenses.

Comprehensive income

     Our comprehensive income increased by US($454,300) from US($144,800) for the nine months ended September 30, 2011 to US($599,100) for the nine months ended September 30, 2012. The increase is primarily due to significant increases in operating expenses and R&D expenses.

Liquidity and Capital Resources

Overview

     As of September 30, 2012, we had cash and equivalents on hand of US$238,900 and negative working capital of US$-86,300. We believe that our cash on hand and working capital will be sufficient to meet our anticipated cash requirements through December 2012. On July 27, 2012, we issued a Convertible Promissory Note (the “Note”) in the amount of $63,000 to an accredited investor. The Note is payable on April 13, 2012 and has an interest rate of 8% per annum (increases to 22% in the event of default).

     We are currently seeking both short term working capital to finance current operations as well as significant amounts of long term capital to execute our business plan and ultimately offer our products in the U.S. market. We project that to keep operations at our current level, approximately $900,000 in revenue and working capital will be required over the next 12 months to cover monthly expenses of $75,000. In order to successfully execute our business plan of increasing the Company’s presence in Asia and making products available in the US, an additional $2 to $5 million will be required in long term financing.

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     To meet our future objectives, we will need to meet our revenue objectives and/or sell additional equity and debt securities, which could result in dilution to current shareholders. The incurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financial covenants that would restrict our operations. Financing may not be available in amounts or on terms acceptable to us, if at all. Any failure by us to raise additional funds on terms favorable to us, or at all, could limit our ability to expand our business operations and could harm our overall business prospects.

     The Company has incurred significant continuing losses during the nine months ended September 30, 2012 and has an accumulated deficit at September 30, 2012 and has relied on the Company’s registered capital and issuance of convertible notes to fund operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

     Substantially all of our current revenues are earned by CC Power, our PRC subsidiary. However, PRC regulations restrict the ability of our PRC subsidiary to make dividends and other payments to their offshore parent company. Pursuant to the law of PRC on foreign-capital enterprises, when CC Power decides to distribute profits, reserve funds and bonus and welfare funds for workers and staff members shall be withdrawn from the profits after a foreign-capital enterprise has paid income tax in accordance with the provisions of the Chinese tax law. The proportion of reserve funds to be withdrawn shall not be lower than 10% of the total amount of profits after payment of tax; the withdrawal of reserve funds may be stopped when the total cumulative reserve has reached 50% of the registered capital. The proportion of bonus and welfare funds for workers and staff members to be withdrawn shall be determined by the foreign-capital enterprise of its own accord. Companies may be subject to a fine up to 5,000 RMB as a result of non-compliance of such rules. The registered capital of CC Power is $345,864 (RMB 2,526,000).

Net cash provided by (used in) operating activities

     Net cash provided by (used in) operating activities for the nine months ended September 30, 2012 was US$-551,000 compared to net cash used in operating activities of US$-16,400 for the nine months ended September 30, 2011. This increase in cash used in operating activities was primarily due to an increase in other payables and accrued expenses.

Net cash provided by (used in) investing activities

     Net cash used in investing activities for the nine months ended September 30, 2012 was US$-41,500 compared to net cash used in investing activities for the nine months ended September 30, 2011 of US$273,300. The majority of these funds were used to add to the server configuration in China and Hong Kong.

Net cash provided by financing activities

     Net cash provided by financing activities for the nine months ended September 30, 2012 was US$213,000, cash provided by financing activities for the nine months ended September 30, 2011 was $432,300. The increase in cash provided by financing activities was as a result of the issuance of our convertible promissory notes.

Off-Balance Sheet Arrangements

     We have not entered into any other financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to its shares and classified as shareholder’s equity or that are not reflected in its consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to it or engages in leasing, hedging or research and development services with it.

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Critical Accounting Estimates

     The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Management believes that the estimates used in preparing its financial statements are reasonable and prudent. Actual results could differ from these estimates.

     Certain of our accounting policies require higher degrees of professional judgment than others in their application. These include allowance for doubtful accounts, depreciation and impairment of fixed assets, and income tax. Management evaluates all of its estimates and judgments on an ongoing basis.

Recently Issued Accounting Pronouncements

     Management does not believe that any recently issued, but not yet effective accounting standards if currently adopted could have a material effect on the accompanying financial statements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Foreign Exchange Rates

     Our financial instruments consist mainly of cash, borrowings and accounts receivable. The objective of our policies is to mitigate potential income statement, cash flow and fair value exposures resulting from possible future adverse fluctuations in exchange rates. We evaluate our exposure to market risk by assessing the anticipated near-term and long-term fluctuations in foreign exchange rates. This evaluation includes the review of leading market indicators, discussions with financial analysts and investment bankers regarding current and future economic conditions and the review of market projections as to expected future rates.

     The value of the RMB against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions. Since July 2005, the RMB has no longer been pegged to the U.S. dollar. The RMB may appreciate or depreciate significantly in value against the U.S. dollar in the medium to long term. Moreover, it is possible that in the future, PRC authorities may lift restrictions on fluctuations in the RMB exchange rate and lessen intervention in the foreign exchange market.

     Because substantially all of our earnings, cash and assets are currently denominated in RMB, appreciation or depreciation in the value of the RMB relative to the U.S. dollar would affect our financial results reported in U.S. dollar terms without giving effect to any underlying change in our business or results of operations. As a result, we face exposure to adverse movements in currency exchange rates as the financial results of our Chinese operations are translated from local currency into U.S. dollar upon consolidation. If the U.S. dollar weakens against the RMB, the translation of our foreign-currency-denominated balances will result in increased net assets, net revenues, operating expenses, and net income or loss. Similarly, our net assets, net revenues, operating expenses, and net income or loss will decrease if the U.S. dollar strengthens against the RMB. Additionally, foreign exchange rate fluctuations on transactions denominated in RMB other than the functional currency result in gains and losses that are reflected in our consolidated statement of operations. Our operations are subject to risks typical of international business, including, but not limited to, differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility.

     Considering the RMB balance of our cash as of September 30, 2012, which amounted to US$238,900, a 1.0% change in the exchange rates between the RMB and the U.S. dollar would result in an increase or decrease of approximately US$2389 of the balance.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

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     We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (who is our Principal Executive Officer) and our Chief Financial Officer (who is our Principal Financial Officer and Principal Accounting Officer), of the effectiveness of the design of our disclosure controls and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of September 30, 2012, pursuant to Exchange Act Rule 13a-15. Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were not effective as of September 30, 2012 in ensuring that information required to be disclosed by us in 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 (the “SEC”) rules and forms. This conclusion is based on findings that constituted material weaknesses. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s interim financial statements will not be prevented or detected on a timely basis.

In performing the above-referenced assessment, our management identified the following material weaknesses:

i)	We have insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis.
ii)	We do not have an audit committee. While not being legally obligated to have an audit committee, it is the management’s view that to have an audit committee, comprised of independent board members, is an important entity-level control over our financial statements.
iii)	We did not perform an entity level risk assessment to evaluate the implication of relevant risks on financial reporting, including the impact of potential fraud-related risks and the risks related to non-routine transactions, if any, on our internal control over financial reporting. Lack of an entity-level risk assessment constituted an internal control design deficiency which resulted in more than a remote likelihood that a material error would not have been prevented or detected, and constituted a material weakness.
iv)	We lack personnel with formal training to properly analyze and record complex transactions in accordance with U.S. GAAP. Our current Chief Financial Officer, Ms. Wang, has 18 years of experience in financial management in private and public companies in China. She graduated from Huazhong Technical and Science University in 1990 with a Bachelor of Science degree in accounting and finance management; however, she is not familiar with U.S. GAAP. We have retained Audit Prep, a Hong Kong based accounting firm that is fully versant in U.S. GAAP and SEC reporting requirements to assist us with preparing our financial statements in accordance with U.S. GAAP and SEC rules and regulations. Accountants from Audit Prep assisting us are U.S. Certified Public Accountants.
v)	We have not achieved the optimal level of segregation of duties relative to key financial reporting functions.

     Our management feels the weaknesses identified above have not had any material affect on our financial results. However, we are currently reviewing our disclosure controls and procedures related to these material weaknesses and expect to implement changes in the near term, including identifying specific areas within our governance, accounting and financial reporting processes to add adequate resources to potentially mitigate these material weaknesses.

     Our management team will continue to monitor and evaluate the effectiveness of our internal controls and procedures and our internal controls over financial reporting on an ongoing basis and is committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.

     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

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Changes in Internal Controls Over Financial Reporting

     There were no changes in our internal controls over financial reporting that occurred during the quarterly period ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting. We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within any company have been detected.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

None.

Item 1A. Risk Factors.

Not applicable.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosure.

Not applicable.

Item 5. Other Information.

     On July 27, 2012, we issued a Convertible Promissory Note (the “Note”) in the amount of $63,000 to Asher Enterprises, Inc., a Delaware corporation and an accredited investor (the “Holder”). The Note is payable on April 13, 2013 and has an interest rate of 8% per annum (increases to 22% in the event of default). The Note is convertible at the option of the Holder commencing on the date that is 180 days from the date of the Note into shares of the Company’s common stock at a conversion price determined by multiplying 60% by the market price of the Company’s common stock pursuant to the terms of the Note. The Holder is entitled to certain anti-dilution protection such that should the Company sell any common stock or any instrument convertible into common stock, at a price per share that is less than the conversion price, then the conversion price of the Note shall automatically be lowered to that new price. The Company intends to use the net proceeds from the sale of the Note, after payment of certain fees, for general working capital needs and to further the operations of the Company. The issuance of the Note to the Holder was exempt from registration in reliance on the exemption afforded by Regulation D and/or Section 4(2) of the Securities Act of 1933, as amended (the “Securities Act”), and the rules promulgated thereunder as the Holder is an “accredited investor” as such term is defined in Rule 501(a) under the Securities Act.

Item 6. Exhibits.

Exhibit No.	Description
2.1	Share Exchange Agreement, dated July 5, 2011(incorporated by reference to our Current Report on Form 8-K filed on July 6, 2011).
3.1(a)	Articles of Incorporation (incorporated by reference to our Registration Statement on Form S-1 originally filed on October 14, 2009).
3.1(b)	Amendment to Articles of Incorporation (incorporated by reference to our Current Report on Form 8-K filed on March 29, 2011).
3.2	Amended and Restated Bylaws (incorporated by reference to our Current Report on Form 8-K filed on April 27, 2011).
10.1	Convertible Promissory Note issued to Asher Enterprises, Inc.*
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.*
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.*

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Exhibit No.	Description
101.INS	XBRL Instance Document**
101.SCH	XBRL Taxonomy Extension Schema**
101.CAL	XBRL Taxonomy Extension Calculation Linkbase**
101.DEF	XBRL Taxonomy Extension Definition Linkbase**
101.LAB	XBRL Taxonomy Extension Label Linkbase**
101.PRE	XBRL Taxonomy Extension Presentation Linkbase**

* Filed herewith.
**Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability.

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SIGNATURES

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

	XCELMOBILITY INC.
Dated: November 14, 2012	/s/ Xili Wang
	By: Xili Wang
	Its: Chief Financial Officer and Secretary (Principal Financial
	Officer and Principal Accounting Officer)

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EX-10.1

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE, OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

Principal Amount: $63,000.00	Issue Date: July 27, 2012
Purchase Price: $63,000.00

CONVERTIBLE PROMISSORY NOTE

     FOR VALUE RECEIVED, XCELMOBILITY INC., a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order of ASHER ENTERPRISES, INC., a Delaware corporation, or registered assigns (the “Holder”) the sum of $63,000.00 together with any interest as set forth herein, on April 13, 2013 (the “Maturity Date”), and to pay interest on the unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”) per annum from the date hereof (the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments due hereunder (to the extent not converted into common stock, $0.001 par value per share (the “Common Stock”) in accordance with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive order to remain closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase Agreement”).

     This Note is free from all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.

     The following terms shall apply to this Note:

ARTICLE I.CONVERSION RIGHTS

          1.1 Conversion Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date which is one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of this Note into fully paid and non-assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided, however, that in no event shall the Holder be. entitled to convert any portion of this Note in excess of that portion of this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership by the Holder and its affiliates of more than 4.99% of the outstanding shares of Common Stock. For purposes of the proviso to the immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause (1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder upon, at the election of the Holder, not less than 61 days prior notice to the Borrower, and the provisions of the conversion limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail (or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York time on such conversion date (“the Conversion Date”). The term “Conversion Amount” means, with respect to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus (2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided in the Note to the Conversion Date, plus (3) at the Holder’s option, Default interest, if any, on the amounts referred to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof.

2

          1.2 Conversion Price.

               (a) Calculation of Conversion Price. The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications, extraordinary distributions and similar events). The “Variable Conversion Price” shall mean 60% multiplied by the Market Price (as defined herein) (representing a discount rate of 40%). “Market Price” means the average of the lowest three (3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price on the Over-the-Counter Bulletin Board, or applicable trading market (the “OTCBB”) as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if the OTCBB is not the principal trading market for such security, the closing bid price of such security on the principal securities exchange or trading market where such security is listed or traded or, if no closing bid prices of any market makers for such security is available in any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the “pink sheets” by the National Quotation Bureau, Inc. If the Trading Price cannot be calculated for such security on such date in the manner provided above, the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTCBB, or on the principal securities exchange or other securities market on which the Common Stock is then being traded.

