0001136261-12-000491.txt : 20120913 0001136261-12-000491.hdr.sgml : 20120913 20120913140210 ACCESSION NUMBER: 0001136261-12-000491 CONFORMED SUBMISSION TYPE: 10-Q/A PUBLIC DOCUMENT COUNT: 8 CONFORMED PERIOD OF REPORT: 20120630 FILED AS OF DATE: 20120913 DATE AS OF CHANGE: 20120913 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ZOOM TECHNOLOGIES INC CENTRAL INDEX KEY: 0000822708 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE & TELEGRAPH APPARATUS [3661] IRS NUMBER: 510448969 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q/A SEC ACT: 1934 Act SEC FILE NUMBER: 000-18672 FILM NUMBER: 121089809 BUSINESS ADDRESS: STREET 1: C/O BARRY I. GROSSMAN, ESQ., ELLENOFF STREET 2: GROSSMAN & SCHOLE, 150 EAST 42ND STREET CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 9176090333 MAIL ADDRESS: STREET 1: C/O BARRY I. GROSSMAN, ESQ., ELLENOFF STREET 2: GROSSMAN & SCHOLE, 150 EAST 42ND STREET CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: ZOOM TELEPHONICS INC DATE OF NAME CHANGE: 19950622 10-Q/A 1 form10qa.htm 10-Q/A June 30, 2012 DOC


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

FORM 10-Q/A

(Mark One)

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

FOR THE QUARTER ENDED JUNE 30, 2012

OR

[  ] 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 000-18672

ZOOM TECHNOLOGIES, INC.
(Exact name of Registrant as Specified in its Charter)

 
Delaware
51-0448969
  (State or Other Jurisdiction of Incorporation or Organization) 
(I.R.S. Employer Identification Number)

Headquarters:
Sanlitun SOHO, Building A, 11th Floor
No.8 Workers Stadium North Road
Chaoyang District, Beijing, China 100027

U.S. office:
c/o Ellenoff Grossman & Schole LLP
150 East 42nd Street, 11th Floor
New York, NY 10017
(Address of principal executive offices including zip code)

(917) 609-0333
(Registrant's telephone number, including area code)

 
(Former name, former address and former fiscal year, if changed since last report)

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 reports), and (2) has been subject to such filing requirements for the past 90 days.
YES    x        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).     YES  x     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 definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer    ¨

Accelerated filer    ¨

Non-accelerated filer    ¨
(Do not check if a smaller reporting company)

Smaller reporting company    x

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

Applicable only to corporate issuers:

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date: The number of shares of common stock, par value $0.01, outstanding as of August 15, 2012 is 29,106,668.



Explanatory Note

The sole purpose of this amendment on Form 10-Q/A to Zoom Technologies, Inc.'s quarterly report on Form 10-Q for the period ended June 30, 2012, as originally filed with the Securities and Exchange Commission on August 20, 2012 ("the Form 10-Q"), is to furnish Exhibit 101 to the Form 10-Q, as required by Rule 405 of Regulation S-T.

No other changes have been made to the Form 10-Q. This Form 10-Q/A speaks as of the original filing date of the Form 10-Q, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Form 10-Q.

Users of this data are advised that pursuant to Rule 402 of Regulation S-T, the information in these exhibits shall not be deemed to be "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 6. Exhibits.

The following exhibits are included with this report.

Exhibit 31.1*     Rule 13a-14(a) / 15d-14(a) Certification of Lei Gu, CEO.
Exhibit 31.1*     Rule 13a-14(a) / 15d-14(a) Certification of Anthony K. Chan, CFO.
Exhibit 32.0*     Section 1350 Certifications.
101.INS**     XBRL Instance Document
101.SCH**     XBRL Taxonomy Extension Schema Document
101.CAL**     XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF**     XBRL Taxonomy Extension Definition Linkbase Document
101.LAB**     XBRL Taxonomy Extension Label Linkbase Document
101.PRE**     XBRL Taxonomy Extension Presentation Linkbase Document

_______________

*

Filed previously.

**

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.


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 on September 13, 2012 by the undersigned, thereunto duly authorized.

Zoom Technologies, Inc.
(Registrant)

By: /s/ Lei Gu
Lei Gu
Chief Executive Officer

 

 

 

 

 

 

 

 


INDEX TO EXHIBITS

Exhibits:

31.1*

Rule 13a-14(a) / 15d-14(a) Certification of Lei Gu, CEO

31.2*

Rule 13a-14(a) / 15d-14(a) Certification of Anthony K. Chan, CFO

32.0*

Section 1350 Certifications

101.INS**

XBRL Instance Document

101.SCH**

XBRL Taxonomy Extension Schema Document

101.CAL**

XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF**

XBRL Taxonomy Extension Definition Linkbase Document

101.LAB**

XBRL Taxonomy Extension Label Linkbase Document

101.PRE**

XBRL Taxonomy Extension Presentation Linkbase Document

 

 

_______________

*

Filed previously.

**

XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.


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Due to the Net Income of Zoom as reported in the Company's annual report for the year 2010 exceeding the eligibility threshold pursuant to the agreement, the Series E Warrants became ineligible for exercise.</p> <p style="font: 10pt Times New\000D\000ARoman; margin: 0">The Company granted on May 6, 2010, Series F warrants to the above investors for their temporary forfeiture of their right to participate in the Company's future financings.</p> <p style="font: 10pt Times New\000D\000ARoman; margin: 0"><u>&#160;</u></p> <p style="font: 10pt Times New\000D\000ARoman; margin: 0"><u>Series F Warrants</u>: The Series F warrants have an exercise price of $6.00 and a term of 5 years from the issue date. The Company issued 375,000 Series F warrants to investors who participated in private placement transaction pursuant to the Securities Purchase Agreement dated October 15, 2009, to temporarily waive their right for a period of eight months to participate in a future offering of the Company. The investors originally have a period of twenty-four months (&#34;Rights Period&#34;) in which they have the right to participate, and for providing a temporary waiver, an eight-month duration is added to the original expiration of the Rights Period.</p> <p style="font: 10pt Times New\000D\000ARoman; margin: 0">The Company granted Series G warrants to the accredited investors as part of its private place offering on November 15, 2010.</p> <p style="font: 10pt Times New\000D\000ARoman; margin: 0"><u>&#160;</u></p> <p style="font: 10pt Times New\000D\000ARoman; margin: 0"><u>Series G Warrants</u>: The Series G warrants shall have an exercise price of $4.71 and a term of 5 years from the issue date.</p> <p style="font: 10pt Times New\000D\000ARoman; margin: 0">&#160;</p> <p style="font: 10pt Times New\000D\000ARoman; margin: 0">Anti-dilution Adjustments for Certain Warrants: Since the private placement in November 2010 involved sales of the Company's stock at a price that activated anti-dilution provisions in the Series A, C, F and certain placement agent warrants, the exercise price of these warrants is adjusted to $3.74 per share and the number of warrants eligible is multiplied by a factor of 6 / 3.74 or 1.60 with fractional shares rounding up.</p> 143924 8638604 8638604 0 0 0 2.30 2.30 0 0 0 0 0 0 0 2.60 2.30 8638604 2.30 5.00 5.00 5.00 5.00 3.25 2.28 1.50 0.53 3.25 0.4663 0.3030 0.3030 0.3357 0.3918 0.3359 0.3918 0.3359 0.3342 0.0237 0.0210 0.0210 0.0151 0.0126 0.0078 0.0078 0.0028 0.0084 6.87 5.52 5.52 3.99 6.18 3.54 6.18 3.54 3.45 6.00 6.00 6.90 4.71 6.18 5.70 6.18 5.392 3.75 1810000 129350 0 3557000 1810000 0 0 0 0 1339000 0 0 0 0 0 2.97 1.80 0 3.02 2.97 0 0 3.18 0 0 0 0 3.18 2.96 767500 2.74 191156 965680 7300000 30570000 3500000 0.34 0.25 0.25 0.25 0.165 0.165 0.34 20 10200000 10200000 Per purchase contract signed in 2010, CECCC provided mobile phone components to the Company. The Company paid in advance to CECCC by payment of ' bank notes'. During 2011, no purchase transaction was completed. As of June 30, 2012, the total outstanding amount is $8.9 million (RMB 56.6 million) which represents bank notes paid by the bank to CECCC but no purchases made by the Company. Based on a corporate guarantee from the Company and a personal guarantee from Mr. Gu for financing up to 85% of invoice for approved buyer of Profit Harvest, this loan is subject to certain covenants which should be complied at all times. Those covenants includes but not limited to tangible net worth not less than $40 million and net gearing not greater than 1.2 times. As of December 31, 2011, the Company was in violation of one of its loan covenant with HSBC. The covenant calls for the Guarantor, Zoom, on behalf of the Borrower, Profit Harvest, to maintain a minimum tangible net worth of $40,000,000. The Company's tangible net worth at December 31, 2011 was $39,673,617 (Stockholders' equity of $76,778,641 less Goodwill of $36,332,497, less intangible assets of $772,527). With exception to the aforementioned covenant violation, the Company complied with all the other covenants. The Company repaid the loan to HSBC Suzhou Branch on February 13, 2012. The loan was renewed by HSBC in April 2012 requiring the sam Current portion of acquisition payable related to our acquisition of Nollec Wireless on June 1, 2010 of $312,500 (see Note 1). Accrued expenses include a $2.4 million retention bonus payable to certain executives of Portables for services rendered prior to the acquisition. 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Ltd - related party Major Customers [Axis] Tianjin Optical &amp;amp; Electronic Co. Ltd. Tianjin Optical Communication Technology Co., Ltd. Tianjin 712 Communications and Broadcasting Ltd. - related party Larson Limited Leimone (Tianjin) Industrial Co., Ltd. - related party TMO Tianjin Tong Guang Group BeijingLeimone Shengtong Wireless Leimone (Tianjin) Industrial Beijing Leimone Shengtong Cultural TianjinTongGuang Group Shenzhen Leimone 712 (Prior Shareholder) Raja R Amar - CEO Portables AUM Realty Gu Wireless Holdings of Northeast Portables Unlimited International Portables Unlimited Others July 2. 2012 SharebasedEmployeeAndNonemployeeServicesTransactions [Axis] May 22, 2012A May 22, 2012B Feb 28, 2012 Oct 4, 2011 Nov 29, 2011 Series A Class of Warrant or Right [Axis] Series B Series C Series D Series E Series F Series G A C and Placement Agent Warrants of $3.26 F Warrants of $1.51 Placement Agent Warrants of $1.23 G and Placement Warrants of $1.04 Old Plan 865,000 Options Reprice 865,000 Options 235,000 Options Reprice 235,000 Options 677,000 Options Zoom Technologies Legal Entity [Axis] Nollec Wireless Profit Harvest Document And Entity Information Entity Registrant Name Entity Central Index Key Document Type Document Period End Date Amendment Flag Current Fiscal Year End Date Is Entity a Well-known Seasoned Issuer? Is Entity a Voluntary Filer? Is Entity's Reporting Status Current? Entity Filer Category Entity Public Float Entity Common Stock, Shares Outstanding Document Fiscal Period Focus Document Fiscal Year Focus Statement of Financial Position [Abstract] ASSETS Current assets Cash and cash equivalents Restricted cash Accounts receivable, net Inventories, net Purchase deposit Other receivables and prepaid expenses Advance to suppliers Notes receivable Due from related parties Costs in excess of revenue - R&D contracts Deferred tax assets, net Total current assets Long-term investment Property, plant and equipment, net Equipment deposit Construction in progress deposit - related parties Intangible assets Goodwill TOTAL ASSETS LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Short-term loans Notes payable Accounts payable Accrued expenses and other payables Advance from customers Taxes payable Interest payable Dividends payable Due to related parties Total current liabilities Long-term payables Long-term notes payable Long-term loan TOTAL LIABILITIES COMMITMENTS STOCKHOLDERS' EQUITY Preferred stock: authorized 1,000,000 shares, par value $0.01 none issued and outstanding as of June 30, 2012 Common stock: authorized 35,000,000 shares, par value $0.01 Issued 28,935,723 shares and outstanding 28,934,043 shares; and Issued 23,865,723 shares and outstanding 23,864,043 shares at June 30, 2012 and December 31, 2011, respectively Shares to be issued Deferred expenses Additional paid-in capital Treasury shares: 1,680 shares at cost Statutory surplus reserve Accumulated other comprehensive income Retained earnings TOTAL STOCKHOLDERS' EQUITY Noncontrolling interest TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY Preferred stock, par value Preferred stock, shares authorized Preferred stock, shares issued Preferred stock, shares outstanding Common stock, par value Common stock, shares authorized Common stock, shares issued Common stock, shares outstanding Treasury shares, at cost Income Statement [Abstract] Net revenues Cost of goods sold Gross profit Operating expenses: Sales and marketing General and administrative Research and development Non-cash equity-based compensation Total operating expenses Income from operations Other income (expenses) Interest income Loss on disposal of fixed assets Government grants Other income Interest expense Exchange (loss) Other expenses Total other expenses Income before income taxes and noncontrolling interest Income taxes Income before noncontrolling interest Less: income (loss) attributable to noncontrolling interest Net income attributable to Zoom Technologies Inc. Basic and diluted income per common share: Basic Diluted Weighted average common shares outstanding: Basic Diluted Statement of Income and Comprehensive Income [Abstract] Net income attributable to Zoom Technologies Inc. Net income attributable to noncontrolling interest Other comprehensive income: Foreign currency translation adjustments - Zoom Technologies Inc. Foreign currency translation adjustments - noncontrolling interest Comprehensive income - Zoom Technologies Inc. Comprehensive income - noncontrolling interest Statement of Cash Flows [Abstract] Cash flows from operating activities: Income including noncontrolling interest Adjustments to reconcile income to cash including non-controlling interest provided by (used in) operating activities: Depreciation and amortization Provision for inventory obsolescence Provision on accounts receivable Loss on disposal of fixed assets Changes in deferred tax assets Changes in operating assets and liabilities: Accounts receivable Inventories Advances to suppliers Prepaid expenses and other assets Accounts payable Advance from customers Related parties-net Accrued expenses and other current liabilities Net cash provided by (used in) operating activities Cash flows from investing activities: Restricted cash Purchase of property and equipment and other long-term assets Proceeds from collection on notes receivable Equity method investee Refund from factory construction deposit Cash increase due to acquisition of subsidiaries Net cash provided by investing activities Cash flows from financing activities: Issuance of shares for cash Proceeds from short-term loans Advance to related parties Proceeds from borrowings from related parties Repayment on notes payable Receipts from (payments) to related parties Repayment on borrowing from related parties Receipt from related parties Repayments on short-term loans Repayments on long-term loan Net cash provided by (used in) financing activities Effect of exchange rate changes on cash & cash equivalents Net increase in cash and cash equivalents Cash and cash equivalents, beginning balance Cash and cash equivalents, ending balance SUPPLEMENTARY DISCLOSURES: Interest paid Income tax paid Non-cash investing and financing activities Acquision of 100% of CDE by issuing 484,800 shares Notes to Financial Statements ORGANIZATION AND NATURE OF BUSINESS OPERATIONS - Note 1 BASIS OF PRESENTATION SUMMARY OF ACCOUNTING POLICIES - Note 2 MERGER AND ACQUISITION - Note 3 RESTRICTED CASH - Note 4 ACCOUNTS RECEIVABLE - Note 5 INVENTORIES - Note 6 ADVANCE TO SUPPLIERS - Note 7 PURCHASE DEPOSIT - Note 8 OTHER RECEIVABLES & PREPAID EXPENSES - Note 9 RESEARCH AND DEVELOPMENT CONTRACTS IN PROGRESS - Note 10 PROPERTY, PLANT AND EQUIPMENT - Note 11 CONSTRUCTION IN PROGRESS DEPOSIT - RELATED PARTIES - Note 12 INTANGIBLE ASSETS - Note 13 SHORT-TERM LOANS - Note 14 NOTES PAYABLE - Note 15 ACCRUED EXPENSES AND OTHER PAYABLES - Note 16 DIVIDENDS PAYABLE - Note 17 RELATED PARTY TRANSACTIONS - Note 18 LONG-TERM PAYABLES - Note 19 LONG-TERM NOTES PAYABLE - Note 20 STOCKHOLDERS' EQUITY - Note 21 STOCK OPTIONS - Note 22 INCOME TAX - Note 23 STATUTORY RESERVES - Note 24 CONCENTRATION DISCLOSURE - Note 25 OPERATING RISK - Note 26 COMMITMENTS - Note 27 Investments, Debt and Equity Securities [Abstract] INVESTMENT IN SPREADZOOM - Note 28 Subsequent Events [Abstract] SUBSEQUENT EVENT - Note 29 Principles of Consolidation Equity Method Accounting Basis of Presentation Use of Estimates Risks and Uncertainties Comprehensive Income Foreign Currency Transactions Cash and Equivalents Accounts Receivable Inventories Property, Plant and Equipment Capitalized Interest Impairment of Long-lived Assets Goodwill Revenue Recognition Income Taxes Operating Leases Research and Development Costs Earnings Per Share Fair Values of Financial Instruments Concentration of Credit Risk Non-controlling Interests Statement of Cash Flows Recent Accounting Pronouncements Accounting Policies Property Plant And Equipment Tables Property, Plant and Equipment, Useful Life, Average Accounting Policies Fair Value Of Financial Instruments Tables Fair Value Measurement (Tables) Property, Plant and Equipment [Abstract] Fair value of assets acquired and liabilities assumed Schedule of goodwill Accounts Receivable Tables Accounts receivable Inventories Tables Inventories Advance To Suppliers Tables Advance to Suppliers Purchase Deposit Tables Purchase Deposit Other Receivables And Prepaid Expenses Tables Other receivables and prepaid expenses Research And Development Contracts In Progress Tables Research and development contracts in progress Property Plant And Equipment Tables Components of Property, Plant and Equipment Construction In Progress Deposit - Related Party Tables Construction in Progress Deposit - Related Party Intangible Assets Tables Carrying values of intangible assets Short-Term Loans Tables Short-term loans Notes Payable Tables Notes Payable Accrued Expenses And Other Payables Tables Accrued expenses and other payables Related Party Transactions Tables Due From Related Parties Due To Related Parties Long-Term Notes Payable Tables Long-Term Notes Payable Stockholders Equity - Warrants Tables Warrant activity and summary Statement [Table] Statement [Line Items] Option plan activity Option plan summary Income Tax Expense (Benefit) [Abstract] Schedule of Tax Effects of Temporary Differences that Give Rise to Significant Portions of Deferred Tax Assets and Liabilities Schedule of Effective Income Tax Rate and Amount Reconciliation Concentration Disclosure Tables Schedule of Major Customers and Suppliers ScheduleOfOperatingLeaseCommitmentByEntityAxis [Axis] Future minimum annual operating lease payments Long-term Debt, Type [Axis] AdditionalBusinessAcquisitionAxis [Axis] Unusual or Infrequent Item [Axis] SaleAxis [Axis] Statement, Scenario [Axis] Intercompany Foreign Currency Balance by Description [Axis] Investments in and Advances to Affiliates Categorization [Axis] Gold Lion, percentage of company owned Jiangsu Leimone, outstanding stock owned Mr. Gu, percentage of company owned Mr. Dr, outstanding capital stock owned Shares Outstanding Former Gold Lion shareholders ownership Shares outstanding prior to merger Optional percentage of outstanding capital stock Optional shares of outstanding capital stock Dividend of issued and outstanding stock to stockholders Maximum Shares sold per month Zoom percentage of shares aquired Silver Tech percentage owned Ever Elite percentage owned Key Network Holdings percentage owned Better Day Fiance percentage owned Percentage of oustanding stock purchased Total cost of acquisition Common stock issued Consideration in shares of common stock Cash paid for acquisition of business Balance of payment for acquisition remaining Number of installments to pay balance of cash due for acquisition Period within balance of acquisition cost is to be paid Payments remaining on acquisition cost Value of each remaining payment from acquisition Acquisition percentage of company Titles developed for Iphone Promissory note issued for acquisition Promissory note interest rate Years until promissory note matures Debt acquired from acquisition Letter of credit to pay obligations from acquisition Debt aquired from acquisition Change in ownership resulting from non-payment, starting value Change in ownership resulting from non-payment, ending value Portables ownership percentage of company Derecognized assets Complaint seeks damages up to The Company's ownership in complaint Minimum shares held for Spreadtrum to nominate to board of directors Shares Issued Investment in TCB Digital Cao interest in TCB traded to Gu Cao interest in Gold Lion gained from Gu Shares issued Investment in Jiangsu Leimone Accounting Policies Foreign Currency Transactions Narrative Details Foreign currency translation adjustment included in accumulated other comprehensive income in stockholders' equity Property, Plant and Equipment, Useful Life, Average Property, Plant and Equipment, Useful Life, Minimum Property, Plant and Equipment, Useful Life, Maximum Accounting Policies Impairment Of Long-Lived Assets Narrative Details Impairment of Long-lived Assets Accounting Policies Goodwill Narrative Details Accumulated impairment of goodwill Business Acquisition, Effective Date of Acquisition Business Acquisition, Name of Acquired Entity Business Acquisition, Description of Acquired Entity Business Combination, Reason for Business Combination Business Acquisition, Cost of Acquired Entity, Cash Paid Business Acquisition, Percentage of Voting Interests Acquired Cash acquired Other receivables Prepaid expenses Accounts receivable Inventory Due from related parties Fixed assets Equipment deposit Intangible assets Goodwill Short-term loan Notes payable Accounts payable MPF payable Accrued expenses Due to related party Other payables Valuatiuon of non-controlling interest Purchase price Goodwill, Gross Less: Impairment Total goodwill Accounts Receivable Details Accounts receivable Less: Allowance for doubtful accounts Accountants receivable, net Balance Sheet Related Disclosures [Abstract] Raw materials Finished goods Inventories, gross Less: Allowance for obsolete inventories Advance To Suppliers Details Yuechangrui Media Tak Inc. Shenzhen Sangfei Entertainment Communication Co., Ltd. Dongguan Yaxin Semi-conductor Co., Ltd. Shenzhen Bolixin Technology Co., Ltd. Shenzhen Zhuoershi Electronic Technology Co., Ltd. Shenzhen Tongxincheng Photoelectric Co., Ltd. Shenzhen Chuangjie Supply Chain Co., Ltd. Jiangxi TongGuJiangQian Foshan Import and Export Dewav Technology Qualcomm Konka Other - multiple vendors of various amounts Total advance to suppliers ClassOfPurchaseDepositAxis [Axis] Other Receivables And Prepaid Expenses Details Advance to employees Deposit for equipment lease Prepaid expenses Bank notes (a) Other Total other receivables Research And Development Contracts In Progress Details Machinery and equipment Electronic equipment Transportation equipment Workshop reconstruction Leasehold improvements Computer equipment Office equipment Property and equipment, gross Less: Accumulated depreciation Construction In Progress Deposit Related Party Details Useful life Intangible assets, gross Less: Accumulated amortization Intangible assets, net Intangible Assets Narrative1 Details Amortization of intangible assets Intangible Assets Narrative2 Details Finite-Lived Intangible Assets, Future Amortization Expense [Abstract] 2013 2014 2015 2016 2017 Thereafter Total Short-term Debt, Lender Short-term Debt, Terms Accrued Expenses And Other Payables Details Accrued filing fees Accrued rework cost Accrued commission payable Acquisition payable* Accrued expenses Welfare & salary payable Others Due from related parties Due to related parties Revenues from sales to Electronics Science and Tech Beijing Leimone borrowed money maturity duration Purchases from Tianjin Leimone Amount due from Tianjin Leimone Balance of loans Tianjin Tong Guang Group ownership of TCB subsidiary Total sales to 712 Balance of Sales Payment to acquire materials Balance of Loan Advance from related party Total Sales Balance of funds provided by Gu Related party payable TCB Digital purchases from Tianjin Leimone Portables line of credit Line of credit interest rate Line of credit unpaid balance Advances from related party interest rate Long-Term Payables Narrative Details Long-Term Notes Payable Details Long-term debt, description Interest rate SharebasedEmployeeAndNonemployeeServicesTransactionsAxis [Axis] Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures Sale of Stock, price per share Share-based Compensation Options cancelled Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized Exercise price, in dollars Warrant exercise term Description of warrants Stockholders Equity Warrants Activity Details Balance, December 31, 2011 Granted Lapsed Exercised Cancelled Balance, June 30, 2012 Weighted-average exercise price, beginning balance Weighted-average exercise price, granted Weighted-average exercise price, lapsed Weighted-average exercise price, exercised Weighted-average exercise price, cancelled Weighted-average exercise price, ending balance Aggregate intrinsic value, beginnig balance Aggregate intrinsic value, ending balance Stockholders Equity Summary Of Warrants Outstanding And Exercisable Details Warrants outstanding, Weighted-average remaining life, in years Warrants outstanding, Weighted-average exercise price Warrants exercisable, at June 30, 2012 Warrants exercisable, Weighted-average exercise price Stock price Exercise price Expected life Volatility Discount rate Balance, December 31, 2011 Granted Lapsed Exercised Cancelled Balance, June 30, 2012 Weighted-average exercise price of options outstanding, December 31, 2011 Weighted-average exercise price of options granted during period Weighted-average exercise price of options lapsed during the period Weighted-average exercise price of options exercised during the period Weighted-average exercise price of options cancelled during the period Weighted-average exercise price of options outstanding, June 30, 2012 Aggregate Intrinsic Value, December 31, 2011 Aggregate Intrinsic Value, June 30, 2012 Stockholders Equity Summary Of Options Outstanding And Exercisable Details Options Outstanding, Number of Shares Options Outstanding, Weighted-Average Remaining Contractual Term (in years) Options Outstanding, Weighted-Average Exercise Price Per Share Options Exercisable, Number of Shares Options Exercisable, Weighted-Average Exercise Price Per Share Non-cash compensation expense related to stock options Non-cash compensation expense related to stock options to be recorded up to 2014 Statutory tax rate Net operating loss carry forward period, years Net operating loss ("NOL") carry forwards Deferred tax asset valuation allowance provided Pre-tax profit (loss) Income Tax Schedule Of Tax Effects Of Temporary Differences In Deferred Tax Assets And Liabilities Details Deferred tax assets: Inventory impairment reserve Inventory shortage Long-term investment impairment Total gross deferred assets Less: Valuation allowance Total deferred tax assets Deferred tax liabilities: Developed products Income Tax Schedule Of Effective Income Tax Rate Reconciliation Details US statutory rates Tax rate difference Valuation allowance Tax for prior year Non-taxable Income of pass through entity Tax per financial statements Foreign pretax earnings Accumulated undistributed earnings of non-US subsidiaries invested indefinitely Additional U.S. federal income tax to be provided if earnings were remitted Sales revenue, major customer, amount Sales revenue, major customer, percentage Purchases, major supplier, amount Purchases, major supplier, percentage Year 2012 2013 2014 2015 Total minimum payments Investment In Spreadzoom Narrative Details Equity Method Investment, Description of Principal Activities Equity Method Investment, Additional Information Equity Method Investments Prepayment refund for the purchase of raw material Commitments Operating Leases Narrative Details Sublease income Rent expense, net Rent paid to company member Fair Value, Inputs, Level 2 [Member] Fair Value, Inputs, Level 3 [Member] ZOOMTechnologiesMember Assets, Current Assets Liabilities, Current Liabilities Deferred Compensation Equity Treasury Stock, Value Stockholders' Equity Attributable to Parent Liabilities and Equity Gross Profit Operating Expenses Operating Income (Loss) Interest Expense Other Expenses Nonoperating Income (Expense) Weighted Average Number of Shares Outstanding, Basic Weighted Average Number of Shares Outstanding, Diluted Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest Comprehensive Income (Loss), Net of Tax, Attributable to Parent Comprehensive Income (Loss), Net of Tax, Attributable to Noncontrolling Interest Gain (Loss) on Disposition of Assets Increase (Decrease) in Accounts Payable Increase (Decrease) in Customer Advances Net Cash Provided by (Used in) Operating Activities Increase (Decrease) in Restricted Cash Payments to Acquire Property, Plant, and Equipment RefundFromFactoryConstructionDeposit Net Cash Provided by (Used in) Investing Activities, Continuing Operations AdvanceToRelatedParties Repayments of Related Party Debt Repayments of Short-term Debt Net Cash Provided by (Used in) Financing Activities Cash and Cash Equivalents, Period Increase (Decrease) Inventory, Policy [Policy Text Block] Goodwill and Intangible Assets, Policy [Policy Text Block] Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] Schedule of Inventory, Current [Table Text Block] Schedule of Other Assets [Table Text Block] Schedule of Short-term Debt [Table Text Block] Schedule of Accrued Liabilities [Table Text Block] Property, Plant and Equipment, Useful Life, Average [Default Label] Impairment of Long-Lived Assets Held-for-use BusinessAcquisitionPurchasePriceAllocationCurrentAssetsAccountsReceivable BusinessAcquisitionPurchasePriceAllocationCurrentAssetsDueFromRelatedParties BusinessAcquisitionPurchasePriceAllocationEquipmentDeposit Business Acquisition, Purchase Price Allocation, Amortizable Intangible Assets Business Acquisition, Purchase Price Allocation, Goodwill Amount BusinessAcquisitionPurchasePriceAllocationCurrentLiabilitiesShorttermLoan BusinessAcquisitionPurchasePriceAllocationCurrentLiabilitiesNotesPayable BusinessAcquisitionPurchasePriceAllocationCurrentLiabilitiesMpfPayable Business Acquisition, Purchase Price Allocation, Current Liabilities, Accrued Liabilities BusinessAcquisitionPurchasePriceAllocationCurrentLiabilitiesDueToRelatedParty Business Acquisition, Purchase Price Allocation, Other Noncurrent Liabilities BusinessAcquisitionPurchasePriceAllocationOtherNoncurrentLiabilitiesValuatiuonOfNoncontrollingInterest Accounts Receivable, Gross, Current Allowance for Doubtful Accounts Receivable, Current Inventory Valuation Reserves Prepaid Expense, Current Machinery and Equipment, Gross ElectronicEquipment TransportationEquipment Property, Plant and Equipment, Gross Accumulated Depreciation, Depletion and Amortization, Property, Plant, and Equipment Other Accrued Liabilities, Current Due from Related Parties Due to Related Parties Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested in Period Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Forfeited in Period Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Intrinsic Value Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Net of Forfeitures Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period Share-based Compensation Arrangement by Share-based Payment Award, Options, Outstanding, Intrinsic Value Deferred Tax Assets, Gross Deferred Tax Assets, Valuation Allowance Deferred Tax Assets, Net Deferred Tax Liabilities, Deferred Expense, Capitalized Inventory Costs Effective Income Tax Rate, Continuing Operations Operating Leases, Future Minimum Payments, Due in Two Years Operating Leases, Future Minimum Payments, Due in Three Years Operating Leases, Future Minimum Payments, Due in Four Years Operating Leases, Future Minimum Payments Due Amounts due from others within one year and the sum of the amounts paid in advance for capitalized costs that will be expensed with the passage of time or the occurrence of a triggering event, and will be charged against earnings within one year. Amouns due from suppliers in advance of good delivered within one year. Funds advanced as purchase deposit Refund of funds deposited for factory construction Acconts receivable Advance to suppliers Tabular disclosure of notes payable arrangements (having initial terms of repayment within one year or the normal operating cycle, if longer) including: (1) description of the short-term debt arrangement; (2) identification of the lender or type of lender; (3) repayment terms; (4) weighted average interest rate; (5) carrying amount of funds borrowed under the specified short-term debt arrangement as of the balance sheet date; (6) description of the refinancing of a short-term obligation when that obligation is excluded from current liabilities in the balance sheet; and (7) amount of a short-term obligation that has been excluded from current liabilities in the balance sheet because of a refinancing of the obligation. Element representing additional business acquisitions, secondary to the primary acquisition. Element representing Zoom Technologies Element representing Jiangsu Leimone Element representing all acquisitions of TCB Digital Element representing Gold Lion Holdings Element representing Profit Harvest Corp Element Representing all acqusitions of Gold Lion Holding Element representing TCB Digital Element representing all acquisitions of Zoom Technologies Element representing Nollec Wireless Element representing Ever Elite Element representing Silver Tech Element representing all acquisitions of Silver Tech Element representing Celestial Digital Entertainment Element representing all acquisitions of Portables corporation Member to define Additional Business Acquisitions Member representing complaint against Zoom from Portables Member represents all purchases of Zoom Technologies by Spreadtrum Member represents stock issued to Mr. Gu. Member represents stock issued to Mr. Du. Member represents all acquisitions of Profit Harvest Corp Member representing Hebei Leimone Member representing USD Member representing Mr. Gu. Member representing Mr. Cao. Member representing RMB (CNY) Member representing Beijing Depu Member representing Nantong Zong Yi Member representing all investments by Jiangsui Leimone Member representing all acquisitions of Jiangsu Leimone Member representing HKD currency Percentage Gold Lion Holding owns of an entity Percentage Jiangsu owns of an entity Percentage Mr. Gu owns of an entity Percentage Mr. Du owns of an entity. Element representing percentage of stock sold in a single transaction Outstanding shares recapitalized Option that can be exercised to take ownership of a percentage of a company. Dividend issued of a percentage of issued and outstanding stock Percentage of shares that can be sold at a time Percentage of an entity Zoom Technologies owns Percentage of a company Silver Tech owns. Percentage of an entity that Ever Elite owns Percentage of an entity owned by Key Network. Percentage of an entity owned by Better Day Finance Percentage of all outstanding stock purchased Cash remaining to be paid for acquisition of an entity Number of payments agreed upon to pay for the acquisition of an entity. Duration of time in which balance of acquisition cash price must be repaid. Number of payments remaining Number of software titles published Time until promissory note matures Starting value of ownership percentage, when ownership changtes hands Ending value of ownership percentage, when ownership changtes hands Percentage of entity owned by Portables Monetary amount of damages specified in legal complaint Ownership of a company specified in particular complaint action. Number of shares, below which the company can no longer nominate one person to the board of directors. Interest in TCB traded, originally owned by Mr. Cao. Ownership in Gold Lion holdings gained by Mr Cao, for his interest in TCB. Monetary increase in ownership in Jiangsu Leimone Supplier to company Supplier to company Supplier to company Supplier to company Supplier to company Supplier to company Supplier to company Supplier to company Supplier to company Supplier to company Supplier to company Supplier to company Supplier to company Supplier to company Element representing purchases deposit. Purchases deposit member Purchases deposit member Purchases deposit member Gross amount, as of the balance sheet date, of long-lived, depreciable assets used in the production process to produce goods and services. Gross amount, as of the balance sheet date, of long-lived, depreciable assets used in the production process to produce goods and services. Gross amount, as of the balance sheet date, of long-lived, depreciable assets used in the production process to produce goods and services. Gross amount, as of the balance sheet date, of long-lived, depreciable assets used in the production process to produce goods and services. Gross amount, as of the balance sheet date, of long-lived, depreciable assets used in the production process to produce goods and services. Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Short-term loan Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Notes payable short-term Accrued filing fees, current Accrued rework cost, current Accrued expenses from acquisition, curreent Member representing Hui Pak Kong Total revenues from entity 712 Total balance of sales over a period of time to an entity Total sales over a period of time to an entity Loan from a related party Monetary advance to an affiliate, rate of interest Duration of time until maturity of debt issued to related party Payment to acquire material Member representing short term debt liabilities to related parties Member representing debt that is not short term to related parties Amount of undistributed earnings of foreign subsidiaries intended to be permanently reinvested outside the United States that are not subject to U.S. federal income taxes. EX-101.PRE 8 zoom-20120630_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE XML 9 R39.htm IDEA: XBRL DOCUMENT v2.4.0.6
Merger and Acquisitions (Tables)
6 Months Ended
Jun. 30, 2012
Property, Plant and Equipment [Abstract]  
Fair value of assets acquired and liabilities assumed

