10-Q

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

FORM 10-Q

(Mark One)

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

FOR THE QUARTER ENDED MARCH 31, 2013

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)

(845) 507-8200
(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  ¨

Explanatory Note: Pursuant to Rule 405(a)(2) of Regulation S-T, the registrant is relying upon the applicable 30-day grace period for the initial filing of its first Interactive Data File required to contain detail-tagged footnotes or schedules. The registrant intends to file the required detail-tagged footnotes or schedules by the filing of an amendment to this Quarterly Report on Form 10-Q within the 30-day period.

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 May 20, 2013 is 29,525,168.

Zoom Technologies, Inc.
and Subsidiaries

FORM 10-Q

For March 31, 2013

TABLE OF CONTENTS

Part I.	Consolidated Financial Information
Item 1.	Condensed Consolidated Financial Statements	2
	Condensed Consolidated Balance Sheets as of March 31, 2013 (Unaudited) and December 31, 2012	2
	Condensed Consolidated Statements of Operations for The Three Months ended March 31, 2013 and 2012 (Unaudited)	3
	Condensed Consolidated Statements of Comprehensive Income (Loss) for The Three Months ended March 31, 2013 and 2012 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for The Three Months ended March 31, 2013 and 2012 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations	43
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	50
Item 4.	Controls and Procedures	50
Part II.	Other Information
Item 1.	Legal Proceedings	51
Item 1A.	Risk Factors	51
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	51
Item 3.	Default Upon Senior Securities	51
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	52
Signatures		53
Exhibits		54

1

PART I — FINANCIAL INFORMATION

Item 1. Condensed Consolidated Financial Statements

ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS

		MARCH 31,		DECEMBER 31,
		2013		2012
		(Unaudited)
ASSETS
Current assets
Cash and equivalents	$	212,665	$	430,746
Restricted cash		19,149,140		19,044,294
Accounts receivable, net		2,566,950		3,246,247
Inventories, net		446,416		928,881
Other receivables and prepaid expenses		4,232,796		4,514,434
Due from related parties		20,967,777		20,964,025
Current assets of discontinued operations, held for sale		175,950,575		144,751,290
Total current assets		223,526,319		193,879,917
Property, plant and equipment, net		2,392,429		2,376,639
Equipment deposit		35,249		35,249
Intangible assets		477,439		480,690
Long-term investments		11,660,368		11,912,956
Goodwill		27,031,492		27,031,492
TOTAL ASSETS	$	265,123,296	$	235,716,943
LIABILITIES AND EQUITY
Current liabilities
Short-term loans		3,600,596		3,519,999
Accounts payable		4,964,714		6,409,278
Accrued expenses and other payables		3,983,448		3,814,647
Purchase deposit from buyer		8,740,490		8,740,490
Taxes payable		22,457		22,334
Due to related parties		8,152,524		9,889,037
Warrant liability		13,715		7,340
Current liabilities of discontinued operations		169,860,070		138,348,859
Total current liabilities		199,338,014		170,751,984
Long-term loans		1,863,897		-
Long-term notes payables		317,500		317,500
TOTAL LIABILITIES		201,519,411		171,069,484
COMMITMENTS AND CONTINGENCIES
EQUITY
STOCKHOLDERS' EQUITY
Preferred stock: authorized 1,000,000 shares, par value $0.01 none      issued and outstanding		-		-
Common stock: authorized 60,000,000 shares, par value $0.01,      29,526,848 shares issued and 29,525,168 shares outstanding at      March 31, 2013; 29,320,848 shares issued and 29,319,168 shares      outstanding at December 31, 2012.		295,252		293,192
Treasury shares: 1,680 shares at cost		(7,322)		(7,322)
Additional paid-in capital		51,300,193		51,108,409
Statutory surplus reserve		702,539		702,539
Accumulated other comprehensive income		4,390,530		4,058,657
Accumulated deficit		(5,561,303)		(4,098,798)
TOTAL STOCKHOLDERS' EQUITY		51,119,889		52,056,677
Non-controlling interest		12,483,996		12,590,782
TOTAL EQUITY	$	63,603,885	$	64,647,459
TOTAL LIABILITIES AND EQUITY	$	265,123,296	$	235,716,943

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

2

ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

		FOR THE THREE MONTHS ENDED MARCH 31,
		2013		2012
		(Unaudited)		(Unaudited)
Net revenues	$	7,365,230	$	16,082,335
Cost of sales		5,893,746		13,338,448
Gross profit		1,471,484		2,743,887
Operating expenses:
Selling, general, and administrative expenses		2,098,166		2,470,904
Non-cash equity-based compensation		193,844		434,249
Total operating expenses		2,292,010		2,905,153
Loss from operations		(820,526)		(161,266)
Other income and (expenses)
Interest income		-		6
Interest expense		(219,826)		(111,117)
Change in fair value of warrants		(6,375)		(116,953)
Investment loss		(252,588)		-
Other income (expense), net		7,874		4,091
Other income (expense), net		(470,915)		(223,973)
Loss before income taxes and noncontrolling interest		(1,291,441)		(385,239)
Income taxes for continuing operations		2,250		-
Loss before noncontrolling interest from continuing operations		(1,293,691)		(385,239)
less: (Loss) income attributable to noncontrolling interest of continuing operations		(151,873)		239,742
Loss attributable to Zoom Technologies, Inc. from continuing operations		(1,141,818)		(624,981)
Discontinued Operations:
(Loss) income from discontinued operations, net of tax		(358,568)		1,087,685
less: Loss attributable to noncontrolling interest from discontinued operations		(37,881)		(62,228)
(Loss) income attributable to Zoom Technologies, Inc. from discontinued operations		(320,687)		1,149,913
Net (loss) income attributable to Zoom Technologies, Inc.	$	(1,462,505)	$	524,932
Basic and diluted loss per common share from continuing operations:
Basic	$	(0.04)	$	(0.03)
Diluted	$	(0.04)	$	(0.03)
Basic and diluted (loss) income per common share from discontinued operations:
Basic	$	(0.01)	$	0.05
Diluted	$	(0.01)	$	0.05
Basic and diluted (loss) income per common share
Basic	$	(0.05)	$	0.02
Diluted	$	(0.05)	$	0.02
Weighted average common shares outstanding:
Basic		29,467,946		23,958,988
Diluted		29,467,946		24,020,832

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

3

ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

		FOR THE THREE MONTHS ENDED MARCH 31,
		2013		2012
		(Unaudited)		(Unaudited)
Net (loss) income attributable to Zoom Technologies, Inc.	$	(1,462,505)	$	524,932
Net (loss) income attributable to noncontrolling interest	$	(189,754)	$	177,514
Other comprehensive income:
Foreign currency translation gain - Zoom Technologies, Inc.		331,873		309,578
Foreign currency translation gain - noncontrolling interest		82,968		21,273
Comprehensive (loss) income Zoom Technologies, Inc.	$	(1,130,632)	$	834,510
Comprehensive (loss) income noncontrolling interest	$	(106,786)	$	198,787

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

4

ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

		FOR THE THREE MONTHS ENDED MARCH 31,
		2013		2012
		(Unaudited)		(Unaudited)
Cash flows from operating activities:
Loss before noncontrolling interest from continuing operations	$	(1,293,691)		(385,239)
Adjustments to reconcile income including non-controlling interest to cash provided by (used in) operating activities:
Depreciation and amortization		75,024		94,297
Non-cash equity-based compensation		193,844		434,249
Provision on accounts receivable		45,000		9,047
Loss on investment in joint venture		252,588		-
Fair value adjustment on warrants		6,375		116,953
Changes in operating assets and liabilities:
Accounts receivable		634,297		(5,386,470)
Inventories		482,465		12,531
Advances to suppliers		(33)		353,231
Prepaid expenses and other assets		144,239		(13,827)
Accounts payable		(1,444,778)		976,077
Related parties-net		(1,521,793)		(2,738,781)
Accrued expenses and other current liabilities		306,338		4,648,599
Net cash used in operating activities		(2,120,125)		(1,879,333)
Cash flows from investing activities:
Purchase of property and equipment and other long-term assets		(87,563)		(111,865)
Net cash used in investing activities		(87,563)		(111,865)
Cash flows from financing activities:
Proceeds from loans		2,500,000		1,697,306
Repayment of loans		(555,506)		-
Receipt from related parties		45,080		215,751
Payments to related parties		-		(125,000)
Net cash provided by financing activities		1,989,574		1,788,057
Effect of exchange rate changes on cash & equivalents		33		89
Net decrease in cash and equivalents		(218,081)		(203,052)
Cash and equivalents, beginning of period		430,746		214,684
Cash and equivalents, end of period	$	212,665	$	11,632
SUPPLEMENTARY DISCLOSURES:
Interest paid	$	219,826	$	-
Income tax paid	$	2,250	$	-

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

5

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
ZOOM TECHNOLOGIES, INC., AFFILIATES & SUBSIDIARIES
MARCH 31, 2013 AND 2012

NOTE 1 - ORGANIZATION AND NATURE OF BUSINESS OPERATIONS

The Acquisition

Zoom Technologies, Inc. (the "Company") was incorporated in the state of Delaware on February 29, 2002. Until September 22, 2009, the Company was engaged in the design, production, marketing, sales, and support of broadband and dial-up modems, Voice over Internet Protocol or "VoIP" products and services, Bluetooth® wireless products, and other communication-related products.

On September 22, 2009, the Company consummated a share exchange transaction and acquired all the outstanding shares of Gold Lion Holding Limited ("Gold Lion"), a company incorporated in the British Virgin Islands ("BVI"), and its subsidiaries Jiangsu Leimone Electronics Co. Ltd ("Jiangsu Leimone"), Tianjin Tong Guang Group Digital Communication Co., Ltd ("TCB Digital") both incorporated in the (People's Republic of China, ("PRC"), and Profit Harvest Corporation Limited ("Profit Harvest") incorporated in Hong Kong. In connection with the share exchange transaction, the Company spun off its then-existing business to its stockholders, by distributing and transferring all assets and liabilities to its then subsidiary, Zoom Telephonics, Inc., and issuing shares of its then operating subsidiary as a dividend to its stockholders. The subsidiaries of Gold Lion were engaged in the manufacture design, sale and manufacture of mobile devices and handsets in China.

On June 1, 2010, Zoom pursuant to a share exchange agreement dated April 29, 2010, acquired 100% of the shares of Silver Tech Enterprises Ltd, incorporated in the BVI and its wholly owned subsidiaries Ever Elite Corporation Limited, incorporated in Hong Kong, and Nollec Wireless Company Ltd., ("Nollec Wireless"), incorporated in the PRC. Nollec Wireless is engaged in mobile phone and wireless communication device design.

On January 4, 2011, pursuant to a share exchange agreement, the Company via Profit Harvest acquired 100% ownership of Celestial Digital Entertainment, Ltd., ("CDE") a mobile platform video game development company based in Hong Kong.

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"), one of the largest wholesale distributors and direct retailers of T-Mobile products in the United States. Subsequent to the purchase of the 50% stake in ownership from CNCG, the Company increased its stake in Portables to 50.1% by injecting additional capital.

6

Disposition

On December 31, 2012, Zoom Technologies, Inc. ("Zoom" or the "Company") entered into a Share Purchase Agreement (the "SPA") with Beijing Zhumu Culture Communication Company, Ltd. (the "Purchaser"), a PRC company that provides services to the telecommunication industry. Pursuant to the SPA, the Company agreed to sell (the "Subsidiary Sale") to the Purchaser all the equity interests the Company holds in its China based subsidiaries (except for SpreadZoom Technologies Co., Ltd. ("SpreadZoom") as mentioned below), which include 100% of the outstanding equity interest of Ever Elite Corporation Limited, an intermediary holding company incorporated in Hong Kong, and its wholly owned subsidiary, Beijing Nollec Wireless Company ("Nollec"), 80% of the outstanding equity interest of Tianjin Tongguang Group Digital Communication Company, Ltd. ("TCBD"), 100% of the outstanding equity interest of Profit Harvest Corporation, Ltd. ("Profit Harvest"), and 100% of the outstanding equity interest of Celestial Digital Entertainment, Ltd. ("CDE"). As consideration for the Subsidiary Sale, the Purchaser agreed to pay to the Company RMB 200 million (approximately US$31.7 million) (the "Purchase Price"), subject to adjustment pending an appraisal by an independent third party appraiser. The Company on October 24, 2012 received approximately $12.6 million (RMB 80 million) less and bank charges; the Company on November 5, 2012, received $19.1 million (RMB 120 million) less transaction fees and bank charges. As of the date of this current report, the Purchaser has remitted the entire amount of RMB 200 million to the Company. A portion of the funds, approximately RMB 80 million, was released to the Company to use; accordingly, in the normal course of business, the Company deployed those funds to SpreadZoom and Tianjian Leimone as detailed in "Note 11 - Related Party Transactions". Upon the final closing of the Subsidiary Sale, which will occur 30 days after the Company receives all the requisites corporate and regulatory approvals with respect to the Subsidiary Sale, the balance of the escrowed funds will be released to the Company.

The Company's ownership interest in SpreadZoom, which owns and operates mobile phone manufacturing facilities in Tianjin, is not part of the Subsidiary Sale. In addition, the Company will, through Portables Unlimited, LLC, its U.S. based subsidiary, continue to operate the wholesale distributor business for T-Mobile products and services in the United States. The Company may make contracts with the Purchaser for future businesses.

The closing of the sale of Profit Harvest and CDE occurred on December 31, 2012; the closing of the sale of Ever Elite and Nollec occurred on April 5, 2013; the sale of TCBD is scheduled to close in the second quarter of 2013.

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

Principles of Consolidation

The Company's accompanying condensed consolidated balance sheet at March 31, 2013 and December 31, 2012, include the accounts of Gold Lion Holding Ltd and its wholly owned subsidiary Jiangsu Leimone, its 100%-owned subsidiary Silver Tech, and its specifically formed, wholly owned subsidiary, Zoom Sub which accounted for its ownership of Portables as 50.1%, as continuing operations. The Company's condensed consolidated balance sheet also included the accounts of TCB Digital for which the Company owns 80% indirectly through its indirectly held, 100% of Ever Elite which wholly owns Nollec Wireless, indirectly held through Silver Tech, all of which have been classified as discontinued operations held for sale.

The Company's condensed consolidated results of operations for the three months ended March 31, 2013 from continuing operations included the results of Gold Lion, Silver Tech, Jiangsu Leimone, Zoom Sub, and Portables; results of operations from Ever Elite, Nollec Wireless, and TCB Digital have been presented as discontinued operations. The Company's condensed consolidated results of operations for the three months ended March 31, 2012 from continuing operations included the results of Gold Lion, Silver Tech, Jiangsu Leimone, Zoom Sub, and Portables; results of operations from Profit Harvest, CDE, Ever Elite, Nollec Wireless, and TCB Digital have been presented as discontinued operations.

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 a loss on investment in SpreadZoom for $252,588 for the three months ended March 31, 2013. Refer to "Note 22 - Equity Method Investee: SpreadZoom" for details.

7

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." Management believes that the same is true at March 31, 2013 (See "Note 21 - Commitments" for details).

Based on this assessment, management believes that AUM is not a VIE because the Company does not make decisions that have significant impact on the performance of AUM; therefore, it 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 "non-controlling interest". AUM guarantees $1.7 million of the $3 million line of credit with M&T Bank for Portables Unlimited, LLC.

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). The functional currency of the Company's continuing operation Jiangsu Leimone and its equity investment SpreadZoom is the Chinese Renminbi ("RMB"). The functional currency of the Company's continuing operations Portables and Zoom Sub is United States Dollars ("USD" or "$"). The functional currency of the Company's discontinued operations, TCB Digital and Nollec Wireless is the RMB. The functional currency of the Company's discontinued operations Ever Elite and CDE is Hong Kong Dollars ("HKD"). The accompanying consolidated financial statements are translated and presented in the reporting currency of USD.