               (b) Conversion Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower (i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred to in clause (i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and (y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the Conversion Price .shall be determined as set forth in this Section 1.2(a) . For purposes hereof, “Adjusted Conversion Price Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i) above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.

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          1.3 Authorized Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have authorized and reserved five times the number of shares that is actually issuable upon full conversion of the Note (based on the Conversion Price of the Notes in effect from time to time)(the “Reserved Amount”). The Reserved Amount shall be increased from time to time in accordance with the Borrower’s obligations pursuant to Section 4(g) of the Purchase Agreement. The Borrower represents that upon issuance, such shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.

          If, at any time the Borrower does not maintain the Reserved amount it will be considered an Event of Default under Section 3.2 of the Note.

          1.4 Method of Conversion.

               (a) Mechanics of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section 1.4(b), surrendering this Note at the principal office of the Borrower.

               (b) Surrender of Note Upon Conversion: Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower, so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such records of the Borrower shall, primafacie, be controlling and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented by this Note may be less than the amount stated on the face hereof.

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               (c) Payment of Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such tax or shall have established to the satisfaction of the Borrower that such tax has been paid..

               (d) Delivery of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section 1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for the Common Stock issuable upon such conversion within five (5) business days after such receipt (the “Deadline”)(and, solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms hereof and the Purchase Agreement.

               (e) Obligation of Borrower to Deliver Common Stock Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations under this Article 1, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same, any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff, counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower, and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.

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               (f) Delivery of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained in Section 1.1 and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit Withdrawal Agent Commission (“DWAC”) system.

               (g) Failure to Deliver Common Stock Prior to Deadline Without in any way limiting the Holder’s right to pursue other remedies, including actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder. The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible to qualify. Accordingly the parties acknowledge that the liquidated damages provision contain in this Section 1.4(g) are justified.

          1.5 Concerning the Shares The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule) (“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor (as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:

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“NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”

          The legend set forth above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i) the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.

          1.6 Effect of Certain Events.

               (a) Effect of Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than 50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii) be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company, partnership, association, trust or other entity or organization.

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               (b) Adjustment Due to Merger, Consolidation, Etc.. If, at any time when this Note is issued and outstanding and prior to conversion of all of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower, then the Holder of this note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion, such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such case appropriate provisions shall be made with respect to the rights and interest of the Holder of this Note to the end that the provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section 1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen (15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b) . The above provisions shall similarly apply to successive consolidations, mergers, sales, transfers or share exchanges.

               (c) Adjustment Due to Distribution If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets) to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary (i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.

               (d) Adjustment Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith) less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration per share received by the Borrower in such Dilutive Issuance.

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          The Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights or options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to purchase Common Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”) (such warrants, rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”) and the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the “price per share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration payable upon the conversion or exchange therof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon exercise of such Options.

          Additionally, the Borrower shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities, whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the price per share for which Common Stock is issuable upon such conversion or exchange Is less than the Conversion Price then in effect, then the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the “price per share for which Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the total amount, if any, received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus the minimum aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange of all thereof at the time such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.

               (e) Purchase Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.

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               (f) Notice of Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion of the Note.

          1.7 Trading Market Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note and the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the “Maximum Share Amount”), which shall he 4.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement), subject to equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued, if the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower’s ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note, this will be considered an Event of Default under Section 3,3 of the Note.

          1.8 Status as Shareholder. Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share Amount) shall be deemed converted into shares of Common Stock and (ii) the, Holder’s rights as a Holder of such converted portion of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered, adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section 1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower’s failure to convert this Note.

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          1.9 Prepayment. Notwithstanding anything to the contrary contained in this Note, at any time during the period beginning on the Issue Date and ending on the date which is one hundred eighty (180) days following the issue date, the Borrower shall have the right, exercisable on not less than three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest), in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”) shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make payment of the Optional Prepayment Amount (as defined below) to or upon the order of the Holder as specified by the Holder in writing to the Borrower at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises it right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Optional Prepayment Amount”) equal to 140% multiplied by the sum of: (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever forfeit its right to prepay the Note pursuant to this Section 1.9.

ARTICLE II. CERTAIN COVENANTS

          2.1 Distributions on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or other securities) on shares of capital stock other than dividends on shares of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s disinterested directors.

          2.2 Restriction on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall note without the Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants, rights or options to purchase or acquire any such shares.

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          2.3 Borrowings. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection, or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date hereof and of which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors or financial institutions incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note.

          2.4 Sale of Assets. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.

          2.5 Advances and Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a) in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b) made in the ordinary course of business or (c) not in excess of $100,000.

ARTICLE III. EVENTS OF DEFAULT

          If any of the following events of default (each, an “Event of Default”) shall occur:

          3.1 Failure to Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether at maturity, upon acceleration or otherwise.

          3.2 Conversion and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form) any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement, statement or threat that it does not intend to honor the obligations described in this paragraph) any such failure shall continue uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three (3) business das after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed, hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by the Borrower to the Holder within forty eight (48) hours of demand from the Holder.

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          3.3 Breach of Covenants. The Borrower breaches any material covenant or other material covenant or other material term or condition contained in this Note and any collateral documents included but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice thereof to the Borrower from the Holder.

          3.4 Breach of Representations and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

          3.5 Receiver or Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a receiver or trustee shall otherwise be appointed.

          3.6 Judgments. Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty (20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.

          3.7 Bankruptcy Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the Borrower.

          3.8 Delisting of Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTCBB or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.

13

          3.9 Failure to Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.

          3.10 Liquidation Any dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.

          3.11 Cessation of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going concern” shall not be an admission that the Borrower cannot pay its debts as they become due.

          3.12 Maintenance of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other assets which are necessary to conduct its business (whether not or in the future).

          3.13 Financial Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder with respect to this Note or the Purchase Agreement.

          3.14 Reverse Splits The Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.

          3.15 Replacement of the Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.

          3.16 Cross-Default. Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements, in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder. “Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower, and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes; provided, however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of Borrower to the Holder.

14

Upon the occurrence and during the continuation of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein), UPON THE OCCURRENCE AND DURING THE CONTINUATION OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN); MULTIPLIED BY (Z) TWO (2). Upon the occurrence and during the continuation of any Event of Default specified in Sections 3.1 (solely with respect to failure to pay the principal hereof or interest thereon when due on this Note upon a Trading Market Prepayment Event pursuant to Section 1.7 or upon acceleration), 3.3, 3.4, 3.6, 3.8, 3.9, 3.11, 3.12, 3.13, 3.14, and/or 3.15 exercisable through the delivery of written notice to the Borrower by such Holders (the “Default Notice”), and upon the occurrence of an Event of Default specified the remaining sections of Articles III (other than failure to pay the principal hereof or interest thereon at the Maturity Date specified in Section 3.1 hereof), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus (y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) the “parity value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation, legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at law or in equity.

If the Borrower fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder shall have the right at any time, so long as the Borrower remains in default (and so long and to the extent that there are sufficient authorized shares), to require the Borrower, upon written notice, to immediately issue, in lieu of the Default Amount, the number of shares of Common Stock of the Borrower equal to the Default Amount divided by the Conversion Price then in effect.

15

ARTICLE IV. MISCELLANEOUS

          4.1 Failure or Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative to, and not exclusive of, any rights or remedies otherwise available.

          4.2 Notices. All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitted facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communication shall be:

     If to the Borrower, to:

XCELMOBILITY INC.
303 Twin Dolphins Drive - Suite 600
Redwood City, CA 94065
Attn: RENYAN GE, Chief Executive Officer
facsimile:

With a copy by fax only to (which copy shall not constitute notice):

[enter name of law firm]
Attn:[attorney name]
[enter address line 1]
[enter city, state, zip]
facsimile: [enter fax number]

     If to the Holder:

16

ASHER ENTERPRISES, INC.
1 Linden Pl., Suite 207
Great Neck, NY. 11021
Attn: Curt Kramer, President
facsimile: 516-498-9894

     With a copy by fax only to (which copy shell not constitute notice):

Naidich Wurman Birnbaum & Maday, LLP
80 Cuttermill Road, Suite 410
Great Neck, NY 11021
Attn: Bernard S. Feldman Esq.
facsimile: 516-466-3555

          4.3 Amendments. This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term “Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.

          4.4 Assignability. This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a) of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with a bonafide margin account or other lending arrangement.

          4.5 Cost of Collection. If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable attorneys’ fees.

          4.6 Governing Law. This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs. In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.

17

          4.7 Certain Amounts. Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.

          4.8 Purchase Agreement. By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.

          4.9 Notice of Corporate Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders). In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property, or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date on which any such record is to be taken for the purpose of such dividend, distribution, right or other event to the extent known at such time. The Borrower shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with the notification to the Holder in accordance with the terms of this Section 4.9.

          4.10 Remedies. The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic loss and without any bond or other security being required.

18

     IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by its duly authorized officer this July 27, 2012.

XCELMOBILITY INC.
By:/s/
	RENYAN GE
	Chief Executive Officer

19

EXHIBIT A
NOTICE OF CONVERSION

     The undersigned hereby elects to convert $______________ principal amount of the Note (defined below) into that number of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth below, of XCELMOBILITY INC., a Nevada corporation (the “Borrower”) according to the conditions of the convertible note of the Borrower dated as of July 27, 2012 (the “Note”), as of the date written below. No fee will be charged to the Holder for any conversion, except for transfer taxes, if any.

Box Checked as to applicable instructions:

[   ]	The Borrower shall electronically transmit the Common Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or the nominee with DTC through its Deposit Withdrawal Agent Commission system (“DWAC Transfer”).
	Name of DTC Prime Broker:
	Account Number:
[   ]	The undersigned hereby requests that the Borrower issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment hereto:
	ASHER ENTERPRISES, INC.
	1 Linden Pl., Suite 207
	Great Neck, NY. 11021
	Attention: Certificate Delivery
	(516) 498-9890
	Date of Conversion:
	Applicable Conversion Price:	$
	Number of Shares of Common Stock to be Issued
	Pursuant to Conversion of the Notes:
	Amount of Principal Balance Due remaining
	Under the Note after this conversion:
	ASHER. ENTERPRISES, INC.
	By:
	Name: Curt Kramer
	Title: President
	Date:
	1 Linden Pl., Suite 207
	Great Neck, New York 11021

20

EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO

18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Renyan Ge, certify that:

     1. I have reviewed this report on Form 10-Q of XcelMobility 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(s) 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; and

     5. The registrant’s other certifying officer(s) 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: November 14, 2012

/s/ Renyan Ge

Renyan Ge

Chief Executive Officer and Director

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO

18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Xili Wang, certify that:

     1. I have reviewed this report on Form 10-Q of XcelMobility 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(s) 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; and

     5. The registrant’s other certifying officer(s) 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: November 14, 2012

/s/ Xili Wang

Xili Wang

Chief Financial Officer and Secretary

(Principal Financial Officer and Principal Accounting

Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with this Quarterly Report on Form 10-Q of XcelMobility Inc. (the “Company”) for the period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to his knowledge:

     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 operation of the Company.

Date:	November 14, 2012
By:	/s/ Renyan Ge
	Name: Renyan Ge
	Title: Chief Executive Officer (Principal Executive
	Officer)

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with this Quarterly Report on Form 10-Q of XcelMobility Inc. (the “Company”) for the period ended September 30, 2012 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, in the capacity and on the date indicated below, hereby certifies pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to her knowledge:

     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 operation of the Company.