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed from CDE as of the date of acquisition on January 4, 2011.

 

Cash   $ 235,112
Other receivables   5,895
Prepaid expenses   3,259
Accounts receivable   8,413
Fixed assets   6,565
Goodwill   1,861,409
Short-term loan   (20,075)
Accounts payable   (990)
MPF payable   (1,758)
Due to related party   (277,774)
Accrued expenses   (2,056)
       
Purchase price   $ 1,818,000

 

The Company acquired 55% ownership of Portables on October 11, 2011. As of October 11, 2011, the net assets of Portables were $(9,290,241). The purchase consideration was $9,851,486 which resulted in goodwill of $ 27,005,953. The Company acquired Portables for two reasons; (a) to diversify its revenue sources, and (b) to gain access to the most mature mobile handset market in the world.

 

The following table summarizes the fair market values assigned to the assets acquired and liabilities assumed from Portables as of October 11, 2011.

 

Cash   $ 81,048
Other receivables     4,054,550
Prepaid expenses     255,816
Accounts receivable     3,896,008
Inventory     1,045,478
Due from related parties     3,813,514
Fixed assets     2,216,272
Equipment deposit     103,602
Intangible assets     223,557
Goodwill     27,005,953
Short-term loan     (1,352,562)
Notes payable     (4,757,186)
Accounts payable     (10,717,533)
Accrued expenses     (2,749,780)
Due to related party     (2,818,775)
Other payables     (2,584,250)
Valuation of non-controlling interest     (7,864,226)
       
Purchase Price   $ 9,851,486

 

Our purchase price allocation is preliminary and will be finalized within one year from the date of acquisition of Portables. The Company derecognized the $1,350,000 acquisition payable and revised goodwill from $27,005,953 as at December 31, 2011 to $25,668,755 as at June 30, 2012 as a result of this de recognition. (See Note 1)

 

 

Schedule of goodwill

The following table summarizes goodwill as of June 30, 2012 and December 31, 2011 resulting from the acquisitions of Jiangsu Leimone, Silver Tech, CDE and Portables:

 

    June 30,
2012
  December 31,
2011
      (Unaudited)     (Audited)
             
Jiangsu Leimone    $ 103,057   $ 103,057
Silver Tech     8,395,840     8,395,840
CDE     1,583,198     1,861,409
Portables     25,677,347     27,005,953
      35,759,442     37,126,605
Less: Impairment     (1,033,762)     (1,033,762)
             
Total goodwill    $ 34,725,680   $ 36,332,497

 

 

XML 10 R54.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stockholder's Equity - Warrants (Tables)
6 Months Ended
Jun. 30, 2012
Stockholders Equity - Warrants Tables  
Warrant activity and summary

The following summary represents warrants activity during the quarter ended June 30, 2012:

 

    Number of
Warrants
  Weighted Average
Exercise Price
  Aggregate
Intrinsic Value
             
Balance, December 31, 2011   8,638,604   $2.30   -
             
     Granted   -   -    
     Lapsed   -   -    
     Exercised   -   -    
     Cancelled   -   -    
             
Balance, June 30, 2012   8,638,604   $2.30   -

 

The following presents warrants summary as of June 30, 2012:

 

    Number
Outstanding
  Warrants Outstanding
Weighted Average
Remaining
Contractual Life
  Weighted
Average
Exercise
Price
  Warrants Exercisable
          Number
Exercisable
  Weighted
Average
Exercise Price
                     
Warrants   8,638,604   2.60 years   $2.30   8,638,604   $2.30

 

XML 11 R48.htm IDEA: XBRL DOCUMENT v2.4.0.6
Intangible Assets (Tables)
6 Months Ended
Jun. 30, 2012
Accounting Policies Property Plant And Equipment Tables  
Carrying values of intangible assets

Amortization expense for the customer relationship intangible asset is included in sales and marketing expenses. Amortization expense for technology is included in cost of service revenue. The carrying values of intangible assets were as follows (in thousands):

    June 30, 2012     March 31, 2012
    Gross                 Gross            
    Carrying     Accumulated     Net Carrying     Carrying     Accumulated     Net Carrying
    Amount     Amortization     Amount     Amount     Amortization     Amount
Technology $ 8,242    $ (638)   $ 7,604    $ 8,242    $ (432)   $ 7,810 
Customer relationships   3,305      (601)     2,704      3,305      (450)     2,855 
Trade names/domains   957      -      957      957      -      957 
Total acquired identifiable                                  
     intangible assets $ 12,504    $ (1,239)   $ 11,265    $ 12,504    $ (882)   $ 11,622 

 

At June 30, 2012, annual amortization of intangible assets, based upon our existing intangible assets and current useful lives, is estimated to be the following (in thousands):

 

      Amount
     Remaining 2013   $ 1,071 
     2014     1,334 
     2015     1,325 
     2016     1,325 
     2017     1,318 
     Thereafter     3,935 
     Total   $ 10,308 

 

 

 

 

 

XML 12 R70.htm IDEA: XBRL DOCUMENT v2.4.0.6
Purchase Deposit (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Purchase deposit $ 6,860,108 $ 8,549,315
Shenzhen Wuxing Commercial & Trade Co.
   
Purchase deposit 5,435,989 7,135,266
Shenzhen Nanxin Communication Equipment Co., Ltd.
   
Purchase deposit 791,177 785,583
Shenzhen Futian District Longchengfa Electronic Co., Ltd.
   
Purchase deposit $ 632,942 $ 628,466
XML 13 R55.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stockholder's Equity - Stock Options (Tables)
6 Months Ended
Jun. 30, 2012
Previous Plan
 
Option plan activity

The following summary represents options activity for the three months ended June 30, 2012 under the previous plan.

 

    Under Previous
Plan
  Weighted Average
Exercise Price
  Aggregate
Intrinsic Value
             
Balance, December 31, 2011   129,350   $1.80   -
             
     Granted   -   -    
     Lapsed   (129,350)   -    
     Exercised   -   -    
     Cancelled   -   -    
             
Balance, June 30, 2012   -   -   -

 

New Plan
 
Option plan activity

The following summary represents options activity during the quarter ended June 30, 2012 under the New Plan.

 

    Under the New
Plan
  Weighted Average
Exercise Price
  Aggregate
Intrinsic Value
             
Balance, December 31, 2011   3,557,000   $3.02   $0
             
     Granted   -   -    
     Lapsed   408,000   $3,18    
     Exercised   -   -    
     Cancelled   1,339,000   $3.18    
             
Balance, June 30, 2012   1,810,000   $2.97   $0

 

Option plan summary

The following represents options summary as of June 30, 2012 under the New Plan.

 

    Number
Outstanding
  Options Outstanding
Weighted Average
Remaining
Contractual Life
  Weighted
Average
Exercise
Price
  Options Exercisable
          Number Exercisable   Weighted Average Exercise Price
                     
Options   1,810,000   2.96 years   $2.97   767,500   $2.74

 

XML 14 R78.htm IDEA: XBRL DOCUMENT v2.4.0.6
Short-term Loans (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Dec. 31, 2011
Short-term loans $ 25,565,867 $ 26,405,343
STL Loan 1
   
Short-term Debt, Lender

Bank of Communication Tianjin Branch ("BOCTB")

 
Short-term Debt, Terms

Bank of Communication Tianjin Branch ("BOCTB"), due from July 4, 2011 to July 3, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party

 
Short-term loans 3,164,707 3,142,332
STL Loan 2
   
Short-term Debt, Lender

BOCTB

 
Short-term Debt, Terms

BOCTB, due from June 20, 2011 to June 16, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party

 
Short-term loans 0 3,142,332
STL Loan 3
   
Short-term Debt, Lender

BOCTB

 
Short-term Debt, Terms

BOCTB, due from June 14, 2011 to June 13, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party 

 

 
Short-term loans 0 3,079,485
STL Loan 4
   
Short-term Debt, Lender

BOCTB

 
Short-term Debt, Terms

BOCTB, due from August 18, 2011 to August 17, 2012, with benchmark interest rate plus 5%, mortgaged by fixed assets 

 

 

 
Short-term loans 3,164,707 3,142,332
STL Loan 5
   
Short-term Debt, Lender

BOCTB

 
Short-term Debt, Terms

BOCTB, due from August 3, 2011 to August 1, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party 

 

 

 
Short-term loans 4,747,060 4,713,498
STL Loan 6
   
Short-term Debt, Lender

BOCTB

 
Short-term Debt, Terms

BOCTB, due from June 13, 2012 to June 14, 2013 with interest at 6.941%, guaranteed by TCBGCL - related party 

 

 
Short-term loans 6,329,414 0
STL Loan 7
   
Short-term Debt, Lender

China Merchant Bank Tianjin branch

 

 
Short-term Debt, Terms

China Merchant Bank Tianjin branch, due from July 29, 2011 to January 28, 2012, interest at 7.93%, mortgaged by bank notes of $785,583 (RMB5,000,000); repaid in full on January 28, 2012

 

 
Short-term loans 0 754,160
STL Loan 8
   
Short-term Debt, Lender

Key Network Holdings Limited

 

 
Short-term Debt, Terms

Key Network Holdings Limited, due on demand with interest at 6%.

 

 
Short-term loans 715,018 715,064
STL Loan 9
   
Short-term Debt, Lender

JP Morgan Chase

 

 
Short-term Debt, Terms

JP Morgan Chase credit line for $1.3 million secured by certificate of deposit from Portables Unlimited, Inc. (the 49.5% owner of Portables) due from September 1, 2011 - August 31, 2012, at Libor plus 2.95%

 

 
Short-term loans 2,945,670 854,469
STL Loan 10
   
Short-term Debt, Lender

HSBC

 

 
Short-term Debt, Terms

HSBC, due on demand with interest at 7.25%

 

 
Short-term loans 5,640 48,146
STL Loan 11
   
Short-term Debt, Lender

Bank of Tianjin Laolian Branch

 

 
Short-term Debt, Terms

Bank of Tianjin Laolian Branch, due from June 24, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Tianjin Zhonghuan Electronic Information Group Ltd. ("Electronic")

 

 
Short-term loans 0 1,995,381
STL Loan 12
   
Short-term Debt, Lender

Bank of Tianjin Laolian Branch

 

 
Short-term Debt, Terms

Bank of Tianjin Laolian Branch, due from June 24, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Electronic

 

 
Short-term loans 0 628,466
STL Loan 13
   
Short-term Debt, Lender

Bank of Tianjin Laolian Branch

 

 
Short-term Debt, Terms

Bank of Tianjin Laolian Branch, due from June 27, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Electronic

 

 
Short-term loans 0 157,117
STL Loan 14
   
Short-term Debt, Lender

Bank of Tianjin Laolian Branch

 

 
Short-term Debt, Terms

Bank of Tianjin Laolian Branch, due from June 28, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Electronic

 

 
Short-term loans 0 361,368
STL Loan 15
   
Short-term Debt, Lender

Shanghai Pudong Development Bank Pucheng Branch

 

 
Short-term Debt, Terms

Shanghai Pudong Development Bank Pucheng Branch, due from November 1, 2011 to November 1, 2012 with interest at 7.216%, guaranteed by Tianjin Loan Guaranty Company, price is 1.2% of total principal, shall pay off within 5 days after all principal are paid off

 

 
Short-term loans 1,582,354 1,571,166
STL Loan 16
   
Short-term Debt, Lender

North International Trust Company

 
Short-term Debt, Terms

North International Trust Company, due from April 12, 2012 to April 12, 2013 with interest at 11.5%, guaranteed by Tianjin Loan Guaranty Company

 

 
Short-term loans 1,582,354 0
STL Loan 17
   
Short-term Debt, Lender

Bank of China Tianjin Branch

 
Short-term Debt, Terms

Bank of China Tianjin Branch, due from May 18, 2012 to August 16, 2012 with interest at 4.166850%, by export invoice discount contract 

 
Short-term loans 202,632 0
STL Loan 18
   
Short-term Debt, Lender

Bank of China Tianjin Branch

 
Short-term Debt, Terms

Bank of China Tianjin Branch, due from May 25, 2012 to August 23, 2012 with interest at 4.166850%, by export invoice discount contract

 
Short-term loans 67,544 0
STL Loan 19
   
Short-term Debt, Lender

Bank of China Tianjin Branch

 
Short-term Debt, Terms

Bank of China Tianjin Branch, due from June 25, 2012 to September 23, 2012 with interest at 4.167600%, by export invoice discount contract

 
Short-term loans 438,240 0
STL Loan 20
   
Short-term Debt, Lender

HSBC Suzhou Branch

 
Short-term Debt, Terms

HSBC Suzhou Branch, due from August 15, 2011 to January 12, 2012 with interest at SIBOR plus 4.0%, guaranteed by tangible assets of the Company (a)

 
Short-term loans 0 1,000,000 [1]
STL Loan 21
   
Short-term Debt, Lender

HSBC Suzhou Branch

 
Short-term Debt, Terms

HSBC Suzhou Branch, due from April 27, 2012 to January 12, 2013 with interest at SIBOR plus 4.0%, guaranteed by the Company (a)

 
Short-term loans 600,000 [1] 0
STL Loan 22
   
Short-term Debt, Lender

Beijing Bank Zhongguancun Haidianyuan Sub-branch

 
Short-term Debt, Terms

Beijing Bank Zhongguancun Haidianyuan Sub-branch, due March 14, 2012 with interest at 6.67%, guaranteed by TCB Digital; repaid in full on March 14, 2012

 
Short-term loans 0 235,675
STL Loan 23
   
Short-term Debt, Lender

Beijing Bank Zhongguancun Haidianyuan Sub-branch

 
Short-term Debt, Terms

Beijing Bank Zhongguancun Haidianyuan Sub-branch, due March 14, 2012 with interest at 6.67%, guaranteed by TCB Digital; repaid in full on March 14, 2012

 
Short-term loans 0 314,233
STL Loan 24
   
Short-term Debt, Lender

Beijing Bank Zhongguancun Haidianyuan Sub-branch

 
Short-term Debt, Terms

Beijing Bank Zhongguancun Haidianyuan Sub-branch, due March 14, 2012 with interest at 6.67%, guaranteed by TCB Digital; repaid in full on March 12, 2012

 
Short-term loans 0 534,196
STL Loan 25
   
Short-term Debt, Lender

JP Morgan Chase

 
Short-term Debt, Terms

JP Morgan Chase - Bank Overdraft Account; Due on Demand

 
Short-term loans $ 20,527 $ 15,923
[1] Based on a corporate guarantee from the Company and a personal guarantee from Mr. Gu for financing up to 85% of invoice for approved buyer of Profit Harvest, this loan is subject to certain covenants which should be complied at all times. Those covenants includes but not limited to tangible net worth not less than $40 million and net gearing not greater than 1.2 times. As of December 31, 2011, the Company was in violation of one of its loan covenant with HSBC. The covenant calls for the Guarantor, Zoom, on behalf of the Borrower, Profit Harvest, to maintain a minimum tangible net worth of $40,000,000. The Company's tangible net worth at December 31, 2011 was $39,673,617 (Stockholders' equity of $76,778,641 less Goodwill of $36,332,497, less intangible assets of $772,527). With exception to the aforementioned covenant violation, the Company complied with all the other covenants. The Company repaid the loan to HSBC Suzhou Branch on February 13, 2012. The loan was renewed by HSBC in April 2012 requiring the sam
XML 15 R46.htm IDEA: XBRL DOCUMENT v2.4.0.6
Property, Plant and Equipment (Tables)
6 Months Ended
Jun. 30, 2012
Property Plant And Equipment Tables  
Components of Property, Plant and Equipment

Property, plant and equipment as of June 30, 2012 and December 31, 2011 consisted of the following:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
         
Machinery and equipment   $ 9,761,009   $ 9,678,543
Electronic equipment     2,482,774     2,431,834
Transportation equipment     166,405     182,250
Workshop reconstruction     175,167     173,928
Leasehold improvements     2,668,915     2,547,847
Computer equipment     97,127     96,982
Office equipment     707,946     614,710
      16,059,343     15,726,094
Less: Accumulated depreciation     (10,315,467)     (9,465,419)
             
Property, plant and equipment, net   $ 5,743,876   $ 6,260,675

 

 

 

 

XML 16 R33.htm IDEA: XBRL DOCUMENT v2.4.0.6
COMMITMENTS - Note 27
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
COMMITMENTS - Note 27

NOTE 27 — COMMITMENTS

 

Operating lease commitments

 

The Company has an operating lease for TCB Digital's premises through TCBGCL, a common shareholder of TCB Digital; pursuant to this lease, the rate of rent is at $1.25 (Rmb 8) per square meter per month for production facilities and dormitory space. The Company leases of the Tianjin factory and dormitory expired on July 20, 2012 and December 31, 2011; the Company is currently renting on a month to month basis. The Company also has an operating lease in Beijing for office space shared with Nollec Wireless, with rent at $21.37 (Rmb 137) per square meter per month for 1,409 square meters and with rent at $20.44 (Rmb 131) per square meter per month for 388 square meters. Nollec's Beijing office expires in April 15, 2013. The Company has an operating lease in Hong Kong for the office of CDE, rental and property management fees are $1,363 (HKD 10,588) and $438 (HKD 3,402) respectively per month. The lease for CDE's Hong Kong office expires August 31, 2013. The commitments of the Company (except for Portables which is disclosed separately below) as of June 30, 2012 for the next year are as follows:

 

Year      
2013   $ 381,907

 

On July 7, 2005, a related party, AUM Realty, LLC ("AUM"), purchased real property consisting of a building and parking lot located in Nanuet, New York for $2,050,000 and simultaneously transferred title to, and entered into a lease agreement with, The Rockland County Industrial Development Agency, with a bargain purchase option upon expiration of the lease. A non-controlling member of Portables, entered into a sublease agreement with AUM for the same period as the lease agreement, expiring in July 2015, which requires minimum monthly rent payments and all operating expenses and PILOT payments (real estate taxes). In addition, AUM borrowed $1,628,000 from a bank secured by a first mortgage on the property.

This loan is guaranteed by Portables non-controlling member.

 

Beginning January 1, 2009, Portables entered into a sublease agreement with its non-controlling member on a month-to-month basis for this property.

 

Portables leases two warehouses and 28 retail stores and kiosks. These leases require monthly payments and expire at various dates through 2015. The Company has operating agreements in place with all of the retail stores and kiosks whereby independent third parties (the "operators") operate the retail locations and provide specific services as outlined in the operating agreements. The leases for these locations remain in the name of the Company but are subleased by the operators of the locations. Rent expense is being recorded using the straight-line basis over the term of the leases in accordance with accounting principles generally accepted in the United States of America.

 

The future minimum annual rental commitments of Portables as of June 30, 2012 are as follows:

 

Year      
2012   $ 371,549
2013     283,436
2014     195,044
2015     114,189
       
Total Minimum Lease Payments   $ $ 1,048,388

 

Rent expense, net of sublease income for retail locations of $127,423, amounted to $702,562 of which $143,924 was paid to one of the Company's members under the sublease agreement for the period ended June 30, 2012.

 

 

 

 

XML 17 R79.htm IDEA: XBRL DOCUMENT v2.4.0.6
Notes Payable (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Dec. 31, 2011
Notes payable $ 28,231,522 $ 29,443,650
NP1
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from July 14, 2011 to January 14, 2012, secured by $942,700 of cash in bank; Repaid January 16, 2012

 
Notes payable 0 1,885,399
NP2
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from July 20, 2011 to January 20, 2012, secured by $1,414,049 of cash in bank, Repaid January 20, 2012

 
Notes payable 0 2,828,099
NP3
   
Short-term Debt, Lender

Shanghai Zhanqiao, honored by the BOCTB

 
Short-term Debt, Terms

Shanghai Zhanqiao, honored by the BOCTB, from August 8, 2011 to February 8, 2012, secured by $1,571,166 of cash in bank; repaid February 8, 2012

 
Notes payable 0 1,571,166
NP4
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from September 20, 2011 to March 20, 2012, secured by $3,927,915 of cash in bank; repaid March 20, 2012

 
Notes payable 0 7,855,830
NP5
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from September 22, 2011 to March 22, 2012, secured by $3,220,890 of cash in bank; repaid March 22, 2012

 
Notes payable 0 6,441,780
NP6
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from September 27, 2011 to March 27, 2012, secured by $974,123 of cash in bank; repaid March 27, 2012

 
Notes payable 0 1,948,246
NP7
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from October 14, 2011 to April 14, 2012, secured by $790,551 of cash in bank

 
Notes payable 0 1,571,166
NP8
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from October 19, 2011 to April 19, 2012, secured by $2,687,875 of cash in bank

 
Notes payable 0 5,341,964
NP9
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from January 16 to July 16, 2012, secured by $2,373,530 of cash in bank;

 
Notes payable 4,747,061 0
NP10
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from March 30 to September 30, 2012, secured by $3,955,884 of cash in bank;

 
Notes payable 7,911,768 0
NP11
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from April 5 to October 5, 2012, secured by $4,224,884 of cash in bank;

 
Notes payable 8,449,768 0
NP12
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from April 9 to October 9, 2012, secured by $2,057,060 of cash in bank;

 
Notes payable 4,114,119 0
NP13
   
Short-term Debt, Lender

CECCC, honored by the BOCTB

 
Short-term Debt, Terms

CECCC, honored by the BOCTB, from April 16 to October 16, 2012, secured by $1,424,118 of cash in bank;

 
Notes payable 2,848,237 0
NP14
   
Short-term Debt, Lender

Dongguan Yaxing Semiconductor Co., Ltd, honored by Industrial Bank Jinweilu Branch

 
Short-term Debt, Terms

Dongguan Yaxing Semiconductor Co., Ltd, honored by Industrial Bank Jinweilu Branch, from June 1 to September 1, 2012, secured by $74,054 of cash in bank;

 
Notes payable 74,054 0
NP15
   
Short-term Debt, Lender

Shenzhen Bolixin Technical Co., Ltd, honored by Industrial Bank Jinweilu Branch

 
Short-term Debt, Terms

Shenzhen Bolixin Technical Co., Ltd, honored by Industrial Bank Jinweilu Branch, from June 6 to September 6, 2012, secured by $26,900 of cash in bank;

 
Notes payable 26,900 0
NP16
   
Short-term Debt, Lender

Shenzhen Bolixin Technical Co., Ltd, honored by Industrial Bank Jinweilu Branch

 
Short-term Debt, Terms

Shenzhen Bolixin Technical Co., Ltd, honored by the Industrial Bank Jinweilu Branch, from June 6 to September 6, 2012, secured by $27,968 of cash in bank;

 
Notes payable 27,968 0
NP17
   
Short-term Debt, Lender

Shen Zhen Jun Cheng Hao Trading Ltd., honored by the Bank of China Heping Branch

 
Short-term Debt, Terms

Shen Zhen Jun Cheng Hao Trading Ltd., honored by the Bank of China Heping Branch, from March 7 to September 7, 2012, secured by $31,647 of cash in bank

 
Notes payable $ 31,647 $ 0
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Property, Plant and Equipment (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Balance Sheet Related Disclosures [Abstract]    
Machinery and equipment $ 9,761,009 $ 9,678,543
Electronic equipment 2,482,774 2,431,834
Transportation equipment 166,405 182,250
Workshop reconstruction 175,167 173,928
Leasehold improvements 2,668,915 2,547,847
Computer equipment 97,127 96,982
Office equipment 707,946 614,710
Property and equipment, gross 16,059,343 15,726,094
Less: Accumulated depreciation (10,315,467) (9,465,419)
Property, plant and equipment, net $ 5,743,876 $ 6,260,675
XML 20 R89.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stockholders' Equity Schedule Of Assumptions Used In Black-Scholes Model - Warrants (Narrative) (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Y
A C and Placement Agent Warrants of $3.26
 
Stock price $ 6.87
Exercise price $ 6.00
Expected life 5.00
Volatility 46.63%
Discount rate 2.37%
F Warrants of $1.51
 
Stock price $ 5.52
Exercise price $ 6.00
Expected life 5.00
Volatility 30.30%
Discount rate 2.10%
Placement Agent Warrants of $1.23
 
Stock price $ 5.52
Exercise price $ 6.90
Expected life 5.00
Volatility 30.30%
Discount rate 2.10%
G and Placement Warrants of $1.04
 
Stock price $ 3.99
Exercise price $ 4.71
Expected life 5.00
Volatility 33.57%
Discount rate 1.51%
XML 21 R57.htm IDEA: XBRL DOCUMENT v2.4.0.6
Concentration Disclosure (Tables)
6 Months Ended
Jun. 30, 2012
Concentration Disclosure Tables  
Schedule of Major Customers and Suppliers

(a) During the reporting periods, the customers accounting for 10% or more of the Company's consolidated sales were:

 

Six months ended June 30, 2012   Sales Revenue   % to Total Sales
         
TCB Group Electronic & Science Co. Ltd - related party   $ 29,728,814   16%
Tianjin Optical & Electronic Co. Ltd.     22,405,547   12%
           
Total   $ 52,134,361   28%

 

Six months ended June 30, 2011   Sales Revenue   % to Total Sales
           
Tianjin Optical Communication Technology Co., Ltd.   $ 20,137,058   17%
Tianjin 712 Communications and Broadcasting Ltd. - related party     15,757,425   13%
TCB Group Electronic & Science Co., Ltd. - related party     12,541,921   11%
Larson Limited     14,705,795   13%
           
Total   $ 63,142,199   54%

 

(b) During the reporting periods, the suppliers accounting for 10% or more of the Company's consolidated purchases are:

 

Six months ended June 30, 2012   Total Purchases   % to Total
Purchases
         
Leimone (Tianjin) Industrial Co., Ltd. - related party     72,137,320   37%
TMO     22,770,516   12%
           
Total   $ 94,907,836   49%

 

Six months ended June 30, 2011   Total Purchases   % to Total
Purchases
         
Leimone (Tianjin) Industrial Co., Ltd. - related party   $ 23,684,030   22%
Tianjin 712 Communication and Broadcasting Co., Ltd. - related party     15,523,282   14%
           
Total   $ 39,207,312   36%

 

 

 

 

XML 22 R76.htm IDEA: XBRL DOCUMENT v2.4.0.6
Intangible Assets (Narrative1) (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Intangible Assets Narrative1 Details        
Amortization of intangible assets $ 21,374 $ 14,990 $ 52,575 $ 20,606
XML 23 R86.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stockholders' Equity Warrants (Narrative) (Details) (USD $)
Jun. 30, 2012
Series A
 
Exercise price, in dollars $ 6.00
Warrant exercise term 5 years
Description of warrants

Series A Warrants: The Series A warrants have an exercise price of $6.00 and a term of 5 years from the issue date subject to the Exchange Cap (as defined in the agreement).