The interim condensed consolidated financial information as of March 31, 2013 and for the three months ended March 31, 2013 and 2012 have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures, which are normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The interim consolidated financial information should be read in conjunction with the financial statements and the notes thereto, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, previously filed with the SEC.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company's consolidated financial position as of March 31, 2013, its consolidated results of operations for the three months ended March 31, 2013 and 2012, and its consolidated cash flows for the three months ended March 31, 2013 and 2012, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Use of Estimates

The preparation of condensed 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", 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.

8

Foreign Currency Translation

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 Financial Accounting Standards ("FASB") Accounting Standards Codification ("ASC") Topic 810 with the RMB as the functional currency for the Chinese subsidiaries. According to ASC 810, 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 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

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, Hong Kong and the United States. Cash accounts in China and Hong Kong 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 March 31, 2013, management concluded that the allowance for doubtful accounts, as disclosed in "Note 5 - Accounts Receivable" was 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.

9

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. See "Note 8 - Property, Plant and Equipment" for details.

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. There have not been material amounts of capitalized interest for the three months ended March 31, 2013.

Impairment of Long-lived Assets

In accordance with ASC 360, "Property, Plant and Equipment", 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 last performed annual reviews of its long-lived assets at December 31, 2012 and 2011. In 2012, the Company determined that certain fixed assets and goodwill were impaired based on the disposal of certain operations. The Company has determined there have not been any triggering events during the three months ended March 31, 2013 that would require the Company to perform review for impairment of its 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", 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. The Company recorded impairment of goodwill related to the following subsidiaries: Jiangsu Leimone, CDE, and Silver Tech. See "Note 3 - Merger and Acquisitions" for details.

Revenue Recognition

The Company recognizes sales in accordance with 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,

10

(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 discontinued operation, 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 discontinued operation 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. 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.

11

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.

Uncertain Tax Positions

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes. There were no uncertain tax positions in 2012 and 2011. The Company's evaluation of uncertain tax positions was performed for the tax years ended December 31, 2009 and forward, the tax years which remain subject to examination as of March 31, 2013.

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", 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 (Loss) Per Share

The Company reports earnings (loss) per share in accordance with the provisions of ASC 260 "Earnings Per Share". 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. When the Company's results from operations are a net loss, dilutive securities are not included in diluted loss per share because they would be considered anti-dilutive.

The basic and diluted loss per common share from continuing operations for the periods ended March 31, 2013 and 2012 were $0.04 and $0.03, respectively. The basic and diluted loss per common share from discontinued operations was $0.01 for the period ended March 31, 2013 and the basic and diluted income per common share from discontinued operations was $0.05 for the period ended March 31, 2012.

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Fair Values of Financial Instruments

ASC 820 "Fair Value Measurements and Disclosures", 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 March 31, 2013 and December 31, 2012 are as follows:

		Carrying Value		Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
		2013		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	212,665	$	212,665	$	-	$	-
Restricted cash	$	19,149,140	$	19,149,140	$	-	$	-
Warrants	$	13,715	$	-	$	13,715	$	-
		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	$	430,746	$	430,746	$	-	$	-
Restricted cash	$	19,044,294	$	19,044,294	$	-	$	-
Warrants	$	7,340	$	-	$	7,340	$	-

The Company's financial instruments include cash and equivalents, restricted cash, accounts receivable, notes receivables, other receivables, accounts payable, notes payable, and warrants. 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. 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 March 31, 2013 and December 31, 2012, 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.

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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 for reporting non-controlling interest ("NCI") in a subsidiary. As a result, the Company reports NCI as a separate component of 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.

Statement of Cash Flows

In accordance with ASC 230, "Statement of Cash Flows", 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 February 2013, the Financial Accounting Standards Board ("FASB") issued amendments under ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Topic 220). The amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. We will adopt these amendments in the fourth quarter of 2013.

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. As of December 31, 2012, the Company has taken action to dispose of Silver Tech's operating subsidiaries Ever Elite and Nollec; accordingly, all goodwill related to Silver Tech has been written off.

The Company acquired 100% ownership of CDE on January 4, 2011. As of January 4, 2011, the net liabilities of CDE were $43,409. The purchase consideration was $1,818,000 which resulted in goodwill of $1,861,409. As of December 31, 2012, as part of the Company's disposal of Profit Harvest the Company has indirectly disposed of CDE, accordingly, all of the goodwill related to CDE has been written off.

The Company acquired 55% ownership of Portables on October 11, 2011. As of October 11, 2011, Portables' liabilities exceeded its assets by $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 Company's ownership in Portables has been reduced to 50.1% as of December 31, 2012.

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The following table summarizes goodwill as of March 31, 2013 and December 31, 2012 resulting from the acquisitions of Jiangsu Leimone, Silver Tech, and CDE:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Jiangsu Leimone	$	103,057	$	103,057
Silver Tech		8,395,840		8,395,840
CDE		1,861,409		1,861,409
Portables		27,031,492		27,031,492
Total		37,391,798		37,391,798
Less: Impairment		(10,360,306)		(10,360,306)
Total goodwill	$	27,031,492	$	27,031,492

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.

NOTE 4 - RESTRICTED CASH

Restricted cash was part of the funds deposited with the Company for sale to Beijing Zhumu Culture Communication Company, Ltd. of Profit Harvest, CDE, Ever Elite, Nollec Wireless, and TCB Digital. The funds become unrestricted upon closing of the disposition transaction.

NOTE 5 - ACCOUNTS RECEIVABLE

As of March 31, 2013 and December 31, 2012, the Company's accounts receivable consisted of the following:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Accounts receivable	$	3,402,407	$	4,032,656
less: Allowance for doubtful accounts		(835,457)		(786,409)
Accountants receivable, net	$	2,566,950	$	3,246,247

NOTE 6 - INVENTORIES

Inventories, by major categories, as of March 31, 2013 and December 31, 2012 were as follows:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Finished goods	$	446,416	$	928,881
less: Write down for obsolete inventories		-		-
Inventories, net	$	446,416	$	928,881

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NOTE 7 - OTHER RECEIVABLES AND PREPAID EXPENSES

As of March 31, 2013 and December 31, 2012, the Company's other receivables and prepaid expenses consisted of the following:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Deposit	$	93,353	$	90,091
Advance to employees		522		-
Prepaid expenses		188,840		116,381
Others		3,950,081		4,307,962
Total other receivables and prepaid expenses	$	4,232,796	$	4,514,434

The balances of $3,950,081 and $4,307,962 labeled as "Others" as of March 31, 2013 and December 31, 2012 were primarily comprised of receivables of $3,949,693 and $4,297,253 owed to the Company by Profit Harves that arose in the normal course of business where the Company paid for expenses and professional fees on behalf of Profit Harvest. Profit Harvest was previously a subsidiary of the Company. In 2012, it was sold to Beijing Zhumu Culture Communication Company, Ltd. These amounts are expected to be recovered by the Company.

NOTE 8 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of March 31, 2013 and December 31, 2012 consisted of the following:

	Estimated	March 31,		December 31,
	Useful Lives	2013		2012
		(Unaudited)
Machinery and equipment	4-6 years	$	1,109,206	$	1,103,169
Electronic equipment	4-6 years		90,138		89,645
Transportation equipment	4-6 years		50,525		50,248
Leasehold improvements	5 years		2,864,328		2,791,278
Computer equipment	4-6 years		255,406		255,406
Office equipment	4-6 years		271,453		256,828
Total			4,641,056		4,546,574
less:Accumulated depreciation			(2,248,627)		(2,169,935)
Property, plant and equipment, net		$	2,392,429	$	2,376,639

Depreciation for the three months ended March 31, 2013 and 2012 was $71,773 and $91,046 respectively.

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NOTE 9 - INTANGIBLE ASSETS

As of March 31, 2013 and December 31, 2012, the Company's intangible assets were summarized as follows:

	Estimated	March 31,		December 31,
	Useful life	2013		2012
		(Unaudited)
Domain name, logo and trade mark	Indefinite	$	349,600	$	349,600
Customer list	15 years		1,269,416		1,269,416
Total cost			1,619,016		1,619,016
less: Accumulated amortization			(1,141,577)		(1,138,326)
Intangible assets, net		$	477,439	$	480,690

Intangible assets are stated at cost less accumulated amortization. The Company acquired domain name "zoom.com" and related logo and 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 three months ended March, 2013 and 2012 was $3,251 and $3,251 respectively. The estimated amortization for the next five years as of March 31, 2013 and thereafter is expected to be as follows by years:

Remainder of 2013	$	5,488
2014		8,739
2015		8,739
2016		8,739
2017		8,739
Thereafter		87,395
Total	$	127,839

NOTE 10 - SHORT-TERM LOANS

Short-term loans are due to various financial institutions which are normally due within one year. As of March 31, 2013 and December 31, 2012, the Company's short term loans consisted of the following:

	March 31,		December 31,
	2013		2012
	(Unaudited)
M&T Bank line of credit for up to $3.0 million is collateralized by real property, a certificate of deposit, and guarantees of Portables Unlimited, Inc. (the 49.9% owner of Portables); at 1 month LIBOR plus 3.00%.	$	2,488,424	$	2,994,999
SKAVYNIA HOLDINGS LTD		525,000		525,000
M&T Bank short term portion of $2.5 million loan at 1-month LIBOR plus 3.50% due in 4 years from February 5, 2013, amortizing monthly.		587,172		-
Total	$	3,600,596	$	3,519,999

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NOTE 11 - RELATED PARTY TRANSACTIONS

Due from related parties

As of March 31, 2012 and December 31, 2012, due from related parties were:

	March 31,		December 31,
Due from related parties	2013		2012
	(Unaudited)
Beijing Leimone Shengtong Wireless Technology Co., Ltd.	$	71,809	$	91,571
Leimone (Tianjin) Industrial Co., Ltd.		11,075,639		11,034,982
Shenzhen Leimone		344,414		355,564
Raja R Amar - Chief Executive Officer of Portables		429,877		429,877
Spreadzoom		9,046,038		9,046,038
Others		-		5,993
Total due from related parties	$	20,967,777	$	20,964,025

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. The balances are neither collateralized nor personally guaranteed by Gu.

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. As of March 31, 2013 and December 31, 2012, the amounts due from Tianjin Leimone of $11,075,639 and $11,034,982 represented advances for purchases arising in the normal course of business for transaction prior to December 31, 2012. The difference in balances between March 31, 2013 and December 31, 2012, represents the fluctuation of exchange rates between the functional and reporting currency.

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. $344,414 and $355,564 as of March 31, 2013 and December 31, 2012 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 difference in the balances from March 31, 2013 and December 31, 2012 represents payment made by Shenzhen Leimone to the Company to reduce its outstanding balance.

The amount of $429,877 due from Raja R Amar at March 31, 2013 and December 31, 2012, is related to loans made to Raja R Amar by Portables prior to its acquisition by Zoom. The loans are interest free and are unsecured.

The balance due from SpreadZoom represents an advance to SpreadZoom for it to purchase components to manufacture handsets in the normal course of business. The advance bears no interest, and is uncollateralized. The difference in balances between March 31, 2013 and December 31, 2012, represents the fluctuation of exchange rates between the functional and reporting currency. Such advances are only expected to occur during these early setup stages of the business because once the company becomes fully capitalized it will have sufficient working capital to procure components, and advances will be reimbursed in to the Company.

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Due to related parties

As of March 31, 2013 and December 31, 2012, due to related parties were:

	March 31,		December 31,
Due to related parties	2013		2012
	(Unaudited)
Mr. Lei Gu	$	2,901,283	$	2,901,283
Anthony Chan		397,901		358,814
Beijing Leimone Shengtong Cultural Development Co., Ltd.		102,500		102,500
Wireless Holdings of Northeast		117,600		117,600
Portables Unlimited International		1,304,864		3,779,864
Portables Unlimited, Inc.		2,559,112		2,559,112
AUM Realty, Inc.		63,364		69,864
Total due to related parties	$	7,446,624	$	9,889,037

Mr. Gu provides fund to the Company with no interest and are due on demand. As of March 31, 2013 and December 31, 2012, the balances of funds provided by Gu was $2,901,283 and $2,901,283 respectively.

Mr. Anthony Chan provides fund to the Company with no interest and are due on demand. As of March 31, 2013 and December 31, 2012, the balances of funds provided by Chan were $397,901 and $358,814, respectively.

In January 2011, the Portables entered into a line of credit agreement with a Portables Unlimited International for a total of $5,000,000. Interest on the line is due and payable on demand at 5.6%. The unpaid balance as of March 31, 2013 and December 31, 2012 was $1,304,864 and $3,779,864 respectively.

Portables received advances from its non-controlling owner, Portables Unlimited, Inc., totaling $3,265,012 and $2,559,112 at March 31, 2013 and December 31, 2012. These advances carry an interest rate of 12% per annum and are due on demand.

AUM Realty, Inc. is controlled by certain member of Portables. The outstanding balance represents outstanding rent owed to AUM. The amounts are due upon demand. Refer to "Note 21 - Commitments" for more details.

NOTE 12 - LONG-TERM NOTES PAYABLE

The note was issued to CNCG as part of its acquisition of Portables, with an original face amount of $500,000, term from October 11, 2011 to October 11, 2014, and annual interest rate of 2%. On October 5, 2012, the Company repaid $182,500 of the outstanding principle.

NOTE 13 - LONG-TERM LOANS

On February 5, 2013, Portables entered into a loan agreement with M&T Bank for a monthly amortizing loan for $2,500,000 with an interest rate of 1-month LIBOR plus 3.50%. The loan matures in four years from date of inception.

As of March 31, 2013, the outstanding balance of the loan is $2,451,069 of which $587,172 has been classified as short term and $1,863,897 has been classified as long term.

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NOTE 14 - STOCKHOLDERS' EQUITY

COMMON STOCK

On January 25, 2013 the Company issued 186,000 shares of its common stock to its Board of Directors for the service period from January 1, 2013 to December 31, 2013. These shares were valued at $0.65 per share which was the closing price on the date of Board Approval. The Company recorded non-cash compensation expense of $30,225 for the three months ended March 31, 2013. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $90,675.

On January 25, 2013 the Company issued 20,000 shares of its common stock to consultants for the service period from January 1, 2013 to December 31, 2013. These shares were valued at $0.65 per share which was the closing price on the date of Board Approval. The Company recorded non-cash compensation expense of $3,250 for the three months ended March 31, 2013. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $9,750.

On November 12, 2012, the Company issued 100,000 shares of its common stock to consultants for the service period from November 1, 2012 to October 31, 2013. These shares were valued at $0.80 per share which was the closing price on the date of Board Approval. The Company recorded non-cash compensation expense of $20,000 for the three months ended March 31, 2013. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $46,667.

On October 8, 2012, the Company issued 30,000 shares of its common stock to legal counsel for services rendered and a consultant for the service period from October 1, 2012 to September 30, 2013, respectively. These shares were valued at $0.90 per share which was the closing price on the date of Board Approval. The Company recorded non-cash compensation expense of $6,750 for the three months ended March 31, 2013. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $13,500.

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 October 4, 2011, the Board of Directors approved 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. The Company recorded non-cash compensation expense of $79,050 for the three months ended March 31, 2013. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $632,400.

On November 29, 2011, the BOD approved 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. For the three months ended March 31, 2013, the Company recorded non-cash compensation expense of $19,750. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $52,667.

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NOTE 15 - WARRANTS

The Company granted Series A, B, C, D and E warrants to the accredited investors as part of its private placement 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.

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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 three months ended March 31, 2013:

			Weighted		Aggregate
	Number of		Average Exercise		Intrinsic
	Warrants		Price		Value
Balance, December 31, 2012	8,638,604	$	2.30	$	-
Granted	-		-
Lapsed	-		-
Exercised	-		-
Cancelled	-		-
Balance, March 31, 2013	8,638,604	$	2.30	$	-

The following presents warrants summary as of March 31, 2013:

	Warrants Outstanding				Warrants Exercisable
		Weighted Average		Weighted Average			Weighted Average
	Number	Remaining		Exercise	Number		Exercise
	Outstanding	Contractual Life		Price	Exercisable		Price
Warrants	8,638,604	1.84 years	$	2.30	8,638,604	$	2.30

The Company has accounted for all of the outstanding Series A, C, F, G, and related placement warrants as liabilities. The Company assessed the value of these warrants by using the binomial lattice model. When the Company valued the warrants it used the following assumptions as part of inputs into the valuation model. US treasury rates as measure of the risk free rate of return. The Company also used the mean of the annualized standard deviation of the log normal returns of comparable companies in the same line of business as measure of volatility. The Company controls whether dilution may occur, so it did not add additional assumptions regarding dilutive events into the future discrete outcomes found in the model. The warrants values were adjusted for the dilutive effect as ratio of the outstanding common stock at the time of measurement. In determining the probabilities of an up movement or down movement in the discrete outcomes, as well as the related magnitude of such up or down movements, the Company used a Cox-Ross-Rubenstein approach in applying the binomial lattice model.