Date:	November 14, 2012
By:	/s/ Xili Wang
	Name: Xili Wang
	Title: Chief Financial Officer (Principal Financial
	Officer and Principal Accounting Officer)

XML

Employee Benefits (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Employee Benefits 1	$ 2,000
Employee Benefits 2	1,500
Employee Benefits 3	4,600
Employee Benefits 4	$ 3,600

XML

Schedule of Proforma Recapitalization (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Unaudited Pro-forma Financial Information Schedule Of Proforma Recapitalization 1	$ 4,100
Unaudited Pro-forma Financial Information Schedule Of Proforma Recapitalization 2	43,300
Unaudited Pro-forma Financial Information Schedule Of Proforma Recapitalization 3	26,700
Unaudited Pro-forma Financial Information Schedule Of Proforma Recapitalization 4	(400,700)
Unaudited Pro-forma Financial Information Schedule Of Proforma Recapitalization 5	0
Unaudited Pro-forma Financial Information Schedule Of Proforma Recapitalization 6	(0.01)
Unaudited Pro-forma Financial Information Schedule Of Proforma Recapitalization 7	60,000,000
Unaudited Pro-forma Financial Information Schedule Of Proforma Recapitalization 8	$ 60,000,000

XML

Schedule of Deferred Revenue (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Deferred Revenue Schedule Of Deferred Revenue 1	$ 161,900
Deferred Revenue Schedule Of Deferred Revenue 2	290,500
Deferred Revenue Schedule Of Deferred Revenue 3	20,700
Deferred Revenue Schedule Of Deferred Revenue 4	10,700
Deferred Revenue Schedule Of Deferred Revenue 5	182,600
Deferred Revenue Schedule Of Deferred Revenue 6	$ 301,200

XML

Schedule of Property, Plant and Equipment (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Property And Equipment, Net Schedule Of Property, Plant And Equipment 1	$ 128,500
Property And Equipment, Net Schedule Of Property, Plant And Equipment 2	86,900
Property And Equipment, Net Schedule Of Property, Plant And Equipment 3	13,800
Property And Equipment, Net Schedule Of Property, Plant And Equipment 4	13,500
Property And Equipment, Net Schedule Of Property, Plant And Equipment 5	8,400
Property And Equipment, Net Schedule Of Property, Plant And Equipment 6	8,300
Property And Equipment, Net Schedule Of Property, Plant And Equipment 7	1,900
Property And Equipment, Net Schedule Of Property, Plant And Equipment 8	1,900
Property And Equipment, Net Schedule Of Property, Plant And Equipment 9	153,000
Property And Equipment, Net Schedule Of Property, Plant And Equipment 10	110,600
Property And Equipment, Net Schedule Of Property, Plant And Equipment 11	(58,900)
Property And Equipment, Net Schedule Of Property, Plant And Equipment 12	(44,400)
Property And Equipment, Net Schedule Of Property, Plant And Equipment 13	93,700
Property And Equipment, Net Schedule Of Property, Plant And Equipment 14	$ 66,200

XML

Organization and Nature of Business (Narrative) (Details)	9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 CNY
Organization And Nature Of Business 1	17,700,000	17,700,000
Organization And Nature Of Business 2	7,350,000	7,350,000
Organization And Nature Of Business 3	22,950,000	22,950,000
Organization And Nature Of Business 4	29,700,000	29,700,000
Organization And Nature Of Business 5	60,000,000	60,000,000
Organization And Nature Of Business 6	10,000	10,000
Organization And Nature Of Business 7	$ 1,000
Organization And Nature Of Business 8	$ 1
Organization And Nature Of Business 9	560	560
Organization And Nature Of Business 10	440	440
Organization And Nature Of Business 11	2,000,000
Organization And Nature Of Business 12	400,000
Organization And Nature Of Business 13	1,547,000
Organization And Nature Of Business 14		10,000,000
Organization And Nature Of Business 15	$ 346,000
Organization And Nature Of Business 16	526,000	526,000
Organization And Nature Of Business 17	5.00%	5.00%
Organization And Nature Of Business 18	100.00%	100.00%
Organization And Nature Of Business 19	3	3
Organization And Nature Of Business 20	5	5
Organization And Nature Of Business 21	5	5
Organization And Nature Of Business 22	60.00%	60.00%
Organization And Nature Of Business 23	25.00%	25.00%
Organization And Nature Of Business 24	35.00%	35.00%
Organization And Nature Of Business 25	30,300,000	30,300,000
Organization And Nature Of Business 26	100.00%	100.00%
Organization And Nature Of Business 27	50.50%	50.50%

XML

Property and Equipment, net (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Property, Plant and Equipment [Table Text Block]

		September 30,			December 31,
		2012			2011
Equipment	$	128,500		$	86,900
Office equipment		13,800			13,500
Leasehold improvements		8,400			8,300
Software		1,900			1,900
		153,000			110,600
Less: Accumulated depreciation		(58,900	)		(44,400	)
Property and equipment, net	$	93,700		$	66,200

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Schedule of Convertible Debt (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Convertible Promissory Notes Schedule Of Convertible Debt 1	$ 31
Convertible Promissory Notes Schedule Of Convertible Debt 2	150,000
Convertible Promissory Notes Schedule Of Convertible Debt 3	5.00%
Convertible Promissory Notes Schedule Of Convertible Debt 4	150,000
Convertible Promissory Notes Schedule Of Convertible Debt 5	150,000
Convertible Promissory Notes Schedule Of Convertible Debt 6	100,000
Convertible Promissory Notes Schedule Of Convertible Debt 7	5.00%
Convertible Promissory Notes Schedule Of Convertible Debt 8	100,000
Convertible Promissory Notes Schedule Of Convertible Debt 9	100,000
Convertible Promissory Notes Schedule Of Convertible Debt 10	150,000
Convertible Promissory Notes Schedule Of Convertible Debt 11	5.00%
Convertible Promissory Notes Schedule Of Convertible Debt 12	150,000
Convertible Promissory Notes Schedule Of Convertible Debt 13	150,000
Convertible Promissory Notes Schedule Of Convertible Debt 14	200,000
Convertible Promissory Notes Schedule Of Convertible Debt 15	5.00%
Convertible Promissory Notes Schedule Of Convertible Debt 16	200,000
Convertible Promissory Notes Schedule Of Convertible Debt 17	200,000
Convertible Promissory Notes Schedule Of Convertible Debt 18	200,000
Convertible Promissory Notes Schedule Of Convertible Debt 19	5.00%
Convertible Promissory Notes Schedule Of Convertible Debt 20	200,000
Convertible Promissory Notes Schedule Of Convertible Debt 21	200,000
Convertible Promissory Notes Schedule Of Convertible Debt 22	50,000
Convertible Promissory Notes Schedule Of Convertible Debt 23	5.00%
Convertible Promissory Notes Schedule Of Convertible Debt 24	50,000
Convertible Promissory Notes Schedule Of Convertible Debt 25	50,000
Convertible Promissory Notes Schedule Of Convertible Debt 26	5.00%
Convertible Promissory Notes Schedule Of Convertible Debt 27	50,000
Convertible Promissory Notes Schedule Of Convertible Debt 28	50
Convertible Promissory Notes Schedule Of Convertible Debt 29	0
Convertible Promissory Notes Schedule Of Convertible Debt 30	5.00%
Convertible Promissory Notes Schedule Of Convertible Debt 31	50,000
Convertible Promissory Notes Schedule Of Convertible Debt 32	0
Convertible Promissory Notes Schedule Of Convertible Debt 33	100,000
Convertible Promissory Notes Schedule Of Convertible Debt 34	5.00%
Convertible Promissory Notes Schedule Of Convertible Debt 35	100,000
Convertible Promissory Notes Schedule Of Convertible Debt 36	0
Convertible Promissory Notes Schedule Of Convertible Debt 37	63,000
Convertible Promissory Notes Schedule Of Convertible Debt 38	8.00%
Convertible Promissory Notes Schedule Of Convertible Debt 39	63,000
Convertible Promissory Notes Schedule Of Convertible Debt 40	0
Convertible Promissory Notes Schedule Of Convertible Debt 41	1,113,000
Convertible Promissory Notes Schedule Of Convertible Debt 42	900,000
Convertible Promissory Notes Schedule Of Convertible Debt 43	63,000
Convertible Promissory Notes Schedule Of Convertible Debt 44	0
Convertible Promissory Notes Schedule Of Convertible Debt 45	1,050,000
Convertible Promissory Notes Schedule Of Convertible Debt 46	$ 900,000

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Unaudited Pro-Forma Financial Information (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Unaudited Pro-forma Financial Information 1	$ 300,000

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Convertible Promissory Notes (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012 D
Convertible Promissory Notes 1	$ 14,200
Convertible Promissory Notes 2	5,400
Convertible Promissory Notes 3	38,700
Convertible Promissory Notes 4	5,400
Convertible Promissory Notes 5	0.5
Convertible Promissory Notes 6	1
Convertible Promissory Notes 7	$ 1.5
Convertible Promissory Notes 8	180
Convertible Promissory Notes 9	60.00%

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Schedule of Earnings Per Share Reconciliation (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 1	$ (125,100)
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 2	(153,300)
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 3	(600,800)
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 4	(156,400)
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 5	14,200
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 6	5,400
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 7	38,700
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 8	5,400
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 9	(110,900)
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 10	(147,900)
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 11	(562,100)
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 12	(151,000)
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 13	60,000,000
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 14	67,888,043
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 15	60,000,000
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 16	74,393,407
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 17	0
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 18	0
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 19	(0.01)
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 20	0
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 21	0
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 22	0
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 23	0
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 24	0
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 25	0
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 26	0
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 27	(0.01)
(loss) Earning Per Share Schedule Of Earnings Per Share Reconciliation 28	$ 0

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Results of Discontinued Operations for Nanovision (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 1	$ 0
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 2	84,000
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 3	0
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 4	78,600
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 5	23,000
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 6	23,000
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 7	(4,800)
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 8	4,100
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 9	18,200
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 10	32,500
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 11	0
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 12	1,300
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 13	18,200
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary Results Of Discontinued Operations For Nanovision 14	$ 31,200

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Property and Equipment, net

9 Months Ended

Sep. 30, 2012

Property and Equipment, net [Text Block]

4. Property and Equipment, net

Property, plant and equipment, net consist of the following:

		September 30,			December 31,
		2012			2011
Equipment	$	128,500		$	86,900
Office equipment		13,800			13,500
Leasehold improvements		8,400			8,300
Software		1,900			1,900
		153,000			110,600
Less: Accumulated depreciation		(58,900	)		(44,400	)
Property and equipment, net	$	93,700		$	66,200

The depreciation expense was $5,200 and $1,000 for the three months ended September 30, 2012 and 2011, respectively. The depreciation expense was $14,300 and $9,100 for the nine months ended September 30, 2012 and 2011, respectively.

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Related Party Transaction (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Related Party Transaction 1	$ 14,100
Related Party Transaction 2	$ 42,700

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Income Tax (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

		September 30,			December 31,
		2012			2011
Deferred tax assets:
Net operating losses - U.S.	$	198,700		$	83,100
Net operating losses - PRC and Hong Kong		146,100			59,100
Deferred revenue		45,700			75,300
Allowance for doubtful accounts		900			900
		391,400			218,400
Valuation allowance		(391,400	)		(218,400	)
Deferred tax assets, net	$	-		$	-

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Convertible Promissory Notes (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Convertible Debt [Table Text Block]

				Loan	Interest		September 30,		December 31,
Lender	Date of Note	Maturity Date		Amount	Rate (p.a.)		2012		2011
Vantage Associates SA	April 15, 2011	April 15, 2016	$	150,000	5%	$	150,000	$	150,000
Empa Trading Ltd.	June 5, 2011	June 5, 2016		100,000	5%		100,000		100,000
First Capital A.G.	July 14, 2011	July 14, 2016		150,000	5%		150,000		150,000
First Capital A.G.	September 9, 2011	September 9, 2016		200,000	5%		200,000		200,000
Vantage Associates SA	September 9, 2011	September 9, 2016		200,000	5%		200,000		200,000
Vantage Associates SA	October 27, 2011	October 27, 2016		50,000	5%		50,000		50,000-
First Capital A.G.	December 1, 2011	December 1, 2016		50,000	5%		50,000		50,000-
First Capital A.G.	January 23, 2012	January 23, 2017		50 000	5%		50,000		-
First Capital A.G.	April 25, 2012	April 25,2014		100,000	5%		100,000		-
Asher Enterprises, Inc.	July 27th, 2012	April 13th, 2013		63,000	8%		63,000		-
			$			$	1,113,000	$	900,000
					Less:
					Current portion		63,000		-
					Non-current portion	$	1,050,000	$	900,000

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Restricted Stock to Director (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Restricted Stock To Director 1	360,000
Restricted Stock To Director 2	$ 201,600
Restricted Stock To Director 3	360,000
Restricted Stock To Director 4	135,000
Restricted Stock To Director 5	45,000
Restricted Stock To Director 6	45,000
Restricted Stock To Director 7	45,000
Restricted Stock To Director 8	45,000
Restricted Stock To Director 9	45,000
Restricted Stock To Director 10	82,800
Restricted Stock To Director 11	45,000
Restricted Stock To Director 12	270,000
Restricted Stock To Director 13	25,200
Restricted Stock To Director 14	$ 88,800

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(Loss) earning per Share (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Earnings Per Share Reconciliation [Table Text Block]

		For The Three Months Ended						For The Nine Months Ended
		September 30,						September 30,
		2012			2011			2012			2011
Net (loss) available for common shareholders - basic	$	(125,100	)	$	(153,300	)	$	(600,800	)	$	(156,400	)
Interest expense on convertible notes		14,200			5,400			38,700			5,400
Net (loss) available for common shareholders - diluted	$	(110,900	)	$	(147,900	)	$	(562,100	)	$	(151,000	)
Weighted average outstanding shares of common stock – basic and diluted		60,000,000			67,888,043			60,000,000			74,393,407
Loss per share - basic and diluted:
Continuing Operations	$	-		$	-		$	(0.01	)	$	-
Discontinued Operations	$	-		$	-		$	-		$	-
	$	-		$	-		$	(0.01	)	$	-

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Commitments and Contingencies (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Future Minimum Rental Payments for Operating Leases [Table Text Block]

Remainder of 2012	$	21,200
2013		63,700
Thereafter		-
Total minimum payment	$	84,900

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Going Concern

9 Months Ended

Sep. 30, 2012

Going Concern [Text Block]

3. Going Concern

The Company has incurred significant continuing losses during the nine months ended September 30, 2012 and has an accumulated deficit at September 30, 2012. The Company has relied on its registered capital and issuance of convertible notes to fund operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The financial statements have been prepared assuming that the Company will continue as a going concern and, accordingly, do not include any adjustments that might result from the outcome of this uncertainty. As of September 30, 2012, the Company had limited cash resources and management plans to continue its efforts to raise additional funds through debt or equity offerings which will be used to fund operations.