Series B
 
Exercise price, in dollars $ 0.01
Warrant exercise term 3 months
Description of warrants

Series B Warrants: The Series B warrants have an exercise price of $0.01 and a term of three (3) months from the issue date provided, however, that such date shall be extended indefinitely if the warrant cannot be exercised due to the Beneficial Ownership Limitation (as defined in the agreement) or the Exchange Cap Limitation (as defined in the agreement) until the warrant can be exercised in full by the holder thereof without breaching the Beneficial Ownership Limitation (as defined in the agreement) or the Exchange Cap Limitation (as defined in the agreement). All B Warrants were exercised in December 2009.

Series C
 
Exercise price, in dollars $ 6.00
Warrant exercise term 5 years
Description of warrants

Series C Warrants: The Series C warrants shall be exercisable only upon the exercise of the Series B warrants. The Series C warrants shall have an exercise price of $6.00 and a term of 5 years from the issue date.

Series D
 
Exercise price, in dollars $ 0.01
Warrant exercise term 3 months
Description of warrants

Series D Warrants: The Series D warrants shall be exercisable if the Company fails to meet certain performance criteria for the year 2009. The Series D warrant shall have an exercise price of $0.01 and a term of exercise equal to three (3) months from the date the Maximum Eligibility Date (as defined in the agreement); provided, however, that such date shall be extended indefinitely if the warrant cannot be exercised due to the Beneficial Ownership Limitation (as defined in the agreement) or the Exchange Cap (as defined in the agreement) until the warrant can be exercised in full by the holder without breaching the Beneficial Ownership Limitation (as defined in the agreement) or the Exchange Cap Limitation (as defined in the agreement). Due to the Net Income of Zoom as reported in the Company's annual report for the year 2009 exceeding the eligibility threshold pursuant to the agreement, the Series D Warrants became ineligible for exercise.

Series E
 
Exercise price, in dollars $ 0.01
Warrant exercise term 3 months
Description of warrants

Series E Warrants: The Series E warrants shall be exercisable if the Company fails to meet certain performance criteria for the year 2010. The Series E warrants shall have an exercise price of $0.01 and a term of three (3) months from the date the Maximum Eligibility Date (as defined in the agreement); provided, however, that such date shall be extended indefinitely if the warrant cannot be exercised due to the Beneficial Ownership Limitation (as defined in the agreement) until the Warrant can be exercised in full by the holder thereof without breaching the Beneficial Ownership Limitation (as defined in the agreement). Due to the Net Income of Zoom as reported in the Company's annual report for the year 2010 exceeding the eligibility threshold pursuant to the agreement, the Series E Warrants became ineligible for exercise.

Series F
 
Exercise price, in dollars $ 6.00
Warrant exercise term 5 years
Description of warrants

The Company granted on May 6, 2010, Series F warrants to the above investors for their temporary forfeiture of their right to participate in the Company's future financings.

 

Series F Warrants: The Series F warrants have an exercise price of $6.00 and a term of 5 years from the issue date. The Company issued 375,000 Series F warrants to investors who participated in private placement transaction pursuant to the Securities Purchase Agreement dated October 15, 2009, to temporarily waive their right for a period of eight months to participate in a future offering of the Company. The investors originally have a period of twenty-four months ("Rights Period") in which they have the right to participate, and for providing a temporary waiver, an eight-month duration is added to the original expiration of the Rights Period.

Series G
 
Exercise price, in dollars $ 4.71
Warrant exercise term 5 years
Description of warrants

The Company granted Series G warrants to the accredited investors as part of its private place offering on November 15, 2010.

 

Series G Warrants: The Series G warrants shall have an exercise price of $4.71 and a term of 5 years from the issue date.

 

Anti-dilution Adjustments for Certain Warrants: Since the private placement in November 2010 involved sales of the Company's stock at a price that activated anti-dilution provisions in the Series A, C, F and certain placement agent warrants, the exercise price of these warrants is adjusted to $3.74 per share and the number of warrants eligible is multiplied by a factor of 6 / 3.74 or 1.60 with fractional shares rounding up.

XML 24 R81.htm IDEA: XBRL DOCUMENT v2.4.0.6
Related Party Transactions (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Due from related parties $ 22,267,993 $ 30,425,700
Due to related parties 25,444,409 6,742,373
Tianjin Tong Guang Group
   
Due from related parties 8,505,151 3,883,641
Due to related parties 598,063   
BeijingLeimone Shengtong Wireless
   
Due from related parties 128,487 167,172
Leimone (Tianjin) Industrial Co., Ltd. - related party
   
Due from related parties 7,367,123 20,473,338
Due to related parties 15,871,694   
Beijing Leimone Shengtong Cultural
   
Due from related parties 1,727,525 2,744,697
TianjinTongGuang Group
   
Due from related parties 712,850 379,994
Shenzhen Leimone
   
Due from related parties 400,893 429,170
712 (Prior Shareholder)
   
Due from related parties 758,774 992,815
Raja R Amar - CEO Portables
   
Due from related parties 334,634 741,448
AUM Realty
   
Due from related parties 2,332,556   
Due to related parties    269,049
Lei Gu
   
Due to related parties 2,926,135 2,788,635
Wireless Holdings of Northeast
   
Due to related parties    117,600
Portables Unlimited International
   
Due to related parties 4,620,665 2,633,147
Portables Unlimited
   
Due to related parties 1,110,000 650,000
Others
   
Due from related parties    613,425
Due to related parties $ 317,852 $ 283,943
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Stockholders' Equity Warrants Activity (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Stockholders Equity Warrants Activity Details  
Balance, December 31, 2011 8,638,604
Granted 0
Lapsed 0
Exercised 0
Cancelled 0
Balance, June 30, 2012 8,638,604
Weighted-average exercise price, beginning balance $ 2.30
Weighted-average exercise price, granted $ 0
Weighted-average exercise price, lapsed $ 0
Weighted-average exercise price, exercised $ 0
Weighted-average exercise price, cancelled $ 0
Weighted-average exercise price, ending balance $ 2.30
Aggregate intrinsic value, beginnig balance $ 0
Aggregate intrinsic value, ending balance $ 0
XML 27 R77.htm IDEA: XBRL DOCUMENT v2.4.0.6
Intangible Assets (Narrative2) (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]  
2013 $ 182,545
2014 66,596
2015 18,265
2016 18,265
2017 18,265
Thereafter 50,538
Total $ 354,474
XML 28 R71.htm IDEA: XBRL DOCUMENT v2.4.0.6
Other Receivables and Prepaid Expenses (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Other Receivables And Prepaid Expenses Details    
Advance to employees $ 112,915 $ 23,882
Deposit for equipment lease 212,689 211,583
Prepaid expenses 224,401 238,857
Bank notes (a) 8,949,931 [1] 9,226,641 [1]
Other 123,108 83,044
Total other receivables $ 9,623,044 $ 9,784,007
[1] Per purchase contract signed in 2010, CECCC provided mobile phone components to the Company. The Company paid in advance to CECCC by payment of ' bank notes'. During 2011, no purchase transaction was completed. As of June 30, 2012, the total outstanding amount is $8.9 million (RMB 56.6 million) which represents bank notes paid by the bank to CECCC but no purchases made by the Company.
XML 29 R25.htm IDEA: XBRL DOCUMENT v2.4.0.6
LONG-TERM PAYABLES - Note 19
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
LONG-TERM PAYABLES - Note 19

NOTE 19 — LONG-TERM PAYABLES

 

Acquisition payable arose from our acquisition of Nollec Wireless on June 1, 2010. As of June 30, 2012, there are three payments outstanding of $145,000 each in six month intervals with the first payment due on December 1, 2012.

 

 

XML 30 R50.htm IDEA: XBRL DOCUMENT v2.4.0.6
Notes Payable (Tables)
6 Months Ended
Jun. 30, 2012
Notes Payable Tables  
Notes Payable

These notes are payable in three to six months and bear no interest. The balance of notes payable as of June 30, 2012 and December 31, 2011 consisted of the following (all were bankers' acceptances):

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
CECCC, honored by the BOCTB, from July 14, 2011 to January 14, 2012, secured by $942,700 of cash in bank; Repaid January 16, 2012     -   1,885,399
           
CECCC, honored by the BOCTB, from July 20, 2011 to January 20, 2012, secured by $1,414,049 of cash in bank, Repaid January 20, 2012     -   2,828,099
           
Shanghai Zhanqiao, honored by the BOCTB, from August 8, 2011 to February 8, 2012, secured by $1,571,166 of cash in bank; repaid February 8, 2012     -   1,571,166
           
CECCC, honored by the BOCTB, from September 20, 2011 to March 20, 2012, secured by $3,927,915 of cash in bank; repaid March 20, 2012     -   7,855,830
           
CECCC, honored by the BOCTB, from September 22, 2011 to March 22, 2012, secured by $3,220,890 of cash in bank; repaid March 22, 2012     -   6,441,780
           
CECCC, honored by the BOCTB, from September 27, 2011 to March 27, 2012, secured by $974,123 of cash in bank; repaid March 27, 2012     -   1,948,246
           
CECCC, honored by the BOCTB, from October 14, 2011 to April 14, 2012, secured by $790,551 of cash in bank     -   1,571,166
           
CECCC, honored by the BOCTB, from October 19, 2011 to April 19, 2012, secured by $2,687,875 of cash in bank     -   5,341,964
           
CECCC, honored by the BOCTB, from January 16 to July 16, 2012, secured by $2,373,530 of cash in bank;     4,747,061   6,441,780
           
CECCC, honored by the BOCTB, from March 30 to September 30, 2012, secured by $3,955,884 of cash in bank;     7,911,768   1,948,246
           
CECCC, honored by the BOCTB, from April 5 to October 5, 2012, secured by $4,224,884 of cash in bank;     8,449,768   -
           
CECCC, honored by the BOCTB, from April 9 to October 9, 2012, secured by $2,057,060 of cash in bank;     4,114,119   -
           
CECCC, honored by the BOCTB, from April 16 to October 16, 2012, secured by $1,424,118 of cash in bank;     2,848,237   -
           
Dongguan Yaxing Semiconductor Co., Ltd, honored by Industrial Bank Jinweilu Branch, from June 1 to September 1, 2012, secured by $74,054 of cash in bank;     74,054   -
           
Shenzhen Bolixin Technical Co., Ltd, honored by Industrial Bank Jinweilu Branch, from June 6 to September 6, 2012, secured by $26,900 of cash in bank;     26,900   -
           
Shenzhen Bolixin Technical Co., Ltd, honored by the Industrial Bank Jinweilu Branch, from June 6 to September 6, 2012, secured by $27,968 of cash in bank;     27,968   -
           
Shen Zhen Jun Cheng Hao Trading Ltd., honored by the Bank of China Heping Branch, from March 7 to September 7, 2012, secured by $31,647 of cash in bank     31,647   1,571,166
           
Total notes payable   $ 28,231,522   $ 29,443,650

 

XML 31 R42.htm IDEA: XBRL DOCUMENT v2.4.0.6
Advance to Suppliers (Tables)
6 Months Ended
Jun. 30, 2012
Advance To Suppliers Tables  
Advance to Suppliers

As of June 30, 2012 and December 31, 2011, the Company's advance to suppliers consisted of the following:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Yuechangrui   $ -   $ 7,399,939
Media Tak Inc.     124,490     -
Shenzhen Sangfei Entertainment Communication Co., Ltd.     103,018     -
Dongguan Yaxin Semi-conductor Co., Ltd.     660,612     -
Shenzhen Bolixin Technology Co., Ltd.     219,244     -
Shenzhen Zhuoershi Electronic Technology Co., Ltd.     189,053      
Shenzhen Tongxincheng Photoelectric Co., Ltd.     119,553      
Shenzhen Chuangjie Supply Chain Co., Ltd.     175,237     -
Jiangxi TongGuJiangQian     -     478,000
Foshan Import and Export     -     129,384
Dewav Technology     -     877,650
Qualcomm     128,318     101,181
Konka     62,294     79,852
Other - multiple vendors of various amounts     514,593     644,401
             
Total advance to suppliers   $ 2,296,412   $ 9,834,017

 

 

XML 32 R75.htm IDEA: XBRL DOCUMENT v2.4.0.6
Intangible Assets (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Y
Dec. 31, 2011
Intangible assets, gross $ 947,121 $ 943,917
Less: Accumulated amortization (243,047) (171,390)
Intangible assets, net 704,074 772,527
Software
   
Useful life 3  
Intangible assets, gross 202,295 201,275
Domain name, logo & trade mark
   
Intangible assets, gross 349,600 349,600
Customer list
   
Useful life 5  
Intangible assets, gross 86,250 86,250
Technology use right
   
Useful life 1  
Intangible assets, gross 126,325 125,432
Patent techniques
   
Useful life 10  
Intangible assets, gross $ 182,651 $ 181,360
XML 33 R97.htm IDEA: XBRL DOCUMENT v2.4.0.6
Commitments (Operating Leases) (Details) (USD $)
Jun. 30, 2012
Company
 
2012 $ 381,907
Total minimum payments 381,907
Portables
 
2012 371,549
2013 283,436
2014 195,044
2015 198,359
Total minimum payments $ 1,048,388
XML 34 R37.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accounting Policies (Property, Plant and Equipment) (Tables)
6 Months Ended
Jun. 30, 2012
Accounting Policies Property Plant And Equipment Tables  
Property, Plant and Equipment, Useful Life, Average

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of assets as set out below.

 

Fixed Asset Class   Estimated Useful Lives
Machinery and equipment   4-6 years
Electronic equipment   4-6 years
Reconstruction of workshop and assembling line   5 years
Transportation equipment   4-6 years

 

 

XML 35 R52.htm IDEA: XBRL DOCUMENT v2.4.0.6
Related Party Transactions (Tables)
6 Months Ended
Jun. 30, 2012
Related Party Transactions Tables  
Due From Related Parties

As of June 30, 2012 and December 31, 2011, due from related parties were:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
Due from related parties - short term        
         
Tianjin Tong Guang Group Electronics Science & Technology Co., Ltd.   $ 8,505,151   $ 3,883,641
Beijing Leimone Shengtong Wireless Technology Co., Ltd.     128,487     167,172
Leimone (Tianjin) Industrial Co., Ltd.     7,367,123     20,473,338
Beijing Leimone Shengtong Cultural Development Co., Ltd.     1,727,525     2,744,697
Tianjin Tong Guang Group     712,850     379,994
Shenzhen Leimone     400,893     429,170
712 (Prior Shareholder)     758,774     992,815
Raja R Amar - Chief Executive Officer of Portables     334,634     741,448
AUM Realty     2,332,556     -
Others     -     613,425
             
Total due from related parties   $ 22,267,993   $ 30,425,700

 

 

Due To Related Parties

As of June 30, 2012 and December 31, 2011, due to related parties was:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
         
Gu   $ 2,926,135   $ 2,788,635
Tianjin Tong Guang Group     598,063     -
Leimone (Tianjin) Industrial Co., Ltd.     15,871,694     -
AUM Realty, Inc.     -     269,049
Wireless Holdings of Northeast     -     117,600
Portables Unlimited International     4,620,665     2,633,147
Portables Unlimited, Inc.     1,110,000     650,000
Others     317,852     283,943
             
Total due to related parties   $ 25,444,409   $ 6,742,373

 

XML 36 R67.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accounts Receivable (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Accounts Receivable Details    
Accounts receivable $ 70,662,360 $ 49,798,505
Less: Allowance for doubtful accounts (733,140) (827,956)
Accountants receivable, net $ 69,929,220 $ 48,970,549
XML 37 R61.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accounting Policies (Property and Equipment) (Details)
6 Months Ended
Jun. 30, 2012
Y
Machinery and equipment
 
Property, Plant and Equipment, Useful Life, Minimum 4
Property, Plant and Equipment, Useful Life, Maximum 6
Electronic equipment
 
Property, Plant and Equipment, Useful Life, Minimum 4
Property, Plant and Equipment, Useful Life, Maximum 6
Reconstruction of workshop and assembling line
 
Property, Plant and Equipment, Useful Life, Average 5
Transportation equipment
 
Property, Plant and Equipment, Useful Life, Minimum 4
Property, Plant and Equipment, Useful Life, Maximum 6
XML 38 R47.htm IDEA: XBRL DOCUMENT v2.4.0.6
Construction in Progress Deposit - Related Party (Tables)
6 Months Ended
Jun. 30, 2012
Construction In Progress Deposit - Related Party Tables  
Construction in Progress Deposit - Related Party

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
         
Manufacturing plant   $ -   $ 10,170,809
             

 

XML 39 R9.htm IDEA: XBRL DOCUMENT v2.4.0.6
MERGER AND ACQUISITIONS - Note 3
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
MERGER AND ACQUISITION - Note 3

NOTE 3 — MERGER AND ACQUISITIONS

The Company acquired 100% equity in Silver Tech on May 31, 2010. As of May 31, 2010, the net assets of Silver Tech were $2,564,160. The purchase consideration was $10,960,000 which resulted in goodwill of $8,395,840.

Silver Tech's subsidiary Nollec Wireless primarily focuses on R&D for mobile phones, and hardware and software solutions for domestic Chinese and overseas customers. Its design team includes experienced engineers in the core technologies of wireless communication and mobile phone development. Nollec provides state of the art industrial, user inter-phase, mechanical and engineering designs and software and hardware integration. The acquisition of Nollec allows the Company to provide complete original design and manufactured solutions to its customers in order to maintain a competitive advantage in the mobile handset manufacturing market.

 

The Company acquired 100% ownership of CDE on January 4, 2011. As of January 4, 2011, the net assets of CDE were $(43,409). The purchase consideration was $1,818,000 which resulted in goodwill of $1,861,409. The Company acquired CDE to broaden and deepen its knowledge base towards software solutions for mobile handsets. CDE has designed games for iOS and Android platforms for several years. The accumulated knowledge and source codes can be useful to the Company in integrating and testing operating systems with the hardware that the Company produces.

 

The following table summarizes the preliminary fair values of the assets acquired and liabilities assumed from CDE as of the date of acquisition on January 4, 2011.

 

Cash   $ 235,112
Other receivables   5,895
Prepaid expenses   3,259
Accounts receivable   8,413
Fixed assets   6,565
Goodwill   1,861,409
Short-term loan   (20,075)
Accounts payable   (990)
MPF payable   (1,758)
Due to related party   (277,774)
Accrued expenses   (2,056)
       
Purchase price   $ 1,818,000

 

The Company acquired 55% ownership of Portables on October 11, 2011. As of October 11, 2011, the net assets of Portables were $(9,290,241). The purchase consideration was $9,851,486 which resulted in goodwill of $ 27,005,953. The Company acquired Portables for two reasons; (a) to diversify its revenue sources, and (b) to gain access to the most mature mobile handset market in the world.

 

The following table summarizes the fair market values assigned to the assets acquired and liabilities assumed from Portables as of October 11, 2011.

 

Cash   $ 81,048
Other receivables     4,054,550
Prepaid expenses     255,816
Accounts receivable     3,896,008
Inventory     1,045,478
Due from related parties     3,813,514
Fixed assets     2,216,272
Equipment deposit     103,602
Intangible assets     223,557
Goodwill     27,005,953
Short-term loan     (1,352,562)
Notes payable     (4,757,186)
Accounts payable     (10,717,533)
Accrued expenses     (2,749,780)
Due to related party     (2,818,775)
Other payables     (2,584,250)
Valuation of non-controlling interest     (7,864,226)
       
Purchase Price   $ 9,851,486

 

Our purchase price allocation is preliminary and will be finalized within one year from the date of acquisition of Portables. The Company derecognized the $1,350,000 acquisition payable and revised goodwill from $27,005,953 as at December 31, 2011 to $25,668,755 as at June 30, 2012 as a result of this de recognition. (See Note 1)

 

The following table summarizes goodwill as of June 30, 2012 and December 31, 2011 resulting from the acquisitions of Jiangsu Leimone, Silver Tech, CDE and Portables:

 

    June 30,
2012
  December 31,
2011
      (Unaudited)     (Audited)
             
Jiangsu Leimone    $ 103,057   $ 103,057
Silver Tech     8,395,840     8,395,840
CDE     1,583,198     1,861,409
Portables     25,677,347     27,005,953
      35,759,442     37,126,605
Less: Impairment     (1,033,762)     (1,033,762)
             
Total goodwill    $ 34,725,680   $ 36,332,497

 

As of December 31, 2011, the Company had recorded total impairment of goodwill of $1,033,762. During the six months ended June 30, 2012, after considering markets conditions and the performance of those subsidiaries listed above, the Company concluded that it did not need to record additional impairment of goodwill. The Company continues to closely monitor its subsidiaries when major events occur that may cause the carrying value of the goodwill associated with the above subsidiaries to be impaired.

 

 

 

 

XML 40 R62.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accounting Policies (Impairment of Long-Lived Assets) (Narrative) (Details) (USD $)
6 Months Ended 12 Months Ended
Jun. 30, 2012
Dec. 31, 2011
Accounting Policies Impairment Of Long-Lived Assets Narrative Details    
Impairment of Long-lived Assets $ 0 $ 0
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Purchase Deposit (Tables)
6 Months Ended
Jun. 30, 2012
Purchase Deposit Tables  
Purchase Deposit

As of June 30, 2012 and December 31, 2011, the Company's purchase deposit consisted of the following:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Shenzhen Wuxing Commercial & Trade Co.   $ 5,435,989   $ 7,135,266
Shenzhen Nanxin Communication Equipment Co., Ltd.     791,177     785,583
Shenzhen Futian District Longchengfa Electronic Co., Ltd.     632,942     628,466
             
Total purchase deposit   $ 6,860,108   $ 8,549,315

 

XML 43 R29.htm IDEA: XBRL DOCUMENT v2.4.0.6
INCOME TAX - Note 23
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
INCOME TAX - Note 23

NOTE 23 — INCOME TAX

The Company is subject to income taxes by entity on income arising in or derived from the tax jurisdiction in which each entity is domiciled.

Zoom Technologies Inc., the parent company was incorporated in the U.S. and has net operating losses ("NOL") for income tax purposes, which can be carried forward for up to 20 years from the year the loss is incurred. Zoom has NOL carry forwards for income taxes of approximately $10.2 million at June 30, 2012, which may be available to reduce future years' taxable income. Management believes the realization of benefits from these losses remains uncertain due to Zoom's limited operating history and continuing losses. Accordingly, a 100% deferred tax asset valuation allowance has been provided.

 

TCB Digital, Jiangsu Leimone and Nollec Wireless are governed by the Income Tax Law of the PRC concerning the private-run enterprises, which are generally subject to tax at a statutory rate of 25% on income reported in the statutory financial statements after appropriate tax adjustments.

 

Jiangsu Leimone is exempt from income tax in PRC for two years starting from the first profitable year or the year 2008, whichever is earlier, and is subject to a 50% exemption on normal income tax rate for the following three years.

 

Nollec Wireless is exempt from income tax in PRC for two years starting from 2008, and is subject to a 50% exemption on normal income tax rate for three years starting from 2010 and is subject to normal income tax rate from 2013.

 

Since Nollec has pre-tax loss for the six months period ended June 30, 2012, the Company's net income and earnings per share had no effect due to its income tax exemption.

 

Profit Harvest and CDE are governed by the Income Tax Law of Hong Kong, which is generally subject to tax at a statutory rate of 16.5% on income reported in the statutory financial statements after appropriate tax adjustments.

 

Portables is governed by the Income Tax Law of United States; however, because Portables is a pass through entity for tax purposes, tax liabilities are the responsibility of its members. Therefore, Zoom Sub, which is responsible to report and make payments on its portion of income generated by Portables is subject to a statutory tax rate of 34%.

 

TCB Digital had pre-tax loss of $55,352 and pre-tax profit of $114,730 for the six months ended June 30, 2012 and 2011 respectively, while Jiangsu Leimone had pre-tax loss of $128,753 and $727,077 for the six months ended June 30, 2012 and 2011 respectively, while Profit Harvest had pre-tax profit of $5,154,344 and $8,177,552 for the six months ended June 30, 2012 and 2011 respectively, while Nollec Wireless had pre-tax loss of $1,517,239 and $1,443,556 for the six months ended June 30, 2012 and 2011, while CDE had pre-tax profit of $93,955 and pre-tax loss of $69,776 for the six months ended June 30, 2012 and 2011, while Portables had pre-tax profit of $758,931 for the six months ended June 30, 2012.

 

The following table summarizes the temporary differences which result in deferred tax assets and liabilities as at June 30, 2012 and December 31, 2011:

 

    June 30,
2012
  December 31,
2011
Deferred tax assets:   (Unaudited)   (Audited)
             
Inventory impairment reserve   $ 8,419   $ 8,360
Inventory shortage     61,121     60,688
Long-term investment impairment     17,801     17,676
      87,341     86,724
Less: Valuation allowance     -     -
             
 Total deferred tax assets     87,341     86,724
             
Deferred tax liabilities:            
             
Developed products     (30,793)     (30,575)
             
Deferred tax assets, net   $ 56,548   $ 56,149

 

The following table reconciles the U.S. statutory rates to the Company's effective tax rate for the six months ended June 30, 2012 and 2011:

 

  June 30,
2012
  June 30,
2011
       
US statutory rates 34.0%   34.0%
Tax rate difference -24.0%   -21.8%
Valuation allowance 37.0%   17.2%
Tax for prior year 3.0%   1.2%
Non-taxable Income of pass through entity -11.3%   0.0%
Tax per financial statements 38.7%   30.5%

 

The following table reconciles the U.S. statutory rates to the Company's effective tax rate for the three months ended June 30, 2012 and 2011:

 

  June 30,
2012
  June 30,
2011
       
US statutory rates 34.0%   34.0%
Tax rate difference -27.1%   -14.2%
Valuation allowance 36.1%   0.2%
Tax for prior year 13.1%   10.8%
Non-taxable Income of pass through entity -8.5%   0.0%
Tax per financial statements 47.6%   30.4%

 

Foreign pretax earnings approximated $3.5 million for the six months ended June 30, 2012. Pretax earnings of a foreign subsidiary are subject to U.S. taxation when effectively repatriated. The Company provides income taxes on the undistributed earnings of non-U.S. subsidiaries except to the extent that, such earnings are invested indefinitely outside of the U.S. At June 30, 2012, approximately $30.57 million of accumulated undistributed earnings of non-U.S. subsidiaries was invested indefinitely. At the existing U.S. federal income tax rate, additional taxes of $7.3 million would have to be provided if such earnings were remitted currently.

 

 

XML 44 R28.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCK OPTIONS - Note 22
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
STOCK OPTIONS - Note 22

NOTE 22 — STOCK OPTIONS

Previous Plan

Prior to the acquisition of Gold Lion, the Company issued stock options to its previous employees, officers and directors. Pursuant to terms of the SEA, outstanding stock options at the closing of the acquisition remained valid for the full life of the options regardless if the employee, officer and director remained in any capacity with the Company. There were 423,100 options outstanding as of September 22, 2009, the effective date of the reverse merger between Zoom and Gold Lion, with expiration in 3 years from the date of grant and in various stages of vesting. The non-cash compensation charges of these stock options were recorded by the spun-off subsidiary, Zoom Telephonics, and were expensed by the Company.

 

On the closing of the Merger, 30,000 stock options were granted to four exiting directors of the Company, for their anticipated cooperation with Post-Merger management, including the provision of any historical information about the Company that may be needed in future activities. Such options are exercisable at $10.14 per share, vest in six months from the date of grant and expired two years later. The non-cash compensation charges of these 30,000 shares of options will be expensed by the Company. All such options have expired or were exercised.

 

The following summary represents options activity for the three months ended June 30, 2012 under the previous plan.

 

    Under Previous
Plan
  Weighted Average
Exercise Price
  Aggregate
Intrinsic Value
             
Balance, December 31, 2011   129,350   $1.80   -
             
     Granted   -   -    
     Lapsed   (129,350)   -    
     Exercised   -   -    
     Cancelled   -   -    
             
Balance, June 30, 2012   -   -   -

 

THE 2009 EQUITY INCENTIVE COMPENSATION PLAN

 

On December 10, 2009, the Company's Board of Directors ("BOD") approved and adopted the 2009 Equity Incentive

Compensation Plan (the "New Plan"), and a total of 1,100,000 options were granted on the same day to current employees, executives and directors of the Company, with an exercise price of $6.18 per share, expiration between 1 and 3 years, and vesting over the life of the options.

 

On November 28, 2010, the Company's BOD approved re-pricing of the outstanding options from the exercise price of $6.18 to $3.75 per share.

 

On December 1, 2010, the Company's BOD approved of the granting of 677,000 options to current employees and executives of the Company, with an exercise price of $3.75 per share, vesting over 3 years and expiration in 3.25 years.

 

On May 22, 2012, the Company issued 302,800 shares of its common stock to its employees, consultants and directors in replacement for cancelling 1,339,000 outstanding options that were held by the same recipients. The shares have the same vesting schedule as the options and were valued at $1.12 per share, the closing price on the date of Board Approval. Based on the difference between the market value of the shares and the Black-Scholes value of the cancelled options as of May 22, 2012, there is an extra non-cash compensation expense of $25,760 for the quarter ended June 30, 2012.

 

The following summary represents options activity during the quarter ended June 30, 2012 under the New Plan.