NOTE 16 - STOCK OPTIONS

The 2009 Equity Incentive Compensation Plan

On October 11, 2011, the Company's BOD approved of the granting of 1,500,000 options to employees and executives of Portables Unlimited LLC, the Company's newly acquired subsidiary, with the exercise prices of $1.83 and $3.75 per share, with 25% of the options vesting immediately and the balance equally per quarter over three years. These options expire in four years.

On October 8, 2012, the Company's BOD approved of the re-pricing of 1,200,000 out of the above-mentioned 1,500,000 options from the exercise price of $3.75 to $1.83 per share.

On October 26, 2011, the Company's BOD approved of the granting of 10,000 options to its new independent director, with the exercise price of $2.04 per share, vesting over one year and expiring in two years.

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On November 29, 2011, the Company's BOD approved of the granting of 300,000 options to a consultant, with the exercise price of $1.00 per share, with 1/3 vesting immediately and the balance equally over two quarters. These options expire in two years.

On May 22, 2012, the Company issued 302,800 shares of its common stock to its employees, 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, which is considered the market price at that time. 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 was no extra non-cash compensation expense for the three months ended March 31, 2013.

The following summary represents options activity during the three months ended March 31, 2013 under the New Plan.

	Under New Plan	Weighted Average Exercise Price		Aggregate Intrinsic Value
Balance, December 31, 2012	1,810,000	$	1.69	$	-
Granted	100,000		0.65
Lapsed	-		-
Exercised	-		-
Cancelled	-		-
Balance, March 31, 2013	1,910,000	$	1.64	$	-

The following represents options summary as of March 31, 2013 under the New Plan.

	Options Outstanding				Options Exercisable
		Weighted Average		Weighted Average			Weighted Average
	Number	Remaining		Exercise	Number		Exercise
	Outstanding	Contractual Life		Price	Exercisable		Price
Options	1,910,000	2.30 years	$	1.64	1,060,000	$	1.60

For the re-pricing of the 1,200,000 options on October 8, 2012, from the exercise price of $3.75 to $1.83 per share, the Company determined the incremental fair value of $0.058 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 $0.90, expected life of 3 years, volatility of 39.22% and discount rate of 0.35%.

On November 29, 2011, the Company's BOD approved of the granting of 300,000 options to a consultant, with the exercise price of $1.00 per share, with 1/3 vesting immediately and the balance equally over two quarters. These options expire in two years.

On February 14, 2013, the Company's BOD approved of the granting of 100,000 options to an employee with an exercise price of $0.65, with monthly vesting beginning in February 2013. The options expire four years from the date of grant. The Company determined the grant date fair value of 100,000 options of $0.17 per share which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $0.65 per share, exercise price of $0.65 per share, expected life of 4.00 years, volatility of 32.48% and discount rate of 0.64%.

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The Company recorded $34,819 of non-cash compensation expense related to stock options for the three months ended March 31, 2013. As of March 31, 2013, there was $247,074 of non-cash compensation to be recorded up to 2014 based on options valued at grant date.

NOTE 17 - 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 $1.89 million and $1.38 million at March 31, 2013 and December 31, 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.

The discontinued operations of TCB Digital and Nollec Wireless, and the continuing operation of Jiangsu Leimone 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.  2012, is the last year that Jiangsu Leimone will afforded the 50% exemption from PRC incomes taxes.

SpreadZoom in subject to 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 profit that is reported in the statutory financial statements after appropriate tax adjustments.

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.

Nollec had pre-tax loss for the three months ended March 31, 2013. The Company's net income and earnings per share had no effect due to its income tax exemption.

The discontinued and disposed operations 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 graduated statutory tax rate of 34%.

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U.S. NOL carryforwards are only those arising after September 22, 2009, which was the date when a more-than-50% ownership change occurred.

The following table summarizes the temporary differences which result in deferred tax assets and liabilities as at March 31, 2013 and December 31, 2012:

		March 31,		December 31,
		2013		2012
Deferred tax assets:
Net operating loss	$	310,093	$	511,035
less: Valuation allowance		(310,093)		(511,035)
Total deferred tax assets		-		-
Deferred tax liabilities:		-		-
Deferred tax assets, net	$	-	$	-

The following table reconciles the U.S. statutory rates to the Company's effective tax rates for the years ended March 31, 2013 and 2012:

	For the Three Months Ended March 31,
	2013	2012
US statutory rates	34.00%	34.00%
Tax rate difference	-1.98%	-2.12%
Valuation allowance	-24.01%	-74.63%
State taxes	-0.17%	0.00%
Non-taxable income of pass through entity	-8.01%	42.75%
Tax per financial statements	-0.17%	0.00%

NOTE 18 - 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.

As of March 31, 2013 and December 31, 2012, the Company's statutory surplus reserve was $702,539 and $702,539 respectively.

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NOTE 19 - CONCENTRATION DISCLOSURE

1. During the reporting periods, the customers accounting for 10% or more of the Company's consolidated sales was T Mobile USA.
2. During the reporting periods, the suppliers accounting for 10% or more of the Company's consolidated purchases from continuing operations was T-Mobile USA.

NOTE 20 - 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 s

• 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 had outstanding warrants that are accounted for as derivative securities. Their values are re-measured at each reporting period. The quoted U.S. treasury rates with the maturities similar to those of the warrants are used as inputs in calculating their value; accordingly, the value of the warrants, are subject to fluctuations interest rates.

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NOTE 21 - COMMITMENTS

Operating lease commitments

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. A member of the Company, 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 Real Estate Property Tax payments. In addition, AUM borrowed $1,628,000 from a bank secured by a first mortgage on the property. This loan is guaranteed by the Company's member. As of March 27, 2012 the Chase Mortgage was paid in full in order for the property to be used as collateral in the amount of $1.7M for a Line of Credit for the Company. The mortgage balance that resulted in this transaction is now due to Portables Unlimited, LLC in the amount of $885,000. AUM continues to pay down this balance at $15,000 per month as per the agreement.

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

The Company also leases two other warehouses and 13 retail stores and kiosks. These leases require monthly payments and expire at various dates through 2017. The Company has operating agreements in place with the 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.

The future minimum annual rental commitments as of March 31, 2013 are as follows:

Year
Remainder of 2013	$	831,719
2014		602,966
2015		225,255
Total	$	1,659,940

NOTE 22 - EQUITY METHOD INVESTEE: SPREADZOOM

On May 10, 2012, the Company along with Spreadtrum Communications (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 December 31, 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. Management and control of the business have not been fully determined. The Company has used the equity method to account for its investment in SpreadZoom and has recorded a loss from investment of $252,588 for the three months ended March 31, 2013.

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		March 31, 2013
Financial Position of SpreadZoom		(Unaudited)
Current assets	$	41,454,107
Non-current assets		2,422,513
Total assets		43,876,620
Current liabilities		27,609,965
Non-current liabilities		-
Total liabilities		27,609,965
Net ssset value	$	16,266,655
		For the Three Months
Results of Operations of SpreadZoom		Ended March 31, 2013
		(Unaudited)
Net revenues	$	18,106,466
Cost of goods sold		17,923,971
Gross profit		182,495
Operating expenses		715,903
Operating loss		(533,408)
Other income (expenses), net		185
Income (loss) before taxes		(533,223)
less: Provision for income taxes		-
Net loss	$	(533,223)
Investment loss attributable to Zoom Technologies, Inc.	$	(252,588)

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NOTE 23 - DISCONTINUED OPERATIONS

On December 31, 2012, the Company announced its plan to dispose of certain assets in order to raise cash, and redeploy cash for investment in North America.

Results of Operations	For the Three Months Ended March 31,
	2013		2012
	(Unaudited)		(Unaudited)
Net revenues		42,257,043		75,019,208
Cost of sales		40,241,554		71,448,789
Gross profit		2,015,489		3,570,419
Operating expenses		1,650,821		1,854,853
Operating income		364,668		1,715,566
Other income (expenses), net		(702,175)		(280,971)
(Loss) income before taxes from discontinued operations		(337,507)		1,434,595
less: Provision for income taxes		21,061		346,910
(Loss) income from discontinued operations, net of tax		(358,568)		1,087,685
Basic and diluted (loss) income per common share from discontinued operations:
Basic		(0.01)		0.05
Diluted		(0.01)		0.05

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Financial Position	March 31,		December 31,
	2013		2012
	(Unaudited)
Cash and equivalents	$	4,522,371	$	3,245,529
Restricted cash		88,341,386		64,467,142
Accounts receivable, net		35,050,193		35,642,961
Inventories, net		8,033,191		7,059,829
Other receivables and prepaid expenses		10,926,755		10,580,693
Advance to suppliers		3,991,536		3,004,016
Notes receivable		1,782,855		548,218
Due from related parties		21,618,261		18,322,784
Construction in progress deposit		230,809		243,747
Property, plant and equipment, net		1,137,461		1,293,689
Intangible assets, net		315,757		342,682
Total current assets		175,950,575		144,751,290
Total Assets of Discontinued Operations	$	175,950,575	$	144,751,290
Short-term loans		25,608,946		21,187,680
Notes payable		53,427,536		28,156,022
Accounts payable		11,702,618		16,255,076
Accrued expenses and other payables		995,984		1,013,986
Advances from customers		1,943,637		1,039,775
Taxes payable		(1,545,197)		(2,341,883)
Interest payable		121,561		110,835
Dividends payable		632,352		628,890
Due to related parties		76,972,633		72,298,478
Total current liabilities		169,860,070		138,348,859
Total Liabilities of Discontinued Operations		169,860,070		138,348,859
Net Assets of Discontinued Operations	$	6,090,505	$	6,402,431

The sale of all of the business operations to Beijing Zhumu Culture Communication Company, Ltd. covered in the Share Purchase Agreement as described in "Note 1 - Organization and Nature of Business Operations" was for approximately $31.7 million (RMB 200 million) in sales proceeds. The Share Purchase Agreement covers the sale of several business operations in different jurisdictions, with differing regulatory requirements regarding the purchase and sale of businesses. The table of above details the portion of the transaction related to the sale of Profit Harvest and CDE, which closed on December 31, 2012, for proceeds of $23.0 million. The portion of the sale covered in the Share Purchase Agreement for Ever Elite and Nollec Wireless generated proceeds of $500,000. This sales transaction closed on April 5, 2013. The balance of the sales proceeds, approximately $8.2 million will be allocated to TCB Digital upon the closing of that transaction, which is expected in the second quarter of 2013.

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NOTE 24 - SUBSEQUENT EVENT

The sale of Ever Elite and Nollec Wireless closed on April 5, 2013. The sales proceed for the disposition of Ever Elite and Nollec Wireless was $500,000.

The sale of TCBD is scheduled to close in the second quarter of 2013.

NOTE 25 - CORRECTION OF ERROR FOR ACCOUNTING OF WARRANTS AS DERIVATIVE SECURITIES

Zoom management discovered during the quarter ended September 30, 2012 that in accordance with ASC 815 (formerly EITF 07-5) the Company had incorrectly accounted for warrants issued in the years 2009 and 2010 as equity.  Series A, C, F, and related placement agent warrants contained anti-dilution provision that according to the above guidance required that these derivative securities be accounted for as liabilities and marked to market at each reporting period.  The Series G, and related placement agent warrants contained change of control provisions that required that the warrants be accounted for as liabilities because the securities were no longer indexed to the Company's stock; rather there were characteristics that required them to be accounted for as standalone securities that are considered liabilities to the Company. As a result the results of operations for the three months ended March 31, 2012 for 2012 have been restated as follows:

		For the Three Months Ended March 31, 2013
		As Previously				As Currently
		Reported		Adjustment		Reported
Other income (expenses)
	Change in fair value of warrants	$	-	$	(116,953)	$	(116,953)
	Total other income and expenses		(107,020)		(116,953)		(223,973)
Net income attributable to Zoom Technologies, Inc.		$	641,885		(116,953)	$	524,932
Basic and diluted income per common share:
	Basic	$	0.03	$	(0.01)	$	0.02
	Diluted	$	0.03	$	(0.01)	$	0.02

The Company assessed the value of these warrants by using the binomial lattice model. When the Company valued the warrants it used the following assumptions as part of inputs into the valuation model: US treasury rate of 0.34% as a measure of the risk free rate of return. The Company also used the mean of the annualized standard deviation of the log normal returns of comparable companies in the same line of business as measure of volatility which was 44.42% at March 31, 2012. The Company controls whether dilution may occur, so it did not add additional assumptions regarding dilutive events into the future discrete outcomes found in the model. The warrants values were adjusted for the dilutive effect as ratio of the outstanding common stock at the time of measurement. In determining the probabilities of an up movement or down movement in the discrete outcomes, as well as the related magnitude of such up or down movements, the Company used a Cox-Ross-Rubenstein approach in applying the binomial lattice model.

These corrections will be made to applicable prior period financial information in future filings with the SEC including this filing.

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

Forward Looking Information

The following discussion contains forward-looking statements. Forward looking statements are identified by words and phrases such as "anticipate", "intend", "expect", and words and phrases of similar import. We caution investors that forward-looking statements are only predictions based on our current expectations about future events and are not guarantees of future performance. Actual results, performance or achievements could differ materially from those expressed or implied by the forward-looking statements due to risks, uncertainties and assumptions that are difficult to predict. We encourage you to read those risk factors carefully along with the other information provided in this report and in our other filings with the SEC before deciding to invest in our stock or to maintain or change your investment. We undertake no obligation to revise or update any forward-looking statement for any reason, except as required by law.

You should read this Management's Discussion and Analysis in conjunction with the Condensed Consolidated Financial Statements and Related Notes.

Corporate Overview

Zoom Technologies, Inc. (the "Company") was incorporated in the state of Delaware on February 29, 2002. Until September 22, 2009, our business was the design, production, marketing, sales, and support of broadband and dial-up modems, Voice over Internet Protocol or "VoIP" products and services, Bluetooth® wireless products, and other communication-related products.

On September 22, 2009, the Company consummated a share exchange transaction and 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"). In connection with the share exchange transaction, the Company spun off its then-existing business to its stockholders, by distributing and transferring all assets and liabilities to its then subsidiary, Zoom Telephonics, Inc., and issuing shares of its then operating subsidiary as a dividend to its stockholders.

Zoom's Operations in China

The Company, through Gold Lion, was the owner of 100% of Profit Harvest Corporation Ltd., a company organized under the laws of Hong Kong ("Profit Harvest"), which owns 100% ownership of Celestial Digital Entertainment, Ltd., a mobile platform video game development company based in Hong Kong. The Company, through Gold Lion's wholly owned subsidiary, Jiangsu Leimone, was the owner of 80% of TCB Digital, a company organized under the laws of the People's Republic of China ("PRC"). Both TCB Digital and Jiangsu Leimone were in the business of manufacturing, research and development, and sales of electronic components for third generation mobile phones, wireless communication circuitry, GPS equipment, and related software products.

The Company also held 100% ownership of Silver Tech Enterprises, Ltd ("Silver Tech"), a BVI holding company which owns 100% of Ever Elite Corporation, Ltd ("Ever Elite"), a Hong Kong holding company, which owns 100% of Nollec Wireless ("Nollec"), a mobile phone and wireless communication design company located in Beijing, China.

On October 26, 2011, the Company closed the sale of 1,676,300 shares of common stock to Spreadtrum Communications, Inc., ("Spreadtrum") in consideration of $2,900,000, pursuant to a Common Stock Purchase Agreement (the "Purchase Agreement") entered into by and among the Company, Spreadtrum and Leo (Lei) Gu (the "Key Stockholder"). 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 Purchase Agreement, Spreadtrum has 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, was added to our Board of Directors.