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Unaudited Pro-Forma Financial Information (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Proforma Recapitalization [Table Text Block]

		Unaudited, Pro forma		Unaudited, Pro forma
		Three Months Ended		Nine Months Ended
		September 30,		September 30,
		2011		2011
Revenues	$	4,100	$	43,300
Net Profit (Loss) applicable to common shareholders	$	26,700	$	(400,700	)
Loss per share	$	-	$	(0.01	)
Weighted Average Shares Outstanding		60,000,000		60,000,000

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Commitments and Contingencies (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Commitments And Contingencies 1	$ 21,300
Commitments And Contingencies 2	7,200
Commitments And Contingencies 3	63,800
Commitments And Contingencies 4	$ 18,900

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Schedule of Future Minimum Rental Payments for Operating Leases (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Commitments And Contingencies Schedule Of Future Minimum Rental Payments For Operating Leases 1	$ 21,200
Commitments And Contingencies Schedule Of Future Minimum Rental Payments For Operating Leases 2	63,700
Commitments And Contingencies Schedule Of Future Minimum Rental Payments For Operating Leases 3	0
Commitments And Contingencies Schedule Of Future Minimum Rental Payments For Operating Leases 4	$ 84,900

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CONDENSED CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2012	Dec. 31, 2011
Current Assets:
Cash and cash equivalents	$ 238,900	$ 615,200
Trade accounts receivable	19,200	0
Other receivables, net of allowance for doubtful accounts of $3,500 and $3,500, respectively	5,600	5,400
Inventory	300	0
Prepaid expenses	9,000	8,800
Advances to suppliers	3,400	0
Total Current Assets	276,400	629,400
Property and Equipment, net of accumulated depreciation of $58,900 and $44,400, respectively	93,700	66,200
TOTAL ASSETS	370,100	695,600
Current Liabilities:
Accounts payable	105,500	41,400
Other payables and accrued expenses	32,300	44,700
Deferred revenue	161,900	290,500
Convertible notes	63,000	0
Total Current Liabilities	362,700	376,600
Convertible notes	1,050,000	900,000
Accrued interest	56,900	18,300
Deferred revenue	20,700	10,700
Total Liabilities	1,490,300	1,305,600
Shareholders' Deficit:
Preferred stock, $0.001 par value, 20,000,000 shares authorized; no shares issued and outstanding September 30, 2012 and December 31, 2011	0	0
Common stock, $0.001 par value, 100,000,000 shares authorized; 60,000,000 issued and outstanding September 30, 2012 and December 31, 2011	60,000	60,000
Additional paid in capital	161,100	72,200
Accumulated deficit	(1,373,700)	(772,900)
Accumulated other comprehensive income	32,400	30,700
Total Shareholders' Deficit	(1,120,200)	(610,000)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$ 370,100	$ 695,600

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Schedule of Other Assets and Other Liabilities (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Summary Of Significant Accounting Policies Schedule Of Other Assets And Other Liabilities 1	$ 215,300
Summary Of Significant Accounting Policies Schedule Of Other Assets And Other Liabilities 2	326,600
Summary Of Significant Accounting Policies Schedule Of Other Assets And Other Liabilities 3	294,200
Summary Of Significant Accounting Policies Schedule Of Other Assets And Other Liabilities 4	390,000
Summary Of Significant Accounting Policies Schedule Of Other Assets And Other Liabilities 5	427,700
Summary Of Significant Accounting Policies Schedule Of Other Assets And Other Liabilities 6	460,200
Summary Of Significant Accounting Policies Schedule Of Other Assets And Other Liabilities 7	448,500
Summary Of Significant Accounting Policies Schedule Of Other Assets And Other Liabilities 8	$ 470,900

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Organization and Nature of Business

9 Months Ended

Sep. 30, 2012

Organization and Nature of Business [Text Block]

1. Organization and Nature of Business

XcelMobility Inc.
XcelMobility Inc. (a development stage company) (“Xcel” or the “Company”) was incorporated under the laws of the State of Nevada on December 27, 2007. Initial operations have included organization and incorporation, target market identification, marketing plans, and capital formation. The Company has generated no revenues since inception.

Share Cancellation
On August 11, 2011, Moses Carlo Supera Paez, a director and shareholder of the Company, surrendered 17,700,000 shares of common stock for cancellation. Further, on August 30, 2011, Mr. Paez surrendered an additional 7,350,000 shares of our common stock for cancellation and Mr. Jaime Brodeth, one of our former directors and a shareholder, surrendered 22,950,000 shares of our common stock for cancellation. As such, immediately prior to the Exchange Transaction as further discussed in detail later and after giving effect to the foregoing cancellations, the Company had 29,700,000 shares of common stock issued and outstanding. Immediately after the Exchange Transaction, the Company had 60,000,000 shares of common stock issued and outstanding.

CC Mobility Limited
CC Mobility Limited (“CC Mobility”), a company organized under the laws of Hong Kong, was formed on May 3, 2011 and has authorized capital of 10,000 shares with registered capital of HK$1,000 at HK$1 per share. At formation, CC Mobility Limited has issued 560 shares to CC Wireless Limited, a company organized under the laws of Hong Kong, and 440 shares to Sheen Ventures Limited, a company organized under the laws of Hong Kong. The Company is a holding company formed for the purpose of acquiring a target company to effect a reverse merger with a U.S. reporting company. The reverse merger was completed on August 30, 2011.

CC Power Investment Consulting Co. Ltd.
Shenzhen CC Power Investment Consulting Co. Ltd. (“CC Investment”), a wholly-owned subsidiary of CC Mobility, was incorporated on July 27, 2011 under the laws of the People’s Republic of China (“PRC”) as a wholly foreign owned limited liability company. The required registered capital is $2,000,000 and as of September 30, 2012, $400,000 of the registered capital has been contributed.

Shenzhen CC Power Corporation
Shenzhen CC Power Corporation (“CC Power”, the Company) is a Chinese enterprise organized in the PRC on March 13, 2003 in accordance with the Laws of the People’s Republic of China. The required registered capital of the Company was approximately $1,547,000 (RMB10,000,000) and as of December 31, 2011, the Company has paid up approximately $346,000 (RMB2, 526,000). In March 2011, Mr. Ryan Ge sold his 5% ownership in CC Power to the other shareholder, Xili Wang (“CC Power Shareholder”). Ms. Wang holds 100% ownership interest in CC Power as of September 30, 2012 and December 31, 2011.

CC Power is primarily engaged in the research, development and commercialization of applications for mobile devices that access the Internet utilizing mobile phone networks. CC Power’s principal activity is the design, testing sale and support of software to support mobile internet applications on cellular phones, smart phones, tablets and mobile computers in China. The principal product designed and built by CC Power is its Mach 5 Accelerator. This product has been independently tested by all 3 mobile phone carriers in China and accesses the internet 5 times faster than with other mobile browsers. The speed of the Mach 5 browser enables CC Power to develop other mobile software that can leverage off the Mach 5 products speed of processing. In order to support CC Power products the Company has built a series of server locations throughout China. CC Power sells its products to corporations directly, to individual users via the company’s website and retail locations, through distribution agents and through all three mobile phone carriers in China.

As noted above, the primary purpose of CC Power is to develop software that allows user faster access to the Internet. CC Power’s primary focus is in the mobile Internet market, with a focus on providing software that significantly increases the speed that users of smartphones, tablets and laptops can access the Internet over cellular phone networks. CC Power also uses their technology to increase the speed at which users of Virtual Private Networks can access data from their networks.

CC Power had 60% equity interest in Shenzhen Nanovision Technology Ltd. (“Nanovision”) as of December 31, 2010. On June 15, 2011, CC Power sold 25% of its ownership in Nanovision. In August 2011, CC Power sold its remaining 35% interest in Nanovision, after the disposition, CC Power has neither ownership nor involvement in Nanovision.

Share Exchange Agreement

On August 30, 2011, the Company completed a voluntary share exchange transaction with Shenzhen CC Power Corporation, CC Mobility Limited and the shareholders of CC Mobility (“Selling Shareholders”) pursuant to a Share Exchange Agreement dated July 5, 2011 (the “Exchange Agreement”). In accordance with the terms of Exchange Agreement, on the Closing Date, Xcel issued 30,300,000 shares of its common stock to the Selling Shareholders in exchange for 100% of the issued and outstanding capital stock of CC Mobility (the “Exchange Transaction”). As a result of the Exchange Transaction, there was a change of control in the Company as the Selling Shareholders of CC Mobility acquired 50.5% of Xcel’s issued and outstanding common stock, CC Mobility became Xcel’s wholly-owned subsidiary, and Xcel acquired the business and operations of CC Mobility and CC Power.

For accounting purposes, the merger transaction is being accounted for as a reverse merger. The transaction has been treated as a recapitalization of CC Mobility and its subsidiaries, with Xcel (the legal acquirer of CC Mobility and its subsidiaries) considered the accounting acquiree and CC Mobility whose management took control of Xcel (the legal acquire of CC Mobility) considered the accounting acquirer.

CC Power is owned by an individual but controlled by CC Investment through a series of contractual arrangements that transferred all of the benefits and responsibilities for the operations of CC Power to CC Investment. CC Investment accounts for CC Power as a Variable Interest Entity (“VIE”) under ASC 810 “Consolidation.” Accordingly, CC Investment consolidates CC Power’s results, assets and liabilities.

As a result of the Exchange Transaction, the organizational structure of the Company is as follows:

**PLEASE SEE HTML DOCUMENT FOR IMAGES

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Property and Equipment, net (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Property And Equipment, Net 1	$ 5,200
Property And Equipment, Net 2	1,000
Property And Equipment, Net 3	14,300
Property And Equipment, Net 4	$ 9,100

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Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events [Text Block]

17. Subsequent Events

The Company has no significant subsequent events from September 30, 2012 through the consolidated financial statements issue date of this report.

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Equity Investment in Affiliated Company and Deconsolidation of Subsidiary (Narrative) (Details)	9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 CNY
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary 1	25.00%	25.00%
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary 2		250,000
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary 3	35.00%	35.00%
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary 4	35.00%	35.00%
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary 5	35,000
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary 6	35.00%	35.00%
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary 7	25.00%	25.00%
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary 8	60.00%	60.00%
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary 9	35.00%	35.00%
Equity Investment In Affiliated Company And Deconsolidation Of Subsidiary 10		350,000

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Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Other Assets and Other Liabilities [Table Text Block]

		September 30,		December 31,
		2012		2011
Total current assets	$	215,300	$	326,600
Total assets		294,200		390,000
Total current liabilities		427,700		460,200
Total liabilities		448,500		470,900

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Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Text Block]

2. Summary of Significant Accounting Policies

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries at September 30, 2012 and for the three and nine months ended September 30, 2012 and 2011 reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the financial position and results of operations of the Company for the periods presented. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2011. The Company follows the same accounting policies in the preparation of interim reports. The Company’s accounting policies used in the preparation of the accompanying financial statements conform to accounting principles generally accepted in the United States of America (“US GAAP”)

The functional currency is the Chinese Renminbi, however the accompanying condensed consolidated financial statements have been translated and presented in United States Dollars ($). All significant inter-company balances and transactions have been eliminated in consolidation.

All dollars are rounded to nearest hundred except for share data.

Reclassification

Cost of revenue –Cost of revenue totaled $300 and 29,300 for the three and nine months ended September 30, 2011 has been reclassified from cost of revenue to selling expense and general and administrative expense to conform to current presentation.

Use of estimates

In preparing financial statements in conformity with US GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported periods. Actual results could differ from those estimates.

Significant Estimates

These financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to depreciation of property, plant and equipment, the valuation allowance for deferred taxes. It is reasonably possible that the above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods.

Variable Interest Entity

The accounts of CC Power have been consolidated with the accounts of the Company because CC Power is a variable interest entity with respect to CC Investment, which is a wholly-owned subsidiary of the Company. CC Investment entered into five agreements dated August 22, 2011 with CC Power Shareholder and with CC Power pursuant to which CC Investment provides CC Power with exclusive technology consulting and management services. In summary, the five agreements contain the following terms:

Entrusted Management Agreement. This agreement provides that CC Investment will provide exclusive management services to CC Power. Such management services include but are not limited to financial management, business management, marketing management, human resource management and internal control of CC Power. The Entrusted Management Agreement will remain in effect until the acquisition of all assets or equity of CC Power by CC Investment is complete (as more fully described in the Exclusive Purchase Option Agreement below).

Technical Services Agreement. This agreement provides that CC Investment will provide exclusive technical services to CC Power. Such technical services include but are not limited to software, computer system, data analysis, training and other technical services. CC Investment shall be entitled to charge CC Power service fees equivalent to CC Power’s total net income. The Technical Service Agreement will remain in effect until the acquisition of all assets or equity of CC Power by CC Investment is complete (as more fully described in the Exclusive Purchase Option Agreement below).