 

    Under the New
Plan
  Weighted Average
Exercise Price
  Aggregate
Intrinsic Value
             
Balance, December 31, 2011   3,557,000   $3.02   $0
             
     Granted   -   -    
     Lapsed   408,000   $3,18    
     Exercised   -   -    
     Cancelled   1,339,000   $3.18    
             
Balance, June 30, 2012   1,810,000   $2.97   $0

 

The following represents options summary as of June 30, 2012 under the New Plan.

 

    Number
Outstanding
  Options Outstanding
Weighted Average
Remaining
Contractual Life
  Weighted
Average
Exercise
Price
  Options Exercisable
          Number Exercisable   Weighted Average Exercise Price
                     
Options   1,810,000   2.96 years   $2.97   767,500   $2.74

 

The Company determined the grant date fair value of 865,000 options of $1.80 per share which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $6.18 per share, exercise price of $6.18 per share, expected life of 3.25 years, volatility of 39.18% and discount rate of 1.26%.

 

For the re-pricing of the above 865,000 options on November 28, 2010, from the exercise price of $6.18 to $3.75 per share, the Company determined the incremental fair value of $0.48 per share which was calculated by taking the difference between the Black Scholes values of the new exercise price and that of the old exercise price. Other data used in the calculations include: the stock market price of $3.54, expected of 2.28 years, volatility of 33.59% and discount rate of 0.78%.

 

The Company determined the grant date fair value of 235,000 options of $1.20 per share which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $6.18 per share, exercise price of $6.18 per share, expected life of 1.5 years, volatility of 39.18% and discount rate of 0.78%.

 

For the re-pricing of the above 235,000 options on November 28, 2010, from the exercise price of $6.18 to $3.75 per share, the Company determined the incremental fair value of $0.26 per share which was calculated by taking the difference between the Black Scholes values of the new exercise price and that of the old exercise price. Other data used in the calculations include: the stock market price of $3.54, expected of 0.53 years, volatility of 33.59% and discount rate of 0.28%.

 

The Company determined the grant date fair value of 677,000 options of $0.74 per share which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $3.45 per share, exercise price of $3.75 per share, expected life of 3.25 years, volatility of 33.42% and discount rate of 0.84%.

 

The Company recorded $191,156 of non-cash compensation expense related to stock options for the quarter ended June 30, 2012. As of June 30, 2012, there was $965,680 of non-cash compensation to be recorded up to 2014 based on options valued at grant date.

 

XML 45 R56.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Tax (Tables)
6 Months Ended
Jun. 30, 2012
Income Tax Expense (Benefit) [Abstract]  
Schedule of Tax Effects of Temporary Differences that Give Rise to Significant Portions of Deferred Tax Assets and Liabilities

The following table summarizes the temporary differences which result in deferred tax assets and liabilities as at June 30, 2012 and December 31, 2011:

 

    June 30,
2012
  December 31,
2011
Deferred tax assets:   (Unaudited)   (Audited)
             
Inventory impairment reserve   $ 8,419   $ 8,360
Inventory shortage     61,121     60,688
Long-term investment impairment     17,801     17,676
      87,341     86,724
Less: Valuation allowance     -     -
             
 Total deferred tax assets     87,341     86,724
             
Deferred tax liabilities:            
             
Developed products     (30,793)     (30,575)
             
Deferred tax assets, net   $ 56,548   $ 56,149

 

 

 

Schedule of Effective Income Tax Rate and Amount Reconciliation

The following table reconciles the U.S. statutory rates to the Company's effective tax rate for the six months ended June 30, 2012 and 2011:

 

  June 30,
2012
  June 30,
2011
       
US statutory rates 34.0%   34.0%
Tax rate difference -24.0%   -21.8%
Valuation allowance 37.0%   17.2%
Tax for prior year 3.0%   1.2%
Non-taxable Income of pass through entity -11.3%   0.0%
Tax per financial statements 38.7%   30.5%

 

The following table reconciles the U.S. statutory rates to the Company's effective tax rate for the three months ended June 30, 2012 and 2011:

 

  June 30,
2012
  June 30,
2011
       
US statutory rates 34.0%   34.0%
Tax rate difference -27.1%   -14.2%
Valuation allowance 36.1%   0.2%
Tax for prior year 13.1%   10.8%
Non-taxable Income of pass through entity -8.5%   0.0%
Tax per financial statements 47.6%   30.4%

 

 

 

XML 46 R44.htm IDEA: XBRL DOCUMENT v2.4.0.6
Other Receivables and Prepaid Expenses (Tables)
6 Months Ended
Jun. 30, 2012
Other Receivables And Prepaid Expenses Tables  
Other receivables and prepaid expenses

As of June 30, 2012 and December 31, 2011, the Company's other receivables and prepaid expenses consisted of the following:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Advance to employees   $ 112,915   $ 23,882
Deposit for equipment lease     212,689     211,583
Prepaid expenses     224,401     238,857
Bank notes (a)     8,949,931     9,226,641
Other     123,108     83,044
             
Total other receivables   $ 9,623,044   $ 9,784,007

 

The deposit for equipment lease is recoverable within one year.

 

(a) Per purchase contract signed in 2010, CECCC provided mobile phone components to the Company. The Company paid in advance to CECCC by payment of ' bank notes'. During 2011, no purchase transaction was completed. As of June 30, 2012, the total outstanding amount is $8.9 million (RMB 56.6 million) which represents bank notes paid by the bank to CECCC but no purchases made by the Company.

 

XML 47 R30.htm IDEA: XBRL DOCUMENT v2.4.0.6
STATUTORY RESERVES - Note 24
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
STATUTORY RESERVES - Note 24

NOTE 24 — STATUTORY RESERVES

As stipulated by the Company Law of the PRC, net income after taxation can only be distributed as dividends after appropriation has been made for the following:

i) Making up cumulative prior years' losses, if any;

 

ii) Allocations to the "Statutory surplus reserve" of at least 10% of income after tax, as determined under PRC accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital;

 

iii) Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the Company's "Statutory common welfare fund", which is established for the purpose of providing employee facilities and other collective benefits to the Company's employees; and Statutory common welfare fund is no longer required per the new cooperation law executed in 2006.

 

iv) Allocations to the discretionary surplus reserve, if approved in the shareholders' general meeting.

 

In accordance with Chinese Company Law, the Company allocated 10% of its net income to surplus. For the six months ended June 30, 2012 and 2011, the Company appropriated Nil and $3,667 to statutory surplus reserve respectively. As of June 30, 2012 and December 31, 2011, the Company's statutory surplus reserve was $682,528 and $682,528 respectively.

XML 48 R31.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONCENTRATION DISCLOSURE - Note 25
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
CONCENTRATION DISCLOSURE - Note 25

NOTE 25 - CONCENTRATION DISCLOSURE

(a) During the reporting periods, the customers accounting for 10% or more of the Company's consolidated sales were:

Six months ended June 30, 2012   Sales Revenue   % to Total Sales
         
TCB Group Electronic & Science Co. Ltd - related party   $ 29,728,814   16%
Tianjin Optical & Electronic Co. Ltd.     22,405,547   12%
           
Total   $ 52,134,361   28%

 

Six months ended June 30, 2011   Sales Revenue   % to Total Sales
           
Tianjin Optical Communication Technology Co., Ltd.   $ 20,137,058   17%
Tianjin 712 Communications and Broadcasting Ltd. - related party     15,757,425   13%
TCB Group Electronic & Science Co., Ltd. - related party     12,541,921   11%
Larson Limited     14,705,795   13%
           
Total   $ 63,142,199   54%

41

(b) During the reporting periods, the suppliers accounting for 10% or more of the Company's consolidated purchases are:

 

Six months ended June 30, 2012   Total Purchases   % to Total
Purchases
         
Leimone (Tianjin) Industrial Co., Ltd. - related party     72,137,320   37%
TMO     22,770,516   12%
           
Total   $ 94,907,836   49%

 

Six months ended June 30, 2011   Total Purchases   % to Total
Purchases
         
Leimone (Tianjin) Industrial Co., Ltd. - related party   $ 23,684,030   22%
Tianjin 712 Communication and Broadcasting Co., Ltd. - related party     15,523,282   14%
           
Total   $ 39,207,312   36%

 

 

XML 49 R8.htm IDEA: XBRL DOCUMENT v2.4.0.6
BASIS OF PRESENTATION SUMMARY OF ACCOUNTING POLICIES - Note 2
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
BASIS OF PRESENTATION SUMMARY OF ACCOUNTING POLICIES - Note 2

NOTE 2 — BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The Company's accompanying consolidated balance sheet at June 30, 2012 includes the accounts of Gold Lion Holding Ltd, its 100%- owned subsidiary Profit Harvest which wholly owns Celestial Digital Entertainment, its 100%-owned subsidiary Jiangsu Leimone, which owns 80% of TCB Digital, its 100%-owned subsidiary Silver Tech, which wholly owns Ever Elite, and Ever Elite's wholly owned subsidiary Nollec Wireless, and its specifically formed wholly owned Zoom Sub which owned 55% of Portables. Zoom's consolidated balance sheet as of June 30. 2012 includes the balance sheets of Gold Lion, TCB Digital, Jiangsu Leimone, Profit Harvest, Silver Tech, Ever Elite, Nollec Wireless, CDE, Zoom Sub, and Portables. The consolidated operating results for the six months ended June 30, 2012 include Gold Lion, TCB Digital, Jiangsu Leimone, Profit Harvest, Silver Tech, Ever Elite, Nollec Wireless, CDE, Zoom Sub, and Portables. Portables ownership interest reduced to 50.5% as of June 30, 2012 and its operating results reported accordingly (See Note 1). The consolidated operating results for the six months ended June 30, 2011 include Gold Lion, TCB Digital, Jiangsu Leimone, Profit Harvest, Silver Tech, Ever Elite, Nollec Wireless, and CDE.

 

Equity Method Accounting

 

In May 2012, the Company invested $12.3 million to establish a new joint venture named SpreadZoom Technologies Co. Ltd., ("SpreadZoom"). The Company owns 47.4% of SpreadZoom and accounted for this investment under the equity method of accounting (ASC 323-30). The Company recorded its investment at original cost. This balance will increase with income and decrease for dividends and losses from the joint venture that accrue to the Company. SpreadZoom has no operations as of June 30, 2012.

 

Exclusion of Related Party Lessor from Consolidation

 

Portables commencing in January 2009, subleased its principal facility from one of its noncontrolling member. The member began leasing the facility in December 2005 from a related party, AUM Realty, LLC ("AUM"). The Company's management has assessed whether AUM should be consolidated pursuant to FASB ASC 810 Consolidations. ASC 810 is not a "rules based" standard and thereby includes limited circumstances under which it can be conclusively determined whether an entity should be consolidated. Management believes that AUM is not a variable interest entity ("VIE") as defined in ASC 810 because AUM was adequately capitalized. Equity contributions from AUM's owners exceeded 20% of the acquisition costs of the property. Management believes that this is, according to ASC 810 criteria, "sufficient to permit the entity to finance its activities without additional subordinated financial support." Portables noncontrolling member and the owners of AUM provided guarantees of AUM's Rockland County Industrial Development Agency ("IDA") supported bank loan. Such a guarantee constitutes a form of "subordinated financial support," which provides a contrary indication to management's assessment that AUM is not a VIE. Management believes, however, that the guarantees were not necessary for AUM to finance its activities, and its equity capital was sufficient to support its activities if necessary, but the guarantees were only required under IDA rules in order to obtain the reduced financing costs of the IDA support. Management believes that the same is true at June 30, 2012 (See Note 27 for details).

 

Based on this assessment, management believes that AUM is not a VIE and therefore is not consolidated as a component of these consolidated financial statements. If the matter were to be assessed differently, these consolidated financial statements would have included AUM's assets (principally land and building), liabilities (principally loan payable) and expenses, with the excess of AUM's assets over liabilities shown as a "noncontrolling interest".

 

Basis of Presentation

 

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). For the Company's subsidiaries of JS Leimone, TCB Digital and Nollec Wireless, the functional currency is the Chinese Renminbi ("RMB"); the functional currency of Gold Lion, Profit Harvest, silver Tech, Zoom Sub and Portables is United States Dollars ("USD" or "$"), and the functional currency of Ever Elite and CDE is Hong Kong Dollars ("HKD"). The accompanying consolidated financial statements were translated and presented in USD.

 

Use of Estimates

 

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.

 

Risks and Uncertainties

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

 

Comprehensive Income

 

The Company follows the provisions of ASC 220 "Reporting Comprehensive Income", previously SFAS No. 130, establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements.

 

ASC 220 defines comprehensive income is comprised of net income and all changes to the statements of stockholders' equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders, including adjustments to minimum pension liabilities, accumulated foreign currency translation, and unrealized gains or losses on marketable securities.

 

Foreign Currency Transactions

 

The accounts of the Company's Chinese subsidiaries are maintained in the RMB and the accounts of the U.S. parent company are maintained in the USD. The accounts of the Chinese subsidiaries were translated into USD in accordance with Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation," (codified in Financial Accounting Standards ("FASB") Accounting Standards Codification ("ASC") Topic 810) with the RMB as the functional currency for the Chinese subsidiaries. According to SFAS 52, all assets and liabilities were translated at the exchange rate at the date of the balance sheet; stockholders' equity is translated at historical rates; the line items on the statement of operations are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, "Reporting Comprehensive Income" (codified in FASB ASC Topic 220). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the income statement.

 

Translations adjustments resulting from this process are included in accumulated other comprehensive income in the stockholders' equity were $2,471,146 and $2,081,429 as of June 30, 2012 and December 31, 2011.

 

Cash and Equivalents

 

For Statement of Cash Flows purposes, the Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. The Company maintains cash with various banks and trust companies located in China. Cash accounts are not insured or otherwise protected. Should any bank or trust company holding cash deposits become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash on deposit with that particular bank or trust company.

 

Accounts Receivable

 

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Accounts are written off against the allowance when it becomes evident collection will not occur. For the contracted manufacturing activities, our standard terms for accounts receivable from our customers are between 60 to 75 days from close of the billing cycle; and for sales of own brand phones our terms include prepaid arrangements and extending receivable to customers up to 60 days. We also offer credit terms of up to 150 days in our trading activities to a certain customers. As of June 30, 2012, management concluded that the allowances as accrued and disclosed in Note 4 - Accounts Receivable were adequate to cover any potential unrecoverable balances as a result of delinquency.

 

Inventories

 

Inventories are stated at the lower of cost or market. Cost is determined on a weighted average basis and includes all expenditures incurred in bringing the goods to the point of sale and putting them in a saleable condition. In assessing the ultimate realization of inventories, the management makes judgments as to future demand requirements compared to current or committed inventory levels. Our reserve requirements generally increase as our projected demand requires; or decrease due to market conditions and product life cycle changes. The Company estimates the demand requirements based on market conditions, forecasts prepared by its customers, sales contracts and orders in hand.

 

In addition, the Company estimates net realizable value based on intended use, current market value and inventory ageing analyses. The Company writes down inventories for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventories and their estimated market value based upon assumptions about future demand and market conditions. Historically, the actual net realizable value has been close to management's estimate.

 

Property, Plant and Equipment

 

Property, plant and equipment are recorded at cost. Gains or losses on disposals are reflected as gain or loss in the year of disposal. All ordinary repair and maintenance costs are expensed as incurred. Expenditures for maintenance and repairs are expensed as incurred. Major renewals and betterments are charged to the property accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed in the current period.

 

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of assets as set out below.

 

Fixed Asset Class   Estimated Useful Lives
Machinery and equipment   4-6 years
Electronic equipment   4-6 years
Reconstruction of workshop and assembling line   5 years
Transportation equipment   4-6 years

 

Capitalized Interest

 

Interest associated with major development and construction projects is capitalized and included in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using weighted-average cost of the Company's outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or development activity is suspended for more than a brief period.

 

Impairment of Long-lived Assets

 

In accordance with ASC 360, "Property, Plant and Equipment", previously SFAS No. 144, the Company reviews the carrying values of long-lived assets, including property, plant and equipment and other intangible assets, whenever facts and circumstances indicate that the assets may be impaired. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If an asset is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs of disposal. The Company performed as annual review of its long-lived assets at December 31, 2011, and management concluded that for year 2011 there was no impairment. As of and for the six months ended June 30, 2012, management did not become aware of events that impaired the carrying value of the Company's long lived assets.

 

Goodwill

 

The Company recognizes goodwill for the excess of the purchase price over the fair value of the identifiable net assets of the business acquired. ASC 350 "Intangible Assets-Goodwill and Other", previously SFAS No. 142, an impairment test for goodwill is undertaken by the Company at the reporting unit level annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. As of June 30, 2012, and December 31, 2011 the Company recorded impairment of goodwill of $1,033,762 and $1,033,762 respectively.

 

Revenue Recognition

 

The Company recognizes sales in accordance with the U.S. Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition in Financial Statements" (FASB ASC Topic 605), "Revenue Recognition."

 

The Company recognizes revenue when the following criteria are met:

 

(i) persuasive evidence of an arrangement exists;

 

(ii) delivery has occurred or services were rendered;

 

(iii) the price to the customer is fixed or determinable and,

 

(iv) collection of the resulting receivable is reasonably assured. Revenue is not recognized until title and risk of loss is transferred to the customer, which occurs upon delivery of goods, and objective evidence exists that customer acceptance provisions were met.

 

The Company bases its estimates on historical experience taking into consideration the type of products sold, the type of customer, and the type of specific transaction in each arrangement. Revenues represent the invoiced value of goods, net of value added tax ("VAT").

 

The Company does not offer promotional payments, customer coupons, rebates or other cash redemption offers to its customers. Deposits or advance payments from customers prior to delivery of goods and passage of title of goods are recorded as advanced from customers.

 

The Company's subsidiary, Nollec Wireless is in the mobile phone design, software integration and mobile solution R&D business, Nollec Wireless, recognizes revenue under the percentage of completion method ASC Topic 605-35-25 (Construction - Type and Production - Type Contracts) when reasonably dependable estimates can be made and all the following conditions exist:

  1. Contracts executed by the parties normally include provisions that clearly specify the enforceable rights regarding goods or services to be provided and received by the parties, the consideration to be exchanged, and the manner and terms of settlement.
  2. The buyer can be expected to satisfy all obligations under the contract.
  3. The contractor can be expected to perform all contractual obligations.

 

Estimates of cost to complete is reviewed periodically and revised as appropriate to reflect new information. When the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract is made.

 

Income is recognized as the percentage of estimated total income, and is determined by dividing incurred costs to date by estimated total costs after giving effect to adjustments, if any, in estimates of costs to completion based upon the most recent information. Percentage of completion is based on labor hours incurred to date divided by total estimated labor hours for the contract.

 

Royalty income on sales of licensed products by its customers is recorded when the customers report sales to the Company. Royalty income is reported monthly and recorded in the period in which the product is sold. The Company has the right to audit the books of the licensees.

 

The Company's subsidiary, CDE is in the business of video games and applications for mobile phones and mobile platforms development. Revenue is recognized in accordance with ASC 985-605-55-125. Cost of Software Development Revenue is accounted for under ASC 985-20 to be sold, leased or otherwise marketed.

 

CDE capitalizes cost of development of software for hosting purpose in accordance with ASC subtopic 350-40 ("ASC 350-40"), Intangibles-Goodwill and Other: Internal-Use Software (Pre-codification: Statement of Position ("SOP") No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use). As such, CDE expenses all costs that are incurred in connection with the planning and implementation phases of development and costs that are associated with repair or maintenance. Costs incurred in the development phase are capitalized and amortized over the estimated product life. Since the inception of CDE, the amount of costs qualifying for capitalization has been insignificant and as a result all internally used software development costs have been expensed as incurred.

 

The Company's subsidiary, Portables is in the business of distribution of mobile phone and provision of wireless service. Revenue from the sale of equipment is recognized upon shipment or when purchased at Portables retail locations. Commission income is recognized upon activation of wireless communication services with T-Mobile.

 

Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740 "Income Taxes", previously SFAS No. 109. Under this method, deferred income taxes are recognized for the estimated tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts and each year-end based on enacted tax laws and statutory rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established to reduce deferred tax assets to the amount expected to be realized when, in management's opinion; it is more likely than not that some portion of the deferred tax assets will not be realized. The provision for income taxes represents current taxes payable net of the change during the period in deferred tax assets and liabilities.

 

Operating Leases

 

Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company that do not meet the capitalization criteria of ASC 840 "Leases", previously SFAS No. 13, are accounted for as operating leases. Rental payables under operating leases are expensed on the straight-line basis over the lease term.

 

Research and Development Costs

 

Research and development costs are related primarily to the development of cell phone technology, video games and applications for mobile phones and mobile platforms development. Research and development costs are expensed as incurred.

 

Earnings Per Share

 

The Company reports earnings per share in accordance with the provisions of ASC 260 "Earnings Per Share", previously SFAS No. 128. ASC 260 requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock using the treasury method.

Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company's net income (loss) position at the calculation dates.

 

Fair Values of Financial Instruments

 

ASC 820 "Fair Value Measurements and Disclosures", previously FAS 157, adopted January 1, 2008, defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for current receivables and payables qualify as financial instruments. Management concluded the carrying values are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available. The three levels are defined as follows:

 

· Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

· Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

· Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

 

The assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of June 30, 2012 and December 31, 2011 are as follows:

 

    Carrying value   Active markets
For identical Assets
  Significant
other Observable
Inputs
  Significant
Unobservable
Inputs
    2012   (Level 1)   (Level 2)   (Level 3)
                 
Cash and cash equivalents   $ 5,942,846   $ 5,942,846   -   -
                     
Restricted cash   $ 14,196,046   $ 14,196,046   -   -

 

    Carrying value   Active markets
For identical Assets
  Significant
other Observable
Inputs
  Significant
Unobservable
Inputs
    2011   (Level 1)   (Level 2)   (Level 3)
                 
Cash and cash equivalents   $ 1,131,109   $ 1,131,109   -   -
                     
Restricted cash   $ 15,507,408   $ 15,507,408   -   -

 

The Company's financial instruments include cash and equivalents, restricted cash, accounts receivable, notes receivables, other receivables, accounts payable, notes payable. Cash and cash equivalents consist primarily of high rated money market funds at a variety of well-known institutions with original maturities of three months or less. Restricted cash represents time deposits on account to secure short-term bank loans and notes payable (Note 15). Management estimates the carrying amounts of the non-related party financial instruments approximate their fair values due to their short-term nature.

 

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and equivalents and trade and bills receivables. As of June 30, 2012 and December 31, 2011, substantially all of the Company's cash and equivalents and restricted cash were held by major financial institutions located in the PRC, Hong Kong and the United States, which management believes are of high credit quality. With respect to trade and notes receivables, the Company extends credit based on an evaluation of the customer's financial condition. The Company generally does not require collateral for trade receivables and maintains an allowance for doubtful accounts of trade receivables.

 

Notes receivable are undertaken by the banks to honor the payments at maturity and the customers are required to place deposits with the banks equivalent to certain percentage of the notes amount as collateral. These notes receivable can be sold to any third party at a discount before maturity. The Company does not maintain an allowance for notes receivable in the absence of bad debt experience and the payments are undertaken by the banks.

 

Non-controlling Interests

 

The Company follows ASC 810, previously SFAS No. 160 "Non-controlling Interests in Consolidated Financial Statements-reported in equity" for reporting non-controlling interest ("NCI") in a subsidiary. As a result, the Company reports NCI as a separate component of Stockholders' Equity in the Consolidated Balance Sheet. Additionally, the Company reports the portion of net income and comprehensive income attributed to the Company and NCI separately in the Consolidated Statement of Income. The Company also includes a separate column for NCI in the Consolidated Statement of Changes in Stockholders' Equity.

 

Statement of Cash Flows

 

In accordance with ASC 230, "Statement of Cash Flows", previously SFAS No. 95, cash flows from the Company's operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

 

Recent Accounting Pronouncements

 

In July 2012, the FASB issued ASU 2012-02, Intangibles-Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. The ASU provides entities with an option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. If an entity concludes that it is more than 50% likely that an indefinite-lived intangible asset is not impaired, no further analysis is required. However, if an entity concludes otherwise, it would be required to determine the FV of the indefinite-lived intangible asset to measure the amount of actual impairment, if any, as currently required under US GAAP. The ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted. The adoption of this pronouncement will not have a material impact on its financial statements.

 

As of June 30, 2012, there are no other recently issued accounting standards not yet adopted that would have a material effect on the Company's consolidated financial statements.

 

 

XML 50 R32.htm IDEA: XBRL DOCUMENT v2.4.0.6
OPERATING RISK - Note 26
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
OPERATING RISK - Note 26

NOTE 26 - OPERATING RISK

  • Industry risk

 

The industry in which we compete is a rapidly evolving, highly competitive and fragmented market driven by consumer preferences and quickly evolving technology. Increased competition may result in price reductions, reduced gross margin and loss of market share. Failure to compete successfully against current or future competitors could have a material adverse effect on the Company's business, operating results and financial condition.

  • Exchange risk

 

The Company cannot guarantee the Renminbi and USD exchange rate will remain steady; therefore, the Company could post the same profit for two comparable periods and post higher or lower profit depending on exchange rate of Renminbi and USD. The exchange rate could fluctuate depending on changes in the political and economic environments without notice.

  • Political risk

 

Currently, PRC is in a period of growth and is openly promoting business development in order to bring more business into PRC. Additionally PRC currently allows a Chinese corporation to be owned by a United States corporation. If the laws or regulations relating to ownership of a Chinese corporation are changed by the PRC government, the Company's ability to operate the PRC subsidiaries could be affected.

  • Interest risk

 

The Company is exposed to interest rate risk arising from short-term variable rate borrowings from time to time. The Company's future interest expense will fluctuate in line with any change in borrowing rates. The Company does not have any derivative financial instruments as of June 30, 2012 and December 31, 2011 and believes its exposure to interest rate risk is not material.

 

 

XML 51 R83.htm IDEA: XBRL DOCUMENT v2.4.0.6
Long-Term Payables (Narrative) (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Long-Term Payables Narrative Details    
Long-term payables $ 145,000 $ 145,000
XML 52 R40.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accounts Receivable (Tables)
6 Months Ended
Jun. 30, 2012
Accounts Receivable Tables  
Accounts receivable

As of June 30, 2012 and December 31, 2011, the Company's accounts receivable consisted of the following:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Accounts receivable   $ 70,662,360   $ 49,798,505
Less: Allowance for doubtful accounts     (733,140)     (827,956)
             
Accountants receivable, net   $ 69,929,220   $ 48,970,549

 

 

 

XML 53 R53.htm IDEA: XBRL DOCUMENT v2.4.0.6
Long-Term Notes Payable (Tables)
6 Months Ended
Jun. 30, 2012
Long-Term Notes Payable Tables  
Long-Term Notes Payable

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
CNCG, as part of the consideration payable to the sellers in our acquisition of Portables, from October 11, 2011 to October 11, 2014 with interest at 2%   $ 500,000   $ 500,000

 

 

XML 54 R72.htm IDEA: XBRL DOCUMENT v2.4.0.6
Research and Development Contracts in Progress (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Research And Development Contracts In Progress Details    
Costs in excess of revenue - R&D contracts $ 514,797 $ 91,880
XML 55 R2.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSOLIDATED BALANCE SHEETS (USD $)
Jun. 30, 2012
Dec. 31, 2011
Current assets    
Cash and cash equivalents $ 5,943,116 $ 1,131,109
Restricted cash 14,196,046 15,507,408
Accounts receivable, net 69,929,220 48,970,549
Inventories, net 7,458,737 3,070,000
Purchase deposit 6,860,108 8,549,315
Other receivables and prepaid expenses 9,623,044 9,784,007
Advance to suppliers 2,296,412 9,834,017
Notes receivable 0 1,086,606
Due from related parties 22,267,993 30,425,700
Costs in excess of revenue - R&D contracts 514,797 91,880
Deferred tax assets, net 56,548 56,149
Total current assets 139,146,021 128,506,740
Long-term investment 12,342,358 0
Property, plant and equipment, net 5,743,876 6,260,675
Equipment deposit 39,710 101,859
Construction in progress deposit - related parties 0 10,170,809
Intangible assets 704,074 772,527
Goodwill 34,725,680 36,332,497
TOTAL ASSETS 192,701,719 182,145,107
Current liabilities    
Short-term loans 25,565,867 26,405,343
Notes payable 28,231,522 29,443,650
Accounts payable 4,972,190 14,336,883
Accrued expenses and other payables 11,010,728 10,173,712
Advance from customers 1,343,394 1,112,179
Taxes payable 3,478,555 4,287,309
Interest payable 97,569 85,323
Dividends payable 627,039 622,606
Due to related parties 25,444,409 6,742,373
Total current liabilities 100,771,273 93,209,378
Long-term payables 145,000 145,000
Long-term notes payable 500,000 500,000
Long-term loan 0 10,458
TOTAL LIABILITIES 101,416,273 93,864,836
COMMITMENTS     
STOCKHOLDERS' EQUITY    
Preferred stock: authorized 1,000,000 shares, par value $0.01 none issued and outstanding as of June 30, 2012 0 0
Common stock: authorized 35,000,000 shares, par value $0.01 Issued 28,935,723 shares and outstanding 28,934,043 shares; and Issued 23,865,723 shares and outstanding 23,864,043 shares at June 30, 2012 and December 31, 2011, respectively 289,340 238,640
Shares to be issued 1,726 1,000
Deferred expenses (6,038,757) (1,400,068)
Additional paid-in capital 58,992,716 53,133,895
Treasury shares: 1,680 shares at cost (7,322) (7,322)
Statutory surplus reserve 682,528 682,528
Accumulated other comprehensive income 2,471,146 2,081,429
Retained earnings 23,110,363 22,048,539
TOTAL STOCKHOLDERS' EQUITY 79,501,740 76,778,641
Noncontrolling interest 11,783,706 11,501,630
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 192,701,719 $ 182,145,107
XML 56 R45.htm IDEA: XBRL DOCUMENT v2.4.0.6
Research and Development Contracts in Progress (Tables)
6 Months Ended
Jun. 30, 2012
Research And Development Contracts In Progress Tables  
Research and development contracts in progress

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
         
Costs in excess of billings   $ 514,797   $ 91,880
             

 

 

XML 57 R96.htm IDEA: XBRL DOCUMENT v2.4.0.6
Concentration Disclosure (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Sales revenue, major customer, amount $ 52,134,361 $ 63,142,199
Sales revenue, major customer, percentage 28.00% 54.00%
Purchases, major supplier, amount 94,907,836 39,207,312
Purchases, major supplier, percentage 49.00% 36.00%
TCB Group Electronic &amp;amp; Science Co. Ltd - related party
   
Sales revenue, major customer, amount 29,728,814 12,541,921
Sales revenue, major customer, percentage 16.00% 11.00%
Tianjin Optical &amp;amp; Electronic Co. Ltd.
   