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In May 2012, the Company and Spreadtrum Communications (Tianjin) Co, Ltd formed a joint venture in Tianjin City, China, named SpreadZoom Technologies, Inc. ("SpreadZoom"), of which the Company holds 47.4% ownership. In connection with the joint venture, the Company contributed a manufacturing facility valued at approximately $11 million into SpreadZoom. SpreadZoom's business is focused on manufacturing and sales of mobile phones containing certain chipset products of Spreadtrum.

Subsidiary Sale

On December 31, 2012, the Company entered into a Share Purchase Agreement (the "SPA") with Beijing Zhumu Culture Communication Company, Ltd. (the "Purchaser"), a PRC company that provides services to the telecommunication industry. Pursuant to the SPA, the Company agreed to sell (the "Subsidiary Sale") to the Purchaser all the equity interests the Company holds in its China based subsidiaries (except for SpreadZoom as mentioned above), which include 100% of the outstanding equity interest of Ever Elite and its wholly owned subsidiary Nollec, 80% of the outstanding equity interest of TCB Digital, 100% of the outstanding equity interest of Profit Harvest, and 100% of the outstanding equity interest of CDE. As consideration for the Subsidiary Sale, the Purchaser agreed to pay to the Company RMB 200 million (approximately US$32 million) (the "Purchase Price"), subject to adjustment pending an appraisal by an independent third party appraiser. As of the date of this report, the Purchaser has remitted the entire amount of RMB 200 million to the Company to use; accordingly, in the normal course of business, the Company deployed those funds to SpreadZoom and Tianjin Leimone as detailed in "Note 11 - Related Party Transactions". Upon the final closing of the Subsidiary Sale, which will occur 30 days after the Company receives all the requisites corporate and regulatory approvals with respect to the Subsidiary Sale, the balance of the escrowed funds will be released to the Company. As of the date of this quarterly report, the transfer of ownership of Profit Harvest, Nollec Wireless and CDE has been completed.

Zoom's Operation in the U.S.

On October 12, 2011, the Company and Zoom USA Holdings, Inc., a wholly-owned subsidiary of the Company ("Zoom Sub") entered into a 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, Zoom (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. In addition, Zoom Sub purchased an additional 5% interest in Portables for $750,000. Further, in connection with the transaction, Zoom assumed the responsibility for repaying certain indebtedness owed by Portables to T-Mobile USA, Inc. 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 $857,186 was due on December 20, 2011 (the "Final Payment"). The Initial Payment and Second Payment were made timely, and pursuant to the agreement with T-Mobile the Final Payment was waived. Zoom also agreed to pay other outstanding indebtedness of Portables of $4,500,000, less the amount of T-Mobile Indebtedness paid off. Additionally, 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. As of the date of this quarterly report, the Company's and Portables Unlimited, Inc.'s ownership interests in Portables are 50.1% and 49.9%, respectively.

Our principal executive offices are located in the People's Republic of China at Sanlitun SOHO, Building A, 11th Floor, No.8 Workers Stadium North Road, Chaoyang District, Beijing, China 100027; our telephone number is 86-10-5935-9000. Our U.S. office is located at Portables' offices at 136 First Street, Nanuet, NY 10954, and the telephone number is 1-845-507-8200. Our corporate web site address is www.zoom.com.

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The diagram below summarizes our corporate structure as of March 31, 2013:

Plan of Operation

During the next 12 months, Zoom, together with its subsidiaries, expects to take the following steps in connection with the development of our business and the implementation of our plan of operations:

• Zoom will continue to service and expand its licensed wholesale distribution service for T-Mobile USA.
• Zoom will be negotiating with North American and European companies that have potential synergies with Zoom's business activities for acquisition purposes.

Critical Accounting Policies and Estimates

The preparation of Zoom's consolidated financial statements in conformity with accounting principles generally accepted in the United States ("US GAAP") requires it to make estimates and judgments that affect its reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. Zoom based its estimates and judgments on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Future events, however, may differ markedly from current expectations and assumptions. While there are a number of significant accounting policies affecting Zoom's consolidated financial statements, we believe the following critical accounting policies involve the most complex, difficult and subjective estimates and judgments: allowance for doubtful accounts; income taxes; asset impairment.

Revenue Recognition

In accordance with US GAAP, revenue is recognized only when the price is fixed or determinable, persuasive evidence of an arrangement exists, the service is performed, and collection of the resulting receivable is reasonably assured. Noted below are brief descriptions of the product or service revenues that Zoom recognizes in the financial statements contained herein.

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."

34

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.

Income is recognized as the percentage of estimated total income that incurred costs to date divided by estimated total costs after giving effect to estimates of costs to complete based on 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.

In our Portables operations, revenue from the sale of equipment is recognized upon shipment or when purchased at Company retail locations. Commission income is recognized upon activation of wireless communication services with T-Mobile.

Allowance for doubtful accounts

Zoom maintains an allowance for doubtful accounts to reduce amounts to their estimated realizable value. A considerable amount of judgment is required when Zoom assesses the realization of accounts receivables, including assessing the probability of collection and the current credit-worthiness of each customer. If the financial condition of customers were to deteriorate, resulting in an impairment of their ability to make payments, an additional provision for doubtful accounts could be required. Zoom initially records a provision for doubtful accounts based on its historical experience, and then adjusts this provision at the end of each reporting period based on a detailed assessment of its accounts receivable and allowance for doubtful accounts. In estimating the provision for doubtful accounts, Zoom considers: (i) the aging of the accounts receivable; (ii) trends within and ratios involving the age of the accounts receivable; (iii) the customer mix in each of the aging categories and the nature of the receivable; (iv) its historical provision for doubtful accounts; (v) the credit worthiness of the customer; and (vi) the economic conditions of the customer's industry as well as general economic conditions, among other factors. Management regularly reviews outstanding receivables to determine their recoverability. Zoom regularly reviews the credit policies and procedures of its operating subsidiaries to ensure that procedures are appropriate to the Company's risk management approach as well as the general economic environment.

Income taxes

Zoom accounts for income taxes in accordance with SFAS No. 109 (ASC Topic 740), "Accounting for Income Taxes". 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. Zoom adopted FIN 48 (ASC Topic 740), Accounting for Uncertainty in Tax Positions. Zoom has engages tax preparers in all of the jurisdictions in which it operates to determine if the Company is both fully compliant with applicable tax laws and is lawfully maximizing tax benefits to the Company.

35

Asset Impairment

Zoom periodically evaluates the carrying value of other long-lived assets, including, but not limited to, property and equipment and intangible assets, when events and circumstances warrant such a review. The carrying value of a long-lived asset is considered impaired when the anticipated undiscounted cash flows from such asset is less than its carrying value. In that event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Significant estimates are utilized to calculate expected future cash flows utilized in impairment analyses. Zoom also utilizes judgment to determine other factors within fair value analyses, including the applicable discount rate. As of December 31, 2012, the Company has completely written off goodwill resulting from its acquisition of Jiangsu Leimone, Silver Tech, and CDE.

Commitments

As detailed in Note 20 - Commitments of the accompanying notes to the financial statements, the Company had operating leases commitments for it leased facilities.

Results of Operations for the Quarter ended March 31, 2013

Revenues

Our revenues from continuing operations were $7,365,230 for the quarter ended March 31, 2013, a decrease of $8,717,105 or 54.2% compared to 16,082,335 in the corresponding quarter in 2012. The decrease in revenues in the first quarter of 2013 compared to the corresponding quarter in 2012 was attributable to both a decline in phone sales as well as commission from activation of lines by Portables. For the three months ended March 31, 2013, Portables derived $2,031,592 from the sale of phones and accessories, and $5,333,638 from activation and reoccurring carrier service fees.

Cost of sales

For the quarter ended March 31, 2013 our cost of sales from continuing operations was $5,893,746 or 80.0% of revenues while cost of sales for the same period in 2012, was $13,338,448 or 82.9% of revenues. The decrease in the cost of sales as a percentage of revenues is derived from the slight improvement on the inbound costs of handsets and accessories.

Gross Profit

Gross profit from continuing operations for the quarter ended March 31, 2013 declined by 46.4% to $1,471,484 compared to $2,743,887 for the corresponding same period in 2012. Gross profit as a percentage of revenues for the first quarter of 2013 was 20.0%, an increase from 17.1% for the same period in 2012. The main reason for the increase in gross margin is correlated with the slight decrease in cost of sales for handsets and accessories.

The sales of mobile handsets and accessories by Portables produced gross margins of 6.8%, while activation and reoccurring carrier service fees provided for 25.0% gross margins during the quarter ended March 31, 2013. Gross margins, on weighted average basis for the combined product and services mix derived from Portables was $1,471,484 and $2,743,887, or 20.0% and 17.1% for the quarters ended March 31, 2013, and 2012, respectively.

Operating expenses

Sales, general and administrative expenses primarily consisted of compensation for sales personnel, marketing, transportation, administrative personnel, depreciation, travel expenses, rental, materials expenses related to ordinary administration, and fees for professional services; and these were $ 2,098,166 for the three months ended March 31, 2013 compared to $2,470,904 for the corresponding period in 2012. The decrease in such expenses in 2013 was due to the Company's cost cutting measures in the first quarter of 2013 which included reductions in employees.

36

The Company's non-cash equity-based compensation charges were $193,844 and $434,249 for the three months ended March 31, 2013, and 2012, respectively. The $240,405 decrease, or 55.4%, is a result of the discontinuance of certain operations. Non-cash equity-based compensation issued to consultants and employees providing services to operations the Company has or is in the course of disposing have been accelerated and written off in 2012. Non-cash equity-based compensation on go forward basis reflect grants and awards that have been issued to personnel still in the service of the Company's continuing operating entities.

Other income/(expenses)-net

The Company's other expenses-net were $470,915 and $223,973 for the three months ended March 31, 2013 and 2012 respectively. These expenses increased primarily as result of the increase in interest expense from $111,117 in 2012 to $219,826 in 2013. Additionally, as a result of the Company's investment in SpreadZoom, the Company recorded a loss of $252,588 for the quarter ended March 31, 2013.

Net (loss) income

For the quarter ended March 31, 2013, the Company's net loss was $1,462,505, as compared to net income of $524,932 for the corresponding period in 2012. The losses incurred in the first quarter of 2013 as compared to the profit shown in the same period in 2012 reflects the Company's recent efforts to reorganize its business and reduce costs. The Company believes that its efforts to restructure the business will allow the Company to return to profitability in the near future.

Other comprehensive income/(loss)

For the three months ended March 31, 2013 and 2012, the Company's other comprehensive income was $331,873 and $309,578 respectively. Other comprehensive income resulted from foreign currency exchange fluctuations particularly the Renminbi against the USD.

Liquidity and Capital Resources

Zoom generally finances its operations from cash flow generated internally, interest-free credit lines in the form of banker acceptances and short-term loans from domestic banks. As of March 31, 2013, the Company had cash and equivalents of $212,665 and restricted cash of $19,149,140. Restricted cash was part of the funds deposited with the Company for sale to Beijing Zhumu Culture Communication Company, Ltd. of Profit Harvest, CDE, Ever Elite, Nollec Wireless, and TCB Digital. We had cash and equivalents of $430,746 and restricted cash of $19,044,294 as of December 31, 2012.

Net cash used in operating activities for the three months ended March 31, 2013 was $2,120,125 compared to $1,879,333 for the same period in 2012. In the first three months of 2013, operational use of funds included net decreases in accounts payable and net related party balances of $1,444,778 and $1,521,793, respectively. These decreases were partially offset by decreases in accounts receivable and inventories of $634,297 and $482,465, respectively.

Net cash used in investing activities was $87,563 in the three months ended March 31, 2013 as compared to $111,865 for the same period in 2012 was for the purchase of fixed assets.

Net cash provided by financing activities was $1,989,574 for the three months ended March 31, 2013 as compared to $1,788,057 in the same period in 2012. The source of cash was primarily attributable to increases in bank borrowings of $2,500,000 and $1,697,306 for 2013 and 2012 respectively.

Contractual Obligations

As of March 31, 2013, the Company has short-term loan obligations of $3,600,596 and long term loan obligations of $1,863,897.

On a go forward basis over the next 12 months, Zoom intends to continue to rely on loans and restricted cash to fund its operational cash needs. In the event that expansion or acquisition opportunities exist, we may contemplate additional conventional bank and/or equity financing to take advantage of such opportunities. However, there is no assurance that such opportunities can be found, and if so, whether financing is available at acceptable terms.

37

Off Balance Sheet Arrangements

As of March 31, 2013, Zoom had no off balance sheet arrangements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

Item 4. Controls and Procedures.

(a) Disclosure Controls and Procedures.

The Company's disclosure controls and procedures are designed to ensure that information required to be disclosed in the Company's reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized, and reported within the time periods specified in the SEC's rules and forms, including, without limitation, that such information is accumulated and communicated to Company management, including the Company's principal executive and financial officer, as appropriate to allow timely decisions regarding required disclosures.

Limitations on the Effectiveness of Disclosure Controls. In designing and evaluating the Company's disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, Company management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Evaluation of Disclosure Controls and Procedures. The Company's principal executive and financial officers have evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) as of March 31, 2013, and based on this evaluation, the Company's principal executive and financial officers have concluded that the Company's disclosure controls and procedures were effective to ensure that material information is recorded, processed, summarized and reported by management of the Company on a timely basis in order to comply with the Company's disclosure obligations under the Exchange Act and the rules and regulations promulgated thereunder. The Company's principal executive and financial officers conclusion regarding the Company's disclosure controls and procedures is based solely on management's conclusion that the Company's internal control over financial reporting are effective.

(b) Changes in Internal Control over Financial Reporting.

There were no significant changes in the Company's internal control over financial reporting that occurred during the first three months of fiscal 2013 that have materially affected, or are reasonably likely to materially affect, such control.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

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 Mid-Level People's Court of Tianjin City has issued a decision in the last quarter of 2012 which is acceptable to the Company. HUCG appealed the decision and in the second quarter of 2013, the Court of Appeals upheld the previous rulings. The Company is awaiting the Court to execute on its ruling.

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Other than our dispute disclosed above we are not a party to any material legal proceedings nor are we aware of any circumstance that may reasonably lead a third party to initiate legal proceedings against us.

Item 1A. Risk Factors.

Not applicable.

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

Not applicable.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

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 31.2 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

_______________

* 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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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 May 20, 2013 by the undersigned, thereunto duly authorized.

Zoom Technologies, Inc.
(Registrant)

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

40

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

_______________

* 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.

41

EX-31.1 2 exh31-1.htm CEO 302 CERTIFICATE

Exhibit 31.1

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

I, Lei Gu, Chief Executive Officer, of Zoom Technologies, Inc., a Delaware corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Zoom Technologies, Inc. for the quarterly period ended March 31, 2013;

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

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

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

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

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

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

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fiscal quarter in this quarterly report that has materially affected or is reasonably like to affect, the registrant's internal control over financial reporting;

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

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

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

 Date: May 20, 2013

/s/ Lei Gu         
Lei Gu
Chief Executive Officer

EX-31.1

March 31, 2013 Exhibit 31.1

EX-31.2

Exhibit 31.2

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

I, Anthony K. Chan, Chief Financial Officer, of Zoom Technologies, Inc., a Delaware corporation, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Zoom Technologies, Inc. for the quarter period ended March 31, 2013;

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

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

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

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

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

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

d) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's fiscal quarter in this quarterly report that has materially affected or is reasonably like to affect, the registrant's internal control over financial reporting;

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

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

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

Date: May 20, 2013

/s/ Anthony K. Chan        
Anthony K. Chan
Chief Financial Officer

EX-32

Exhibit 32

SECTION 1350 CERTIFICATIONS

We, Lei Gu, Chief Executive Officer and Anthony K. Chan, Chief Financial Officer, of Zoom Technologies, Inc., a Delaware corporation (the "Company"), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that to the best of our knowledge:

1. the Quarterly Report on Form 10-Q of the Company for the period ended March 31, 2013 (the "Report") fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)); and

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

Date: May 20, 2013

/s/ Lei Gu           
Lei Gu
Chief Executive Officer

and

/s/ Anthony K. Chan           
Anthony K. Chan
Chief Financial Officer

The material contained in Exhibit 32.0 is not deemed "filed" with the SEC and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language contained in such filing.