Exclusive Purchase Option Agreement. Under the Exclusive Purchase Option Agreement, the CC Power Shareholder granted CC Investment an irrevocable and exclusive purchase option to acquire CC Power’s equity and/or assets at a nominal consideration. CC Investment may exercise the purchase option at any time.

Loan Agreement. Under the Loan Agreement, CC Investment agreed to lend RMB10,000,000 to the CC Power Shareholder, to be used solely for the operations of CC Power.

Equity Pledge Agreement. Under the Equity Pledge Agreement, the CC Power Shareholder pledged all of its equity interests in CC Power, including the proceeds thereof, to guarantee all of CC Investment’s rights and benefits under the Entrusted Management Agreement, the Technical Service Agreement, the Exclusive Purchase Option Agreement and the Loan Agreement. Prior to termination of this Equity Pledge Agreement, the pledged equity interests cannot be transferred without CC Investment’s prior consent. The CC Power Shareholder covenants to CC Investment that among other things, it will only appoint/elect the candidates for the directors of CC Power nominated by CC Investment.

In sum, the agreements transfer to CC Investment all of the benefits and all of the risk arising from the operations of CC Power, as well as complete managerial authority over the operations of CC Power. Through these contractual arrangements, the Company has the ability to substantially influence CC Power’s daily operations and financial affairs, appoint its directors and senior executives, and approve all matters requiring board and/or shareholder approval. These contractual arrangements enable the Company to control CC Power and operate our business in the PRC through CC Investment. By reason of the relationship described in these agreements, CC Power is a variable interest entity with respect to CC Investment and CC Investment is considered the primary beneficiary of CC Power because the following characteristics identified in ASC 810-10-15-14 are present:

The holder of the equity investment in CC Power lacks the direct or indirect ability to make decisions about the entity’s activities that have a significant effect on the success of CC Power, having assigned their voting rights and all managerial authority to CC Investment. (ASC 810-10-15-14(b)(1)).

The holder of the equity investment in CC Power lacks the obligation to absorb the expected losses of CC Power, having assigned to CC Investment all revenue and responsibility for all payables. (ASC 810-10-15-14(b)(2).

The holder of the equity investment in CC Power lacks the right to receive the expected residual returns of CC Power, having granted to CC Investment all revenue as well as an option to purchase the equity interests at a fixed price. (ASC 810-10-15-14(b)(3)).

Accordingly, the Company’s condensed consolidated financial statements reflect the results of operations, assets and liabilities of CC Power. The carrying amount and classification of CC Power’s assets and liabilities included in the Condensed Consolidated Balance Sheets are as follows:

		September 30,		December 31,
		2012		2011
Total current assets	$	215,300	$	326,600
Total assets		294,200		390,000
Total current liabilities		427,700		460,200
Total liabilities		448,500		470,900

Revenue recognition

Our source of revenues is from internet accelerator software, which includes new software license revenues and software plus hardware and maintenance arrangements. During the quarter ended September 30, 2012, we also have revenues derived from GPS system development and website development projects along with maintenance arrangements.

We evaluate revenue recognition based on the criteria set forth in FASB ASC 985-605, Software: Revenue Recognition and Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104, Revenue Recognition.

Revenue Recognition for Software Products (Software Elements)

New software license revenues represent fees earned from granting customers licenses to download our software products that aim at improving the internet connection speed of the mobile phone, computers or servers. The basis for software license revenue recognition is substantially governed by the accounting guidance contained in ASC 985-605, Software-Revenue Recognition. For software license that do not require significant modification or customization of the underlying software, we recognize new software license revenues when: (1) we enter into a legally binding arrangement with a customer for the license of software; (2) we deliver the products; (3) the sale price is fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is probable. Revenues that are not recognized at the time of sale because the foregoing conditions are not met are recognized when those conditions are subsequently met.

Our software license arrangements do not include acceptance provisions, software license updates or product support contracts.

Revenue Recognition for Multiple-Element Arrangements – Software Products and Software Related Services (Software Arrangements)

We enter into arrangements with customers that purchase software related products that include one to three year product support service and a short training session (referred to as software related multiple-element arrangements). Such software related multiple-element arrangements include the sale of our software products, and product support contracts whereby software license delivery is followed by the subsequent delivery of the other elements. Our software license arrangements include acceptance provisions. We recognize revenue upon the receipt of written customer acceptance. The vast majority of our software license arrangements include software license updates and product support contracts. Software license updates provide customers with rights to unspecified software product upgrades during the term of the support period. Product support includes telephone access to technical support personnel or on-site support. For those software related multiple-element arrangements, we recognized revenue pursuant to ASC 985-605. Since we are unable to determine the fair value of the selling price for the undelivered elements in a multiple-element arrangement, which is the product support service and training, the entire arrangement consideration is deferred and is recognized ratably over the term of the arrangement, typically one year to three years.

Revenue Recognition for Multiple-Element Arrangements – Arrangements with Software and Hardware Elements

We also enter into multiple-element arrangements that may include a combination of our software installed in the hardware products we purchased from third parties and service offerings including purchased hardware , new software licenses, installation of the software in the hardware and one to three years product support. We adopted Accounting Standards Update (“ASU”) 2009-13, Revenue Recognition (Topic 605) : Multiple-Deliverable Revenue Arrangements . This guidance modifies the fair value requirements of FASB ASC subtopic 605-25, Revenue Recognition-Multiple Element Arrangements , by allowing the use of the “best estimate of selling price” in addition to vendor-specific objective evidence and third-party evidence for determining the selling price of a deliverable for non-software arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence, (b) third-party evidence, or (c) estimated selling price. In addition, the residual method of allocating arrangement consideration is no longer permitted. In such arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and to the hardware elements. We recognize the hardware element considerations upon delivery of the hardware. The consideration allocated to the software group which includes the software element and the product support is recognized in according to the software arrangements policy as described above.

Cost of Revenue

Cost of revenue primarily consists of business tax and surcharges on revenue.

Credit risk

The Company may be exposed to credit risk from its cash and fixed deposits at bank. No allowance has been made for estimated irrecoverable amounts determined by reference to past default experience and the current economic environment.

Accounts receivable

Accounts receivable consists of amounts due from customers. An allowance for doubtful accounts is established and determined based on management’s assessment of known requirements, aging of receivables, payment history, the customer’s current credit worthiness and the economic environment. As of September 30, 2012 and December 31, 2011, no allowance for doubtful accounts was deemed necessary based on management’s assessment.

Fair Value of Financial Instruments

FASB accounting standards require disclosing fair value to the extent practicable for financial instruments that are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.

For certain financial instruments, including cash, accounts payable, accruals and other payables, the carrying amounts approximate fair value because of the near term maturities of such obligations.

Patents

The Company has three patents as listed in the table below relating to its internet accelerator software products. Fees related to registering these patents were insignificant and have been expensed as incurred.

Patent	Register Number	Issued By
Mach5 Internet Acceleration Software V.6.0	2007SR09253	National Copyright Administration of PRC
Mach5 Enterprise Acceleration Software V.3.3	2009SR058767	National Copyright Administration of PRC
Mach5 Web Browser Software	2010SR001089	National Copyright Administration of PRC

Research and development and Software Development Costs

All research and development costs are expensed as incurred. Software development costs eligible for capitalization under ASC 985-20, Software-Costs of Software to be Sold, Leased or Marketed , were not material to our consolidated financial statements for the three and nine months ended September 30, 2012 and 2011. Research and development expenses amounted to $47,000 and $5,800 for three months ended September 30, 2012 and 2011, respectively, and were included in general and administrative expense. Research and development expenses amounted to $192,500 and $15,500 for nine months ended September 30, 2012 and 2011, respectively, and were included in general and administrative expense.

Comprehensive income

Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. For the Company, comprehensive income for the periods presented includes net income and foreign currency translation adjustments.

Income taxes

Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred income tax liabilities or assets are recorded to reflect the tax consequences in future differences between the tax basis of assets and liabilities and the financial reporting amounts at each year end. A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized.

Foreign currency translation

Assets and liabilities of the Company’s subsidiaries with a functional currency other than US$ are translated into US$ using period end exchange rates. Income and expense items are translated at the average exchange rates in effect during the period. Foreign currency translation differences are included as a component of Accumulated Other Comprehensive Income in Shareholders’ Equity.

The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements were as follows:

September 30, 2012
Balance sheet	RMB6.3265 to US $1.00
Statement of operations and other comprehensive loss	RMB6.3180 to US $1.00
September 30, 2011
Balance sheet	RMB6.3952 to US $1.00
Statement of operations and other comprehensive loss	RMB6.4972 to US $1.00
December 31, 2011
Balance sheet	RMB6.3585 to US $1.00
Statement of operations and other comprehensive loss	RMB6.4640 to US $1.00

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 USD at the rates used in translation.

Post-retirement and post-employment benefits

The Company contributes to a state pension plan in respect of its PRC employees. Other than the state pension plan, the Company does not provide any other post-retirement or post-employment benefits.

Statutory surplus reserve

In accordance with the relevant laws and regulations of the PRC and the articles of associations of the Company, CC Power is required to allocate 10% of its net income reported in the PRC statutory accounts, after offsetting any prior years’ losses, to the statutory surplus reserve, on an annual basis. When the balance of such reserve reaches 50% of the respective registered capital, any further allocation is optional.

The statutory surplus reserves can be used to offset prior years’ losses, if any, and may be converted into registered capital, provided that the remaining balances of the reserve after such conversion is not less than 25% of registered capital. The statutory surplus reserve is non-distributable.

Recently Issued Accounting Pronouncements

In December 2011, the FASB issued Accounting Standards Update 2011-11 (“ASU 2011-11”), Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 enhances disclosure requirements about the nature of an entity’s right to offset and related arrangements associated with its financial instruments and derivative instruments. The new guidance requires the disclosure of the gross amounts subject to rights of set-off, amounts offset in accordance with the accounting standards followed, and the related net exposure. The new guidance will be effective for us beginning January 1, 2013. Other than requiring additional disclosures, we do not anticipate material impacts on our financial statements upon adoption.

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CONDENSED CONSOLIDATED BALANCE SHEETS (PARENTHETICAL) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Other Receivables	$ 3,500	$ 3,500
Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment	$ 58,900	$ 44,400
Preferred Stock, Par Value Per Share	$ 0.001	$ 0.001
Preferred Stock, Shares Authorized	20,000,000	20,000,000
Preferred Stock, Shares Issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, Par Value Per Share	$ 0.001	$ 0.001
Common Stock, Shares Authorized	100,000,000	100,000,000
Common Stock, Shares, Issued	60,000,000	60,000,000
Common Stock, Shares, Outstanding	60,000,000	60,000,000

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Concentrations, Risks, and Uncertainties

9 Months Ended

Sep. 30, 2012

Concentrations, Risks, and Uncertainties [Text Block]

12. Concentrations, Risks, and Uncertainties

Customer Concentrations

The Company has the following concentrations of business with each customer constituting greater than 10% of the Company’s gross sales:

	For The Three Months Ended		For The Nine Months Ended
	September 30,		September 30,
	2012	2011	2012	2011
Customer A	82%	*	90%	*
Customer B	*	89%	*	24%
Customer C	-	-	-	70%

* Constitutes less than 10% of the Company’s gross sales.

The Company has not experienced any significant difficulty in collecting its accounts receivable in the past and is not aware of any financial difficulties being experienced by its major customers.

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 08, 2012
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Trading Symbol	xcll
Entity Registrant Name	XcelMobility Inc.
Entity Central Index Key	0001465509
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		60,000,000
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well Known Seasoned Issuer	No
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3

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Operating Risk

9 Months Ended

Sep. 30, 2012

Operating Risk [Text Block]

13. Operating Risk

The Company’s operations are all carried out in the PRC. Accordingly, the Company’s business, financial condition, and results of operations may be influenced by the political, economic and legal environments in the PRC, and by the general state of the PRC’s economy.

The Company’s operations in the PRC are subject to specific considerations and significant risks not typically associated with companies in the North America and Western Europe. These include risks associated with, among others, the political, economic and legal environments and foreign currency exchange. The Company’s results may be adversely affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things.