Sales revenue, major customer, amount 22,405,547  
Sales revenue, major customer, percentage 12.00%  
Tianjin Optical Communication Technology Co., Ltd.
   
Sales revenue, major customer, amount   20,137,058
Sales revenue, major customer, percentage   17.00%
Tianjin 712 Communications and Broadcasting Ltd. - related party
   
Sales revenue, major customer, amount   15,757,425
Sales revenue, major customer, percentage   13.00%
Purchases, major supplier, amount   15,523,382
Purchases, major supplier, percentage   14.00%
Larson Limited
   
Sales revenue, major customer, amount   14,705,795
Sales revenue, major customer, percentage   13.00%
Leimone (Tianjin) Industrial Co., Ltd. - related party
   
Purchases, major supplier, amount 72,137,320 23,684,030
Purchases, major supplier, percentage 37.00% 22.00%
TMO
   
Purchases, major supplier, amount $ 22,770,516  
Purchases, major supplier, percentage 12.00%  
XML 58 R6.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)
6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Cash flows from operating activities:    
Income including noncontrolling interest $ 1,433,055 $ 3,289,369
Adjustments to reconcile income to cash including non-controlling interest provided by (used in) operating activities:    
Depreciation and amortization 849,667 785,222
Non-cash equity-based compensation 1,271,559 614,938
Provision for inventory obsolescence (39,160) (69,037)
Provision on accounts receivable (11,390) 0
Loss on disposal of fixed assets 856 8,432
Changes in deferred tax assets 0 (40,080)
Changes in operating assets and liabilities:    
Accounts receivable (20,865,478) (11,665,449)
Inventories (4,381,831) 473,053
Advances to suppliers 7,545,083 3,630,754
Prepaid expenses and other assets 1,976,882 49,645
Accounts payable (9,398,126) 42,557
Advance from customers 243,638 655,962
Related parties-net 26,647,200 (2,134,811)
Accrued expenses and other current liabilities 1,509,985 1,062,926
Net cash provided by (used in) operating activities 6,781,940 (3,296,519)
Cash flows from investing activities:    
Restricted cash 1,420,436 1,615,628
Purchase of property and equipment and other long-term assets (618,063) 128,037
Proceeds from collection on notes receivable 1,093,306 624,341
Equity method investee (12,330,651) 0
Refund from factory construction deposit 12,330,651 0
Cash increase due to acquisition of subsidiaries 0 235,112
Net cash provided by investing activities 1,895,679 2,603,118
Cash flows from financing activities:    
Issuance of shares for cash 0 166,570
Proceeds from short-term loans 7,121,220 14,133,539
Advance to related parties (360,015) (312,941)
Proceeds from borrowings from related parties 40 0
Repayment on notes payable (1,420,436) (1,527,067)
Receipts from (payments) to related parties (1,663,571) 513,325
Repayment on borrowing from related parties (4,867,558) 0
Receipt from related parties 5,343,053 9,075
Repayments on short-term loans (8,131,999) (12,216,538)
Repayments on long-term loan (10,468) (4,818)
Net cash provided by (used in) financing activities (3,989,734) 761,145
Effect of exchange rate changes on cash & cash equivalents 124,122 140,200
Net increase in cash and cash equivalents 4,812,007 207,944
Cash and cash equivalents, beginning balance 1,131,109 6,374,103
Cash and cash equivalents, ending balance 5,943,116 6,582,047
SUPPLEMENTARY DISCLOSURES:    
Interest paid 919,423 929,846
Income tax paid 1,362,364 116,122
Non-cash investing and financing activities    
Acquision of 100% of CDE by issuing 484,800 shares $ 0 $ 1,818,000
XML 59 R94.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Tax (Schedule of Tax Effects of Temporary Differences in Deferred Tax Assets and Liabilities) (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Income Tax Schedule Of Tax Effects Of Temporary Differences In Deferred Tax Assets And Liabilities Details    
Inventory impairment reserve $ 8,419 $ 8,360
Inventory shortage 61,121 60,688
Long-term investment impairment 17,801 17,676
Total gross deferred assets 87,341 86,724
Less: Valuation allowance      
Total deferred tax assets 87,341 86,724
Developed products (30,793) (30,575)
Deferred tax assets, net $ 56,548 $ 56,149
XML 60 R59.htm IDEA: XBRL DOCUMENT v2.4.0.6
ORGANIZATION AND NATURE OF BUSINESS OPERATIONS - Note 1 (Details Narrative) (USD $)
3 Months Ended
Jun. 30, 2010
Jun. 30, 2012
Dec. 31, 2011
Nov. 26, 2008
Sep. 22, 2009
Zoom Technologies
Jan. 31, 2008
Zoom Technologies
Jiangsu Leimone Investment
Jan. 31, 2008
Zoom Technologies
RMB
Jiangsu Leimone Investment
Nov. 26, 2008
Zoom Technologies
Lei Gu Issued Stock
Nov. 26, 2008
Zoom Technologies
Songtau Du Issued Stock
Oct. 26, 2011
Zoom Technologies
Spreadtrum Communications
Sep. 22, 2009
Zoom Technologies
Jiangsu Leimone
Mar. 31, 2010
Zoom Technologies
TCB Digital Acquisition
Jun. 30, 2007
Zoom Technologies
TCB Digital Acquisition
Jun. 30, 2007
Zoom Technologies
TCB Digital Acquisition
RMB
Sep. 22, 2009
Zoom Technologies
Gold Lion Acquisition
Jun. 01, 2010
Zoom Technologies
Nollec Wireless Acquisition
Dec. 31, 2011
Zoom Technologies
Silver Tech Enterprises Acquisition
Dec. 31, 2010
Zoom Technologies
Silver Tech Enterprises Acquisition
Jun. 30, 2010
Zoom Technologies
Silver Tech Enterprises Acquisition
NumberOfPayments
Jun. 01, 2010
Zoom Technologies
Silver Tech Enterprises Acquisition
May 31, 2010
Zoom Technologies
Silver Tech Enterprises Acquisition
NumberOfPayments
Jun. 30, 2012
Zoom Technologies
Silver Tech Enterprises Acquisition
Other Note Payable
Jun. 30, 2012
Zoom Technologies
Silver Tech Enterprises Acquisition
Long Term Debt
Jan. 04, 2011
Zoom Technologies
Celestial Digital Acquisition
SoftwareTitles
Jun. 30, 2012
Zoom Technologies
Portables Acquisition
Oct. 11, 2011
Zoom Technologies
Portables Acquisition
Y
Aug. 14, 2012
Zoom Technologies
Portables Acquisition
Complaint
Apr. 13, 2012
Zoom Technologies
Portables Acquisition
Complaint
Oct. 11, 2011
Zoom Technologies
Portables Acquisition
Additional Acquisition
Dec. 20, 2011
Zoom Technologies
Portables Acquisition
Debt Acquired from Acquisition
Dec. 10, 2011
Zoom Technologies
Portables Acquisition
Debt Acquired from Acquisition
Nov. 10, 2011
Zoom Technologies
Portables Acquisition
Debt Acquired from Acquisition
Nov. 26, 2008
Zoom Technologies
Jiangsu Leimone Acquisition
Nov. 26, 2008
Zoom Technologies
Jiangsu Leimone Acquisition
HKD
Sep. 22, 2009
Jiangsu Leimone
TCB Digital Acquisition
Sep. 22, 2009
Gold Lion Holding Limited
Profit Harvest Acquisition
Dec. 01, 2008
Gold Lion Holding Limited
Profit Harvest Corp Acquisition
Nov. 30, 2007
Gold Lion Holding Limited
Nantong Zong Yi Acquisition
Sep. 22, 2009
TCB Digital
Zoom Technologies Acquisition
Jun. 01, 2010
Ever Elite
Jun. 01, 2010
Silver Tech Enterprises
Jun. 30, 2007
Hebei Leimone
TCB Digital Acquisition
Jun. 30, 2007
Hebei Leimone
TCB Digital Acquisition
Mar. 31, 2010
Lei Gu
TCB Digital Acquisition
Jun. 30, 2007
Lei Gu
TCB Digital Acquisition
Mar. 31, 2010
Lei Gu
TCB Digital Acquisition
Shares issued in consideration
Jun. 30, 2007
Wei Cao
TCB Digital Acquisition
Jun. 30, 2007
Beijing Depu Investment
TCB Digital Acquisition
Gold Lion, percentage of company owned                     100.00%                                                 100.00% 100.00% 60.00%                    
Jiangsu Leimone, outstanding stock owned           80.00%                                                     20.00%   51.03%                          
Mr. Gu, percentage of company owned                             70.60%                                                     25.10%            
Mr. Dr, outstanding capital stock owned                             29.40%                                                                  
Shares Outstanding                             4,225,219                                                                  
Former Gold Lion shareholders ownership                             69.30%                                                                  
Shares outstanding prior to merger                             1,980,978                                                                  
Optional percentage of outstanding capital stock                                                                     29.00%                 29.00%        
Optional shares of outstanding capital stock                                                                     2,402,576                          
Dividend of issued and outstanding stock to stockholders         100.00%                                                                                      
Maximum Shares sold per month                                                                             3.00%                  
Zoom percentage of shares aquired                               100.00%                                                                
Silver Tech percentage owned                                                                               100.00%                
Ever Elite percentage owned                               100.00%                                                                
Key Network Holdings percentage owned                                                                                 76.80%              
Better Day Fiance percentage owned                                                                                 23.20%              
Percentage of oustanding stock purchased                                                                                 100.00%              
Total cost of acquisition                                                         $ 750,000                       $ 10,960,000              
Common stock issued   28,935,723 23,865,723             1,676,300                   1,342,599 1,342,599     484,800   1,494,688                                            
Consideration in shares of common stock   289,340 238,640             2,900,000                   9,590,000       1,818,000                                                
Cash paid for acquisition of business                                 275,000 137,500     500,000 290,000 145,000                             10,273       9,000,000 1,286,000          
Balance of payment for acquisition remaining                                         870,000                                                      
Number of installments to pay balance of cash due for acquisition                                         6                                                      
Period within balance of acquisition cost is to be paid                                         3 years               30 days                                      
Payments remaining on acquisition cost                                     3                                                          
Value of each remaining payment from acquisition                                     145,000                                                          
Acquisition percentage of company                       80.00%                       100.00%   50.00%     5.00%                         36.00%           15.00%
Titles developed for Iphone                                               40                                                
Promissory note issued for acquisition                                                   500,000                                            
Promissory note interest rate   2.00%                                               2.00%                                            
Years until promissory note matures                                                   3                                            
Debt acquired from acquisition                                                   4,757,187     4,500,000 853,788 1,400,000 2,500,000                                
Letter of credit to pay obligations from acquisition                                                   500,000                                            
Debt aquired from acquisition                                                   1,350,000                                            
Change in ownership resulting from non-payment, starting value                                                       55.00%                                        
Change in ownership resulting from non-payment, ending value                                                       50.50%                                        
Portables ownership percentage of company                                                       49.50%                                        
Derecognized assets                                                 1,350,000                                              
Complaint seeks damages up to                                                     5                                          
The Company's ownership in complaint                                                     4600.00%                                          
Minimum shares held for Spreadtrum to nominate to board of directors                   838,150                                                                            
Shares Issued       1,000       705 294                                                                     60,000   2,402,576    
Investment in TCB Digital                         4,679,111 (35,306,300)                                                             15,928,700   10,377,600  
Cao interest in TCB traded to Gu                                                                                             15.00%  
Cao interest in Gold Lion gained from Gu                                                                                             29.40%  
Shares issued 2,462,576                                                                                              
Investment in Jiangsu Leimone           $ 5,074,226 $ (38,800,000)                                                   $ 103,214 $ (800,000)                            
XML 61 R99.htm IDEA: XBRL DOCUMENT v2.4.0.6
Commitments (Operating Leases Narrative) (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Commitments Operating Leases Narrative Details  
Sublease income $ 127,423
Rent expense, net 702,562
Rent paid to company member $ 143,924
XML 62 R35.htm IDEA: XBRL DOCUMENT v2.4.0.6
SUBSEQUENT EVENT - Note 29
6 Months Ended
Jun. 30, 2012
Subsequent Events [Abstract]  
SUBSEQUENT EVENT - Note 29

NOTE 29 - SUBSEQUENT EVENT

 

The Company was advised that on or about August 14, Portables Unlimited Inc., both individually and derivatively, filed an action in the Supreme Court of the State of New York, County of Nassau against the Company, its US subsidiary, and two officers of the Company. The Complaint seeks damages up to an aggregate amount of $5 million for breach of that certain Securities Purchase Agreement and a declaration as to the percentage interest the Company retains in Portables Unlimited, Inc. equal to 46%. The Company believes that it is entitled to hold 50.5% interest in Portables based on the terms of the Securities Purchase Agreement. Once the Complaint is served, the Company intends to defend itself vigorously and to assert counterclaims that will, in the aggregate, seek a higher damages award than Portables Unlimited, Inc. seeks.

 

XML 63 R65.htm IDEA: XBRL DOCUMENT v2.4.0.6
Merger and Acquisitions (Details) (USD $)
6 Months Ended 6 Months Ended 6 Months Ended
Jun. 30, 2012
Silver Tech Enterprises
Oct. 11, 2011
Silver Tech Enterprises
Jun. 30, 2012
CDE
Jan. 04, 2011
CDE
Jun. 30, 2012
Portables
Oct. 11, 2011
Portables
Business Acquisition, Effective Date of Acquisition 2010-05-31   2011-01-04   2011-10-11  
Business Acquisition, Name of Acquired Entity

Silver Tech Enterprises, Ltd.

 

Celestial Digital Entertainment, Ltd., ("CDE")

 

Portables Unlimited LLC

 
Business Acquisition, Description of Acquired Entity

Silver Tech's subsidiary Nollec Wireless primarily focuses on R&D for mobile phones, and hardware and software solutions for domestic Chinese and overseas customers. Its design team includes experienced engineers in the core technologies of wireless communication and mobile phone development. Nollec provides state of the art industrial, user inter-phase, mechanical and engineering designs and software and hardware integration.

 

The Company acquired CDE to broaden and deepen its knowledge base towards software solutions for mobile handsets. CDE has designed games for iOS and Android platforms for several years.

 

On October 12, 2011, the Company acquired 55% of Portables Unlimited LLC ("Portables"), one of the largest exclusive wholesale distributors of T-Mobile products in the United States. Portables has direct access to more than 1,000 retail locations across twenty U.S. States selling T-Mobile products, including approximately 100 exclusive T-Mobile carrier locations. The Company's percentage of ownership has been subsequently adjusted down to 50.5%.

 
Business Combination, Reason for Business Combination

The acquisition of Nollec allows the Company to provide complete original design and manufactured solutions to its customers in order to maintain a competitive advantage in the mobile handset manufacturing market.

 

The accumulated knowledge and source codes can be useful to the Company in integrating and testing operating systems with the hardware that the Company produces.

 

The Company acquired Portables for two reasons; (a) to diversify its revenue sources, and (b) to gain access to the most mature mobile handset market in the world.

 
Business Acquisition, Cost of Acquired Entity, Cash Paid   $ 10,960,000   $ 1,818,000   $ 9,851,486
Business Acquisition, Percentage of Voting Interests Acquired   100.00%   100.00%   55.00%
Cash acquired       235,112   81,048
Other receivables       5,895   4,054,550
Prepaid expenses       3,259   255,816
Accounts receivable       8,413   3,896,008
Inventory           1,045,478
Due from related parties           3,813,514
Fixed assets       6,565   2,216,272
Equipment deposit           103,602
Intangible assets           223,557
Goodwill       1,861,409   27,005,953
Short-term loan       (20,075)   (1,352,562)
Notes payable           (4,757,186)
Accounts payable       (990)   (10,717,533)
MPF payable       (1,758)    
Accrued expenses       (2,056)   (2,749,780)
Due to related party       (277,774)   (2,818,775)
Other payables           (2,584,250)
Valuatiuon of non-controlling interest           (7,864,226)
Purchase price       $ 1,818,000   $ 9,851,846
XML 64 R22.htm IDEA: XBRL DOCUMENT v2.4.0.6
ACCRUED EXPENSES AND OTHER PAYABLES - Note 16
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
ACCRUED EXPENSES AND OTHER PAYABLES - Note 16

NOTE 16 — ACCRUED EXPENSES AND OTHER PAYABLES

As of June 30, 2012 and December 31, 2011, the accrued expenses and other payables of the Company were summarized as follows:

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Accrued filing fees   $ 433,029   $ 445,391
Accrued rework cost     227,963     215,560
Accrued commission payable     5,460,873     4,616,079
Acquisition payable*     312,500     1,662,500
Accrued expenses     3,410,591     2,686,016
Welfare & salary payable     518,224     341,137
Others     647,548     207,029
             
             
Total accrued expenses and other payables   $ 11,010,728   $ 10,173,712

 

*Current portion of acquisition payable related to our acquisition of Nollec Wireless on June 1, 2010 of $312,500 (see Note 1).

 

Pursuant to the terms of the Securities Purchase Agreement, in case Zoom and/or Zoom Sub does not pay the T-Mobile liabilities of Portables which were assumed in the transaction, (collectively, the "Cash Payments") in full and arrange for the Letter of Credit within the Payment Period (30 days after the closing), then the unpaid portion of the Cash Payments shall incur interest at an annual rate of 2% during the 60-day period following the Payment Period (the end of such 60-day period shall be the "Final Payment Date"). Subject to Rescission Remedy, in the event the Cash Payments are not made in full and the Letter of Credit is not arranged for by Zoom and/or Zoom Sub by the Final Payment Date, then a percentage of the Portables shall be returned by Zoom Sub to Portables, effective immediately following the Final Payment Date, based on the certain formula as stipulated in the Securities Purchase Agreement. The Company currently is in default of this payment. On April 13, 2012, we received notice that we are in default on the Securities Purchase Agreement. The Securities Purchase Agreement provides that if we are in default, the Company's ownership of Portables will be reduced. CNCG will be entitled to enforce certain rescission rights against the Company, as more fully described in the Securities Purchase Agreement. Also, in case of a default, Portables, CNCG and the other member of Portables may bring claims for indemnification against the Company for a breach under the Securities Purchase Agreement, as more fully described in the Securities Purchase Agreement. The Company's non-payment to Portables has reduced its percentage of ownership from 55.0% to 50.5%. Portables Unlimited Inc. owns 49.5% of Portables. As of May 15, 2012, the Company is in dispute with two of the managing members of Portables over the Company's percentage of ownership of Portables. In the event that the Company was not able to maintain its 50.5% ownership of Portables, the Company would account for its investment in Portables using the equity method of accounting.

 

Accrued commission payable reflects commissions earned by and payable to store operators based on monthly commission reports from T-Mobile.

 

Accrued expenses include a $2.4 million retention bonus payable to certain executives of Portables for services rendered prior to the acquisition.

 

XML 65 R36.htm IDEA: XBRL DOCUMENT v2.4.0.6
Summary of Significant Accounting Policies (Policies)
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
Principles of Consolidation

Principles of Consolidation

 

The Company's accompanying consolidated balance sheet at December 31, 2011 includes the accounts of Gold Lion Holding Ltd, its 100%-owned subsidiary Profit Harvest which wholly owns Celestial Digital Entertainment, its 100%-owned subsidiary Jiangsu Leimone, which owns 80% of TCB Digital, its 100%-owned subsidiary Silver Tech, which wholly owns Ever Elite, and Ever Elite's wholly owned subsidiary Nollec Wireless, and its specifically formed wholly owned Zoom Sub which owned 55% of Portables. Zoom's consolidated balance sheet as of March 31. 2012 includes the balance sheets of Gold Lion, TCB Digital, Jiangsu Leimone, Profit Harvest, Silver Tech, Ever Elite, Nollec Wireless, CDE, Zoom Sub, and Portables. The consolidated operating results for the three months ended March 31, 2012 include Gold Lion, TCB Digital, Jiangsu Leimone, Profit Harvest, Silver Tech, Ever Elite, Nollec Wireless, CDE, Zoom Sub, and Portables. Portables ownership interest reduced to 50.5% as of March 31, 2012 and its operating results reported accordingly (See Note 1). The consolidated operating results for the three months ended March 31, 2011 include Gold Lion, TCB Digital, Jiangsu Leimone, Profit Harvest, Silver Tech, Ever Elite, Nollec Wireless, and CDE.

 

Exclusion of Related Party Lessor from Consolidation

 

Portables commencing in January 2009, subleased its principal facility from one of its noncontrolling member. The member began leasing the facility in December 2005 from a related party, AUM Realty, LLC ("AUM"). The Company's management has assessed whether AUM should be consolidated pursuant to FASB ASC 810 Consolidations. ASC 810 is not a "rules based" standard and thereby includes limited circumstances under which it can be conclusively determined whether an entity should be consolidated. Management believes that AUM is not a variable interest entity ("VIE") as defined in ASC 810 because AUM was adequately capitalized. Equity contributions from AUM's owners exceeded 20% of the acquisition costs of the property. Management believes that this is, according to ASC 810 criteria, "sufficient to permit the entity to finance its activities without additional subordinated financial support." Portables noncontrolling member and the owners of AUM provided guarantees of AUM's Rockland County Industrial Development Agency ("IDA") supported bank loan. Such a guarantee constitutes a form of "subordinated financial support," which provides a contrary indication to management's assessment that AUM is not a VIE. Management believes, however, that the guarantees were not necessary for AUM to finance its activities, and its equity capital was sufficient to support its activities if necessary, but the guarantees were only required under IDA rules in order to obtain the reduced financing costs of the IDA support. Management believes that the same is true at March 31, 2012 and December 31, 2011 (See Note 27 for details).

 

Based on this assessment, management believes that AUM is not a VIE and therefore is not consolidated as a component of these consolidated financial statements. If the matter were to be assessed differently, these consolidated financial statements would have included AUM's assets (principally land and building), liabilities (principally loan payable) and expenses, with the excess of AUM's assets over liabilities shown as a "noncontrolling interest".

 

 

 

 

 

 

 

Equity Method Accounting

Equity Method Accounting

 

In May 2012, the Company invested $12.3 million to establish a new joint venture named SpreadZoom Technologies Co. Ltd., ("SpreadZoom"). The Company owns 47.4% of SpreadZoom and accounted for this investment under the equity method of accounting (ASC 323-30). The Company recorded its investment at original cost. This balance will increase with income and decrease for dividends and losses from the joint venture that accrue to the Company. SpreadZoom has no operations as of June 30, 2012.

 

 

Basis of Presentation

Basis of Presentation

 

The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). For the Company's subsidiaries of JS Leimone, TCB Digital and Nollec Wireless, the functional currency is the Chinese Renminbi ("RMB"); the functional currency of Gold Lion, Profit Harvest, silver Tech, Zoom Sub and Portables is United States Dollars ("USD" or "$"), and the functional currency of Ever Elite and CDE is Hong Kong Dollars ("HKD"). The accompanying consolidated financial statements were translated and presented in USD.

 

 

Use of Estimates

Use of Estimates

 

The preparation of consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements and the amount of revenues and expenses during the reporting periods. Management makes these estimates using the best information available at the time the estimates are made. However, actual results could differ materially from those results.

 

 

 

Risks and Uncertainties

Risks and Uncertainties

 

The Company is subject to substantial risks from, among other things, intense competition associated with the industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited operating history, foreign currency exchange rates and the volatility of public markets.

 

 

 

Comprehensive Income

Comprehensive Income

 

The Company follows the provisions of ASC 220 "Reporting Comprehensive Income", previously SFAS No. 130, establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements.

 

ASC 220 defines comprehensive income is comprised of net income and all changes to the statements of stockholders' equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders, including adjustments to minimum pension liabilities, accumulated foreign currency translation, and unrealized gains or losses on marketable securities.

Foreign Currency Transactions

Foreign Currency Transactions

 

The accounts of the Company's Chinese subsidiaries are maintained in the RMB and the accounts of the U.S. parent company are maintained in the USD. The accounts of the Chinese subsidiaries were translated into USD in accordance with Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation," (codified in Financial Accounting Standards ("FASB") Accounting Standards Codification ("ASC") Topic 810) with the RMB as the functional currency for the Chinese subsidiaries. According to SFAS 52, all assets and liabilities were translated at the exchange rate at the date of the balance sheet; stockholders' equity is translated at historical rates; the line items on the statement of operations are translated at the weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with SFAS No. 130, "Reporting Comprehensive Income" (codified in FASB ASC Topic 220). Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the income statement.

Cash and Equivalents

Cash and Equivalents

 

For Statement of Cash Flows purposes, the Company considers all cash on hand and in banks, including accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less, when purchased, to be cash and cash equivalents. The Company maintains cash with various banks and trust companies located in China. Cash accounts are not insured or otherwise protected. Should any bank or trust company holding cash deposits become insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash on deposit with that particular bank or trust company.

Accounts Receivable

Accounts Receivable

 

The Company maintains reserves for potential credit losses on accounts receivable. Management reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves. Accounts are written off against the allowance when it becomes evident collection will not occur. For the contracted manufacturing activities, our standard terms for accounts receivable from our customers are between 60 to 75 days from close of the billing cycle; and for sales of own brand phones our terms include prepaid arrangements and extending receivable to customers up to 60 days. We also offer credit terms of up to 150 days in our trading activities to a certain customers. As of June 30, 2012, management concluded that the allowances as accrued and disclosed in Note 4 - Accounts Receivable were adequate to cover any potential unrecoverable balances as a result of delinquency.

Inventories

Inventories

 

Inventories are stated at the lower of cost or market. Cost is determined on a weighted average basis and includes all expenditures incurred in bringing the goods to the point of sale and putting them in a saleable condition. In assessing the ultimate realization of inventories, the management makes judgments as to future demand requirements compared to current or committed inventory levels. Our reserve requirements generally increase as our projected demand requires; or decrease due to market conditions and product life cycle changes. The Company estimates the demand requirements based on market conditions, forecasts prepared by its customers, sales contracts and orders in hand.

 

In addition, the Company estimates net realizable value based on intended use, current market value and inventory ageing analyses. The Company writes down inventories for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventories and their estimated market value based upon assumptions about future demand and market conditions. Historically, the actual net realizable value has been close to management's estimate.

Property, Plant and Equipment

Property, Plant and Equipment

 

Property, plant and equipment are recorded at cost. Gains or losses on disposals are reflected as gain or loss in the year of disposal. All ordinary repair and maintenance costs are expensed as incurred. Expenditures for maintenance and repairs are expensed as incurred. Major renewals and betterments are charged to the property accounts while replacements, maintenance and repairs, which do not improve or extend the lives of the respective assets, are expensed in the current period.

 

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated useful lives of assets as set out below.

 

Fixed Asset Class   Estimated Useful Lives
Machinery and equipment   4-6 years
Electronic equipment   4-6 years
Reconstruction of workshop and assembling line   5 years
Transportation equipment   4-6 years
Capitalized Interest

Capitalized Interest

 

Interest associated with major development and construction projects is capitalized and included in the cost of the project. When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using weighted-average cost of the Company's outstanding borrowings. Capitalization of interest ceases when the project is substantially complete or development activity is suspended for more than a brief period.

Impairment of Long-lived Assets

Impairment of Long-lived Assets

 

In accordance with ASC 360, "Property, Plant and Equipment", previously SFAS No. 144, the Company reviews the carrying values of long-lived assets, including property, plant and equipment and other intangible assets, whenever facts and circumstances indicate that the assets may be impaired. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset. If an asset is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds the fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs of disposal. The Company performed as annual review of its long-lived assets at December 31, 2011, and management concluded that for year 2011 there was no impairment. As of and for the six months ended June 30, 2012, management did not become aware of events that impaired the carrying value of the Company's long lived assets.

Goodwill

Goodwill

 

The Company recognizes goodwill for the excess of the purchase price over the fair value of the identifiable net assets of the business acquired. ASC 350 "Intangible Assets-Goodwill and Other", previously SFAS No. 142, an impairment test for goodwill is undertaken by the Company at the reporting unit level annually, or more frequently if events or changes in circumstances indicate that goodwill might be impaired. As of June 30, 2012, and December 31, 2011 the Company recorded impairment of goodwill of $1,033,762 and $1,033,762 respectively.

Revenue Recognition

Revenue Recognition

 

The Company recognizes sales in accordance with the U.S. Securities and Exchange Commission ("SEC") Staff Accounting Bulletin ("SAB") No. 104, "Revenue Recognition in Financial Statements" (FASB ASC Topic 605), "Revenue Recognition."

 

The Company recognizes revenue when the following criteria are met:

 

(i) persuasive evidence of an arrangement exists;

 

(ii) delivery has occurred or services were rendered;

 

(iii) the price to the customer is fixed or determinable and,

 

(iv) collection of the resulting receivable is reasonably assured. Revenue is not recognized until title and risk of loss is transferred to the customer, which occurs upon delivery of goods, and objective evidence exists that customer acceptance provisions were met.

 

The Company bases its estimates on historical experience taking into consideration the type of products sold, the type of customer, and the type of specific transaction in each arrangement. Revenues represent the invoiced value of goods, net of value added tax ("VAT").

 

The Company does not offer promotional payments, customer coupons, rebates or other cash redemption offers to its customers. Deposits or advance payments from customers prior to delivery of goods and passage of title of goods are recorded as advanced from customers.

 

The Company's subsidiary, Nollec Wireless is in the mobile phone design, software integration and mobile solution R&D business, Nollec Wireless, recognizes revenue under the percentage of completion method ASC Topic 605-35-25 (Construction - Type and Production - Type Contracts) when reasonably dependable estimates can be made and all the following conditions exist:

  1. Contracts executed by the parties normally include provisions that clearly specify the enforceable rights regarding goods or services to be provided and received by the parties, the consideration to be exchanged, and the manner and terms of settlement.
  2. The buyer can be expected to satisfy all obligations under the contract.
  3. The contractor can be expected to perform all contractual obligations.

Estimates of cost to complete is reviewed periodically and revised as appropriate to reflect new information. When the current estimates of total contract revenue and contract cost indicate a loss, a provision for the entire loss on the contract is made.

 

Income is recognized as the percentage of estimated total income, and is determined by dividing incurred costs to date by estimated total costs after giving effect to adjustments, if any, in estimates of costs to completion based upon the most recent information. Percentage of completion is based on labor hours incurred to date divided by total estimated labor hours for the contract.

 

Royalty income on sales of licensed products by its customers is recorded when the customers report sales to the Company. Royalty income is reported monthly and recorded in the period in which the product is sold. The Company has the right to audit the books of the licensees.