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Intangible Assets (Tables)

3 Months Ended

Mar. 31, 2013

Intangible Assets Tables

Carrying values of intangible assets

As of March 31, 2013 and December 31, 2012, the Company's intangible assets were summarized as follows:

	Estimated	March 31,		December 31,
	Useful life	2013		2012
		(Unaudited)
Domain name, logo and trade mark	Indefinite	$	349,600	$	349,600
Customer list	15 years		1,269,416		1,269,416
Total cost			1,619,016		1,619,016
less: Accumulated amortization			(1,141,577)		(1,138,326)
Intangible assets, net		$	477,439	$	480,690

The estimated amortization for the next five years as of March 31, 2013 and thereafter is expected to be as follows by years:

Remainder of 2013	$	5,488
2014		8,739
2015		8,739
2016		8,739
2017		8,739
Thereafter		87,395
Total	$	127,839

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Merger and Acquisitions - Goodwill (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Goodwill, Gross	$ 37,113,588	$ 37,126,605
Less: Impairment	(1,033,762)	(1,033,762)
Total goodwill	27,031,492	27,031,492
Jiangsu Leimone
Goodwill, Gross	103,057	103,057
Silver Tech
Goodwill, Gross	8,395,840	8,395,840
CDE
Goodwill, Gross	1,583,198	1,861,409
Portables
Goodwill, Gross	$ 27,031,493	$ 27,005,953

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Correction of Error (Tables)

3 Months Ended

Mar. 31, 2013

Correction Of Error Tables

Restatement to Prior Year Income

As a result the results of operations for the three months ended March 31, 2012 for 2012 have been restated as follows:

		For the Three Months Ended March 31, 2013
		As Previously				As Currently
		Reported		Adjustment		Reported
Other income (expenses)
	Change in fair value of warrants	$	-	$	(116,953)	$	(116,953)
	Total other income and expenses		(107,020)		(116,953)		(223,973)
Net income attributable to Zoom Technologies, Inc.		$	641,885		(116,953)	$	524,932
Basic and diluted income per common share:
	Basic	$	0.03	$	(0.01)	$	0.02
	Diluted	$	0.03	$	(0.01)	$	0.02

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Long-Term Notes Payable (Details) (USD $)

3 Months Ended

Mar. 31, 2013

Dec. 31, 2012

Long-Term Notes Payable Details

Long-term notes payable

$ 317,500

$ 317,500

Long-term debt, description

The note owed to CNCG was classified as short term at September 30, 2012 because the Company was in default. Subsequent to the balance sheet date, the company has remedied the issue.

Interest rate

2.00%

XML

Accounts Receivable (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Accounts Receivable Details
Accounts receivable	$ 3,402,407	$ 4,032,656
Less: Allowance for doubtful accounts	(835,457)	(786,409)
Accountants receivable, net	$ 2,566,950	$ 3,246,247

XML

Stockholders' Equity Schedule Of Assumptions Used In Black-Scholes Model - Options (Narrative) (Details) (USD $)	3 Months Ended		3 Months Ended
	Sep. 30, 2012	Mar. 31, 2013	Mar. 31, 2013 865,000 Options Y	Mar. 31, 2013 Reprice 865,000 Options Y	Mar. 31, 2013 235,000 Options Y	Mar. 31, 2013 Reprice 235,000 Options Y	Mar. 31, 2013 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	$ 259,701
Non-cash compensation expense related to stock options to be recorded up to 2014		$ 705,979

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Investment in SpreadZoom (Tables)

3 Months Ended

Mar. 31, 2013

Investment In Spreadzoom Tables

Summary Investment Holdings

. The Company has used the equity method to account for its investment in SpreadZoom and has recorded a loss from investment of $252,588 for the three months ended March 31, 2013.

		March 31, 2013
Financial Position of SpreadZoom		(Unaudited)
Current assets	$	41,454,107
Non-current assets		2,422,513
Total assets		43,876,620
Current liabilities		27,609,965
Non-current liabilities		-
Total liabilities		27,609,965
Net ssset value	$	16,266,655
		For the Three Months
Results of Operations of SpreadZoom		Ended March 31, 2013
		(Unaudited)
Net revenues	$	18,106,466
Cost of goods sold		17,923,971
Gross profit		182,495
Operating expenses		715,903
Operating loss		(533,408)
Other income (expenses), net		185
Income (loss) before taxes		(533,223)
less: Provision for income taxes		-
Net loss	$	(533,223)
Investment loss attributable to Zoom Technologies, Inc.	$	(252,588)

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Accounting Policies (Fair Value of Financial Instruments) (Tables)

3 Months Ended

Mar. 31, 2013

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 March 31, 2013 and December 31, 2012 are as follows:

		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	$	212,665	$	212,665	$	-	$	-
Restricted cash	$	19,149,140	$	19,149,140	$	-	$	-
Warrants	$	13,715	$	-	$	13,715	$	-
		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	$	430,746	$	430,746	$	-	$	-
Restricted cash	$	19,044,294	$	19,044,294	$	-	$	-
Warrants	$	7,340	$	-	$	7,340	$	-

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Income Tax (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Pre-tax profit (loss)	$ (1,291,441)	$ (385,239)
Zoom Technologies
Statutory tax rate	34.00%
Net operating loss carry forward period, years	20
Net operating loss ("NOL") carry forwards	10,200,000
Deferred tax asset valuation allowance provided	10,200,000
TCB Digital
Statutory tax rate	25.00%
Pre-tax profit (loss)	(1,361,596)	(360,102)
Jiangsu Leimone
Statutory tax rate	25.00%
Pre-tax profit (loss)	(190,738)	(801,131)
Nollec Wireless
Statutory tax rate	25.00%
Pre-tax profit (loss)	(2,455,326)	(1,884,866)
Profit Harvest
Statutory tax rate	16.50%
Pre-tax profit (loss)	8,780,223	12,333,401
CDE
Statutory tax rate	16.50%
Pre-tax profit (loss)	369,569	(133,576)
Portables
Statutory tax rate	34.00%
Pre-tax profit (loss)	$ 901,857

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Stockholders' Equity Warrants Activity (Details) (USD $)	3 Months Ended
	Mar. 31, 2013
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

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Other Receivables and Prepaid Expenses (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Other Receivables And Prepaid Expenses Details
Deposit	$ 93,353	$ 90,091
Advance to employees	522	0
Prepaid expenses	188,840	116,381
Others	3,950,081	4,307,962
Total other receivables	$ 4,232,796	$ 4,514,434

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Stockholders' Equity Options Activity (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
Balance, September 30, 2012	1,810,000
Weighted-average exercise price of options outstanding, September 30, 2012	$ 2.97
Old Plan
Balance, December 31, 2011	129,350
Granted	0
Lapsed	(129,350)
Exercised	0
Cancelled	0
Balance, September 30, 2012	0
Weighted-average exercise price of options outstanding, December 31, 2011	$ 0
Weighted-average exercise price of options granted during period	$ 0
Weighted-average exercise price of options lapsed during the period	$ 1.80
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, September 30, 2012	$ 0
Aggregate Intrinsic Value, December 31, 2011	$ 0
Aggregate Intrinsic Value, September 30, 2012	0
New Plan
Balance, December 31, 2011	3,557,000
Granted	0
Lapsed	(408,000)
Exercised	0
Cancelled	(1,339,000)
Balance, September 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, September 30, 2012	$ 2.97
Aggregate Intrinsic Value, December 31, 2011	0
Aggregate Intrinsic Value, September 30, 2012	$ 0

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Other Incone (Expenses) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Other Incone Expenses Details
Loss on disposal of fixed assets	$ 0	$ (8,487)
Government grants	203,026	15,895
Other income	113,982	520,179
Exchange gain (loss)	191,758	(67,859)
Other income (expense)	42,043	(346,837)
Total	$ (470,915)	$ (223,973)

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Income Tax (Schedule of Effective Income Tax Rate Reconciliation) (Details) (USD $) In Millions, unless otherwise specified	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Income Tax Schedule Of Effective Income Tax Rate Reconciliation Details
US statutory rates	34.00%	34.00%
Tax rate difference	(24.50%)	(22.60%)
Valuation allowance	37.10%	5.55%
Tax for prior year	2.12%	1.30%
Non-taxable Income of pass through entity	(8.19%)	0.00%
Tax per financial statements	40.53%	18.25%
Foreign pretax earnings	$ 3.50
Accumulated undistributed earnings of non-US subsidiaries invested indefinitely	30.53
Additional U.S. federal income tax to be provided if earnings were remitted	$ 7.30

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Stockholders' Equity Summary of Options Outstanding and Exercisable (Details) (USD $)	Mar. 31, 2013 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)	2.71
Options Outstanding, Weighted-Average Exercise Price Per Share	$ 2.97
Options Exercisable, Number of Shares	963,750
Options Exercisable, Weighted-Average Exercise Price Per Share	$ 2.62

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Stockholders' Equity Common Stock (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Mar. 31, 2013 September 6, 2012	Sep. 30, 2012 September 6, 2012	Mar. 31, 2013 June 25, 2012	Sep. 30, 2012 June 25, 2012	Mar. 31, 2013 July 2, 2012	Mar. 31, 2013 May 22, 2012A	Mar. 31, 2013 May 22, 2012B	Sep. 30, 2012 May 22, 2012B	Mar. 31, 2013 Feb 28, 2012	Sep. 30, 2012 Feb 28, 2012	Mar. 31, 2013 Oct 4. 2011	Sep. 30, 2012 Oct 4. 2011	Mar. 31, 2013 Nov 29, 2011	Sep. 30, 2012 Nov 29, 2011
Stock Issued During Period, Shares, Share-based Compensation, Net of Forfeitures			72,500		35,000		137,625	302,800	4,497,200		170,000		1,130,000		200,000
Sale of Stock, price per share			$ 0.98		$ 1.07		$ 1.03	$ 1.12	$ 1.12		$ 1.34		$ 1.19		$ 0.79
Share-based Compensation	$ 193,844	$ 434,249		$ 1,974		$ 9,363	$ 141,754			$ 314,804		$ 56,950		$ 96,050		$ 19,750
Options cancelled								1,339,000
Employee Service Share-based Compensation, Nonvested Awards, Total Compensation Cost Not yet Recognized			$ 24,967					$ 308,553	$ 4,407,256		$ 56,950		$ 960,500		$ 92,167

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CONCENTRATION DISCLOSURE - Note 19

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

CONCENTRATION DISCLOSURE - Note 19

NOTE 19 - CONCENTRATION DISCLOSURE

1. During the reporting periods, the customers accounting for 10% or more of the Company's consolidated sales was T Mobile USA.
2. During the reporting periods, the suppliers accounting for 10% or more of the Company's consolidated purchases from continuing operations was T-Mobile USA.

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Accounting Policies (Impairment of Long-Lived Assets) (Narrative) (Details) (USD $)	3 Months Ended	12 Months Ended
	Mar. 31, 2013	Dec. 31, 2011
Accounting Policies Impairment Of Long-Lived Assets Narrative Details
Impairment of Long-lived Assets	$ 0	$ 0

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Stockholder's Equity - Warrants (Tables)

3 Months Ended

Mar. 31, 2013

Stockholders Equity - Warrants Tables

Warrant activity and summary

The following summary represents warrants activity during the three months ended March 31, 2013:

			Weighted		Aggregate
	Number of		Average Exercise		Intrinsic
	Warrants		Price		Value
Balance, December 31, 2012	8,638,604	$	2.30	$	-
Granted	-		-
Lapsed	-		-
Exercised	-		-
Cancelled	-		-
Balance, March 31, 2013	8,638,604	$	2.30	$	-

The following presents warrants summary as of March 31, 2013:

	Warrants Outstanding				Warrants Exercisable
		Weighted Average		Weighted Average			Weighted Average
	Number	Remaining		Exercise	Number		Exercise
	Outstanding	Contractual Life		Price	Exercisable		Price
Warrants	8,638,604	1.84 years	$	2.30	8,638,604	$	2.30

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Stockholders' Equity Schedule Of Assumptions Used In Black-Scholes Model - Warrants (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013 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%

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Other Receivables and Prepaid Expenses (Tables)

3 Months Ended

Mar. 31, 2013

Other Receivables And Prepaid Expenses Tables

Other receivables and prepaid expenses

As of March 31, 2013 and December 31, 2012, the Company's other receivables and prepaid expenses consisted of the following:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Deposit	$	93,353	$	90,091
Advance to employees		522		-
Prepaid expenses		188,840		116,381
Others		3,950,081		4,307,962
Total other receivables and prepaid expenses	$	4,232,796	$	4,514,434

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Accounting Policies (Correction of Prior Period Financial Statements (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Warrant liability	$ 13,715		$ 7,340
Total current liabilities	199,338,014		170,751,984
TOTAL LIABILITIES	201,519,411		171,069,484
Additional paid-in capital	51,300,193		51,108,409
Retained earnings	(5,561,303)		(4,098,798)
TOTAL STOCKHOLDERS' EQUITY	51,119,889		52,056,677
Change in fair value of warrants	(6,375)	(116,953)
Total other income and expense	(470,915)	(223,973)
Net income attributable to Zoom Technologies Inc.	(1,462,505)	524,932
Basic and diluted income per common share:
Basic	$ (0.05)	$ 0.02
Diluted	$ (0.05)	$ 0.02
Previouly Reported
Warrant liability			0
Total current liabilities			93,209,378
TOTAL LIABILITIES			93,864,836
Additional paid-in capital			53,133,895
Retained earnings			22,048,539
TOTAL STOCKHOLDERS' EQUITY			76,778,641
Change in fair value of warrants		821,341
Total other income and expense		821,314
Net income attributable to Zoom Technologies Inc.		821,314
Basic and diluted income per common share:
Basic		$ 0.05
Diluted		$ 0.05
Adjustment
Warrant liability			850,841
Total current liabilities			850,841
TOTAL LIABILITIES			850,841
Additional paid-in capital			(7,176,026)
Retained earnings			6,325,185
TOTAL STOCKHOLDERS' EQUITY			(850,841)
Change in fair value of warrants		0
Total other income and expense		(1,293,059)
Net income attributable to Zoom Technologies Inc.		5,023,248
Basic and diluted income per common share:
Basic		$ 0.32
Diluted		$ 0.32
As Currently Reported
Warrant liability			850,841
Total current liabilities			94,060,219
TOTAL LIABILITIES			94,715,677
Additional paid-in capital			45,957,869
Retained earnings			28,373,724
TOTAL STOCKHOLDERS' EQUITY			75,927,800
Change in fair value of warrants		4,208,983
Total other income and expense		2,915,924
Net income attributable to Zoom Technologies Inc.		$ 9,232,231
Basic and diluted income per common share:
Basic		$ 0.58
Diluted		$ 0.58

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Related Party Transactions (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Due from related parties	$ 20,967,777	$ 20,964,025
Due to related parties	7,446,624	9,889,037
BeijingLeimone Shengtong Wireless
Due from related parties	71,809	91,571
Leimone (Tianjin) Industrial
Due from related parties	11,075,639	11,034,982
Beijing Leimone Shengtong Cultural
Due to related parties	102,500	102,500
Shenzhen Leimone
Due from related parties	344,414	355,564
Raja R Amar - CEO Portables
Due from related parties	429,877	429,877
AUM Realty
Due to related parties	63,364	69,864
Gu
Due to related parties	2,901,283	2,901,283
Anthony Chan
Due to related parties	397,901	358,814
Wireless Holdings of Northeast
Due to related parties	117,600	117,600
Portables Unlimited International
Due to related parties	1,304,864	3,779,864
Portables Unlimited
Due to related parties	2,559,112	2,559,112
Spreadzoom
Due from related parties	9,046,038	9,046,038
Others
Due from related parties	$ 0	$ 5,993

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Property, Plant and Equipment Depreciation (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Property Plant And Equipment Depreciation Narrative Details
Depreciation expense	$ 71,773	$ 91,046

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Discontinued Operations (Tables)

3 Months Ended

Mar. 31, 2013

Discontinued Operations Tables

Schedule of Discontinued Operations, Income Statement, Balance Sheet and Additional Disclosures

On December 31, 2012, the Company announced its plan to dispose of certain assets in order to raise cash, and redeploy cash for investment in North America.