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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Revenue	$ 72,000	$ 4,100	$ 198,800	$ 43,300
Cost of Revenue	4,000	200	11,900	2,400
Gross Profit	68,000	3,900	186,900	40,900
Operating Expenses:
Selling expense	6,100	5,100	35,400	15,400
General and administrative expense	262,500	178,000	823,200	220,600
Total Operating Expenses	268,600	183,100	858,600	236,000
Loss from Operations	(200,600)	(179,200)	(671,700)	(195,100)
Other Income (Expense):
Interest income	100	100	800	100
Interest expense	(14,200)	(5,400)	(38,700)	(5,400)
Other income (expense)	89,600	13,000	108,800	12,800
Total Other Income	75,500	7,700	70,900	7,500
Loss Before Taxes	(125,100)	(171,500)	(600,800)	(187,600)
Income tax expense	0	0	0	0
Loss from continuing operation	(125,100)	(171,500)	(600,800)	(187,600)
Discontinued Operation:
Income from discontinued operation	0	23,000	0	27,100
(Loss) Gain on disposal of interest in subsidiary	0	(4,800)	0	4,100
Net income from discontinued operation	0	18,200	0	31,200
Net Loss	(125,100)	(153,300)	(600,800)	(156,400)
Less: income attributable to non-controlling interest	0	0	0	1,600
Net loss attributable to XcelMobility	(125,100)	(153,300)	(600,800)	(158,000)
Net loss	(125,100)	(153,300)	(600,800)	(156,400)
Foreign currency translation adjustment	(600)	5,500	1,700	10,200
Comprehensive loss	(125,700)	(147,800)	(599,100)	(146,200)
Less: Comprehensive Income attributable to Non-controlling interest	0	0	0	1,400
Comprehensive loss attributable to XcelMobility	(125,700)	(147,800)	(599,100)	(144,800)
Basic and diluted loss per share attributable to XcelMobility shareholders:
Continuing Operation			$ (0.01)
Discontinued Operation
Basic and diluted loss per share attributable to XcelMobility shareholders:			$ (0.01)
Basic and diluted weighted average number of shares outstanding	60,000,000	67,888,043	60,000,000	74,393,407

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Convertible Promissory Notes

9 Months Ended

Sep. 30, 2012

Convertible Promissory Notes [Text Block]

7. Convertible Promissory Notes

Outstanding balances for the four convertible promissory notes as of September 30, 2012 and December 31, 2011 are as follow:

				Loan	Interest		September 30,		December 31,
Lender	Date of Note	Maturity Date		Amount	Rate (p.a.)		2012		2011
Vantage Associates SA	April 15, 2011	April 15, 2016	$	150,000	5%	$	150,000	$	150,000
Empa Trading Ltd.	June 5, 2011	June 5, 2016		100,000	5%		100,000		100,000
First Capital A.G.	July 14, 2011	July 14, 2016		150,000	5%		150,000		150,000
First Capital A.G.	September 9, 2011	September 9, 2016		200,000	5%		200,000		200,000
Vantage Associates SA	September 9, 2011	September 9, 2016		200,000	5%		200,000		200,000
Vantage Associates SA	October 27, 2011	October 27, 2016		50,000	5%		50,000		50,000-
First Capital A.G.	December 1, 2011	December 1, 2016		50,000	5%		50,000		50,000-
First Capital A.G.	January 23, 2012	January 23, 2017		50 000	5%		50,000		-
First Capital A.G.	April 25, 2012	April 25,2014		100,000	5%		100,000		-
Asher Enterprises, Inc.	July 27th, 2012	April 13th, 2013		63,000	8%		63,000		-
			$			$	1,113,000	$	900,000
					Less:
					Current portion		63,000		-
					Non-current portion	$	1,050,000	$	900,000

Interest expense for the three months ended September 30, 2012 and 2011 was $14,200 and $5,400, respectively. Interest expense for the nine months ended September 30, 2012 and 2011 was $38,700 and $5,400, respectively.

Except for the convertible promissory note issued to Asher Enterprises, Inc., all the convertible promissory notes (the “Notes”) are convertible upon the occurrence of the following events:

(1) At any time, prior to the maturity date, the Company and the holder of the notes may mutually agree on a date to convert in whole or in part the notes into shares of common stock of the Company on the following terms: Holder of the note will be issued share units comprising of one common share to be purchased at a price of $0.5, and one warrant that is convertible into one common share at a price of $1.00, and expires two years from the date of the Exchange Transaction is completed, and one warrant that is convertible into one common share at a price of $1.5, and expires three years from the date the Exchange Transaction is completed.

(2) Unless earlier converted into common stock mentioned above, if within twelve months of the date hereof the Company completes a Qualified Financing, as defined by the respective convertible promissory notes, the holder agrees to exchange the notes simultaneously with the initial closing of such Qualified Financing as follows:

(a) In the event of a debt Qualified Financing (“Qualified Debt Financing”), the Holder may at its option exchange in whole or in part this Note for a promissory note (or other evidence of indebtedness) in the same form and with the same terms and conditions as those issued in such Qualified Debt Financing and in a principal amount equal to the then outstanding Debt.

(b) In the event of an equity Qualified Financing (“Qualified Equity Financing”), the Holder may at its option convert the Debt into shares of capital stock of the same class and series and with the same rights, preferences and privileges as those issued in such Qualified Equity Financing, at a price per share equal to the purchase price paid by investors in such Qualified Equity Financing.

The convertible promissory note issued to Asher Enterprises, Inc., is convertible upon the occurrence of the following events:

1)

At any time during the period beginning on the date which is 180 days following the date of the convertible promissory note, which is July 27, 2012, and ending on the later of the maturity date and the date of payment in default, the remaining outstanding principal amount shall convert into fully paid and non-assessable shares of the company’s common stock. The conversion price shall equal the variable conversion price, which is 60% multiplied by the market price of the common stock, as defined in the promissory note agreement.

2)

In the event of a consolidation or merger with any other corporation (other than a merger in which the Company is the surviving corporation and its capital stock is unchanged), or asset sale, then the conversion price is subject to adjustment, as defined by the convertible promissory note agreement.

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Deferred Revenue

9 Months Ended

Sep. 30, 2012

Deferred Revenue [Text Block]

6. Deferred Revenue

Deferred revenue represents deferred internet accelerator license revenue over the maintenance period of one to three years for our multiple element arrangements (Note 2).

In addition, deferred revenue includes two government grants for use in research and development related expenditures for periods through July 2014. The portion of the grants that has not been spent is deferred and recognize as other income as the funds are spent on research and development related expenditures.

Deferred revenue included on the balance sheets as of September 30, 2012 and December 31, 2011 is as follow:

		September 30,		December 31,
		2012		2011
Deferred revenue:
Current	$	161,900	$	290,500
Non-current		20,700		10,700
Total	$	182,600	$	301,200

The table below sets forth the deferred revenue activities during the nine months ended September 30, 2012 and 2011:

		For the nine months ended September 30,
		2012		2011
Deferred revenue, balance at beginning of period	$	301,200		44,400
Add: Payments received from customers during the nine months		94,700		15,000
Add: Government grant received during the nine months		95,000		(40,300	)
Less: government grant earned during the nine months		(111,200	)	73,500
Less: Revenue earned during the nine months		(197,100	)	(13,500	)
Deferred revenue, balance at end of period	$	182,600		79,100

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Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Basis of Presentation [Policy Text Block]

Basis of presentation

The accompanying unaudited condensed consolidated financial statements of the Company and its subsidiaries at September 30, 2012 and for the three and nine months ended September 30, 2012 and 2011 reflect all adjustments (consisting only of normal recurring adjustments) that, in the opinion of management, are necessary to present fairly the financial position and results of operations of the Company for the periods presented. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ending December 31, 2012. The accompanying condensed consolidated financial statements should be read in conjunction with the audited financial statements and the notes thereto for the year ended December 31, 2011. The Company follows the same accounting policies in the preparation of interim reports. The Company’s accounting policies used in the preparation of the accompanying financial statements conform to accounting principles generally accepted in the United States of America (“US GAAP”)

The functional currency is the Chinese Renminbi, however the accompanying condensed consolidated financial statements have been translated and presented in United States Dollars ($). All significant inter-company balances and transactions have been eliminated in consolidation.

All dollars are rounded to nearest hundred except for share data.

Reclassification [Policy Text Block]

Reclassification

Cost of revenue –Cost of revenue totaled $300 and 29,300 for the three and nine months ended September 30, 2011 has been reclassified from cost of revenue to selling expense and general and administrative expense to conform to current presentation.

Use of Estimates [Policy Text Block]

Use of estimates

In preparing financial statements in conformity with US GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reported periods. Actual results could differ from those estimates.

Significant Estimates [Policy Text Block]

Significant Estimates

These financial statements include some amounts that are based on management’s best estimates and judgments. The most significant estimates relate to depreciation of property, plant and equipment, the valuation allowance for deferred taxes. It is reasonably possible that the above-mentioned estimates and others may be adjusted as more current information becomes available, and any adjustment could be significant in future reporting periods.

Variable Interest Entity [Policy Text Block]

Variable Interest Entity

The accounts of CC Power have been consolidated with the accounts of the Company because CC Power is a variable interest entity with respect to CC Investment, which is a wholly-owned subsidiary of the Company. CC Investment entered into five agreements dated August 22, 2011 with CC Power Shareholder and with CC Power pursuant to which CC Investment provides CC Power with exclusive technology consulting and management services. In summary, the five agreements contain the following terms:

Entrusted Management Agreement. This agreement provides that CC Investment will provide exclusive management services to CC Power. Such management services include but are not limited to financial management, business management, marketing management, human resource management and internal control of CC Power. The Entrusted Management Agreement will remain in effect until the acquisition of all assets or equity of CC Power by CC Investment is complete (as more fully described in the Exclusive Purchase Option Agreement below).

Technical Services Agreement. This agreement provides that CC Investment will provide exclusive technical services to CC Power. Such technical services include but are not limited to software, computer system, data analysis, training and other technical services. CC Investment shall be entitled to charge CC Power service fees equivalent to CC Power’s total net income. The Technical Service Agreement will remain in effect until the acquisition of all assets or equity of CC Power by CC Investment is complete (as more fully described in the Exclusive Purchase Option Agreement below).

Exclusive Purchase Option Agreement. Under the Exclusive Purchase Option Agreement, the CC Power Shareholder granted CC Investment an irrevocable and exclusive purchase option to acquire CC Power’s equity and/or assets at a nominal consideration. CC Investment may exercise the purchase option at any time.

Loan Agreement. Under the Loan Agreement, CC Investment agreed to lend RMB10,000,000 to the CC Power Shareholder, to be used solely for the operations of CC Power.

Equity Pledge Agreement. Under the Equity Pledge Agreement, the CC Power Shareholder pledged all of its equity interests in CC Power, including the proceeds thereof, to guarantee all of CC Investment’s rights and benefits under the Entrusted Management Agreement, the Technical Service Agreement, the Exclusive Purchase Option Agreement and the Loan Agreement. Prior to termination of this Equity Pledge Agreement, the pledged equity interests cannot be transferred without CC Investment’s prior consent. The CC Power Shareholder covenants to CC Investment that among other things, it will only appoint/elect the candidates for the directors of CC Power nominated by CC Investment.

In sum, the agreements transfer to CC Investment all of the benefits and all of the risk arising from the operations of CC Power, as well as complete managerial authority over the operations of CC Power. Through these contractual arrangements, the Company has the ability to substantially influence CC Power’s daily operations and financial affairs, appoint its directors and senior executives, and approve all matters requiring board and/or shareholder approval. These contractual arrangements enable the Company to control CC Power and operate our business in the PRC through CC Investment. By reason of the relationship described in these agreements, CC Power is a variable interest entity with respect to CC Investment and CC Investment is considered the primary beneficiary of CC Power because the following characteristics identified in ASC 810-10-15-14 are present:

The holder of the equity investment in CC Power lacks the direct or indirect ability to make decisions about the entity’s activities that have a significant effect on the success of CC Power, having assigned their voting rights and all managerial authority to CC Investment. (ASC 810-10-15-14(b)(1)).

The holder of the equity investment in CC Power lacks the obligation to absorb the expected losses of CC Power, having assigned to CC Investment all revenue and responsibility for all payables. (ASC 810-10-15-14(b)(2).

The holder of the equity investment in CC Power lacks the right to receive the expected residual returns of CC Power, having granted to CC Investment all revenue as well as an option to purchase the equity interests at a fixed price. (ASC 810-10-15-14(b)(3)).

Accordingly, the Company’s condensed consolidated financial statements reflect the results of operations, assets and liabilities of CC Power. The carrying amount and classification of CC Power’s assets and liabilities included in the Condensed Consolidated Balance Sheets are as follows:

		September 30,		December 31,
		2012		2011
Total current assets	$	215,300	$	326,600
Total assets		294,200		390,000
Total current liabilities		427,700		460,200
Total liabilities		448,500		470,900

Revenue Recognition [Policy Text Block]

Revenue recognition

Our source of revenues is from internet accelerator software, which includes new software license revenues and software plus hardware and maintenance arrangements. During the quarter ended September 30, 2012, we also have revenues derived from GPS system development and website development projects along with maintenance arrangements.

We evaluate revenue recognition based on the criteria set forth in FASB ASC 985-605, Software: Revenue Recognition and Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104, Revenue Recognition.

Revenue Recognition for Software Products (Software Elements)

New software license revenues represent fees earned from granting customers licenses to download our software products that aim at improving the internet connection speed of the mobile phone, computers or servers. The basis for software license revenue recognition is substantially governed by the accounting guidance contained in ASC 985-605, Software-Revenue Recognition. For software license that do not require significant modification or customization of the underlying software, we recognize new software license revenues when: (1) we enter into a legally binding arrangement with a customer for the license of software; (2) we deliver the products; (3) the sale price is fixed or determinable and free of contingencies or significant uncertainties; and (4) collection is probable. Revenues that are not recognized at the time of sale because the foregoing conditions are not met are recognized when those conditions are subsequently met.

Our software license arrangements do not include acceptance provisions, software license updates or product support contracts.