 

The Company's subsidiary, CDE is in the business of video games and applications for mobile phones and mobile platforms development. Revenue is recognized in accordance with ASC 985-605-55-125. Cost of Software Development Revenue is accounted for under ASC 985-20 to be sold, leased or otherwise marketed.

 

CDE capitalizes cost of development of software for hosting purpose in accordance with ASC subtopic 350-40 ("ASC 350-40"), Intangibles-Goodwill and Other: Internal-Use Software (Pre-codification: Statement of Position ("SOP") No. 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use). As such, CDE expenses all costs that are incurred in connection with the planning and implementation phases of development and costs that are associated with repair or maintenance. Costs incurred in the development phase are capitalized and amortized over the estimated product life. Since the inception of CDE, the amount of costs qualifying for capitalization has been insignificant and as a result all internally used software development costs have been expensed as incurred.

 

The Company's subsidiary, Portables is in the business of distribution of mobile phone and provision of wireless service. Revenue from the sale of equipment is recognized upon shipment or when purchased at Portables retail locations. Commission income is recognized upon activation of wireless communication services with T-Mobile.

 

 

 

Income Taxes

Income Taxes

 

The Company accounts for income taxes in accordance with ASC 740 "Income Taxes", previously SFAS No. 109. Under this method, deferred income taxes are recognized for the estimated tax consequences in future years of differences between the tax bases of assets and liabilities and their financial reporting amounts and each year-end based on enacted tax laws and statutory rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established to reduce deferred tax assets to the amount expected to be realized when, in management's opinion; it is more likely than not that some portion of the deferred tax assets will not be realized. The provision for income taxes represents current taxes payable net of the change during the period in deferred tax assets and liabilities.

 

 

Operating Leases

Operating Leases

 

Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company that do not meet the capitalization criteria of ASC 840 "Leases", previously SFAS No. 13, are accounted for as operating leases. Rental payables under operating leases are expensed on the straight-line basis over the lease term.

 

 

Research and Development Costs

Research and Development Costs

 

Research and development costs are related primarily to the development of cell phone technology, video games and applications for mobile phones and mobile platforms development. Research and development costs are expensed as incurred.

Earnings Per Share

Earnings Per Share

 

The Company reports earnings per share in accordance with the provisions of ASC 260 "Earnings Per Share", previously SFAS No. 128. ASC 260 requires presentation of basic and diluted earnings per share in conjunction with the disclosure of the methodology used in computing such earnings per share. Basic earnings per share excludes dilution and is computed by dividing income available to common stockholders by the weighted average common shares outstanding during the period. Diluted earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were exercised and converted into common stock using the treasury method.

 

Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company's net income (loss) position at the calculation dates.

 

 

Fair Values of Financial Instruments

Fair Values of Financial Instruments

 

ASC 820 "Fair Value Measurements and Disclosures", previously FAS 157, adopted January 1, 2008, defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The carrying amounts reported in the balance sheets for current receivables and payables qualify as financial instruments. Management concluded the carrying values are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated interest rate approximates current rates available. The three levels are defined as follows:

 

· Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

 

· Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial instruments.

 

· Level 3 inputs to the valuation methodology are unobservable and significant to the fair value.

 

The assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of June 30, 2012 and December 31, 2011 are as follows:

 

    Carrying value   Active markets
For identical Assets
  Significant
other Observable
Inputs
  Significant
Unobservable
Inputs
    2012   (Level 1)   (Level 2)   (Level 3)
                 
Cash and cash equivalents   $ 5,942,846   $ 5,942,846   -   -
                     
Restricted cash   $ 14,196,046   $ 14,196,046   -   -

 

    Carrying value   Active markets
For identical Assets
  Significant
other Observable
Inputs
  Significant
Unobservable
Inputs
    2011   (Level 1)   (Level 2)   (Level 3)
                 
Cash and cash equivalents   $ 1,131,109   $ 1,131,109   -   -
                     
Restricted cash   $ 15,507,408   $ 15,507,408   -   -

 

The Company's financial instruments include cash and equivalents, restricted cash, accounts receivable, notes receivables, other receivables, accounts payable, notes payable. Cash and cash equivalents consist primarily of high rated money market funds at a variety of well-known institutions with original maturities of three months or less. Restricted cash represents time deposits on account to secure short-term bank loans and notes payable (Note 15). Management estimates the carrying amounts of the non-related party financial instruments approximate their fair values due to their short-term nature.

Concentration of Credit Risk

Concentration of Credit Risk

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and equivalents and trade and bills receivables. As of June 30, 2012 and December 31, 2011, substantially all of the Company's cash and equivalents and restricted cash were held by major financial institutions located in the PRC, Hong Kong and the United States, which management believes are of high credit quality. With respect to trade and notes receivables, the Company extends credit based on an evaluation of the customer's financial condition. The Company generally does not require collateral for trade receivables and maintains an allowance for doubtful accounts of trade receivables.

 

Notes receivable are undertaken by the banks to honor the payments at maturity and the customers are required to place deposits with the banks equivalent to certain percentage of the notes amount as collateral. These notes receivable can be sold to any third party at a discount before maturity. The Company does not maintain an allowance for notes receivable in the absence of bad debt experience and the payments are undertaken by the banks.

 

 

Non-controlling Interests

Non-controlling Interests

 

The Company follows ASC 810, previously SFAS No. 160 "Non-controlling Interests in Consolidated Financial Statements-reported in equity" for reporting non-controlling interest ("NCI") in a subsidiary. As a result, the Company reports NCI as a separate component of Stockholders' Equity in the Consolidated Balance Sheet. Additionally, the Company reports the portion of net income and comprehensive income attributed to the Company and NCI separately in the Consolidated Statement of Income. The Company also includes a separate column for NCI in the Consolidated Statement of Changes in Stockholders' Equity.

Statement of Cash Flows

Statement of Cash Flows

 

In accordance with ASC 230, "Statement of Cash Flows", previously SFAS No. 95, cash flows from the Company's operations are calculated based upon the local currencies. As a result, amounts related to assets and liabilities reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance sheet.

 

 

Recent Accounting Pronouncements

Recent Accounting Pronouncements

 

In July 2012, the FASB issued ASU 2012-02, Intangibles-Goodwill and Other (Topic 350) - Testing Indefinite-Lived Intangible Assets for Impairment. The ASU provides entities with an option to first assess qualitative factors to determine whether events or circumstances indicate that it is more likely than not that the indefinite-lived intangible asset is impaired. If an entity concludes that it is more than 50% likely that an indefinite-lived intangible asset is not impaired, no further analysis is required. However, if an entity concludes otherwise, it would be required to determine the FV of the indefinite-lived intangible asset to measure the amount of actual impairment, if any, as currently required under US GAAP. The ASU is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted.

The adoption of this pronouncement will not have a material impact on its financial statements.

 

As of June 30, 2012, there are no other recently issued accounting standards not yet adopted that would have a material effect on the Company's consolidated financial statements.

 

 

XML 66 R98.htm IDEA: XBRL DOCUMENT v2.4.0.6
Investment in Spreadzoom (Narrative) (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Dec. 31, 2011
Investment In Spreadzoom Narrative Details    
Equity Method Investment, Description of Principal Activities

On May 25, 2012, the Company along with Spreadtrum Communication (Tianjin) Co., Ltd, Tianjin Baoshui District Investment Co, Ltd, and Han & Qin International (BVI) Limited invested in the joint venture SpreadZoom Technologies, Inc ("SpreadZoom"). SpreadZoom is domiciled in Tianjin, China with a registered capital of $47,352,700 (RMB 300,000,000. As of June 30, 2012, $17,520,500 (RMB 111,000,000) in capital had been contributed to SpreadZoom; the Company contributed $12,342,358 (RMB 78,000,000).

 
Equity Method Investment, Additional Information

The Company's capital contribution to SpreadZoom of $12,342,358 was primarily comprised of rights to the deposits made for the construction of the new factory in Tianjin that as of December 31, 2011, was valued at $10,170,809. The balance of $2,171,549 was a refund of a prepayment for the purchase raw material in the ordinary course of business made to Leimone (Tianjin) Industrial Co., Ltd., a related party who is also the general contractor for the construction of the new factory. See details described in Note 12 Construction in Progress - Related Party. SpreadZoom is still in the initial phases of setup and registration. Management and control of the business have not been fully determined. As of June 30, 2012, the Company has used the equity method to account for its investment in SpreadZoom.

 
Equity Method Investments $ 12,342,358 $ 0
Construction in progress deposit - related parties 0 10,170,809
Prepayment refund for the purchase of raw material $ 2,171,549  
XML 67 R24.htm IDEA: XBRL DOCUMENT v2.4.0.6
RELATED PARTY TRANSACTIONS - Note 18
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
RELATED PARTY TRANSACTIONS - Note 18

NOTE 18 — RELATED PARTY TRANSACTIONS

Due from related parties

As of June 30, 2012 and December 31, 2011, due from related parties were:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
Due from related parties - short term        
         
Tianjin Tong Guang Group Electronics Science & Technology Co., Ltd.   $ 8,505,151   $ 3,883,641
Beijing Leimone Shengtong Wireless Technology Co., Ltd.     128,487     167,172
Leimone (Tianjin) Industrial Co., Ltd.     7,367,123     20,473,338
Beijing Leimone Shengtong Cultural Development Co., Ltd.     1,727,525     2,744,697
Tianjin Tong Guang Group     712,850     379,994
Shenzhen Leimone     400,893     429,170
712 (Prior Shareholder)     758,774     992,815
Raja R Amar - Chief Executive Officer of Portables     334,634     741,448
AUM Realty     2,332,556     -
Others     -     613,425
             
Total due from related parties   $ 22,267,993   $ 30,425,700

 

Tianjin Tong Guang Group Electronics Science & Technology Co., Ltd. ("Electronics Science & Tech"), an entity related to the Company through a common shareholder of TCB Digital, purchased products from the Company. For the six months ended June 30, 2012 and 2011, the Company recorded revenues of $29,728,814 and $12,541,921 from sales to Electronics Science & Tech respectively. For the three months ended June 30, 2012 and 2011, the Company recorded revenues of $20,259,709 and $6,270,484 from sales to Electronics Science & Tech respectively.

 

Beijing Leimone Shengtong Wireless Technology Co., Ltd. ("Beijing Leimone") was founded by Gu, the largest shareholder of the Company. Beijing Leimone borrows money from the Company. The borrowings bore no interest and had a maturity of 12 months.

 

Leimone (Tianjin) Industrial Co., Ltd. ("Tianjin Leimone") was controlled by Gu, the largest shareholder of the Company. Tianjin Leimone sells raw materials to the Company. For the six months ended June 30, 2012 and 2011, the Company recorded total purchases from Tianjin Leimone of $72,137,320 and $23,684,030 respectively. The amount due from Tianjin Leimone represented advances of $553,641 and $13,708,030 as of June 30, 2012 and December 31, 2011 respectively. The Company also sold certain products to Tianjin Leimone. In addition, Tianjin Leimone borrowed money from the Company and these borrowings bore no interest. As of June 30, 2012 and December 31, 2011, the balance of such loans was $6,813,482 and $6,765,308 respectively.

 

The amount due from Beijing Leimone Shengtong Cultural Development Co., Ltd. ("Beijing Leimone Cultural") for short term loan granted by the Company. Beijing Leimone Cultural was controlled by Gu. The borrowing bore no interest and is due on demand.

 

Tianjin Tong Guang Group, a 20% shareholder of our TCB subsidiary, borrowed money from the Company. The borrowings bear no interest and are due on demand.

 

712 was a minority shareholder of TCB Digital before Mr. Gu exercised the option to acquire 29.0% of TCB Digital. (See note 1.) 712 purchases raw materials from the Company. For the six months ended June 30, 2012 and 2011, the Company recorded revenues from sales to 712 of $316,870 and $15,757,425 respectively. For the three months ended June 30, 2012 and 2011, the Company recorded revenues from sales to 712 of $316,870 and $7,838,896 respectively. As of June 30, 2012 and December 31, 2011, the balance of such sales was $560,980 and $796,419 respectively. In addition, the Company purchases raw materials from 712. For the six months ended June 30, 2012 and 2011, the Company recorded purchases from 712 of Nil and $15,523,282 respectively. For the three months ended June 30, 2012 and 2011, the Company recorded total purchases from 712 of Nil and $6,399,926 respectively. 712 was no longer a related party of the Company after Mr. Gu exercised his option to acquire the additional 29.0% of TCB Digital in March 2010.

 

Shenzhen Leimone Company, Ltd., formed by individuals including our Chairman, Mr. Gu, is set up with the intention of providing manufacturing services to our Company particularly for exports. $400,893 and $408,831 as of June 30, 2012 and December 31, 2011 was a loan to Shenzhen Leimone for setup costs. Our Chairman, Mr. Gu, plans to personally fund the cost of equipment as his investment into Shenzhen Leimone and become the controlling shareholder of Shenzhen Leimone. The Company purchased raw materials from Shenzhen Leimone in 2011. The balance as of December 31, 2011 was advance to Shenzhen Leimone amounted to $20,339. In addition, for the six months ended June 30, 2012 and 2011, the Company recorded revenues from sales to Shenzhen Leimone of $16,024 and Nil respectively. For the three months ended June 30, 2012 and 2011, the Company recorded total revenue from sales to Shenzhen Leimone of Nil and Nil respectively.

 

The amounts due from Raja R Amar are related to loans made to Raja R Amar by Portables prior to its acquisition by Zoom.

The loans are interest free and are unsecured and are expected to be repaid by December 31, 2012.

 

Due to related parties

 

As of June 30, 2012 and December 31, 2011, due to related parties was:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
         
Gu   $ 2,926,135   $ 2,788,635
Tianjin Tong Guang Group     598,063     -
Leimone (Tianjin) Industrial Co., Ltd.     15,871,694     -
AUM Realty, Inc.     -     269,049
Wireless Holdings of Northeast     -     117,600
Portables Unlimited International     4,620,665     2,633,147
Portables Unlimited, Inc.     1,110,000     650,000
Others     317,852     283,943
             
Total due to related parties   $ 25,444,409   $ 6,742,373

 

The Company borrowed money from Hui Pak Kong, a prior shareholder of CDE before the Company's acquisition on January 4, 2011. The borrowings bear no interest and are due on demand. As of June 30, 2012 and December 31, 2011, the balance of such loans was Nil and $277,943 respectively. The loan owed to Hui Pak Kong was forgiven and the amount was added to the additional paid in capital during the six months ended June 30, 2012.

 

Gu provides fund to the Company with no interest and are due on demand. As of June 30, 2012 and December 31, 2011, the balances of funds provided by Gu was $2,926,135 and $2,788,635 respectively.

 

TCB Digital had outstanding related party payable of $15,871,694 owed to Tianjin Leimone for raw materials that TCB Digital purchased through Tianjin Leimone for its manufacturing in the normal course of business. During the six months ended June 30, 2012, the TCB Digital purchased approximately $72.1 million of material from Tianjin Leimone.

 

In January 2011, the Portables entered into a line of credit agreement with a Portables Unlimited International for $3,000,000. Interest on the line is due and payable on demand at 5.6%. The unpaid balance as of June 30, 2012 and December 31, 2011 was $4,620,665 and $2,633,147 respectively.

 

Portables received advances from one of its non-controlling owner, Portables Unlimited, Inc., totaling $1,110,000. The advance has an interest rate of 12% per annum and is due on demand.

 

 

XML 68 R68.htm IDEA: XBRL DOCUMENT v2.4.0.6
Inventories by major categories (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Balance Sheet Related Disclosures [Abstract]    
Raw materials $ 2,474,432 $ 1,574,759
Finished goods 5,017,982 1,502,197
Inventories, gross 7,492,414 3,076,956
Less: Allowance for obsolete inventories (33,677) (6,956)
Inventories, net $ 7,458,737 $ 3,070,000
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ORGANIZATION AND NATURE OF BUSINESS OPERATIONS - Note 1
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
ORGANIZATION AND NATURE OF BUSINESS OPERATIONS - Note 1

NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS OPERATIONS

The Acquisition

On September 22, 2009, Zoom Technologies, Inc. ("Zoom", "us", "we", or the "Company"), pursuant to the share exchange agreement ("SEA") dated January 28, 2009, (amended May 12, 2009) acquired all the outstanding shares of Gold Lion Holding Limited ("Gold Lion"), a company organized and existing under the laws of the British Virgin Islands ("BVI") (the "Merger"). In connection with the SEA, the Company spun off its then-existing business to its stockholders, by distributing all assets and liabilities of the subsidiary and issuing shares of its then operating subsidiary as a dividend to its stockholders.

 

The parties to the SEA were: (1) Zoom Technologies, Inc., (2) Tianjin Tong Guang Group Digital Communication Co., Ltd., ("TCB Digital") a company organized under the laws of the People's Republic of China, ("PRC"); (3) Zoom Telephonics, Inc., or Zoom Telephonics, a wholly owned subsidiary of Zoom; (4) Gold Lion, (5) Lei (Leo) Gu, a citizen of the PRC; and (6) Songtao Du, a citizen of the PRC.

 

Gold Lion owns 100% of the outstanding stock of Jiangsu Leimone Electronics Co., Ltd., ("Jiangsu Leimone"), a foreign investment enterprise organized under the laws of the PRC that engages in the manufacturing, R&D, and sales of electronic components for 3rd generation mobile phones, wireless communication circuitry, GPS equipment, and related software products. Jiangsu Leimone owned 51.03% of the outstanding stock of TCB Digital. Gold Lion also owns 100% of Profit Harvest Corporation Ltd, ("Profit Harvest"), a marketing and sales company organized and existing under the laws of Hong Kong.

 

As of the date of the Merger, Mr. Gu owned 70.6% of the outstanding capital stock of Gold Lion. Mr. Du owned 29.4% of the outstanding capital stock of Gold Lion, which was pledged to Mr. Wei Cao.

 

On September 22, 2009, pursuant to the SEA and approval of the majority of the stockholders of the Company, the Company acquired from the Gold Lion shareholders 100% of Gold Lion's outstanding equity for 4,225,219 shares of the Company's common stock. As a result of this issuance, the former Gold Lion shareholders owned 69.3% of the outstanding stock of the Company and the transaction was recorded as a reverse acquisition. Prior to the Merger, the Company had 1,980,978 shares outstanding which were recapitalized as part of the Merger. The Company, which had an option to acquire an additional 29.0% of the outstanding capital stock of TCB Digital, pursuant to the SEA and the approval of the majority of the stockholders of the Company, agreed to provide the Company the option in exchange for the 2,402,576 shares of the Company's common stock. As of March 31, 2010, Mr. Gu exercised this option (See details in Section entitled "The Subsidiaries" below).

 

Simultaneous with the closing of the Merger, the Company issued a dividend of 100% of the issued and outstanding stock of Zoom Telephonics to the Company's stockholders of record immediately prior to the closing which is referred to herein as the "spin-off"). In connection with the spin-off, the Company distributed all assets and liabilities related to the Company to Zoom Telephonics, subject to certain licensing rights discussed below. Zoom's stockholders immediately prior to the closing of the Merger retained their existing shares in Zoom and also received an equal number of new shares in Zoom Telephonics. After the Merger and the spin-off, the Company and Zoom Telephonics became independent companies.

 

TCB Digital and Zoom Telephonics entered into a license agreement which granted TCB Digital rights to the "Zoom" and "Hayes" trademarks for certain products and geographic regions. Zoom and Zoom Telephonics also entered into a separation and distribution agreement that allocates responsibility for obligations arising before and after the spin-off, including, among others, obligations relating to taxes.

 

Our former directors, entered into founder lock-up agreements pursuant to which they agreed that during the one-year period commencing on the date of closing of the Merger each will not sell, transfer, assign, pledge or hypothecate, in any calendar month, greater than 3% of the aggregate amount of shares of the Company's common stock sold in the previous four calendar weeks.

 

On June 1, 2010, Zoom pursuant to a share exchange agreement (the "Agreement") dated April 29, 2010, acquired 100% of the shares of Nollec Wireless Company Ltd., ("Nollec Wireless") a mobile phone and wireless communication design company in Beijing, China (the "Acquisition").

 

The parties to the Agreement include: (1) Zoom Technologies, Inc.; (2) Silver Tech Enterprises, Ltd. ("Silver Tech"), a holding company founded in July 2005, organized and existing under the laws of the BVI, which owned 100% of Ever Elite Corporation, Ltd. ("Ever Elite"); (3) Ever Elite, a holding company founded in June 2007, organized under the laws of Hong Kong, or HK, which owned 100% of Nollec Wireless; (4) Nollec Wireless, the operating company founded in June 2007, organized under the laws of the PRC; (5) Key Network Holdings, Ltd. ("KNH"), a BVI company, then owner of 76.8% of the outstanding stock of Silver Tech; and (6) Better Day Finance, Ltd. ("BDF"), a BVI company, then owner of 23.2% of the outstanding stock of Silver Tech.

 

Pursuant to the terms of the Agreement, the Company purchased 100% of the outstanding stock of Silver Tech from KNH and BDF, the existing shareholders of Silver Tech, for $10.96 million, comprised of $1.37 million in cash and 1,342,599 newly issued unregistered shares of common stock of Zoom valued at $9.59 million at the weighted average closing price of shares for 10 days prior and leading up to the Agreement date. At the closing of the Acquisition on May 31, 2010, the Company issued 1,342,599 shares of its common stock and paid $500,000; the balance of $870,000 in cash will be paid in six equal installments over a period of three years. As of June 30, 2011, the Company owed three remaining payments of $145,000 each. The Company paid $275,000 in year 2011 and $137,500 in 2010 and as of June 30, 2012, $290,000 was included in other payables and $145,000 was included in long-term payables (See Note 19). After the closing of the Acquisition on June 1, 2010, Silver Tech, Ever Elite and Nollec Wireless became wholly owned subsidiaries of Zoom. The Company determined the Acquisition did not require the preparation and filing of audited financial statements of Silver Tech under Rule 3-05(b)(2)(i) of Regulation S-X.

 

On January 4, 2011, pursuant to a share exchange agreement (the `Share Exchange Agreement") the Company acquired 100% ownership of Celestial Digital Entertainment, Ltd., ("CDE") a mobile platform video game development company based in HK. The consideration was $1,818,000 in shares of common stock of the Company; the number of shares was calculated by dividing $1,818,000 by the higher of i) $3.75 per share or ii) the Volume Weighted Average Closing Price of the Company's shares for the 10 consecutive trading days leading up to the day before the date of the Share Exchange Agreement which was December 20, 2010. This resulted in the issuance of 484,800 shares of the Company's common stock to acquire CDE. CDE primarily focuses on development of video games and applications for mobile phones and mobile platforms. CDE has developed over 40 titles for the Apple iPhone and is one of the largest developers of iPhone applications in Asia. The Company acquired CDE through its wholly owned HK subsidiary, Profit Harvest.

 

On October 11, 2011, the Company and Zoom USA Holdings, Inc., a newly formed wholly-owned subsidiary of the Company ("Zoom Sub") entered into a Securities Purchase Agreement ("Securities Purchase Agreement") to purchase from The Cellular Network Communications Group, Inc. ("CNCG") a 50% interest in Portables Unlimited LLC ("Portables"), an exclusive wholesale distributor of T-Mobile products in the United States. As consideration of the 50% interest in Portables, the Company (i) issued 1,494,688 shares of Zoom common stock (the "Equity Consideration") to the principals of CNCG and (ii) through Zoom Sub, issued a promissory note of $500,000 payable to CNCG. The promissory note accrues interest at 2% and matures three years from the date of issuance. The Equity Consideration was to be held in escrow until the date that Portables provided to the Company financial statements for Portables' third quarter ended September 30, 2011. The financial statements were provided in January 2012 and the stock certificates were released from escrow. In addition, Zoom Sub purchased an additional 5% interest in Portables for $750,000, to be paid within 30 days of the closing date, which is currently outstanding. Further, in connection with the transaction, the Company assumed the responsibility for repaying certain indebtedness owed by Portables to T-Mobile USA, Inc. in the amount of $4,757,187 (the "T-Mobile Indebtedness"), and agreed to arrange for a $500,000 letter of credit in the name of Portables to secure obligations of Portables to T-Mobile. The T-Mobile Indebtedness was payable under the following schedule: $2,500,000 was due on November 10, 2011 (the "Initial Payment"), $1,400,000 was due on December 10, 2011 (the "Second Payment"), and the remaining $853,788 was due on December 20, 2011 (the "Final Payment"). The Initial Payment and Second Payment were made in a timely manner, and pursuant to an agreement with T- Mobile the Final Payment was waived. The waiver of the final payment was recognized as other income in 2011 because this settlement was not a required condition in the Company's acquisition of Portables. Additionally, the Company agreed to pay other outstanding indebtedness of Portables in the amount of $4,500,000, less the amount of T-Mobile Indebtedness paid off.

 

The Company had previously recognized acquisition payables to Portables in the amount of $1,350,000 and the need to arrange a $500,000 Letter of Credit in Portables' name to secure obligations to T-Mobile. On April 13, 2012, the Company received notice that it was in default on the Securities Purchase Agreement. The Securities Purchase Agreement provides that if the Company was in default, the Company's ownership of Portables will be reduced and CNCG will be entitled to enforce certain rescission rights against the Company, as more fully described in the Securities Purchase Agreement. Also, in case of a default, Portables, CNCG and the other member of Portables may bring claims for indemnification against the Company for a breach under the Securities Purchase Agreement, as more fully described in the Securities Purchase Agreement. The Company's non-payment to Portables has reduced its percentage of ownership from 55.0% to 50.5%. Portables Unlimited Inc. owns 49.5% of Portables. As of June 30, 2012, the Company is in dispute with Portables Unlimited Inc. over the Company's percentage of ownership of Portables. The Company derecognized the $1,350,000 acquisition payable and does not expect to make payment for that liability. In the event that the Company is not able to maintain its majority ownership of Portables, the Company would account for its investment in Portables using the equity method of accounting. The Company was advised that on or about August 14, Portables Unlimited Inc., both individually and derivatively, filed an action in the Supreme Court of the State of New York, County of Nassau against the Company, its US subsidiary, and two officers of the Company. The Complaint seeks damages up to an aggregate amount of $5 million for breach of contract, and a declaration as to the percentage interest the Company retains in Portables Unlimited, Inc. equal to 46%. The Company believes that it is entitled to hold 50.5% interest in Portables based on the terms of the Securities Purchase Agreement. Once the Complaint is served, the Company intends to defend itself vigorously and to assert counterclaims that will, in the aggregate, seek a higher damages award than Portables Unlimited, Inc. seeks.

 

On October 26, 2011, the Company closed the sale of 1,676,300 shares of common stock to Spreadtrum Communications, Inc., ("Spreadtrum") pursuant to the Common Stock Purchase Agreement (the "Purchase Agreement") entered into by and among the Company, Spreadtrum and Leo (Lei) Gu (the "Key Stockholder"). In consideration, Spreadtrum paid $2,900,000. The Company, Key Stockholder and Spreadtrum executed the Purchase Agreement in reliance upon the exemption from securities registration afforded by the rules and regulations promulgated by the Securities and Exchange Commission under Section 4(2) of the Securities Act of 1933, as amended. Spreadtrum did not receive any registration rights and no warrants were issued pursuant to the Agreement. Pursuant to the Purchase Agreement, the Company also agreed to design and develop all applicable Company products to integrate and operate solely with Spreadtrum's products, and to not design and develop any Company products to integrate or operate with any Spreadtrum's competitive products for a term of three years from the Purchase Agreement. Also pursuant to the Agreement, Spreadtrum shall have the right to nominate one nominee to the board of directors of the Company (the "Nomination Right"), subject to approval of the Company's independent directors, as required under Nasdaq Rule 5605(e)-Independent Director Oversight of Director Nominations. Spreadtrum's Nomination Right shall continue until such time that Spreadtrum owns not less than 838,150 shares of the Company's outstanding common stock. In accordance to the Purchase Agreement, Dr. Leo Li, Chairman and Chief Executive Officer of Spreadtrum Communications Inc., was added to our Board of Directors.

 

The Subsidiaries

 

Gold Lion was founded by Mr. Lei Gu ("Gu") in September 2002 in the BVI. Pursuant to an agreement dated June 30, 2007, Mr. Wei Cao ("Cao"), purchased from Gu 29.4% of then outstanding shares of the Company. Through a resolution of the Company on November 26, 2008, the Company's issued 705 shares to Gu and 294 shares to Mr. Songtao Du ("Du"), resulting in 1,000 issued and outstanding shares of common stock. Pursuant to a pledge agreement dated November 26, 2008, Du pledged his 294 shares to Cao, including all rights to such shares. As such, Gu and Cao jointly controlled 100% of Gold Lion.

 

On August 2, 2007, Gu founded Profit Harvest in Hong Kong, and in December 2008, 100% ownership of Profit Harvest was transferred to Gold Lion. Profit Harvest serves two purposes: i) to facilitate the export of the Company's finished goods to international markets, and ii) trading of components and chipsets for a profit.

 

Pursuant to the capital injection agreement ("the CIA") by and among Tianjin Communication and Broadcasting Group Co., Ltd. ("TCBGCL"), TCBGCL Labor Union, Hebei Leimone Science and Technology Co., Ltd. ("Hebei Leimone"), Tianjin 712 Communication and Broadcasting Co., Ltd. ("712"), Beijing Depu Investment Co., Ltd. ("Beijing Depu") and other natural person shareholders on May 8, 2007 and a resolution of the shareholder's meeting on June 30, 2007, Hebei Leimone, a company controlled by Gu, acquired 25.1% of TCB Digital from TCBGCL Labour Union and various natural person shareholders for RMB9,000,000, equivalent to USD $1,286,000. Pursuant to this CIA, Hebei Leimone and Beijing Depu, the companies controlled by Gu and Cao, were to invest RMB15,928,700 and RMB10,377,600 respectively in TCB Digital, bringing the total investment from Hebei Leimone and Beijing Depu to USD $4,679,111 (RMB35,306,300). After this investment was made as of June 30, 2007, Hebei Leimone and Beijing Depu held 36.0% and 15.0% respectively of TCB Digital, or 51.0% aggregate ownership in TCB Digital. Pursuant to an agreement dated June 30, 2007, Cao irrevocably pledged his 15.0% interest in TCB Digital through his ownership in Beijing Depu to Gu for a 29.4% stake in Gold Lion. As of March 31, 2010, Gu exercised his option to transfer an additional 29.0% of TCB Digital to the Company. The Company issued 2,402,576 common shares to Mr. Gu and his assignees as purchase consideration and 60,000 common shares to an investment banker as compensation for this transaction. The Company's ownership interest in TCB Digital was increased to 80% as of March 31, 2010. This transaction was recorded under SFAS No. 160 (Included in ASC 810 "Consolidation") "Noncontrolling Interests in Consolidated Financial Statements", an amendment of ARB No. 51, with the excess of fair value of shares over the carrying value of minority interests charged to additional paid in capital. During the three months ended June 30, 2010, the Company issued 2,462,576 shares.