Results of Operations	For the Three Months Ended March 31,
	2013		2012
	(Unaudited)		(Unaudited)
Net revenues		42,257,043		75,019,208
Cost of sales		40,241,554		71,448,789
Gross profit		2,015,489		3,570,419
Operating expenses		1,650,821		1,854,853
Operating income (loss)		364,668		1,715,566
Other income (expenses), net		(702,175)		(280,971)
Income (loss) before taxes from discontinued operations		(337,507)		1,434,595
less: Provision for income taxes		21,061		346,910
(Loss) Income from discontinued operations, net of tax		(358,568)		1,087,685
Basic and diluted (loss) income per common share from discontinued operations:
Basic		(0.01)		0.05
Diluted		(0.01)		0.05

Financial Position	March 31,		December 31,
	2013		2012
	(Unaudited)
Cash and equivalents	$	4,522,371	$	3,245,529
Restricted cash		88,341,386		64,467,142
Accounts receivable, net		35,050,193		35,642,961
Inventories, net		8,033,191		7,059,829
Other receivables and prepaid expenses		10,926,755		10,580,693
Advance to suppliers		3,991,536		3,004,016
Notes receivable		1,782,855		548,218
Due from related parties		21,618,261		18,322,784
Costs in excess of revenue - R&D contracts		230,809		-
Property, plant and equipment, net		1,137,461		1,293,689
Construction in progress deposit - related parties		-		243,747
Intangible assets		315,757		342,682
Total current assets		175,950,575		144,751,290
Total Assets of Discontinued Operations	$	175,950,575	$	144,751,290
Short-term loans		25,608,946		21,187,680
Notes payable		53,427,536		28,156,022
Accounts payable		11,702,618		16,255,076
Accrued expenses and other payables		995,984		1,013,986
Advances from customers		1,943,637		1,039,775
Taxes payable		(1,545,197)		(2,341,883)
Interest payable		121,561		110,835
Dividends payable		632,352		628,890
Due to related parties		76,972,633		72,298,478
Total current liabilities		169,860,070		138,348,859
Total Liablities of Discontinued Operations		169,860,070		138,348,859
Net Assets of Discontinued Operations	$	6,090,505	$	6,402,431

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MERGER AND ACQUISITIONS - Note 3

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

MERGER AND ACQUISITIONS - 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. As of December 31, 2012, the Company has taken action to dispose of Silver Tech's operating subsidiaries Ever Elite and Nollec; accordingly, all goodwill related to Silver Tech has been written off.

The Company acquired 100% ownership of CDE on January 4, 2011. As of January 4, 2011, the net liabilities of CDE were $43,409. The purchase consideration was $1,818,000 which resulted in goodwill of $1,861,409. As of December 31, 2012, as part of the Company's disposal of Profit Harvest the Company has indirectly disposed of CDE, accordingly, all of the goodwill related to CDE has been written off.

The Company acquired 55% ownership of Portables on October 11, 2011. As of October 11, 2011, Portables’ liabilities exceeded its assets by $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 Company's ownership in Portables has been reduced to 50.1% as of December 31, 2012.

The following table summarizes goodwill as of March 31, 2013 and December 31, 2012 resulting from the acquisitions of Jiangsu Leimone, Silver Tech, and CDE:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Jiangsu Leimone	$	103,057	$	103,057
Silver Tech		8,395,840		8,395,840
CDE		1,861,409		1,861,409
Portables		27,031,492		27,031,492
Total		37,391,798		37,391,798
Less: Impairment		(10,360,306)		(10,360,306)
Total goodwill	$	27,031,492	$	27,031,492

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.

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Intangible Assets (Details) (USD $)	3 Months Ended
	Mar. 31, 2013 Y	Dec. 31, 2012
Intangible assets, gross	$ 1,122,001	$ 943,917
Less: Accumulated amortization	(222,547)	(171,390)
Intangible assets, net	477,439	480,690
Software
Useful life	3
Intangible assets, gross	202,343	201,275
Domain name, logo & trade mark
Intangible assets, gross	349,600	349,600
Customer list
Useful life	5
Intangible assets, gross	0	86,250
Technology use right
Useful life	1
Intangible assets, gross	387,387	125,432
Patent techniques
Useful life	10
Intangible assets, gross	$ 182,671	$ 181,360

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Stockholder's Equity - Stock Options (Tables) (New Plan)

3 Months Ended

Mar. 31, 2013

New Plan

Option plan activity

The following summary represents options activity during the year ended March 31, 2013 under the New Plan.

	Under New Plan	Weighted Average Exercise Price		Aggregate Intrinsic Value
Balance, December 31, 2012	1,810,000	$	1.69	$	-
Granted	100,000		0.65
Lapsed	-		-
Exercised	-		-
Cancelled	-		-
Balance, March 31, 2013	1,910,000	$	1.64	$	-

Option plan summary

The following represents options summary as of March 31, 2013 under the New Plan.

	Options Outstanding				Options Exercisable
		Weighted Average		Weighted Average			Weighted Average
	Number	Remaining		Exercise	Number		Exercise
	Outstanding	Contractual Life		Price	Exercisable		Price
Options	1,910,000	2.30 years	$	1.64	1,060,000	$	1.60

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DISCONTINUED OPERATIONS - Note 23

3 Months Ended

Mar. 31, 2013

Other income (expenses)

DISCONTINUED OPERATIONS - Note 23

NOTE 23 - DISCONTINUED OPERATIONS

On December 31, 2012, the Company announced its plan to dispose of certain assets in order to raise cash, and redeploy cash for investment in North America.

Results of Operations	For the Three Months Ended March 31,
	2013		2012
	(Unaudited)		(Unaudited)
Net revenues		42,257,043		75,019,208
Cost of sales		40,241,554		71,448,789
Gross profit		2,015,489		3,570,419
Operating expenses		1,650,821		1,854,853
Operating income (loss)		364,668		1,715,566
Other income (expenses), net		(702,175)		(280,971)
(Loss) income before taxes from discontinued operations		(337,507)		1,434,595
less: Provision for income taxes		21,061		346,910
(Loss) income from discontinued operations, net of tax		(358,568)		1,087,685
Basic and diluted (loss) income per common share from discontinued operations:
Basic		(0.01)		0.05
Diluted		(0.01)		0.05

Financial Position	March 31,		December 31,
	2013		2012
	(Unaudited)
Cash and equivalents	$	4,522,371	$	3,245,529
Restricted cash		88,341,386		64,467,142
Accounts receivable, net		35,050,193		35,642,961
Inventories, net		8,033,191		7,059,829
Other receivables and prepaid expenses		10,926,755		10,580,693
Advance to suppliers		3,991,536		3,004,016
Notes receivable		1,782,855		548,218
Due from related parties		21,618,261		18,322,784
Construction in progress deposit - related parties		230,809		243,747
Property, plant and equipment, net		1,137,461		1,293,689
Intangible assets, net		315,757		342,682
Total current assets		175,950,575		144,751,290
Total Assets of Discontinued Operations	$	175,950,575	$	144,751,290
Short-term loans		25,608,946		21,187,680
Notes payable		53,427,536		28,156,022
Accounts payable		11,702,618		16,255,076
Accrued expenses and other payables		995,984		1,013,986
Advances from customers		1,943,637		1,039,775
Taxes payable		(1,545,197)		(2,341,883)
Interest payable		121,561		110,835
Dividends payable		632,352		628,890
Due to related parties		76,972,633		72,298,478
Total current liabilities		169,860,070		138,348,859
Total Liabilities of Discontinued Operations		169,860,070		138,348,859
Net Assets of Discontinued Operations	$	6,090,505	$	6,402,431

The sale of all of the business operations to Beijing Zhumu Culture Communication Company, Ltd. covered in the Share Purchase Agreement as described in "Note 1 - Organization and Nature of Business Operations" was for approximately $31.7 million (RMB 200 million) in sales proceeds. The Share Purchase Agreement covers the sale of several business operations in different jurisdictions, with differing regulatory requirements regarding the purchase and sale of businesses. The table of above details the portion of the transaction related to the sale of Profit Harvest and CDE, which closed on December 31, 2012, for proceeds of $23.0 million. The portion of the sale covered in the Share Purchase Agreement for Ever Elite and Nollec Wireless generated proceeds of $500,000. This sales transaction closed on April 5, 2013. The balance of the sales proceeds, approximately $8.2 million will be allocated to TCB Digital upon the closing of that transaction, which is expected in the second quarter of 2013.

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EQUITY METHOD INVESTEE: SPREADZOOM - Note 22

3 Months Ended

Mar. 31, 2013

Investments, Debt and Equity Securities [Abstract]

EQUITY METHOD INVESTEE: SPREADZOOM - Note 22

NOTE 22 - EQUITY METHOD INVESTEE: SPREADZOOM

On May 10, 2012, the Company along with Spreadtrum Communications (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 December 31, 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. Management and control of the business have not been fully determined. The Company has used the equity method to account for its investment in SpreadZoom and has recorded and loss from investment of $252,588 for the three months ended March 31, 2013.

		March 31, 2013
Financial Position of SpreadZoom		(Unaudited)
Current assets	$	41,454,107
Non-current assets		2,422,513
Total assets		43,876,620
Current liabilities		27,609,965
Non-current liabilities		-
Total liabilities		27,609,965
Net ssset value	$	16,266,655
		For the Three Months
Results of Operations of SpreadZoom		Ended March 31, 2013
		(Unaudited)
Net revenues	$	18,106,466
Cost of goods sold		17,923,971
Gross profit		182,495
Operating expenses		715,903
Operating loss		(533,408)
Other income (expenses), net		185
Income (loss) before taxes		(533,223)
less: Provision for income taxes		-
Net loss	$	(533,223)
Investment loss attributable to Zoom Technologies, Inc.	$	(252,588)

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Inventories by major categories (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Balance Sheet Related Disclosures [Abstract]
Finished goods	$ 446,416	$ 928,881
Less: Allowance for obsolete inventories	0	0
Inventories, net	$ 446,416	$ 928,881

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Income Tax (Tables)

3 Months Ended

Mar. 31, 2013

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 March 31, 2013 and December 31, 2012:

		March 31,		December 31,
		2013		2012
Deferred tax assets:
Net operating loss	$	310,093	$	511,035
less: Valuation allowance		(310,093)		(511,035)
Total deferred tax assets		-		-
Deferred tax liabilities:		-		-
Deferred tax assets, net	$	-	$	-

Schedule of Effective Income Tax Rate and Amount Reconciliation

The following table reconciles the U.S. statutory rates to the Company's effective tax rates for the years ended March 31, 2013 and 2012:

	For the Three Months Ended March 31,
	2013	2012
US statutory rates	34.00%	34.00%
Tax rate difference	-1.98%	-2.12%
Valuation allowance	-24.01%	-74.63%
State taxes	-0.17%	0.00%
Non-taxable income of pass through entity	-8.01%	42.75%
Tax per financial statements	-0.17%	0.00%

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SUBSEQUENT EVENT - Note 24

3 Months Ended

Mar. 31, 2013

Subsequent Event - Note 24

SUBSEQUENT EVENT - Note 24

NOTE 24 - SUBSEQUENT EVENT

The sale of Ever Elite and Nollec Wireless closed on April 5, 2013. The sales proceed for the disposition of Ever Elite and Nollec Wireless was $500,000.

The sale of TCBD is scheduled to close in the second quarter of 2013.

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CORRECTION OF ERROR FOR ACCOUNTING OF WARRANTS AS DERIVATIVE SECURITIES - Note 25

3 Months Ended

Mar. 31, 2013

Correction Of Error For Accounting Of Warrants As Derivative Securities - Note 25

CORRECTION OF ERROR FOR ACCOUNTING OF WARRANTS AS DERIVATIVE SECURITIES - Note 25

NOTE 25 - CORRECTION OF ERROR FOR ACCOUNTING OF WARRANTS AS DERIVATIVE SECURITIES

Zoom management discovered during the quarter ended September 30, 2012 that in accordance with ASC 815 (formerly EITF 07-5) the Company had incorrectly accounted for warrants issued in the years 2009 and 2010 as equity.  Series A, C, F, and related placement agent warrants contained anti-dilution provision that according to the above guidance required that these derivative securities be accounted for as liabilities and marked to market at each reporting period.  The Series G, and related placement agent warrants contained change of control provisions that required that the warrants be accounted for as liabilities because the securities were no longer indexed to the Company's stock; rather there were characteristics that required them to be accounted for as standalone securities that are considered liabilities to the Company. As a result the results of operations for the three months ended March 31, 2012 for 2012 have been restated as follows:

		For the Three Months Ended March 31, 2013
		As Previously				As Currently
		Reported		Adjustment		Reported
Other income (expenses)
	Change in fair value of warrants	$	-	$	(116,953)	$	(116,953)
	Total other income and expenses		(107,020)		(116,953)		(223,973)
Net income attributable to Zoom Technologies, Inc.		$	641,885		(116,953)	$	524,932
Basic and diluted income per common share:
	Basic	$	0.03	$	(0.01)	$	0.02
	Diluted	$	0.03	$	(0.01)	$	0.02

The Company assessed the value of these warrants by using the binomial lattice model. When the Company valued the warrants it used the following assumptions as part of inputs into the valuation model: US treasury rate of 0.34% as a measure of the risk free rate of return. The Company also used the mean of the annualized standard deviation of the log normal returns of comparable companies in the same line of business as measure of volatility which was 44.42% at March 31, 2012. The Company controls whether dilution may occur, so it did not add additional assumptions regarding dilutive events into the future discrete outcomes found in the model. The warrants values were adjusted for the dilutive effect as ratio of the outstanding common stock at the time of measurement. In determining the probabilities of an up movement or down movement in the discrete outcomes, as well as the related magnitude of such up or down movements, the Company used a Cox-Ross-Rubenstein approach in applying the binomial lattice model.

These corrections will be made to applicable prior period financial information in future filings with the SEC including this filing.

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BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES - Note 2

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

BASIS OF PRESENTATION AND SUMMARY OF ACCOUNTING POLICIES - Note 2

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

Principles of Consolidation

The Company's accompanying condensed consolidated balance sheet at March 31, 2013 and December 31, 2012, include the accounts of Gold Lion Holding Ltd and its wholly owned subsidiary Jiangsu Leimone, its 100%-owned subsidiary Silver Tech, and its specifically formed, wholly owned subsidiary, Zoom Sub which accounted for its ownership of Portables as 50.1%, as continuing operations. The Company's condensed consolidated balance sheet also included the accounts of TCB Digital for which the Company owns 80% indirectly through its indirectly held, 100% of Ever Elite which wholly owns Nollec Wireless, indirectly held through Silver Tech, all of which have been classified as discontinued operations held for sale.

The Company's condensed consolidated results of operations for the three months ended March 31, 2013 from continuing operations included the results of Gold Lion, Silver Tech, Jiangsu Leimone, Zoom Sub, and Portables; results of operations from Ever Elite, Nollec Wireless, and TCB Digital have been presented as discontinued operations. The Company's condensed consolidated results of operations for the three months ended March 31, 2012 from continuing operations included the results of Gold Lion, Silver Tech, Jiangsu Leimone, Zoom Sub, and Portables; results of operations from Profit Harvest, CDE, Ever Elite, Nollec Wireless, and TCB Digital have been presented as discontinued operations.

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 a loss on investment in SpreadZoom for $252,588 for the three months ended March 31, 2013. Refer to "Note 22 - Equity Method Investee: SpreadZoom" for details.

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." Management believes that the same is true at March 31, 2013 (See "Note 21 - Commitments" for details).

Based on this assessment, management believes that AUM is not a VIE because the Company does not make decisions that have significant impact on the performance of AUM; therefore, it 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 "non-controlling interest". AUM guarantees $1.7 million of the $3 million line of credit with M&T Bank for Portables Unlimited, LLC.