Revenue Recognition for Multiple-Element Arrangements – Software Products and Software Related Services (Software Arrangements)

We enter into arrangements with customers that purchase software related products that include one to three year product support service and a short training session (referred to as software related multiple-element arrangements). Such software related multiple-element arrangements include the sale of our software products, and product support contracts whereby software license delivery is followed by the subsequent delivery of the other elements. Our software license arrangements include acceptance provisions. We recognize revenue upon the receipt of written customer acceptance. The vast majority of our software license arrangements include software license updates and product support contracts. Software license updates provide customers with rights to unspecified software product upgrades during the term of the support period. Product support includes telephone access to technical support personnel or on-site support. For those software related multiple-element arrangements, we recognized revenue pursuant to ASC 985-605. Since we are unable to determine the fair value of the selling price for the undelivered elements in a multiple-element arrangement, which is the product support service and training, the entire arrangement consideration is deferred and is recognized ratably over the term of the arrangement, typically one year to three years.

Revenue Recognition for Multiple-Element Arrangements – Arrangements with Software and Hardware Elements

We also enter into multiple-element arrangements that may include a combination of our software installed in the hardware products we purchased from third parties and service offerings including purchased hardware , new software licenses, installation of the software in the hardware and one to three years product support. We adopted Accounting Standards Update (“ASU”) 2009-13, Revenue Recognition (Topic 605) : Multiple-Deliverable Revenue Arrangements . This guidance modifies the fair value requirements of FASB ASC subtopic 605-25, Revenue Recognition-Multiple Element Arrangements , by allowing the use of the “best estimate of selling price” in addition to vendor-specific objective evidence and third-party evidence for determining the selling price of a deliverable for non-software arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a deliverable, which is based on: (a) vendor-specific objective evidence, (b) third-party evidence, or (c) estimated selling price. In addition, the residual method of allocating arrangement consideration is no longer permitted. In such arrangements, we first allocate the total arrangement consideration based on the relative selling prices of the software group of elements as a whole and to the hardware elements. We recognize the hardware element considerations upon delivery of the hardware. The consideration allocated to the software group which includes the software element and the product support is recognized in according to the software arrangements policy as described above.

Cost of Revenue [Policy Text Block]

Cost of Revenue

Cost of revenue primarily consists of business tax and surcharges on revenue.

Credit risk [Policy Text Block]

Credit risk

The Company may be exposed to credit risk from its cash and fixed deposits at bank. No allowance has been made for estimated irrecoverable amounts determined by reference to past default experience and the current economic environment.

Accounts receivable [Policy Text Block]

Accounts receivable

Accounts receivable consists of amounts due from customers. An allowance for doubtful accounts is established and determined based on management’s assessment of known requirements, aging of receivables, payment history, the customer’s current credit worthiness and the economic environment. As of September 30, 2012 and December 31, 2011, no allowance for doubtful accounts was deemed necessary based on management’s assessment.

Fair Value of Financial Instruments [Policy Text Block]

Fair Value of Financial Instruments

FASB accounting standards require disclosing fair value to the extent practicable for financial instruments that are recognized or unrecognized in the balance sheet. The fair value of the financial instruments disclosed herein is not necessarily representative of the amount that could be realized or settled, nor does the fair value amount consider the tax consequences of realization or settlement.

For certain financial instruments, including cash, accounts payable, accruals and other payables, the carrying amounts approximate fair value because of the near term maturities of such obligations.

Patents [Policy Text Block]

Patents

The Company has three patents as listed in the table below relating to its internet accelerator software products. Fees related to registering these patents were insignificant and have been expensed as incurred.

Patent	Register Number	Issued By
Mach5 Internet Acceleration Software V.6.0	2007SR09253	National Copyright Administration of PRC
Mach5 Enterprise Acceleration Software V.3.3	2009SR058767	National Copyright Administration of PRC
Mach5 Web Browser Software	2010SR001089	National Copyright Administration of PRC

Research and development and Software Development Costs [Policy Text Block]

Research and development and Software Development Costs

All research and development costs are expensed as incurred. Software development costs eligible for capitalization under ASC 985-20, Software-Costs of Software to be Sold, Leased or Marketed , were not material to our consolidated financial statements for the three and nine months ended September 30, 2012 and 2011. Research and development expenses amounted to $47,000 and $5,800 for three months ended September 30, 2012 and 2011, respectively, and were included in general and administrative expense. Research and development expenses amounted to $192,500 and $15,500 for nine months ended September 30, 2012 and 2011, respectively, and were included in general and administrative expense.

Comprehensive income [Policy Text Block]

Comprehensive income

Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. For the Company, comprehensive income for the periods presented includes net income and foreign currency translation adjustments.

Income taxes [Policy Text Block]

Income taxes

Income taxes are provided on an asset and liability approach for financial accounting and reporting of income taxes. Current tax is based on the profit or loss from ordinary activities adjusted for items that are non-assessable or disallowable for income tax purpose and is calculated using tax rates that have been enacted or substantively enacted at the balance sheet date. Deferred income tax liabilities or assets are recorded to reflect the tax consequences in future differences between the tax basis of assets and liabilities and the financial reporting amounts at each year end. A valuation allowance is recognized if it is more likely than not that some portion, or all, of a deferred tax asset will not be realized.

Foreign currency translation [Policy Text Block]

Foreign currency translation

Assets and liabilities of the Company’s subsidiaries with a functional currency other than US$ are translated into US$ using period end exchange rates. Income and expense items are translated at the average exchange rates in effect during the period. Foreign currency translation differences are included as a component of Accumulated Other Comprehensive Income in Shareholders’ Equity.

The exchange rates used to translate amounts in RMB into USD for the purposes of preparing the financial statements were as follows:

September 30, 2012
Balance sheet	RMB6.3265 to US $1.00
Statement of operations and other comprehensive loss	RMB6.3180 to US $1.00
September 30, 2011
Balance sheet	RMB6.3952 to US $1.00
Statement of operations and other comprehensive loss	RMB6.4972 to US $1.00
December 31, 2011
Balance sheet	RMB6.3585 to US $1.00
Statement of operations and other comprehensive loss	RMB6.4640 to US $1.00

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 USD at the rates used in translation.

Post-retirement and post-employment benefits [Policy Text Block]

Post-retirement and post-employment benefits

The Company contributes to a state pension plan in respect of its PRC employees. Other than the state pension plan, the Company does not provide any other post-retirement or post-employment benefits.

Statutory surplus revenue [Policy Text Block]

Statutory surplus reserve

In accordance with the relevant laws and regulations of the PRC and the articles of associations of the Company, CC Power is required to allocate 10% of its net income reported in the PRC statutory accounts, after offsetting any prior years’ losses, to the statutory surplus reserve, on an annual basis. When the balance of such reserve reaches 50% of the respective registered capital, any further allocation is optional.

The statutory surplus reserves can be used to offset prior years’ losses, if any, and may be converted into registered capital, provided that the remaining balances of the reserve after such conversion is not less than 25% of registered capital. The statutory surplus reserve is non-distributable.

Recently Issued Accounting Pronouncements [Policy Text Block]

Recently Issued Accounting Pronouncements

In December 2011, the FASB issued Accounting Standards Update 2011-11 (“ASU 2011-11”), Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities. ASU 2011-11 enhances disclosure requirements about the nature of an entity’s right to offset and related arrangements associated with its financial instruments and derivative instruments. The new guidance requires the disclosure of the gross amounts subject to rights of set-off, amounts offset in accordance with the accounting standards followed, and the related net exposure. The new guidance will be effective for us beginning January 1, 2013. Other than requiring additional disclosures, we do not anticipate material impacts on our financial statements upon adoption.

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Unaudited Pro-Forma Financial Information

9 Months Ended

Sep. 30, 2012

Unaudited Pro-Forma Financial Information [Text Block]

14. Unaudited Pro-Forma Financial Information

The accompanying unaudited pro forma financial information for the financial statements for the three and nine months ended September 30, 2011 present the historical financial information of the accounting acquirer. The pro forma financial information is presented for information purposes only. Such information is based upon the standalone historical results of each company and does not reflect the actual results that would have been reported had the acquisition been completed when assumed, nor is it indicative of the future results of operations for the combined enterprise.

The following represents pro forma revenue and earnings information for the three and nine months ended September 30, 2011 as if the acquisition of XcelMobility Inc. and the recapitalization had occurred on the beginning of each of the periods.

		Unaudited, Pro forma		Unaudited, Pro forma
		Three Months Ended		Nine Months Ended
		September 30,		September 30,
		2011		2011
Revenues	$	4,100	$	43,300
Net Profit (Loss) applicable to common shareholders	$	26,700	$	(400,700	)
Loss per share	$	-	$	(0.01	)
Weighted Average Shares Outstanding		60,000,000		60,000,000

The unaudited, pro forma information for the three and nine months ended September 30, 2011 depicted above reflect the impacts of expenses for a total of $300,000 incurred in connection with the recapitalization.

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(Loss) earning per Share

9 Months Ended

Sep. 30, 2012

(Loss) earning per Share [Text Block]

10. (Loss) earning per Share

Basic (loss) earning per share is computed on the basis of the weighted average number of shares of common stock outstanding during the period. Diluted loss per share is computed on the basis of the weighted average number of shares of common stock plus the effect of dilutive potential common shares outstanding during the period using the if-converted method for the convertible notes and preferred stock and the treasury stock method for warrants and options. The following table sets forth the computation of basic and diluted net loss per share:

		For The Three Months Ended						For The Nine Months Ended
		September 30,						September 30,
		2012			2011			2012			2011
Net (loss) available for common shareholders - basic	$	(125,100	)	$	(153,300	)	$	(600,800	)	$	(156,400	)
Interest expense on convertible notes		14,200			5,400			38,700			5,400
Net (loss) available for common shareholders - diluted	$	(110,900	)	$	(147,900	)	$	(562,100	)	$	(151,000	)
Weighted average outstanding shares of common stock – basic and diluted		60,000,000			67,888,043			60,000,000			74,393,407
Loss per share - basic and diluted:
Continuing Operations	$	-		$	-		$	(0.01	)	$	-
Discontinued Operations	$	-		$	-		$	-		$	-
	$	-		$	-		$	(0.01	)	$	-

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Income Tax

9 Months Ended

Sep. 30, 2012

Income Tax [Text Block]

8. Income Tax

We are subject to income tax in the United States, Hong Kong and PRC.

The Company’s subsidiaries, CC Power and CC Investment are incorporated in PRC and are subjected to PRC enterprises income tax at the applicable tax rates on the taxable income as reported in their Chinese statutory accounts in accordance with the relevant enterprises income tax laws (“EIT Law”). The subsidiaries locate in Shenzhen, a special economic region, where companies are allowed to gradually phase into the 25% statutory tax rate. The Company’s statutory income tax rate was 22% and 20% for 2010 and 2009, respectively. For 2011 the statutory income tax rate is 24% and the rate will be 25% for 2012 and thereafter. The open tax years in PRC are 2009-2011.

CC Mobility is incorporated in Hong Kong and is subjected to Hong Kong corporate income tax at 16.5% statutory income tax rate. No Hong Kong profits tax has been provided in the financial statements, as the Company did not have any assessable profits for the three and nine months ended September 30, 2012 and 2011. The open tax year for CC Mobility in Hong Kong is 2011.

The Company has no income tax expense for the three and nine months ended September 30, 2012 and 2011 because it has incurred loss before tax from continuing operation.

The Company applied the provisions of ASC 740.10.50, “Accounting for Uncertainty in Income Taxes”, which provides clarification related to the process associated with accounting for uncertain tax positions recognized in our financial statements. ASC 740.10.50 prescribes a more-likely-than-not threshold for financial statement recognition and measurement of a tax position taken, or expected to be taken, in a tax return. ASC 740.10.50 also provides guidance related to, among other things, classification, accounting for interest and penalties associated with tax positions, and disclosure requirements. The Company recognizes accrued interest and penalties related to unrecognized tax benefits in the provision for income taxes in the statements of operation. The Company’s policy for recording interest and penalties associated with audits is to record such items as a component of income tax expense.

The following table sets forth the components of deferred income taxes as of September 30, 2012 and December 31, 2011:

		September 30,			December 31,
		2012			2011
Deferred tax assets:
Net operating losses - U.S.	$	198,700		$	83,100
Net operating losses - PRC and Hong Kong		146,100			59,100
Deferred revenue		45,700			75,300
Allowance for doubtful accounts		900			900
		391,400			218,400
Valuation allowance		(391,400	)		(218,400	)
Deferred tax assets, net	$	-		$	-

As of September 30, 2012, the Company has net operating losses carry forward of $584,300 in the U.S. and $626,800 in Hong Kong and PRC available to offset future taxable income. They will begin to expire in 2030 and 2012, respectively. We provided for a full valuation allowance against the deferred tax assets of $391,400 on the expected future tax benefits from the net operating loss carry forwards as management believes it is more likely than not that these assets will not be realized in the future.

The change in valuation allowance for the nine months ended September 30, 2012 and 2011 was an increase of $173,000 and an increase of $152,700, respectively.

The Company did not recognize any interest or penalties related to unrecognized tax benefits for the nine months ended September 30, 2012 and 2011.