 

On November 30, 2007, Gold Lion and GD Industrial Company signed a share transfer agreement, pursuant to which, GD Industrial Company transferred to the Company 60% interest of Nantong Zong Yi Kechuang Digital Camera Technology Co., Ltd. ("Nantong Zong Yi") for $10,273. In July 2008, Nantong Zong Yi changed its name to Jiangsu Leimone Electronic Co., Ltd. ("Jiangsu Leimone"). Before the acquisition, Jiangsu Leimone had no operating activities. In January 2008, the Company invested $5,074,226 (HK$38,800,000) in Jiangsu Leimone to increase the Company's ownership in Jiangsu Leimone to 80%. Pursuant to the share transfer agreement by and between Gold Lion and Nantong Zong Yi Investment Co., Ltd. dated November 26, 2008, the Company acquired the remaining 20% of Jiangsu Leimone from Nantong Zong Yi Investment Co., Ltd. for $103,214 (HK$800,000). After this transaction, the Company owned 100% of Jiangsu Leimone.

Pursuant to the share transfer agreement by and among Hebei Leimone, Beijing Depu Investment Co., Ltd and Jiangsu Leimone, dated December 15, 2008, Hebei Leimone and Beijing Depu Investment Co., Ltd. transferred their 51.03% ownership of TCB Digital to Jiangsu Leimone on December 30, 2008.

 

Because TCB Digital and Profit Harvest were under common control with the Company since July 2007 and August 2007, respectively, the Company consolidated their financials at historical cost with the Company from the dates the Company acquired control.

 

TCB Digital is a high technology company engaged in electronic and telecommunication product design, development, and manufacturing for OEM customers and for our own products under the brand name of "Leimone". TCB Digital started its business in 1999 and was originally established as an Electronic Manufacturing Service ("EMS") factory for mobile phone vendors. TCB Digital was Motorola's first independent outsource manufacturing vendor responsible for producing Motorola mobile phones in China. Moreover, TCB Digital was the first EMS factory in China to receive Motorola's International Quality Product and Qualification certificate. Since 2004, TCB Digital developed and produced GSM and CDMA mobile phones, wireless data modules and GPS equipment. Beginning in 2009, TCB Digital started to manufacture and market mobile phones under its own brand name of "Leimone"; and in 2010, its product line also included 3G mobile handsets. TCB Digital is headquartered in Tianjin, China. TCB Digital's two main business operations are EMS for Original Equipment Manufacturer (OEM) customers and the design, production and sale of its own brand mobile phone products.

 

TCB Digital offers high quality and comprehensive EMS to both domestic and global customers, including, Samsung, Tianyu, CECT, Danahar and Spreadtrum. TCB Digital's primary products include mobile phones, wireless telecommunication modules, digital cameras, cable TV set-top boxes and GPS equipment. In addition, TCB Digital has developed various state-of-the-art mobile phones and Smartphones based on both of the main network technologies: Global System for Mobile Communications, or GSM, and Code Division Multiple Access, or CDMA, and beginning in 2010 also 3G capable products. Presently, TCB Digital markets its mobile phone products through distributors in China and also supplies GSM, CDMA and 3G mobile phones to major customers, including China Mobile Communications Corporation, or CMCC, China UNICOM and China Telecom.

 

Nollec Wireless primarily focuses on R&D of mobile phones, and hardware and software solutions for domestic Chinese and overseas customers. Its design team includes experienced engineers in the core technologies of wireless communication and mobile phone development. Nollec provides state of the art industrial, user inter-phase, mechanical and engineering designs and software and hardware integration. Its clients include certain domestic and international mobile phone manufacturers including Philips, Lenovo, Sonim, Gionee and Borqs.

 

CDE primarily focuses on development of video games and applications for mobile phones and mobile platforms. CDE has developed over 40 titles for the Apple iPhone and is one of the largest developers of iPhone applications in Asia.

 

On September 19, 2011, the Company incorporated Zoom USA Holdings, Inc. ("Zoom Sub"), to acquire Portables Unlimited.

 

On October 12, 2011, the Company acquired 55% of Portables Unlimited LLC ("Portables"), one of the largest exclusive wholesale distributors of T-Mobile products in the United States. Portables has direct access to more than 1,000 retail locations across twenty U.S. States selling T-Mobile products, including approximately 100 exclusive T-Mobile carrier locations. The Company's percentage of ownership has been subsequently adjusted down to 50.5%. Please see above paragraph regarding the acquisition of Portables.

 

 

 

XML 71 R3.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)
Jun. 30, 2012
Dec. 31, 2011
STOCKHOLDERS' EQUITY    
Preferred stock, par value $ 0.01 $ 0.01
Preferred stock, shares authorized 1,000,000 1,000,000
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0
Common stock, par value $ 0.01 $ 0.01
Common stock, shares authorized 35,000,000 35,000,000
Common stock, shares issued 28,935,723 23,865,723
Common stock, shares outstanding 28,934,043 23,864,043
Treasury shares, at cost 1,680 1,680
XML 72 R17.htm IDEA: XBRL DOCUMENT v2.4.0.6
PROPERTY, PLANT AND EQUIPMENT - Note 11
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
PROPERTY, PLANT AND EQUIPMENT - Note 11

NOTE 11 — PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of June 30, 2012 and December 31, 2011 consisted of the following:

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
         
Machinery and equipment   $ 9,761,009   $ 9,678,543
Electronic equipment     2,482,774     2,431,834
Transportation equipment     166,405     182,250
Workshop reconstruction     175,167     173,928
Leasehold improvements     2,668,915     2,547,847
Computer equipment     97,127     96,982
Office equipment     707,946     614,710
      16,059,343     15,726,094
Less: Accumulated depreciation     (10,315,467)     (9,465,419)
             
Property, plant and equipment, net   $ 5,743,876   $ 6,260,675

 

Depreciation for the six months ended June, 2012 and 2011 was $797,092 and $372,915 respectively. The depreciation for the three months ended June 30, 2012 and 2011 was $398,216 and $391,701 respectively.

 

XML 73 R93.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Tax (Narrative) (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Pre-tax profit (loss) $ 1,170,295 $ 2,143,371 $ 2,336,604 $ 4,730,174
ZOOMTechnologiesMember
       
Statutory tax rate 34.00%   34.00%  
Net operating loss carry forward period, years 20   20  
Net operating loss ("NOL") carry forwards 10,200,000   10,200,000  
Deferred tax asset valuation allowance provided 10,200,000   10,200,000  
TCB Digital
       
Statutory tax rate 25.00%   25.00%  
Pre-tax profit (loss)     (55,352) 114,730
Jiangsu Leimone
       
Statutory tax rate 25.00%   25.00%  
Pre-tax profit (loss)     (128,753) (727,077)
Nollec Wireless Acquisition
       
Statutory tax rate 25.00%   25.00%  
Pre-tax profit (loss)     (1,517,239) (1,443,556)
Profit Harvest
       
Statutory tax rate 16.50%   16.50%  
Pre-tax profit (loss)     5,154,344 8,177,552
CDE
       
Statutory tax rate 16.50%   16.50%  
Pre-tax profit (loss)     93,955 (69,776)
Portables
       
Statutory tax rate 34.00%   34.00%  
Pre-tax profit (loss)     $ 758,931  
XML 74 R91.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stockholders' Equity Summary of Options Outstanding and Exercisable (Details) (USD $)
Jun. 30, 2012
Y
Stockholders Equity Summary Of Options Outstanding And Exercisable Details  
Options Outstanding, Number of Shares 1,810,000
Options Outstanding, Weighted-Average Remaining Contractual Term (in years) 2.96
Options Outstanding, Weighted-Average Exercise Price Per Share $ 2.97
Options Exercisable, Number of Shares 767,500
Options Exercisable, Weighted-Average Exercise Price Per Share $ 2.74
XML 75 R1.htm IDEA: XBRL DOCUMENT v2.4.0.6
Document and Entity Information (USD $)
6 Months Ended
Jun. 30, 2012
Aug. 14, 2012
Jun. 30, 2011
Document And Entity Information      
Entity Registrant Name ZOOM TECHNOLOGIES INC    
Entity Central Index Key 0000822708    
Document Type 10-Q    
Document Period End Date Jun. 30, 2012    
Amendment Flag false    
Current Fiscal Year End Date --12-31    
Is Entity a Well-known Seasoned Issuer? No    
Is Entity a Voluntary Filer? No    
Is Entity's Reporting Status Current? Yes    
Entity Filer Category Smaller Reporting Company    
Entity Public Float     $ 24,808,179
Entity Common Stock, Shares Outstanding   24,135,723  
Document Fiscal Period Focus Q2    
Document Fiscal Year Focus 2012    
XML 76 R18.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSTRUCTION IN PROGRESS DEPOSIT - RELATED PARTIES - Note 12
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
CONSTRUCTION IN PROGRESS DEPOSIT - RELATED PARTIES - Note 12

NOTE 12 — CONSTRUCTION IN PROGRESS DEPOSIT - RELATED PARTIES

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
         
Manufacturing plant   $ -   $ 10,170,809
             

 

The Company signed an agreement with Leimone (Tianjin) Industrial Co., Ltd. ("Tianjin Leimone") to construct a manufacturing plant on June 26, 2010 for $15,063,000 (RMB 99,591,000). The contract included land use rights for 46,021 square meters and space of 21,029 square meters. At December 31, 2011, the Company had paid to Tianjin Leimone $10,170,809 (RMB 64,734,150). During the three months ended June 30, 2012, the Company incorporated a new joint venture, SpreadZoom Technologies Co., Ltd., that will be the entity to legally hold title to the Company's new factory. The Company believes the valuation of the assets and economic benefits derived from the Company's ownership via the newly formed entity remained unchanged. See note 28 - SpreadZoom Investment for details. The deposit paid to Tianjin Leimone was repaid to the Company and immediately used to capitalize SpreadZoom and then subsequently paid back to Tianjin Leimone for the factory that will owned by SpreadZoom.

 

Leimone (Tianjin) Industrial Co., Ltd ("Leimone Tianjin"), a related party, is currently involved with a dispute with the construction company contracted to build our new manufacturing facility in Tianjin. On August 15, 2011, Leimone Tianjin filed a claim against Henan Urban Construction Group ("HUCG"). The claim is for the termination of the construction contract between Leimone Tianjin and HUCG and claims damages of approximately $1.3 million (RMB 8,072,310) against HUCG. In Leimone Tianjin's court filing, it has accused HUCG of improper use of the funds paid to HUCG by Leimone Tianjin, as a result, construction project has been delayed. HUCG's has claimed as its defense that the delay in construction was a result of poor conditions at the construction site. The outcome of the dispute is still pending decision from the courts from the 2nd Mid- Level People's Court of Tianjin City. The Company is currently unable to determine the probability that it will be successful in this claim. The Company believes the decision by the courts will be issued before the end of third quarter of 2012. As of June 30, 2012, the courts have not yet issued their judgment.

 

 

 

XML 77 R80.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accrued Expenses and Other Payables (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Accrued Expenses And Other Payables Details    
Accrued filing fees $ 433,029 $ 445,391
Accrued rework cost 227,963 215,560
Accrued commission payable 5,460,873 4,616,079
Acquisition payable* 312,500 [1] 1,662,500 [1]
Accrued expenses 3,410,591 [2] 2,686,016 [2]
Welfare & salary payable 518,224 341,137
Others 647,548 207,029
Accrued expenses and other payables $ 11,010,728 $ 10,173,712
[1] Current portion of acquisition payable related to our acquisition of Nollec Wireless on June 1, 2010 of $312,500 (see Note 1).
[2] Accrued expenses include a $2.4 million retention bonus payable to certain executives of Portables for services rendered prior to the acquisition.
XML 78 R90.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stockholders' Equity Options Activity (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Dec. 31, 2011
Balance, June 30, 2012 1,810,000  
Weighted-average exercise price of options outstanding, June 30, 2012 $ 2.97  
Old Plan
   
Balance, December 31, 2011 129,350  
Granted 0  
Lapsed (129,350)  
Exercised 0  
Cancelled 0  
Balance, June 30, 2012 0  
Weighted-average exercise price of options outstanding, December 31, 2011 $ 1.80  
Weighted-average exercise price of options granted during period $ 0  
Weighted-average exercise price of options lapsed during the period $ 0  
Weighted-average exercise price of options exercised during the period $ 0  
Weighted-average exercise price of options cancelled during the period   $ 0
Weighted-average exercise price of options outstanding, June 30, 2012 $ 0  
Aggregate Intrinsic Value, December 31, 2011 $ 0  
Aggregate Intrinsic Value, June 30, 2012 0  
New Plan
   
Balance, December 31, 2011 3,557,000  
Granted 0  
Lapsed 408,000  
Exercised 0  
Cancelled 1,339,000  
Balance, June 30, 2012 1,810,000  
Weighted-average exercise price of options outstanding, December 31, 2011 $ 3.02  
Weighted-average exercise price of options granted during period $ 0  
Weighted-average exercise price of options lapsed during the period $ 3.18  
Weighted-average exercise price of options exercised during the period $ 0  
Weighted-average exercise price of options cancelled during the period $ 3.18  
Weighted-average exercise price of options outstanding, June 30, 2012 $ 2.97  
Aggregate Intrinsic Value, December 31, 2011 0  
Aggregate Intrinsic Value, June 30, 2012 $ 0  
XML 79 R4.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSOLIDATED STATEMENTS OF INCOME (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Income Statement [Abstract]        
Net revenues $ 98,628,326 $ 57,564,265 $ 189,536,590 $ 116,175,951
Cost of goods sold 90,305,883 51,682,375 175,058,589 103,945,192
Gross profit 8,322,443 5,881,890 14,478,001 12,230,759
Operating expenses:        
Sales and marketing 302,319 179,255 547,927 387,794
General and administrative 4,585,044 1,663,774 7,979,684 2,929,965
Research and development 859,332 1,393,511 1,386,046 3,028,715
Non-cash equity-based compensation 837,310 307,469 1,271,559 614,938
Total operating expenses 6,584,005 3,544,009 11,185,216 6,961,412
Income from operations 1,738,438 2,337,881 3,292,785 5,269,347
Other income (expenses)        
Interest income 59,540 38,997 261,822 143,258
Loss on disposal of fixed assets 0 (64) 0 (8,432)
Government grants 19,027 15,342 76,592 15,342
Other income 153,315 443,622 167,027 458,847
Interest expense (626,898) (609,883) (1,210,143) (968,911)
Exchange (loss) (10,593) (21,051) (12,754) (37,223)
Other expenses (162,534) (61,473) (238,725) (142,054)
Total other expenses (568,143) (194,510) (956,181) (539,173)
Income before income taxes and noncontrolling interest 1,170,295 2,143,371 2,336,604 4,730,174
Income taxes 556,639 653,206 903,549 1,440,805
Income before noncontrolling interest 613,656 1,490,165 1,433,055 3,289,369
Less: income (loss) attributable to noncontrolling interest 193,717 (5,058) 371,231 7,333
Net income attributable to Zoom Technologies Inc. $ 419,939 $ 1,495,223 $ 1,061,824 $ 3,282,036
Basic and diluted income per common share:        
Basic $ 0.02 $ 0.09 $ 0.04 $ 0.21
Diluted $ 0.02 $ 0.09 $ 0.04 $ 0.21
Weighted average common shares outstanding:        
Basic 26,191,186 15,866,686 25,075,087 15,825,501
Diluted 26,233,271 15,924,013 25,127,366 15,892,287
XML 80 R12.htm IDEA: XBRL DOCUMENT v2.4.0.6
INVENTORIES - Note 6
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
INVENTORIES - Note 6

NOTE 6 — INVENTORIES

Inventories, by major categories, as of June 30, 2012 and December 31, 2011 were as follows:

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Raw materials   $ 2,474,432   $ 1,574,759
Finished goods     5,017,982     1,502,197
      7,492,414     3,076,956
Less: Allowance for obsolete inventories     (33,677)     (6,956)
             
Inventories, net   $ 7,458,737   $ 3,070,000

 

 

XML 81 R11.htm IDEA: XBRL DOCUMENT v2.4.0.6
ACCOUNTS RECEIVABLE - Note 5
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
ACCOUNTS RECEIVABLE - Note 5

NOTE 5 - ACCOUNTS RECEIVABLE

As of June 30, 2012 and December 31, 2011, the Company's accounts receivable consisted of the following:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Accounts receivable   $ 70,662,360   $ 49,798,505
Less: Allowance for doubtful accounts     (733,140)     (827,956)
             
Accountants receivable, net   $ 69,929,220   $ 48,970,549

 

 

XML 82 R23.htm IDEA: XBRL DOCUMENT v2.4.0.6
DIVIDENDS PAYABLE - Note 17
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
DIVIDENDS PAYABLE - Note 17

NOTE 17 — DIVIDENDS PAYABLE

In June 2007, before the Company acquired 51.0% of TCB Digital, TCB Digital decided to distribute dividends to its original shareholders of $1,074,068 (RMB 7,862,700). The Company paid dividends of $495,926 (RMB 3,900,000) in July 2007 to its original shareholders. The balance of dividends payable was $627,039 and $622,606 as of June 30, 2012 and December 31, 2011 respectively, representing the dividend payable to TCBGCL of RMB 3,962,700. The specific due date of the dividend will be negotiated between the current shareholders and original shareholders of the Company. The fluctuation of the balance of dividend payable represents the fluctuation of currency exchange rate.

XML 83 R19.htm IDEA: XBRL DOCUMENT v2.4.0.6
INTANGIBLE ASSETS - Note 13
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
INTANGIBLE ASSETS - Note 13

NOTE 13 — INTANGIBLE ASSETS

As of June 30, 2012 and December 31, 2011, the Company's intangible assets were summarized as follows:

    Useful life   June 30,
2012
  December 31,
2011
        (Unaudited)   (Audited)
             
Software   3 years   $ 202,295   $ 201,275
Domain name, logo & trade mark   Indefinite     349,600     349,600
Customer list   5 years     86,250     86,250
Technology use right   1 year     126,325     125,432
Patent techniques   10 years     182,651     181,360
Total cost         947,121     943,917
                 
Less: Accumulated amortization         (243,047)     (171,390)
                 
Intangible assets, net       $ 704,074   $ 772,527
                   

 

Intangible assets are stated at cost less accumulated amortization. The Company acquired domain name "zoom.com" and related logo & trade name for 80,000 shares of common stock valued $349,600 as of the date of purchase. The domain name, logo and trademark have indefinite lives and no amortization was recorded. The amortization of intangible assets for the six months ended June, 2012 and 2011 was $52,575 and $20,606 respectively. The amortization of intangible assets for the three months ended June 30, 2012 and 2011 was $21,374 and $14,990 respectively. The estimated amortization for the next five years as of June 30, 2012 and thereafter is expected to be as follows by years:

 

     
2013   $ 182,545
2014     66,596
2015     18,265
2016     18,265
2017     18,265
Thereafter     50,538
       
Total   $ 354,474

 

 

 

XML 84 R84.htm IDEA: XBRL DOCUMENT v2.4.0.6
Long-Term Notes Payable (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Dec. 31, 2011
Long-Term Notes Payable Details    
Long-term notes payable $ 500,000 $ 500,000
Long-term debt, description

CNCG, as part of the consideration payable to the sellers in our acquisition of Portables, from October 11, 2011 to October 11, 2014 with interest at 2%

 
Interest rate 2.00%  
XML 85 R15.htm IDEA: XBRL DOCUMENT v2.4.0.6
OTHER RECEIVABLES & PREPAID EXPENSES - Note 9
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
OTHER RECEIVABLES & PREPAID EXPENSES - Note 9

NOTE 9 - OTHER RECEIVABLES & PREPAID EXPENSES

As of June 30, 2012 and December 31, 2011, the Company's other receivables and prepaid expenses consisted of the following:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Advance to employees   $ 112,915   $ 23,882
Deposit for equipment lease     212,689     211,583
Prepaid expenses     224,401     238,857
Bank notes (a)     8,949,931     9,226,641
Other     123,108     83,044
             
Total other receivables   $ 9,623,044   $ 9,784,007

 

The deposit for equipment lease is recoverable within one year.

 

(a) Per purchase contract signed in 2010, CECCC provided mobile phone components to the Company. The Company paid in advance to CECCC by payment of ' bank notes'. During 2011, no purchase transaction was completed. As of June 30, 2012, the total outstanding amount is $8.9 million (RMB 56.6 million) which represents bank notes paid by the bank to CECCC but no purchases made by the Company.

 

XML 86 R60.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accounting Policies (Foreign Currency Transactions) (Narrative) (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Accounting Policies Foreign Currency Transactions Narrative Details    
Foreign currency translation adjustment included in accumulated other comprehensive income in stockholders' equity $ 2,471,146 $ 2,081,429
XML 87 R13.htm IDEA: XBRL DOCUMENT v2.4.0.6
ADVANCE TO SUPPLIERS - Note 7
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
ADVANCE TO SUPPLIERS - Note 7

NOTE 7 — ADVANCE TO SUPPLIERS

As of June 30, 2012 and December 31, 2011, the Company's advance to suppliers consisted of the following:

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Yuechangrui   $ -   $ 7,399,939
Media Tak Inc.     124,490     -
Shenzhen Sangfei Entertainment Communication Co., Ltd.     103,018     -
Dongguan Yaxin Semi-conductor Co., Ltd.     660,612     -
Shenzhen Bolixin Technology Co., Ltd.     219,244     -
Shenzhen Zhuoershi Electronic Technology Co., Ltd.     189,053      
Shenzhen Tongxincheng Photoelectric Co., Ltd.     119,553      
Shenzhen Chuangjie Supply Chain Co., Ltd.     175,237     -
Jiangxi TongGuJiangQian     -     478,000
Foshan Import and Export     -     129,384
Dewav Technology     -     877,650
Qualcomm     128,318     101,181
Konka     62,294     79,852
Other - multiple vendors of various amounts     514,593     644,401
             
Total advance to suppliers   $ 2,296,412   $ 9,834,017

 

 

 

 

 

XML 88 R14.htm IDEA: XBRL DOCUMENT v2.4.0.6
PURCHASE DEPOSIT - Note 8
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
PURCHASE DEPOSIT - Note 8

NOTE 8 - PURCHASE DEPOSIT

As of June 30, 2012 and December 31, 2011, the Company's purchase deposit consisted of the following:

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Shenzhen Wuxing Commercial & Trade Co.   $ 5,435,989   $ 7,135,266
Shenzhen Nanxin Communication Equipment Co., Ltd.     791,177     785,583
Shenzhen Futian District Longchengfa Electronic Co., Ltd.     632,942     628,466
             
Total purchase deposit   $ 6,860,108   $ 8,549,315

 

These three suppliers provide purchasing platforms. The purchase deposits are paid to ensure the Company is able to purchase components at competitive price. These deposits are refundable during the normal course of business and do not represent any commitment.

 

The Company signed a purchase agreement with Shenzhen Wuxing Commercial & Trade Co. for the supply of components for the E33 mobile phone. These components have been delivered during the fourth quarter of 2011 and the first half year of 2012. The amounts are advanced under such arrangements as of June 30, 2012.

 

As of June 30, 2012, contracts with suppliers to use purchase platform were expired and not renewed. The Company has not recovered all of the deposits and it is pursuing their recovery. The recovery of these amounts is still expected, accordingly, no allowance for non-recovery has been accrued.

 

 

XML 89 R16.htm IDEA: XBRL DOCUMENT v2.4.0.6
RESEARCH AND DEVELOPMENT CONTRACTS IN PROGRESS - Note 10
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
RESEARCH AND DEVELOPMENT CONTRACTS IN PROGRESS - Note 10

NOTE 10 — RESEARCH ANDH DEVELOPMENT CONTRACTS IN PROGRESS

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
         
Costs in excess of billings   $ 514,797   $ 91,880
             

 

Research and development contracts in progress include cost plus profit attributable to mobile phone development contracts in progress. Cost to date is calculated based on the value of man-month engineering costs and related overhead expenses. Company's R&D cost as at June 30, 2012 and December 31, 2011 was $0.5 million and $0.09 million respectively while its progress billings were $0 million and $0 million respectively.

 

XML 90 R64.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accounting Policies (Fair Value of Financial Instruments) (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Jun. 30, 2011
Dec. 31, 2010
Cash and cash equivalents $ 5,943,116 $ 1,131,109 $ 6,582,047 $ 6,374,103
Restricted cash 14,196,046 15,507,408    
Marketable investment securities
       
Cash and cash equivalents 5,943,116 1,131,109    
Restricted cash 14,196,046 15,507,408    
Fair Value, Inputs, Level 2 [Member]
       
Cash and cash equivalents 0 0    
Restricted cash 0 0    
Fair Value, Inputs, Level 3 [Member]
       
Cash and cash equivalents 0 0    
Restricted cash $ 0 $ 0    
XML 91 R85.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stockholders' Equity Common Stock (Narrative) (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Share-based Compensation $ 837,310 $ 307,469 $ 1,271,559 $ 614,938
July 2. 2012
       
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures     137,625  
Sale of Stock, price per share $ 1.03   $ 1.03  
Share-based Compensation     141,754  
May 22, 2012A
       
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures     302,800  
Sale of Stock, price per share $ 1.12   $ 1.12  
Options cancelled     1,339,000  
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized 308,553   308,553  
May 22, 2012B
       
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures     4,497,200  
Sale of Stock, price per share $ 1.12   $ 1.12  
Share-based Compensation     314,804  
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized 4,722,060   4,722,060  
Feb 28, 2012
       
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures     170,000  
Share-based Compensation     56,950  
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized 113,900   113,900  
Oct 4, 2011
       
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures     1,130,000  
Sale of Stock, price per share $ 1.19   $ 1.19  
Share-based Compensation     96,050  
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized 1,056,550   1,056,550  
Nov 29, 2011
       
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures     200,000  
Sale of Stock, price per share $ 0.79   $ 0.79  
Share-based Compensation     19,750  
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized $ 111,917   $ 111,917  
XML 92 R66.htm IDEA: XBRL DOCUMENT v2.4.0.6
Merger and Acquisitions - Goodwill (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Goodwill, Gross $ 35,759,442 $ 37,126,605
Less: Impairment (1,033,762) (1,033,762)
Total goodwill 34,725,680 36,332,497
Jiangsu Leimone
   
Goodwill, Gross 103,057 103,057
Silver Tech Enterprises
   
Goodwill, Gross 8,395,840 8,395,840
CDE
   
Goodwill, Gross 1,583,198 1,861,409
Portables
   
Goodwill, Gross $ 25,677,347 $ 27,005,953
XML 93 R63.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accounting Policies (Goodwill) (Narrative) (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Accounting Policies Goodwill Narrative Details    
Accumulated impairment of goodwill $ 1,033,762 $ 1,033,762
XML 94 R92.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stockholders' Equity Schedule Of Assumptions Used In Black-Scholes Model - Options (Narrative) (Details) (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2012
865,000 Options
Y
Jun. 30, 2012
Reprice 865,000 Options
Y
Jun. 30, 2012
235,000 Options
Y
Jun. 30, 2012
Reprice 235,000 Options
Y
Jun. 30, 2012
677,000 Options
Y
Stock price   $ 6.18 $ 3.54 $ 6.18 $ 3.54 $ 3.45
Exercise price   $ 6.18 $ 5.70 $ 6.18 $ 5.392 $ 3.75
Expected life   3.25 2.28 1.50 0.53 3.25
Volatility   39.18% 33.59% 39.18% 33.59% 33.42%
Discount rate   1.26% 0.78% 0.78% 0.28% 0.84%
Non-cash compensation expense related to stock options $ 191,156          
Non-cash compensation expense related to stock options to be recorded up to 2014 $ 965,680          
XML 95 R34.htm IDEA: XBRL DOCUMENT v2.4.0.6
INVESTMENT IN SPREADZOOM - Note 28
6 Months Ended
Jun. 30, 2012
Investments, Debt and Equity Securities [Abstract]  
INVESTMENT IN SPREADZOOM - Note 28

NOTE 28 - INVESTMENT IN SPREADZOOM

 

On May 25, 2012, the Company along with Spreadtrum Communication (Tianjin) Co., Ltd, Tianjin Baoshui District Investment Co, Ltd, and Han & Qin International (BVI) Limited invested in the joint venture SpreadZoom Technologies, Inc ("SpreadZoom"). SpreadZoom is domiciled in Tianjin, China with a registered capital of $47,352,700 (RMB 300,000,000. As of June 30, 2012, $17,520,500 (RMB 111,000,000) in capital had been contributed to SpreadZoom; the Company contributed $12,342,358 (RMB 78,000,000). The Company has committed to invest an additional 10,117,700 (RMB 64,100,000) in SpreadZoom. The Company's capital contribution to SpreadZoom of $12,342,358 was primarily comprised of rights to the deposits made for the construction of the new factory in Tianjin that as of December 31, 2011, was valued at $10,170,809. The balance of $2,171,549 was a refund of a prepayment for the purchase raw material in the ordinary course of business made to Leimone (Tianjin) Industrial Co., Ltd., a related party who is also the general contractor for the construction of the new factory. See details described in Note 12 Construction in Progress - Related Party. SpreadZoom is still in the initial phases of setup and registration. Management and control of the business have not been fully determined. As of June 30, 2012, the Company has used the equity method to account for its investment in SpreadZoom.

 

 

XML 96 R51.htm IDEA: XBRL DOCUMENT v2.4.0.6
Accrued Expenses and Other Payables (Tables)
6 Months Ended
Jun. 30, 2012
Accrued Expenses And Other Payables Tables  
Accrued expenses and other payables

As of June 30, 2012 and December 31, 2011, the accrued expenses and other payables of the Company were summarized as follows:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Accrued filing fees   $ 433,029   $ 445,391
Accrued rework cost     227,963     215,560
Accrued commission payable     5,460,873     4,616,079
Acquisition payable*     312,500     1,662,500
Accrued expenses     3,410,591     2,686,016
Welfare & salary payable     518,224     341,137
Others     647,548     207,029
             
             
Total accrued expenses and other payables   $ 11,010,728   $ 10,173,712

 

*Current portion of acquisition payable related to our acquisition of Nollec Wireless on June 1, 2010 of $312,500 (see Note 1).