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). The functional currency of the Company's continuing operation Jiangsu Leimone and its equity investment SpreadZoom is the Chinese Renminbi ("RMB"). The functional currency of the Company's continuing operations Portables and Zoom Sub is United States Dollars ("USD" or "$"). The functional currency of the Company's discontinued operations, TCB Digital and Nollec Wireless is the RMB. The functional currency of the Company's discontinued operations Ever Elite and CDE is Hong Kong Dollars ("HKD"). The accompanying consolidated financial statements are translated and presented in the reporting currency of USD.

The interim condensed consolidated financial information as of March 31, 2013 and for the three months ended March 31, 2013 and 2012 have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures, which are normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The interim consolidated financial information should be read in conjunction with the financial statements and the notes thereto, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, previously filed with the SEC.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company's consolidated financial position as of March 31, 2013, its consolidated results of operations for the three months ended March 31, 2013 and 2012, and its consolidated cash flows for the three months ended March 31, 2013 and 2012, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Use of Estimates

The preparation of condensed 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", 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 Translation

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 Financial Accounting Standards ("FASB") Accounting Standards Codification ("ASC") Topic 810 with the RMB as the functional currency for the Chinese subsidiaries. According to ASC 810, 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 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

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, Hong Kong and the United States. Cash accounts in China and Hong Kong 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 March 31, 2013, management concluded that the allowance for doubtful accounts, as disclosed in "Note 5 - Accounts Receivable" was 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.

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. See "Note 8 - Property, Plant and Equipment" for details.

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. There have not been material amounts of capitalized interest for the three months ended March 31, 2013.

Impairment of Long-lived Assets

In accordance with ASC 360, "Property, Plant and Equipment", 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 last performed annual reviews of its long-lived assets at December 31, 2012 and 2011. In 2012, the Company determined that certain fixed assets and goodwill were impaired based on the disposal of certain operations. The Company has determined there have not been any triggering events during the three months ended March 31, 2013 that would require the Company to perform review for impairment of its 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", 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. The Company recorded impairment of goodwill related to the following subsidiaries: Jiangsu Leimone, CDE, and Silver Tech. See "Note 3 - Merger and Acquisitions" for details.

Revenue Recognition

The Company recognizes sales in accordance with 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 discontinued operation, 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 discontinued operation 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. 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.

Uncertain Tax Positions

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes. There were no uncertain tax positions in 2012 and 2011. The Company's evaluation of uncertain tax positions was performed for the tax years ended December 31, 2009 and forward, the tax years which remain subject to examination as of March 31, 2013.

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", 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 (Loss) Per Share

The Company reports earnings (loss) per share in accordance with the provisions of ASC 260 "Earnings Per Share". 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. When the Company's results from operations are a net loss, dilutive securities are not included in diluted loss per share because they would be considered anti-dilutive.

The basic and diluted loss per common share from continuing operations for the periods ended March 31, 2013 and 2012 were $0.04 and $0.03, respectively. The basic and diluted loss per common share from discontinued operations was $0.01 for the period ended March 31, 2013 and the basic and diluted income per common share from discontinued operations was $0.05 for the period ended March 31, 2012.

Fair Values of Financial Instruments

ASC 820 "Fair Value Measurements and Disclosures", 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 March 31, 2013 and December 31, 2012 are as follows:

		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	$	212,665	$	212,665	$	-	$	-
Restricted cash	$	19,149,140	$	19,149,140	$	-	$	-
Warrants	$	13,715	$	-	$	13,715	$	-
		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	$	430,746	$	430,746	$	-	$	-
Restricted cash	$	19,044,294	$	19,044,294	$	-	$	-
Warrants	$	7,340	$	-	$	7,340	$	-

The Company's financial instruments include cash and equivalents, restricted cash, accounts receivable, notes receivables, other receivables, accounts payable, notes payable, and warrants. 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. 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 March 31, 2013 and December 31, 2012, 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 for reporting non-controlling interest ("NCI") in a subsidiary. As a result, the Company reports NCI as a separate component of 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.

Statement of Cash Flows

In accordance with ASC 230, "Statement of Cash Flows", 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 February 2013, the Financial Accounting Standards Board ("FASB") issued amendments under ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Topic 220). The amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. We will adopt these amendments in the fourth quarter of 2013.

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

Principles of Consolidation

Principles of Consolidation

The Company's accompanying condensed consolidated balance sheet at March 31, 2013 and December 31, 2012, include the accounts of Gold Lion Holding Ltd and its wholly owned subsidiary Jiangsu Leimone, its 100%-owned subsidiary Silver Tech, and its specifically formed, wholly owned subsidiary, Zoom Sub which accounted for its ownership of Portables as 50.1%, as continuing operations. The Company's condensed consolidated balance sheet also included the accounts of TCB Digital for which the Company owns 80% indirectly through its indirectly held, 100% of Ever Elite which wholly owns Nollec Wireless, indirectly held through Silver Tech, all of which have been classified as discontinued operations held for sale.

The Company's condensed consolidated results of operations for the three months ended March 31, 2013 from continuing operations included the results of Gold Lion, Silver Tech, Jiangsu Leimone, Zoom Sub, and Portables; results of operations from Ever Elite, Nollec Wireless, and TCB Digital have been presented as discontinued operations. The Company's condensed consolidated results of operations for the three months ended March 31, 2012 from continuing operations included the results of Gold Lion, Silver Tech, Jiangsu Leimone, Zoom Sub, and Portables; results of operations from Profit Harvest, CDE, Ever Elite, Nollec Wireless, and TCB Digital have been presented as discontinued operations.

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." Management believes that the same is true at March 31, 2013 (See "Note 21 - Commitments" for details).

Based on this assessment, management believes that AUM is not a VIE because the Company does not make decisions that have significant impact on the performance of AUM; therefore, it 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 "non-controlling interest". AUM guarantees $1.7 million of the $3 million line of credit with M&T Bank for Portables Unlimited, LLC.

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 a loss on investment in SpreadZoom for $252,588 for the three months ended March 31, 2013. Refer to "Note 22 - Equity Method Investee: SpreadZoom" for details.

Basis of Presentation

Basis of Presentation

The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("US GAAP"). The functional currency of the Company's continuing operation Jiangsu Leimone and its equity investment SpreadZoom is the Chinese Renminbi ("RMB"). The functional currency of the Company's continuing operations Portables and Zoom Sub is United States Dollars ("USD" or "$"). The functional currency of the Company's discontinued operations, TCB Digital and Nollec Wireless is the RMB. The functional currency of the Company's discontinued operations Ever Elite and CDE is Hong Kong Dollars ("HKD"). The accompanying consolidated financial statements are translated and presented in the reporting currency of USD.

The interim condensed consolidated financial information as of March 31, 2013 and for the three months ended March 31, 2013 and 2012 have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). Certain information and footnote disclosures, which are normally included in annual consolidated financial statements prepared in accordance with U.S. GAAP, have been omitted pursuant to those rules and regulations. The interim consolidated financial information should be read in conjunction with the financial statements and the notes thereto, included in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2012, previously filed with the SEC.

In the opinion of management, all adjustments (which include normal recurring adjustments) necessary to present a fair statement of the Company's consolidated financial position as of March 31, 2013, its consolidated results of operations for the three months ended March 31, 2013 and 2012, and its consolidated cash flows for the three months ended March 31, 2013 and 2012, as applicable, have been made. The interim results of operations are not necessarily indicative of the operating results for the full fiscal year or any future periods.

Use of Estimates

Use of Estimates

The preparation of condensed 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", 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 Financial Accounting Standards ("FASB") Accounting Standards Codification ("ASC") Topic 810 with the RMB as the functional currency for the Chinese subsidiaries. According to ASC 810, 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 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, Hong Kong and the United States. Cash accounts in China and Hong Kong 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 March 31, 2013, management concluded that the allowance for doubtful accounts, as disclosed in "Note 5 - Accounts Receivable" was 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.

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. See "Note 8 - Property, Plant and Equipment" for details.

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. There have not been material amounts of capitalized interest for the three months ended March 31, 2013.

Impairment of Long-lived Assets

Impairment of Long-lived Assets

In accordance with ASC 360, "Property, Plant and Equipment", 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 last performed annual reviews of its long-lived assets at December 31, 2012 and 2011. In 2012, the Company determined that certain fixed assets and goodwill were impaired based on the disposal of certain operations. The Company has determined there have not been any triggering events during the three months ended March 31, 2013 that would require the Company to perform review for impairment of its 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", 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. The Company recorded impairment of goodwill related to the following subsidiaries: Jiangsu Leimone, CDE, and Silver Tech. See "Note 3 - Merger and Acquisitions" for details.

Revenue Recognition

Revenue Recognition

The Company recognizes sales in accordance with 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 discontinued operation, 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 discontinued operation 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. 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.

Uncertain Tax Positions

Uncertain Tax Positions

The Company accounts for uncertainty in income taxes using a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon settlement. The Company classifies the liability for unrecognized tax benefits as current to the extent that the Company anticipates payment (or receipt) of cash within one year. Interest and penalties related to uncertain tax positions are recognized and recorded as necessary in the provision for income taxes. There were no uncertain tax positions in 2012 and 2011. The Company's evaluation of uncertain tax positions was performed for the tax years ended December 31, 2009 and forward, the tax years which remain subject to examination as of March 31, 2013.

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", 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 (Loss) Per Share

Earnings (Loss) Per Share

The Company reports earnings (loss) per share in accordance with the provisions of ASC 260 "Earnings Per Share". 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. When the Company's results from operations are a net loss, dilutive securities are not included in diluted loss per share because they would be considered anti-dilutive.

Fair Values of Financial Instruments

Fair Values of Financial Instruments

ASC 820 "Fair Value Measurements and Disclosures", 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 March 31, 2013 and December 31, 2012 are as follows:

		Carrying Value		Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
		2013		(Level 1)		(Level 2)		(Level 3)
Cash and cash equivalents	$	212,665	$	212,665	$	-	$	-
Restricted cash	$	19,149,140	$	19,149,140	$	-	$	-
Warrants	$	13,715	$	-	$	13,715	$	-
		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	$	430,746	$	430,746	$	-	$	-
Restricted cash	$	19,044,294	$	19,044,294	$	-	$	-
Warrants	$	7,340	$	-	$	7,340	$	-

The Company's financial instruments include cash and equivalents, restricted cash, accounts receivable, notes receivables, other receivables, accounts payable, notes payable, and warrants. 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. 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 March 31, 2013 and December 31, 2012, 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 for reporting non-controlling interest ("NCI") in a subsidiary. As a result, the Company reports NCI as a separate component of 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.

Statement of Cash Flows

Statement of Cash Flows

In accordance with ASC 230, "Statement of Cash Flows", 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 February 2013, the Financial Accounting Standards Board ("FASB") issued amendments under ASU No. 2013-02, Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (Topic 220). The amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income, but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. We will adopt these amendments in the fourth quarter of 2013.

Correction of Prior Period Financial Statements

NOTE 25 - CORRECTION OF ERROR FOR ACCOUNTING OF WARRANTS AS DERIVATIVE SECURITIES

Zoom management discovered during the quarter ended September 30, 2012 that in accordance with ASC 815 (formerly EITF 07-5) the Company had incorrectly accounted for warrants issued in the years 2009 and 2010 as equity.  Series A, C, F, and related placement agent warrants contained anti-dilution provision that according to the above guidance required that these derivative securities be accounted for as liabilities and marked to market at each reporting period.  The Series G, and related placement agent warrants contained change of control provisions that required that the warrants be accounted for as liabilities because the securities were no longer indexed to the Company's stock; rather there were characteristics that required them to be accounted for as standalone securities that are considered liabilities to the Company. As a result the results of operations for the three months ended March 31, 2012 for 2012 have been restated as follows:

		For the Three Months Ended March 31, 2013
		As Previously				As Currently
		Reported		Adjustment		Reported
Other income (expenses)
	Change in fair value of warrants	$	-	$	(116,953)	$	(116,953)
	Total other income and expenses		(107,020)		(116,953)		(223,973)
Net income attributable to Zoom Technologies, Inc.		$	641,885		(116,953)	$	524,932
Basic and diluted income per common share:
	Basic	$	0.03	$	(0.01)	$	0.02
	Diluted	$	0.03	$	(0.01)	$	0.02

The Company assessed the value of these warrants by using the binomial lattice model. When the Company valued the warrants it used the following assumptions as part of inputs into the valuation model: US treasury rate of 0.34% as a measure of the risk free rate of return. The Company also used the mean of the annualized standard deviation of the log normal returns of comparable companies in the same line of business as measure of volatility which was 44.42% at March 31, 2012. The Company controls whether dilution may occur, so it did not add additional assumptions regarding dilutive events into the future discrete outcomes found in the model. The warrants values were adjusted for the dilutive effect as ratio of the outstanding common stock at the time of measurement. In determining the probabilities of an up movement or down movement in the discrete outcomes, as well as the related magnitude of such up or down movements, the Company used a Cox-Ross-Rubenstein approach in applying the binomial lattice model.

These corrections will be made to applicable prior period financial information in future filings with the SEC including this filing.

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Commitments (Operating Leases) (Details) (USD $)	Mar. 31, 2013
Company
2012	$ 269,570
2013	462,301
2014	155,341
Total minimum payments	887,212
Portables
2012	203,055
2013	349,766
2014	145,044
2015	72,522
Total minimum payments	$ 770,387

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Short-Term Loans (Tables)

3 Months Ended

Mar. 31, 2013

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 March 31, 2013 and December 31, 2012, the Company's short term loans consisted of the following:

	March 31,		December 31,
	2013		2012
	(Unaudited)
M&T Bank line of credit for up to $3.0 million is collateralized by real property, a certificate of deposit, and guarantees of Portables Unlimited, Inc. (the 49.9% owner of Portables); at 1 month LIBOR plus 3.00%.	$	2,488,424	$	2,994,999
SKAVYNIA HOLDINGS LTD		525,000		525,000
M&T Bank Short Term Portion of $2.5 million loan at 1-month LIBOR plus 3.50% due in 4 years from February 5, 2013, amortizing monthly.		587,172		-
Total	$	3,600,596	$	3,519,999

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Merger and Acquisitions (Details) (USD $)

3 Months Ended

3 Months Ended

3 Months Ended

Mar. 31, 2013

Silver Tech

Oct. 11, 2011

Silver Tech

Mar. 31, 2013

CDE

Jan. 04, 2011

CDE

Mar. 31, 2013

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

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Stockholders' Equity Warrants (Narrative) (Details) (USD $)

Mar. 31, 2013

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.