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Employee Benefits

9 Months Ended

Sep. 30, 2012

Employee Benefits [Text Block]

9. Employee Benefits

The Company contributes to a state pension plan organized by municipal and provincial governments in respect of its employees in PRC. The compensation expense related to this plan was $2,000 and $1,500 for the three months ended September 30, 2012 and 2011, respectively. The compensation expense related to this plan was $4,600 and $3,600 for the nine months ended September 30, 2012 and 2011, respectively.

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Commitments and Contingencies

9 Months Ended

Sep. 30, 2012

Commitments and Contingencies [Text Block]

11. Commitments and Contingencies

Operating commitments:

Operating commitment consists of the lease for office space under operating lease agreement which expired in August 2012 and the Company has renewed the lease for a one year period.

Operating lease agreement generally contains renewal options that may be exercised at the Company’s discretion after the completion of the terms. The Company’s obligations under operating lease are as follows:

Remainder of 2012	$	21,200
2013		63,700
Thereafter		-
Total minimum payment	$	84,900

The Company incurred rental expenses of $21,300 and $7,200 for the three months ended September 30, 2012 and 2011, respectively.

The Company incurred rental expenses of $63,800 and $18,900 for the nine months ended September 30, 2012 and 2011, respectively.

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Summary of Significant Accounting Policies (Narrative) (Details)	9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 CNY
Summary Of Significant Accounting Policies 1	$ 300
Summary Of Significant Accounting Policies 2	29,300	29,300
Summary Of Significant Accounting Policies 3		10,000,000
Summary Of Significant Accounting Policies 4	47,000
Summary Of Significant Accounting Policies 5	5,800
Summary Of Significant Accounting Policies 6	192,500
Summary Of Significant Accounting Policies 7	15,500
Summary Of Significant Accounting Policies 8		6.3265
Summary Of Significant Accounting Policies 9	1
Summary Of Significant Accounting Policies 10		6.318
Summary Of Significant Accounting Policies 11	1
Summary Of Significant Accounting Policies 12		6.3952
Summary Of Significant Accounting Policies 13	1
Summary Of Significant Accounting Policies 14		6.4972
Summary Of Significant Accounting Policies 15	1
Summary Of Significant Accounting Policies 16		6.3585
Summary Of Significant Accounting Policies 17	1
Summary Of Significant Accounting Policies 18		6.464
Summary Of Significant Accounting Policies 19	$ 1
Summary Of Significant Accounting Policies 20	10.00%	10.00%
Summary Of Significant Accounting Policies 21	50.00%	50.00%
Summary Of Significant Accounting Policies 22	25.00%	25.00%

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Schedule of Deferred Tax Assets and Liabilities (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Income Tax Schedule Of Deferred Tax Assets And Liabilities 1	$ 198,700
Income Tax Schedule Of Deferred Tax Assets And Liabilities 2	83,100
Income Tax Schedule Of Deferred Tax Assets And Liabilities 3	146,100
Income Tax Schedule Of Deferred Tax Assets And Liabilities 4	59,100
Income Tax Schedule Of Deferred Tax Assets And Liabilities 5	45,700
Income Tax Schedule Of Deferred Tax Assets And Liabilities 6	75,300
Income Tax Schedule Of Deferred Tax Assets And Liabilities 7	900
Income Tax Schedule Of Deferred Tax Assets And Liabilities 8	900
Income Tax Schedule Of Deferred Tax Assets And Liabilities 9	391,400
Income Tax Schedule Of Deferred Tax Assets And Liabilities 10	218,400
Income Tax Schedule Of Deferred Tax Assets And Liabilities 11	(391,400)
Income Tax Schedule Of Deferred Tax Assets And Liabilities 12	(218,400)
Income Tax Schedule Of Deferred Tax Assets And Liabilities 13	0
Income Tax Schedule Of Deferred Tax Assets And Liabilities 14	$ 0

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Restricted Stock to Director

9 Months Ended

Sep. 30, 2012

Restricted Stock to Director [Text Block]

16. Restricted Stock to Director

On April 20, 2012, the Board of Directors of the Company appointed Jack Zwick as the independent director of the Company and granted to Mr. Zwick 360,000 shares of the Company’s common stock. The restricted stock shall vest with respect to 1/8 th of the total number of restricted stock per quarter from vesting commencement date of April 1, 2012 such that all restricted stock shall vest on January 1, 2013, subject to his continuous service. The fair value of the restricted stock on the grant date is $201,600.

On August 14, 2012, the Board of Directors of the Company granted 360,000 shares of the Company’s common stock to Gregory Tse for his service to serve as the Company’s independent director. The restricted stock shall vest with respect to 135,000 shares of Restricted Stock immediately, 45,000 shares on September 1, 2012, 45,000 shares on January 1, 2013, 45,000 shares on May 1, 2013, 45,000 shares on September 1, 2013, and the remaining 45,000 shares on January 1, 2014, subject to his continuous service. The fair value of the restricted stock on the grant date is $82,800.

The fair value of the restricted stock is recognized as stock based compensation over the service period. The shares have not been issued as of September 30, 2012.

During the three and nine months ended September 30, 2012, 45,000 and 270,000 shares were vested and stock based compensation expense totaled $25,200 and $88,800 were recorded, respectively.

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Equity Investment in Affiliated Company and Deconsolidation of Subsidiary (Tables)

9 Months Ended

Sep. 30, 2012

Results of Discontinued Operations for Nanovision [Table Text Block]

		For the Three		For the Nine
		Months Ended		Months Ended
		September 30,		September 30,
		2011		2011
Net revenues	$	-		84,000
Total cost of sales and expenses		-		78,600
Investment income from equity investment in discontinued operation		23,000		23,000
Gain (loss) on disposal of discontinued operation		(4,800	)	4,100
Income before tax		18,200		32,500
Income tax (income)/expense		-		1,300
Gain from discontinued operation	$	18,200		31,200

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Schedule of Movement in Deferred Revenue (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Deferred Revenue Schedule Of Movement In Deferred Revenue 1	$ 301,200
Deferred Revenue Schedule Of Movement In Deferred Revenue 2	44,400
Deferred Revenue Schedule Of Movement In Deferred Revenue 3	94,700
Deferred Revenue Schedule Of Movement In Deferred Revenue 4	15,000
Deferred Revenue Schedule Of Movement In Deferred Revenue 5	95,000
Deferred Revenue Schedule Of Movement In Deferred Revenue 6	(40,300)
Deferred Revenue Schedule Of Movement In Deferred Revenue 7	(111,200)
Deferred Revenue Schedule Of Movement In Deferred Revenue 8	73,500
Deferred Revenue Schedule Of Movement In Deferred Revenue 9	(197,100)
Deferred Revenue Schedule Of Movement In Deferred Revenue 10	(13,500)
Deferred Revenue Schedule Of Movement In Deferred Revenue 11	182,600
Deferred Revenue Schedule Of Movement In Deferred Revenue 12	$ 79,100

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Concentrations, Risks, and Uncertainties (Narrative) (Details)	9 Months Ended
	Sep. 30, 2012
Concentrations, Risks, And Uncertainties 1	10.00%
Concentrations, Risks, And Uncertainties 2	82.00%
Concentrations, Risks, And Uncertainties 3	90.00%
Concentrations, Risks, And Uncertainties 4	89.00%
Concentrations, Risks, And Uncertainties 5	24.00%
Concentrations, Risks, And Uncertainties 6	0
Concentrations, Risks, And Uncertainties 7	0
Concentrations, Risks, And Uncertainties 8	0
Concentrations, Risks, And Uncertainties 9	70.00%
Concentrations, Risks, And Uncertainties 10	10.00%

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash Flows from Operating Activities:
Net loss	$ (600,800)	$ (156,400)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation	14,300	9,100
Stock compensation expenses	88,900	0
Gain on disposal of subsidiaries	0	(4,100)
Investment income from equity investment in affiliate	0	(27,100)
Changes in assets and liabilities:
Trade accounts receivable	(19,300)	1,400
Other receivables and prepayment	(300)	(10,300)
Advances to suppliers	(3,400)	0
Inventory	(300)	0
Accounts payable	64,100	0
Accrued interest	38,700	5,400
Other payables and accrued expenses	(12,600)	133,300
Deferred revenue	(120,300)	32,800
Net cash used in continuing operating activities	(551,000)	(15,900)
Net Cash Used In Discontinued Operating Activities	0	(500)
Net Cash Used In Operating Activities	(551,000)	(16,400)
Cash Flows from Investing Activities:
Purchase of property, plant and equipment, net of value added tax refunds received	(41,500)	(12,900)
Cash acquired in CC Mobility and XcelMobility	0	193,900
Proceeds from disposal of ownership interest in affiliate	0	92,300
Net Cash ( Used In) Provided By Investing Activities	(41,500)	273,300
Cash Flows from Financing Activities:
Proceeds from issuance of notes payable	213,000	400,000
Receipt of amount due from shareholder	0	32,300
Net Cash Provided By Financing Activities	213,000	432,300
Effect of Exchange Rate Changes on Cash and Cash Equivalents	3,200	2,600
Net Change in Cash and Cash Equivalents	(376,300)	691,800
Cash and Cash Equivalents at Beginning of Period	615,200	8,800
Cash and Cash Equivalents at End of Period	238,900	700,600
Supplement Cash Flow Information
Cash paid during the period for interest	0	0
Cash paid during the period for income taxes	0	0
Convertible notes payable assumed from reverse merger	$ 0	$ 400,000

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Equity Investment in Affiliated Company and Deconsolidation of Subsidiary

9 Months Ended

Sep. 30, 2012

Equity Investment in Affiliated Company and Deconsolidation of Subsidiary [Text Block]

5. Equity Investment in Affiliated Company and Deconsolidation of Subsidiary

On June 15, 2011, CC Power sold 25% of its ownership in Nanovision to an unrelated party for RMB250,000. After the disposition, CC Power retains 35% ownership interest in Nanovision as of June 30, 2011. The fair value of our 35% retained interest approximates the pro-rata share of the net asset value of Nanovision as of the date of disposal, which is approximately $35,000.

During the three months period ended September 30, 2011, despite CC Power has no continue involvement in the operation of Nanovision, it retains voting rights and 35% ownership interest in Nanovision and therefore has significant influence on Nanovision. As such, CC Power accounts for its investment in Nanovision under the equity method during the three months ended September 30, 2011.

Prior to the disposition of the 25% equity interest in Nanovision, CC Power held 60% equity interest in Nanovision. Up through June 15, 2011, Nanovision was consolidated with CC Power.

In August 2011, CC Power disposed its remaining 35% ownership interest in Nanovision to Xili Wang, sole shareholder of CC Power for proceeds totaled RMB350,000. After the disposition, CC Power has no ownership interest and no involvement in Nanovision.

The results of operations for Nanovision for the three and nine months ended September 30, 2011, which includes the calibration panel sales segment and the technical consulting service segment, are reported as a discontinued operation.

The following are the summarized results of discontinued operations for Nanovision attributable to the Company for the three and nine months ended September 30, 2011.

		For the Three		For the Nine
		Months Ended		Months Ended
		September 30,		September 30,
		2011		2011
Net revenues	$	-		84,000
Total cost of sales and expenses		-		78,600
Investment income from equity investment in discontinued operation		23,000		23,000
Gain (loss) on disposal of discontinued operation		(4,800	)	4,100
Income before tax		18,200		32,500
Income tax (income)/expense		-		1,300
Gain from discontinued operation	$	18,200		31,200

As of September 30, 2012 and December 31, 2011, the Company has no ownership interest in Nanovision and therefore the balance sheet of the discontinued operations is not included in the condensed consolidated balance sheet of the Company.

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Deferred Revenue (Tables)

9 Months Ended

Sep. 30, 2012

Schedule of Deferred Revenue [Table Text Block]

		September 30,		December 31,
		2012		2011
Deferred revenue:
Current	$	161,900	$	290,500
Non-current		20,700		10,700
Total	$	182,600	$	301,200

Schedule of Movement in Deferred Revenue [Table Text Block]

		For the nine months ended September 30,
		2012		2011
Deferred revenue, balance at beginning of period	$	301,200		44,400
Add: Payments received from customers during the nine months		94,700		15,000
Add: Government grant received during the nine months		95,000		(40,300	)
Less: government grant earned during the nine months		(111,200	)	73,500
Less: Revenue earned during the nine months		(197,100	)	(13,500	)
Deferred revenue, balance at end of period	$	182,600		79,100

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Income Tax (Narrative) (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Income Tax 1	25.00%
Income Tax 2	22.00%
Income Tax 3	20.00%
Income Tax 4	24.00%
Income Tax 5	25.00%
Income Tax 6	16.50%
Income Tax 7	$ 584,300
Income Tax 8	626,800
Income Tax 9	391,400
Income Tax 10	173,000
Income Tax 11	$ 152,700

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Related Party Transaction

9 Months Ended

Sep. 30, 2012

Related Party Transaction [Text Block]

15. Related Party Transaction

Effective October 1, 2011 for a period of one year, the Company’s subsidiary, CC Mobility engaged the Company’s shareholder, CC Wireless Limited, to provide technical consultation for product R&D and business development. The monthly fee is determined periodically. During the three and nine months ended September 30, 2012, $14,100 and $42,700, respectively, of consulting fee were paid to CC Wireless Limited.