 

XML 97 R21.htm IDEA: XBRL DOCUMENT v2.4.0.6
NOTES PAYABLE - Note 15
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
NOTES PAYABLE - Note 15

NOTE 15 — NOTES PAYABLE

These notes are payable in three to six months and bear no interest. The balance of notes payable as of June 30, 2012 and December 31, 2011 consisted of the following (all were bankers' acceptances):

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
CECCC, honored by the BOCTB, from July 14, 2011 to January 14, 2012, secured by $942,700 of cash in bank; Repaid January 16, 2012     -   1,885,399
           
CECCC, honored by the BOCTB, from July 20, 2011 to January 20, 2012, secured by $1,414,049 of cash in bank, Repaid January 20, 2012     -   2,828,099
           
Shanghai Zhanqiao, honored by the BOCTB, from August 8, 2011 to February 8, 2012, secured by $1,571,166 of cash in bank; repaid February 8, 2012     -   1,571,166
           
CECCC, honored by the BOCTB, from September 20, 2011 to March 20, 2012, secured by $3,927,915 of cash in bank; repaid March 20, 2012     -   7,855,830
           
CECCC, honored by the BOCTB, from September 22, 2011 to March 22, 2012, secured by $3,220,890 of cash in bank; repaid March 22, 2012     -   6,441,780
           
CECCC, honored by the BOCTB, from September 27, 2011 to March 27, 2012, secured by $974,123 of cash in bank; repaid March 27, 2012     -   1,948,246
           
CECCC, honored by the BOCTB, from October 14, 2011 to April 14, 2012, secured by $790,551 of cash in bank     -   1,571,166
           
CECCC, honored by the BOCTB, from October 19, 2011 to April 19, 2012, secured by $2,687,875 of cash in bank     -   5,341,964
           
CECCC, honored by the BOCTB, from January 16 to July 16, 2012, secured by $2,373,530 of cash in bank;     4,747,061   6,441,780
           
CECCC, honored by the BOCTB, from March 30 to September 30, 2012, secured by $3,955,884 of cash in bank;     7,911,768   1,948,246
           
CECCC, honored by the BOCTB, from April 5 to October 5, 2012, secured by $4,224,884 of cash in bank;     8,449,768   -
           
CECCC, honored by the BOCTB, from April 9 to October 9, 2012, secured by $2,057,060 of cash in bank;     4,114,119   -
           
CECCC, honored by the BOCTB, from April 16 to October 16, 2012, secured by $1,424,118 of cash in bank;     2,848,237   -
           
Dongguan Yaxing Semiconductor Co., Ltd, honored by Industrial Bank Jinweilu Branch, from June 1 to September 1, 2012, secured by $74,054 of cash in bank;     74,054   -
           
Shenzhen Bolixin Technical Co., Ltd, honored by Industrial Bank Jinweilu Branch, from June 6 to September 6, 2012, secured by $26,900 of cash in bank;     26,900   -
           
Shenzhen Bolixin Technical Co., Ltd, honored by the Industrial Bank Jinweilu Branch, from June 6 to September 6, 2012, secured by $27,968 of cash in bank;     27,968   -
           
Shen Zhen Jun Cheng Hao Trading Ltd., honored by the Bank of China Heping Branch, from March 7 to September 7, 2012, secured by $31,647 of cash in bank     31,647   1,571,166
           
Total notes payable   $ 28,231,522   $ 29,443,650

 

 

 

 

 

XML 98 R26.htm IDEA: XBRL DOCUMENT v2.4.0.6
LONG-TERM NOTES PAYABLE - Note 20
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
LONG-TERM NOTES PAYABLE - Note 20

NOTE 20— LONG-TERM NOTES PAYABLE

 

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
CNCG, as part of the consideration payable to the sellers in our acquisition of Portables, from October 11, 2011 to October 11, 2014 with interest at 2%   $ 500,000   $ 500,000

 

 

 

XML 99 R95.htm IDEA: XBRL DOCUMENT v2.4.0.6
Income Tax (Schedule of Effective Income Tax Rate Reconciliation) (Details) (USD $)
In Millions, unless otherwise specified
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Income Tax Schedule Of Effective Income Tax Rate Reconciliation Details        
US statutory rates 34.00% 34.00% 34.00% 34.00%
Tax rate difference (27.10%) (14.20%) (24.00%) (21.80%)
Valuation allowance 36.10% 0.20% 37.00% 17.20%
Tax for prior year 13.10% 10.80% 3.00% 1.20%
Non-taxable Income of pass through entity (8.50%) 0.00% (11.30%) 0.00%
Tax per financial statements 47.60% 30.40% 38.70% 30.50%
Foreign pretax earnings     $ 3.50  
Accumulated undistributed earnings of non-US subsidiaries invested indefinitely 30.57   30.57  
Additional U.S. federal income tax to be provided if earnings were remitted     $ 7.30  
XML 100 R49.htm IDEA: XBRL DOCUMENT v2.4.0.6
Short-Term Loans (Tables)
6 Months Ended
Jun. 30, 2012
Short-Term Loans Tables  
Short-term loans

Short-term loans are due to various financial institutions which are normally due within one year. As of June 30, 2012 and December 31, 2011, the Company's short term loans consisted of the following:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Bank of Communication Tianjin Branch ("BOCTB"), due from July 4, 2011 to July 3, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party     3,164,707     3,142,332
             
BOCTB, due from June 20, 2011 to June 16, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party     -     3,142,332
             
BOCTB, due from June 14, 2011 to June 13, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party     -     3,079,485
             
BOCTB, due from August 18, 2011 to August 17, 2012, with benchmark interest rate plus 5%, mortgaged by fixed assets     3,164,707     3,142,332
             
BOCTB, due from August 3, 2011 to August 1, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party     4,747,060     4,713,498
             
BOCTB, due from June 13, 2012 to June 14, 2013 with interest at 6.941%, guaranteed by TCBGCL - related party     6,329,414     -
             
China Merchant Bank Tianjin branch, due from July 29, 2011 to January 28, 2012, interest at 7.93%, mortgaged by bank notes of $785,583 (RMB5,000,000); repaid in full on January 28, 2012     -     754,160
             
Key Network Holdings Limited, due on demand with interest at 6%.     715,018     715,064
             
JP Morgan Chase credit line for $1.3 million secured by certificate of deposit from Portables Unlimited, Inc. (the 49.5% owner of Portables) due from September 1, 2011 - August 31, 2012, at Libor plus 2.95%     $2,945,670     $854,469
             
HSBC, due on demand with interest at 7.25%     $5,640     $48,146
             
Bank of Tianjin Laolian Branch, due from June 24, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Tianjin Zhonghuan Electronic Information Group Ltd. ("Electronic")     -     1,995,381
             
Bank of Tianjin Laolian Branch, due from June 24, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Electronic     -     628,466
             
Bank of Tianjin Laolian Branch, due from June 27, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Electronic     -     157,117
             
Bank of Tianjin Laolian Branch, due from June 28, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Electronic     -     361,368
             
Shanghai Pudong Development Bank Pucheng Branch, due from November 1, 2011 to November 1, 2012 with interest at 7.216%, guaranteed by Tianjin Loan Guaranty Company, price is 1.2% of total principal, shall pay off within 5 days after all principal are paid off     1,582,354     1,571,166
             
North International Trust Company, due from April 12, 2012 to April 12, 2013 with interest at 11.5%, guaranteed by Tianjin Loan Guaranty Company     1,582,354     -
             
Bank of China Tianjin Branch, due from May 18, 2012 to August 16, 2012 with interest at 4.166850%, by export invoice discount contract     202,632     -
             
Bank of China Tianjin Branch, due from May 25, 2012 to August 23, 2012 with interest at 4.166850%, by export invoice discount contract     67,544     -
             
Bank of China Tianjin Branch, due from June 258, 2012 to September 23, 2012 with interest at 4.167600%, by export invoice discount contract     438,240     -
             
HSBC Suzhou Branch, due from August 15, 2011 to January 12, 2012 with interest at SIBOR plus 4.0%, guaranteed by tangible assets of the Company (a)     -     1,000,000
             
HSBC Suzhou Branch, due from April 27, 2012 to January 12, 2013 with interest at SIBOR plus 4.0%, guaranteed by the Company (a)     600,000     -
             
Beijing Bank Zhongguancun Haidianyuan Sub-branch, due March 14, 2012 with interest at 6.67%, guaranteed by TCB Digital; repaid in full on March 14, 2012     -     235,675
             
Beijing Bank Zhongguancun Haidianyuan Sub-branch, due March 14, 2012 with interest at 6.67%, guaranteed by TCB Digital, repaid in full on March 14, 2012     -     314,233
             
Beijing Bank Zhongguancun Haidianyuan Sub-branch, due March 14, 2012 with interest at 6.67%, guaranteed by TCB Digital; repaid in full on March 12, 2012     -     534,196
             
JP Morgan Chase - Bank Overdraft Account; Due on Demand     20,527     15,923
             
Total short-term loans   $ 25,565,867   $ 26,405,34

 

 

(a) Based on a corporate guarantee from the Company and a personal guarantee from Mr. Gu for financing up to 85% of invoice for approved buyer of Profit Harvest, this loan is subject to certain covenants which should be complied at all times. Those covenants includes but not limited to tangible net worth not less than $40 million and net gearing not greater than 1.2 times. As of December 31, 2011, the Company was in violation of one of its loan covenant with HSBC. The covenant calls for the Guarantor, Zoom, on behalf of the Borrower, Profit Harvest, to maintain a minimum tangible net worth of $40,000,000. The Company's tangible net worth at December 31, 2011 was $39,673,617 (Stockholders' equity of $76,778,641 less Goodwill of $36,332,497, less intangible assets of $772,527). With exception to the aforementioned covenant violation, the Company complied with all the other covenants. The Company repaid the loan to HSBC Suzhou Branch on February 13, 2012. The loan was renewed by HSBC in April 2012 requiring the same loan covenants as detailed above. The Company's tangible net worth at June 30, 2012 was $44,071,986; its net gearing was 0.96 times. Accordingly, the Company was in compliance with all of the loan covenants.

 

XML 101 R41.htm IDEA: XBRL DOCUMENT v2.4.0.6
Inventories (Tables)
6 Months Ended
Jun. 30, 2012
Inventories Tables  
Inventories

Inventories, by major categories, as of June 30, 2012 and December 31, 2011 were as follows:

 

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Raw materials   $ 2,474,432   $ 1,574,759
Finished goods     5,017,982     1,502,197
      7,492,414     3,076,956
Less: Allowance for obsolete inventories     (33,677)     (6,956)
             
Inventories, net   $ 7,458,737   $ 3,070,000

 

XML 102 R5.htm IDEA: XBRL DOCUMENT v2.4.0.6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)
3 Months Ended 6 Months Ended
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Statement of Income and Comprehensive Income [Abstract]        
Net income attributable to Zoom Technologies Inc. $ 419,939 $ 1,495,223 $ 1,061,824 $ 3,282,036
Net income attributable to noncontrolling interest 193,717 (5,058) 371,231 7,333
Other comprehensive income:        
Foreign currency translation adjustments - Zoom Technologies Inc. 80,139 478,791 389,717 709,060
Foreign currency translation adjustments - noncontrolling interest 2,620 52,235 23,893 72,344
Comprehensive income - Zoom Technologies Inc. 500,078 1,974,014 1,451,541 3,991,096
Comprehensive income - noncontrolling interest $ 196,337 $ 47,177 $ 395,124 $ 79,677
XML 103 R88.htm IDEA: XBRL DOCUMENT v2.4.0.6
Stockholders' Equity Summary of Warrants Outstanding and Exercisable (Details) (USD $)
6 Months Ended
Jun. 30, 2012
Dec. 31, 2011
Stockholders Equity Summary Of Warrants Outstanding And Exercisable Details    
Balance, June 30, 2012 8,638,604 8,638,604
Warrants outstanding, Weighted-average remaining life, in years 2.60  
Warrants outstanding, Weighted-average exercise price $ 2.30  
Warrants exercisable, at June 30, 2012 8,638,604  
Warrants exercisable, Weighted-average exercise price $ 2.30  
XML 104 R10.htm IDEA: XBRL DOCUMENT v2.4.0.6
RESTRICTED CASH - Note 4
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
RESTRICTED CASH - Note 4

NOTE 4 — RESTRICTED CASH

Restricted cash was deposits in banks as collateral for the banks to issue banker's acceptances. Restricted cash may not be recovered when the secured notes payable cannot be paid (see Note 15).

XML 105 R58.htm IDEA: XBRL DOCUMENT v2.4.0.6
Commitments (Tables)
6 Months Ended
Jun. 30, 2012
Company
 
Future minimum annual operating lease payments

The commitments of the Company (except for Portables which is disclosed separately below) as of June 30, 2012 for the next year are as follows:

 

Year      
2013   $ 381,907

 

 

Portables
 
Future minimum annual operating lease payments

The future minimum annual rental commitments of Portables as of June 30, 2012 are as follows:

 

Year      
2012   $ 371,549
2013     283,436
2014     195,044
2015     114,189
       
Total Minimum Lease Payments   $ $ 1,048,388

 

XML 106 R82.htm IDEA: XBRL DOCUMENT v2.4.0.6
RELATED PARTY TRANSACTIONS (Narrative) (Details) (USD $)
1 Months Ended 3 Months Ended 6 Months Ended
Jan. 31, 2011
Jun. 30, 2012
Jun. 30, 2011
Jun. 30, 2012
Jun. 30, 2011
Dec. 31, 2011
Revenues from sales to Electronics Science and Tech   $ 20,259,709 $ 6,270,484 $ 29,728,814 $ 12,541,921  
Beijing Leimone borrowed money maturity duration   12 months   12 months    
Purchases from Tianjin Leimone       72,137,320 23,684,030  
Amount due from Tianjin Leimone   553,641   553,641   13,708,030
Balance of loans   6,813,482   6,813,482   6,765,308
Tianjin Tong Guang Group ownership of TCB subsidiary       20.00%    
Total sales to 712   316,870 7,838,896 316,870 15,757,425  
Balance of Sales   560,980   560,980   796,419
Payment to acquire materials   15,523,282   6,399,926    
Balance of Loan   400,893   400,893   408,831
Advance from related party   1,110,000   1,110,000   20,339
Total Sales   16,024   16,024    
Balance of funds provided by Gu   2,926,135   2,926,135   2,788,635
Related party payable   15,871,694   15,871,694    
TCB Digital purchases from Tianjin Leimone       72    
Portables line of credit 3,000,000          
Line of credit interest rate 56.00%          
Line of credit unpaid balance   4,620,665   4,620,665   2,633,147
Advances from related party interest rate   12   12    
Hui Pak Kong
           
Balance of loans           $ 277,943
XML 107 R69.htm IDEA: XBRL DOCUMENT v2.4.0.6
Advance to Suppliers (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Advance To Suppliers Details    
Yuechangrui    $ 7,399,939
Media Tak Inc. 124,490 123,610
Shenzhen Sangfei Entertainment Communication Co., Ltd. 103,018   
Dongguan Yaxin Semi-conductor Co., Ltd. 660,612   
Shenzhen Bolixin Technology Co., Ltd. 219,244   
Shenzhen Zhuoershi Electronic Technology Co., Ltd. 189,053   
Shenzhen Tongxincheng Photoelectric Co., Ltd. 119,553   
Shenzhen Chuangjie Supply Chain Co., Ltd. 175,237   
Jiangxi TongGuJiangQian    478,000
Foshan Import and Export    129,384
Dewav Technology    877,650
Qualcomm 128,318 101,181
Konka 62,294 79,852
Other - multiple vendors of various amounts 514,593 644,401
Total advance to suppliers $ 2,296,412 $ 9,834,017
XML 108 R27.htm IDEA: XBRL DOCUMENT v2.4.0.6
STOCKHOLDERS' EQUITY - Note 21
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
STOCKHOLDERS' EQUITY - Note 21

NOTE 21— STOCKHOLDERS' EQUITY

COMMON STOCK

On July 2, 2012, the Company issued 137,625 shares of its common stock to the employees of its Nollec Wireless subsidiary in lieu of cash salary within the second quarter. The shares were valued at $1.03 per share, the closing price on the date of Board Approval, and the Company recorded $141,754 of non-cash compensation expense for this issuance for the quarter ended June 30, 2012.

 

On May 22, 2012, the Company issued 302,800 shares of its common stock to its employees, consultants and directors in replacement for cancelling 1,339,000 outstanding options that were held by the same recipients. The shares have the same vesting schedule as the options and were valued at $1.12 per share, the closing price on the date of Board Approval. Based on the difference between the market value of the shares and the Black-Scholes value of the cancelled options as of May 22, 2012, there is an incremental non-cash compensation expense of $308,553 to be recorded over the service period.

 

On May 22, 2012, the Company issued 4,497,200 shares of its common stock, with claw back provisions, to consultants for their services over the next four years beginning with the second quarter of 2012. The shares were valued at $1.12 per share, the closing price on the date of Board Approval. The projects these consultants are pursuing include but are not limited to marketing our ODM business to large Southeast Asian customers, sales of our own brand and ODM products to private companies and government supported programs in China aimed at various demographic sectors of the domestic mobile market, and other cooperative ventures with the three mobile operators of the PRC. The Company recorded $314,804 of non-cash compensation expense for this issuance for the quarter ended June 30, 2012; and the outstanding deferred expenses related to such shares at June 30, 2012 was $4,722,060.

 

On February 28, 2012, the Company issued to members of the Board of Directors a total of 170,000 shares of its common stock. The Company recorded $56,950 of non-cash compensation expense for this issuance for the quarter ended June 30, 2012. The outstanding deferred expenses related to such shares at June 30, 2012 was $113,900.

 

On October 4, 2011, the Board of Directors approved of a grant of 1,130,000 shares of common stock to members of management for their services over the next three and a half years. The shares were valued at $1.19 per share, the closing price on the date of Board approval. As of December 31, 2011, 100,000 of such shares were recorded as shares to be issued; the shares were subsequently issued on February 28, 2012 during the quarterly period ended March 31, 2012. The shares fully vest to management over one year from their date of issue. The Company recorded non-cash compensation expense of $96,050 for the quarter ended June 30, 2012. The outstanding deferred expense related to such shares at June 30, 2012 was $1,056,550.

 

On November 29, 2011, the BOD approved of a grant of 200,000 shares of common stock to management and one consultant for their services over the next two years. The shares were valued at $0.79 per share, the closing price on the date of Board Approval. As of June 30, 2012, we recorded non-cash compensation expense of $19,750 and deferred expenses of $111,917.

 

WARRANTS

 

The Company granted Series A, B, C, D and E warrants to the accredited investors as part of its private place offering on October 16, 2009 and November 18, 2009.

 

Following is the brief description of warrants:

 

Series A Warrants: The Series A warrants have an exercise price of $6.00 and a term of 5 years from the issue date subject to the Exchange Cap (as defined in the agreement).

 

Series B Warrants: The Series B warrants have an exercise price of $0.01 and a term of three (3) months from the issue date provided, however, that such date shall be extended indefinitely if the warrant cannot be exercised due to the Beneficial Ownership Limitation (as defined in the agreement) or the Exchange Cap Limitation (as defined in the agreement) until the warrant can be exercised in full by the holder thereof without breaching the Beneficial Ownership Limitation (as defined in the agreement) or the Exchange Cap Limitation (as defined in the agreement). All B Warrants were exercised in December 2009.

 

Series C Warrants: The Series C warrants shall be exercisable only upon the exercise of the Series B warrants. The Series C warrants shall have an exercise price of $6.00 and a term of 5 years from the issue date.

 

Series D Warrants: The Series D warrants shall be exercisable if the Company fails to meet certain performance criteria for the year 2009. The Series D warrant shall have an exercise price of $0.01 and a term of exercise equal to three (3) months from the date the Maximum Eligibility Date (as defined in the agreement); provided, however, that such date shall be extended indefinitely if the warrant cannot be exercised due to the Beneficial Ownership Limitation (as defined in the agreement) or the Exchange Cap (as defined in the agreement) until the warrant can be exercised in full by the holder without breaching the Beneficial Ownership Limitation (as defined in the agreement) or the Exchange Cap Limitation (as defined in the agreement). Due to the Net Income of Zoom as reported in the Company's annual report for the year 2009 exceeding the eligibility threshold pursuant to the agreement, the Series D Warrants became ineligible for exercise.

 

Series E Warrants: The Series E warrants shall be exercisable if the Company fails to meet certain performance criteria for the year 2010. The Series E warrants shall have an exercise price of $0.01 and a term of three (3) months from the date the Maximum Eligibility Date (as defined in the agreement); provided, however, that such date shall be extended indefinitely if the warrant cannot be exercised due to the Beneficial Ownership Limitation (as defined in the agreement) until the Warrant can be exercised in full by the holder thereof without breaching the Beneficial Ownership Limitation (as defined in the agreement). Due to the Net Income of Zoom as reported in the Company's annual report for the year 2010 exceeding the eligibility threshold pursuant to the agreement, the Series E Warrants became ineligible for exercise.

 

The Company granted on May 6, 2010, Series F warrants to the above investors for their temporary forfeiture of their right to participate in the Company's future financings.

 

Series F Warrants: The Series F warrants have an exercise price of $6.00 and a term of 5 years from the issue date. The Company issued 375,000 Series F warrants to investors who participated in private placement transaction pursuant to the Securities Purchase Agreement dated October 15, 2009, to temporarily waive their right for a period of eight months to participate in a future offering of the Company. The investors originally have a period of twenty-four months ("Rights Period") in which they have the right to participate, and for providing a temporary waiver, an eight-month duration is added to the original expiration of the Rights Period.

 

The Company granted Series G warrants to the accredited investors as part of its private place offering on November 15, 2010.

 

Series G Warrants: The Series G warrants shall have an exercise price of $4.71 and a term of 5 years from the issue date.

 

Anti-dilution Adjustments for Certain Warrants: Since the private placement in November 2010 involved sales of the Company's stock at a price that activated anti-dilution provisions in the Series A, C, F and certain placement agent warrants, the exercise price of these warrants is adjusted to $3.74 per share and the number of warrants eligible is multiplied by a factor of 6 / 3.74 or 1.60 with fractional shares rounding up.

 

The following summary represents warrants activity during the quarter ended June 30, 2012:

 

    Number of
Warrants
  Weighted Average
Exercise Price
  Aggregate
Intrinsic Value
             
Balance, December 31, 2011   8,638,604   $2.30   -
             
     Granted   -   -    
     Lapsed   -   -    
     Exercised   -   -    
     Cancelled   -   -    
             
Balance, June 30, 2012   8,638,604   $2.30   -

 

The following presents warrants summary as of June 30, 2012:

 

    Number
Outstanding
  Warrants Outstanding
Weighted Average
Remaining
Contractual Life
  Weighted
Average
Exercise
Price
  Warrants Exercisable
          Number
Exercisable
  Weighted
Average
Exercise Price
                     
Warrants   8,638,604   2.60 years   $2.30   8,638,604   $2.30

 

 

The Company determined the grant date fair value of Series A, C and placement agent warrants of $3.26 per share which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $6.87 per share, exercise price of $6 per share, expected life of 5 years, volatility of 46.63% and discount rate of 2.37%. These warrants were recorded net off the value of proceeds.

 

The Company determined the grant date fair value of F warrants of $1.51 per share which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $5.52 per share, exercise price of $6 per share, expected life of 5 years, volatility of 30.30% and discount rate of 2.10%. These warrants were recorded net off the value of proceeds.

The Company determined the grant date fair value of placement agent warrants of $1.23 per share which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $5.52 per share, exercise price of $6.90 per share, expected life of 5 years, volatility of 30.30% and discount rate of 2.10%. These warrants were recorded net of the value of proceeds.

 

The Company determined the grant date fair value of the Series G and placement warrants of $1.04 per share which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $3.99 per share, exercise price of $4.71 per share, expected life of 5 years, volatility of 33.57% and discount rate of 1.51%. These warrants were recorded net of the value of proceeds.

 

 

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Construction in Progress Deposit Related Party (Details) (USD $)
Jun. 30, 2012
Dec. 31, 2011
Construction In Progress Deposit Related Party Details    
Construction in progress deposit - related parties $ 0 $ 10,170,809
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Accounting Policies (Fair Value of Financial Instruments) (Tables)
6 Months Ended
Jun. 30, 2012
Accounting Policies Fair Value Of Financial Instruments Tables  
Fair Value Measurement (Tables)

The assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of June 30, 2012 and December 31, 2011 are as follows:

 

    Carrying value   Active markets
For identical Assets
  Significant
other Observable
Inputs
  Significant
Unobservable
Inputs
    2012   (Level 1)   (Level 2)   (Level 3)
                 
Cash and cash equivalents   $ 5,942,846   $ 5,942,846   -   -
                     
Restricted cash   $ 14,196,046   $ 14,196,046   -   -

 

    Carrying value   Active markets
For identical Assets
  Significant
other Observable
Inputs
  Significant
Unobservable
Inputs
    2011   (Level 1)   (Level 2)   (Level 3)
                 
Cash and cash equivalents   $ 1,131,109   $ 1,131,109   -   -
                     
Restricted cash   $ 15,507,408   $ 15,507,408   -   -

 

 

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SHORT-TERM LOANS - Note 14
6 Months Ended
Jun. 30, 2012
Notes to Financial Statements  
SHORT-TERM LOANS - Note 14

NOTE 14 - SHORT-TERM LOANS

Short-term loans are due to various financial institutions which are normally due within one year. As of June 30, 2012 and December 31, 2011, the Company's short term loans consisted of the following:

    June 30,
2012
  December 31,
2011
    (Unaudited)   (Audited)
             
Bank of Communication Tianjin Branch ("BOCTB"), due from July 4, 2011 to July 3, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party     3,164,707     3,142,332
             
BOCTB, due from June 20, 2011 to June 16, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party     -     3,142,332
             
BOCTB, due from June 14, 2011 to June 13, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party     -     3,079,485
             
BOCTB, due from August 18, 2011 to August 17, 2012, with benchmark interest rate plus 5%, mortgaged by fixed assets     3,164,707     3,142,332
             
BOCTB, due from August 3, 2011 to August 1, 2012 with benchmark interest rate plus 5%, guaranteed by TCBGCL - related party     4,747,060     4,713,498
             
BOCTB, due from June 13, 2012 to June 14, 2013 with interest at 6.941%, guaranteed by TCBGCL - related party     6,329,414     -
             
China Merchant Bank Tianjin branch, due from July 29, 2011 to January 28, 2012, interest at 7.93%, mortgaged by bank notes of $785,583 (RMB5,000,000); repaid in full on January 28, 2012     -     754,160
             
Key Network Holdings Limited, due on demand with interest at 6%.     715,018     715,064
             
JP Morgan Chase credit line for $1.3 million secured by certificate of deposit from Portables Unlimited, Inc. (the 49.5% owner of Portables) due from September 1, 2011 - August 31, 2012, at Libor plus 2.95%     $2,945,670     $854,469
             
HSBC, due on demand with interest at 7.25%     $5,640     $48,146
             
Bank of Tianjin Laolian Branch, due from June 24, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Tianjin Zhonghuan Electronic Information Group Ltd. ("Electronic")     -     1,995,381
             
Bank of Tianjin Laolian Branch, due from June 24, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Electronic     -     628,466
             
Bank of Tianjin Laolian Branch, due from June 27, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Electronic     -     157,117
             
Bank of Tianjin Laolian Branch, due from June 28, 2011 to June 22, 2012 with interest at 6.941%, guaranteed by Electronic     -     361,368
             
Shanghai Pudong Development Bank Pucheng Branch, due from November 1, 2011 to November 1, 2012 with interest at 7.216%, guaranteed by Tianjin Loan Guaranty Company, price is 1.2% of total principal, shall pay off within 5 days after all principal are paid off     1,582,354     1,571,166
             
North International Trust Company, due from April 12, 2012 to April 12, 2013 with interest at 11.5%, guaranteed by Tianjin Loan Guaranty Company     1,582,354     -
             
Bank of China Tianjin Branch, due from May 18, 2012 to August 16, 2012 with interest at 4.166850%, by export invoice discount contract     202,632     -
             
Bank of China Tianjin Branch, due from May 25, 2012 to August 23, 2012 with interest at 4.166850%, by export invoice discount contract     67,544     -
             
Bank of China Tianjin Branch, due from June 258, 2012 to September 23, 2012 with interest at 4.167600%, by export invoice discount contract     438,240     -
             
HSBC Suzhou Branch, due from August 15, 2011 to January 12, 2012 with interest at SIBOR plus 4.0%, guaranteed by tangible assets of the Company (a)     -     1,000,000
             
HSBC Suzhou Branch, due from April 27, 2012 to January 12, 2013 with interest at SIBOR plus 4.0%, guaranteed by the Company (a)     600,000     -
             
Beijing Bank Zhongguancun Haidianyuan Sub-branch, due March 14, 2012 with interest at 6.67%, guaranteed by TCB Digital; repaid in full on March 14, 2012     -     235,675
             
Beijing Bank Zhongguancun Haidianyuan Sub-branch, due March 14, 2012 with interest at 6.67%, guaranteed by TCB Digital, repaid in full on March 14, 2012     -     314,233
             
Beijing Bank Zhongguancun Haidianyuan Sub-branch, due March 14, 2012 with interest at 6.67%, guaranteed by TCB Digital; repaid in full on March 12, 2012     -     534,196
             
JP Morgan Chase - Bank Overdraft Account; Due on Demand     20,527     15,923
             
Total short-term loans   $ 25,565,867   $ 26,405,34

 

 

(a) Based on a corporate guarantee from the Company and a personal guarantee from Mr. Gu for financing up to 85% of invoice for approved buyer of Profit Harvest, this loan is subject to certain covenants which should be complied at all times. Those covenants includes but not limited to tangible net worth not less than $40 million and net gearing not greater than 1.2 times. As of December 31, 2011, the Company was in violation of one of its loan covenant with HSBC. The covenant calls for the Guarantor, Zoom, on behalf of the Borrower, Profit Harvest, to maintain a minimum tangible net worth of $40,000,000. The Company's tangible net worth at December 31, 2011 was $39,673,617 (Stockholders' equity of $76,778,641 less Goodwill of $36,332,497, less intangible assets of $772,527). With exception to the aforementioned covenant violation, the Company complied with all the other covenants. The Company repaid the loan to HSBC Suzhou Branch on February 13, 2012. The loan was renewed by HSBC in April 2012 requiring the same loan covenants as detailed above. The Company's tangible net worth at June 30, 2012 was $44,071,986; its net gearing was 0.96 times. Accordingly, the Company was in compliance with all of the loan covenants.