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CONSOLIDATED BALANCE SHEETS (USD $)	Mar. 31, 2013	Dec. 31, 2012
Current assets
Cash and cash equivalents	$ 212,665	$ 430,746
Restricted cash	19,149,140	19,044,294
Accounts receivable, net	2,566,950	3,246,247
Inventories, net	446,416	928,881
Other receivables and prepaid expenses	4,232,796	4,514,434
Due from related parties	20,967,777	20,964,025
Current assets of discontinued operations, held for sale	175,950,575	144,751,290
Total current assets	223,526,319	193,879,917
Property, plant and equipment, net	2,392,429	2,376,639
Equipment deposit	35,249	35,249
Intangible assets	477,439	480,690
Long-term investments	11,660,368	11,912,956
Goodwill	27,031,492	27,031,492
TOTAL ASSETS	265,123,296	235,716,943
Current liabilities
Short-term loans	3,600,596	3,519,999
Accounts payable	4,964,714	6,409,278
Accrued expenses and other payables	3,983,448	3,814,647
Purchase deposit from buyer	8,740,490	8,740,490
Taxes payable	22,457	22,334
Due to related parties	8,152,524	9,889,037
Warrant liability	13,715	7,340
Current liabilities of discontinued operations	169,860,070	138,348,859
Total current liabilities	199,338,014	170,751,984
Long-term loans	1,863,897	0
Long-term notes payable	317,500	317,500
TOTAL LIABILITIES	201,519,411	171,069,484
COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock: authorized 1,000,000 shares, par value $0.01 none issued and outstanding	0	0
Common stock: authorized 60,000,000 shares, par value $0.01, 29,526,848 shares issued and 29,525,168 shares outstanding at March 31, 2013; 29,320,848 shares issued and 29,319,168 shares outstanding at December 31, 2012	295,252	293,192
Treasury shares: 1,680 shares at cost	(7,322)	(7,322)
Additional paid-in capital	51,300,193	51,108,409
Statutory surplus reserve	702,539	702,539
Accumulated other comprehensive income	4,390,530	4,058,657
Accumulated deficit	(5,561,303)	(4,098,798)
TOTAL STOCKHOLDERS' EQUITY	51,119,889	52,056,677
Noncontrolling interest	12,483,996	12,590,782
TOTAL EQUITY	63,603,885	64,647,459
TOTAL LIABILITIES AND EQUITY	$ 265,123,296	$ 235,716,943

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Commitments (Tables) (Company)

3 Months Ended

Mar. 31, 2013

Company

Future minimum annual operating lease payments

The future minimum annual rental commitments as of March 31, 2013 are as follows:

Year
Remainder of 2013		831,719
2014		602,966
2015		225,255
Total	$	1,659,940

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CONSOLIDATED STATEMENT OF CASH FLOWS (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Cash flows from operating activities:
Loss before noncontrolling interest from continuing operations	$ (1,293,691)	$ (385,239)
Adjustments to reconcile loss to cash including non-controlling interest provided by (used in) operating activities:
Depreciation and amortization	75,024	94,297
Non-cash equity-based compensation	193,844	434,249
Provision on accounts receivable	45,000	9,047
Loss on investment in joint venture	252,588	0
Fair value adjustment on warrants	6,375	116,953
Changes in operating assets and liabilities:
Accounts receivable	634,297	(5,386,470)
Inventories	482,465	12,531
Advances to suppliers	(33)	353,231
Prepaid expenses and other assets	144,239	(13,827)
Accounts payable	(1,444,778)	976,077
Related parties-net	(1,521,793)	(2,738,781)
Accrued expenses and other current liabilities	306,338	4,648,599
Net cash used in operating activities	(2,120,125)	(1,879,333)
Cash flows from investing activities:
Purchase of property and equipment and other long-term assets	(87,563)	(111,865)
Net cash used in investing activities	(87,563)	(111,865)
Cash flows from financing activities:
Proceeds from loans	1,944,494	1,697,306
Receipt from related parties	45,080	215,751
Payments to related parties	0	(125,000)
Net cash provided by financing activities	1,989,574	1,788,057
Effect of exchange rate changes on cash & cash equivalents	33	89
Net decrease in cash and cash equivalents	(218,081)	(203,052)
Cash and cash equivalents, beginning of period	430,746	214,684
Cash and cash equivalents, end of period	212,665	11,632
SUPPLEMENTARY DISCLOSURES:
Interest paid	219,826	0
Income tax paid	$ 2,250	$ 0

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Property and Equipment Estimated Useful Lives (Details)	3 Months Ended
	Mar. 31, 2013 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
Transportation equipment
Property, Plant and Equipment, Useful Life, Minimum	4
Property, Plant and Equipment, Useful Life, Maximum	6
Workshop reconstruction
Property, Plant and Equipment, Useful Life, Average	5
Leasehold improvements
Property, Plant and Equipment, Useful Life, Average	5
Computer equipment
Property, Plant and Equipment, Useful Life, Minimum	4
Property, Plant and Equipment, Useful Life, Maximum	6
Office equipment
Property, Plant and Equipment, Useful Life, Minimum	4
Property, Plant and Equipment, Useful Life, Maximum	6

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Accounts Receivable (Tables)

3 Months Ended

Mar. 31, 2013

Accounts Receivable Tables

Accounts receivable

As of March 31, 2013 and December 31, 2012, the Company's accounts receivable consisted of the following:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Accounts receivable	$	3,402,407	$	4,032,656
less: Allowance for doubtful accounts		(835,457)		(786,409)
Accountants receivable, net	$	2,566,950	$	3,246,247

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Short-term Loans (Details) (USD $)

3 Months Ended

Mar. 31, 2013

Dec. 31, 2012

Short-term loans

$ 3,600,596

$ 3,519,999

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

0

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

0

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

0

4,713,498

STL Loan 6

Short-term Debt, Lender

BOCTB

Short-term Debt, Terms

BOCTB, due from June 14, 2012 to June 13, 2013 benchmark interest rate plus 5%, guaranteed by TCBGCL - related party 

Short-term loans

6,330,116

0

STL Loan 7

Short-term Debt, Lender

BOCTB

Short-term Debt, Terms

BOCTB, due from July 19, 2012 to July 18, 2013 benchmark interest rate plus 5%, guaranteed by TCBGCL - related party

Short-term loans

3,165,058

0

STL Loan 8

Short-term Debt, Lender

BOCTB

Short-term Debt, Terms

BOCTB, due from July 26, 2012 to July 25, 2013 benchmark interest rate plus 5%, guaranteed by TCBGCL - related party

Short-term loans

4,747,587

0

STL Loan 9

Short-term Debt, Lender

BOCTB

Short-term Debt, Terms

BOCTB, due from September 3, 2012 to September 2, 2013 benchmark interest rate plus 5%, guaranteed by TCBGCL - related party

Short-term loans

3,006,805

0

STL Loan 10

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 11

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

715,064

715,064

STL Loan 12

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 49.9% owner of Portables) due from September 1, 2011 - August 31, 2012, at Libor plus 2.95%

Short-term loans

525,000

854,469

STL Loan 13

Short-term Debt, Lender

HSBC

Short-term Debt, Terms

HSBC, due on demand with interest at 7.25% 

Short-term loans

0

48,146

STL Loan 14

Short-term Debt, Lender

Bank of Tianjin Laolian Branch

Short-term Debt, Terms

Bank of Tianjin Laolian Branch, due January 9, 2013 with benchmark interest rate plus 5''%, guaranteed by Tianjin Zhonghuan Electronic Information Group Ltd. ("Electronic")

Short-term loans

3,165,058

0

STL Loan 15

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 16

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 17

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 18

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 19

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 (a)

Short-term loans

1,571,166

STL Loan 20

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

1,582,529

0

STL Loan 26

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

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

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

0

15,923

STL Loan 27

Short-term Debt, Lender

HSBC Hong Kong

Short-term Debt, Terms

HSBC Hong Kong; 0.52% flat rate per month, Corporate Guarantee

Short-term loans

7,995

0

STL Loan 28

Short-term Debt, Lender

M&T Bank

Short-term Debt, Terms

M&T Bank line of credit for up to $3.0 million is collateralized by real property, a certificate of deposit, and guarantees
of Portables Unlimited, Inc. (the 49.9% owner of Portables); due March 26, 2015, at 1 month LIBOR plus 3.00%.

Short-term loans

$ 2,849,999

$ 0

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STOCK OPTIONS - Note 16

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

STOCK OPTIONS - Note 16

NOTE 16 - STOCK OPTIONS

The 2009 Equity Incentive Compensation Plan

On October 11, 2011, the Company's BOD approved of the granting of 1,500,000 options to employees and executives of Portables Unlimited LLC, the Company's newly acquired subsidiary, with the exercise prices of $1.83 and $3.75 per share, with 25% of the options vesting immediately and the balance equally per quarter over three years. These options expire in four years.

On October 8, 2012, the Company's BOD approved of the re-pricing of 1,200,000 out of the above-mentioned 1,500,000 options from the exercise price of $3.75 to $1.83 per share.

On October 26, 2011, the Company's BOD approved of the granting of 10,000 options to its new independent director, with the exercise price of $2.04 per share, vesting over one year and expiring in two years.

On November 29, 2011, the Company's BOD approved of the granting of 300,000 options to a consultant, with the exercise price of $1.00 per share, with 1/3 vesting immediately and the balance equally over two quarters. These options expire in two years.

On May 22, 2012, the Company issued 302,800 shares of its common stock to its employees, 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, which is considered the market price at that time. 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 was no extra non-cash compensation expense for the three months ended March 31, 2013.

The following summary represents options activity during the three months ended March 31, 2013 under the New Plan.

	Under New Plan	Weighted Average Exercise Price		Aggregate Intrinsic Value
Balance, December 31, 2012	1,810,000	$	1.69	$	-
Granted	100,000		0.65
Lapsed	-		-
Exercised	-		-
Cancelled	-		-
Balance, March 31, 2013	1,910,000	$	1.64	$	-

The following represents options summary as of March 31, 2013 under the New Plan.

	Options Outstanding				Options Exercisable
		Weighted Average		Weighted Average			Weighted Average
	Number	Remaining		Exercise	Number		Exercise
	Outstanding	Contractual Life		Price	Exercisable		Price
Options	1,910,000	2.30 years	$	1.64	1,060,000	$	1.60

For the re-pricing of the 1,200,000 options on October 8, 2012, from the exercise price of $3.75 to $1.83 per share, the Company determined the incremental fair value of $0.058 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 $0.90, expected life of 3 years, volatility of 39.22% and discount rate of 0.35%.

On November 29, 2011, the Company's BOD approved of the granting of 300,000 options to a consultant, with the exercise price of $1.00 per share, with 1/3 vesting immediately and the balance equally over two quarters. These options expire in two years.

On February 14, 2013, the Company's BOD approved of the granting of 100,000 options to an employee with an exercise price of $0.65, with monthly vesting beginning in February 2013. The options expire four years from the date of grant. The Company determined the grant date fair value of 100,000 options of $0.17 per share which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $0.65 per share, exercise price of $0.65 per share, expected life of 4.00 years, volatility of 32.48% and discount rate of 0.64%.

The Company recorded $34,819 of non-cash compensation expense related to stock options for the three months ended March 31, 2013. As of March 31, 2013, there was $247,074 of non-cash compensation to be recorded up to 2014 based on options valued at grant date.

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Inventories (Tables)

3 Months Ended

Mar. 31, 2013

Inventories Tables

Inventories

Inventories, by major categories, as of March 31, 2013 and December 31, 2012 were as follows:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Finished goods	$	446,416	$	928,881
less: Write down for obsolete inventories		-		-
Inventories, net	$	446,416	$	928,881

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STATUTORY RESERVES - Note 18

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

STATUTORY RESERVES - Note 18

NOTE 18 - 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.

As of March 31, 2013 and December 31, 2012, the Company's statutory surplus reserve was $702,539 and $702,539 respectively.

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RELATED PARTY TRANSACTIONS (Narrative) (Details) (USD $)	1 Months Ended	3 Months Ended
	Jan. 31, 2011	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Revenues from sales to Electronics Science and Tech		$ 41,055,041	$ 21,603,055
Beijing Leimone borrowed money maturity duration		12 months
Purchases from Tianjin Leimone		118,188,000	36,153,234
Amount due from Tianjin Leimone		12,049,192		13,708,030
Balance of loans		11,495,490		6,765,308
Tianjin Tong Guang Group ownership of TCB subsidiary		20.00%
Total sales to 712			15,757,425
Balance of Sales		563,539		796,419
Payment to acquire materials		580,617	15,523,282
Balance of Loan		369,185		408,831
Advance from related party		1,110,000
Total Sales to Shenzhen Leimone		16,055	153,695
Balance of funds provided by Gu		2,883,500		2,788,635
Related party payable		17,171,257
TCB Digital purchases from Tianjin Leimone		72
Portables line of credit	3,000,000
Line of credit interest rate	5.60%
Line of credit unpaid balance		4,079,864		2,633,147
Advances from related party interest rate		12.00%
Hui Pak Kong
Balance of loans				$ 277,076

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ORGANIZATION AND NATURE OF BUSINESS OPERATIONS - Note 1

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

ORGANIZATION AND NATURE OF BUSINESS OPERATIONS - Note 1

NOTE 1 — ORGANIZATION AND NATURE OF BUSINESS OPERATIONS

The Acquisition

Zoom Technologies, Inc. (the "Company") was incorporated in the state of Delaware on February 29, 2002. Until September 22, 2009, the Company was engaged in the design, production, marketing, sales, and support of broadband and dial-up modems, Voice over Internet Protocol or "VoIP" products and services, Bluetooth® wireless products, and other communication-related products.

On September 22, 2009, the Company consummated a share exchange transaction and acquired all the outstanding shares of Gold Lion Holding Limited ("Gold Lion"), a company incorporated in the British Virgin Islands ("BVI"), and its subsidiaries Jiangsu Leimone Electronics Co. Ltd ("Jiangsu Leimone"), Tianjin Tong Guang Group Digital Communication Co., Ltd ("TCB Digital") both incorporated in the (People's Republic of China, ("PRC"), and Profit Harvest Corporation Limited ("Profit Harvest") incorporated in Hong Kong. In connection with the share exchange transaction, the Company spun off its then-existing business to its stockholders, by distributing and transferring all assets and liabilities to its then subsidiary, Zoom Telephonics, Inc., and issuing shares of its then operating subsidiary as a dividend to its stockholders. The subsidiaries of Gold Lion were engaged in the manufacture design, sale and manufacture of mobile devices and handsets in China.

On June 1, 2010, Zoom pursuant to a share exchange agreement dated April 29, 2010, acquired 100% of the shares of Silver Tech Enterprises Ltd, incorporated in the BVI and its wholly owned subsidiaries Ever Elite Corporation Limited, incorporated in Hong Kong, and Nollec Wireless Company Ltd., ("Nollec Wireless"), incorporated in the PRC. Nollec Wireless is engaged in mobile phone and wireless communication device design.

On January 4, 2011, pursuant to a share exchange agreement, the Company via Profit Harvest acquired 100% ownership of Celestial Digital Entertainment, Ltd., ("CDE") a mobile platform video game development company based in Hong Kong.

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"), one of the largest wholesale distributors and direct retailers of T-Mobile products in the United States. Subsequent to the purchase of the 50% stake in ownership from CNCG, the Company increased its stake in Portables to 50.1% by injecting additional capital.

Disposition

On December 31, 2012, Zoom Technologies, Inc. ("Zoom" or the "Company") entered into a Share Purchase Agreement (the "SPA") with Beijing Zhumu Culture Communication Company, Ltd. (the "Purchaser"), a PRC company that provides services to the telecommunication industry. Pursuant to the SPA, the Company agreed to sell (the "Subsidiary Sale") to the Purchaser all the equity interests the Company holds in its China based subsidiaries (except for SpreadZoom Technologies Co., Ltd. ("SpreadZoom") as mentioned below), which include 100% of the outstanding equity interest of Ever Elite Corporation Limited, an intermediary holding company incorporated in Hong Kong, and its wholly owned subsidiary, Beijing Nollec Wireless Company ("Nollec"), 80% of the outstanding equity interest of Tianjin Tongguang Group Digital Communication Company, Ltd. ("TCBD"), 100% of the outstanding equity interest of Profit Harvest Corporation, Ltd. ("Profit Harvest"), and 100% of the outstanding equity interest of Celestial Digital Entertainment, Ltd. ("CDE"). As consideration for the Subsidiary Sale, the Purchaser agreed to pay to the Company RMB 200 million (approximately US$31.7 million) (the "Purchase Price"), subject to adjustment pending an appraisal by an independent third party appraiser. The Company on October 24, 2012 received approximately $12.6 million (RMB 80 million) less and bank charges; the Company on November 5, 2012, received $19.1 million (RMB 120 million) less transaction fees and bank charges. As of the date of this current report, the Purchaser has remitted the entire amount of RMB 200 million to the Company. A portion of the funds, approximately RMB 80 million, was released to the Company to use; accordingly, in the normal course of business, the Company deployed those funds to SpreadZoom and Tianjian Leimone as detailed in "Note 11 - Related Party Transactions". Upon the final closing of the Subsidiary Sale, which will occur 30 days after the Company receives all the requisites corporate and regulatory approvals with respect to the Subsidiary Sale, the balance of the escrowed funds will be released to the Company.

The Company's ownership interest in SpreadZoom, which owns and operates mobile phone manufacturing facilities in Tianjin, is not part of the Subsidiary Sale. In addition, the Company will, through Portables Unlimited, LLC, its U.S. based subsidiary, continue to operate the wholesale distributor business for T-Mobile products and services in the United States. The Company may make contracts with the Purchaser for future businesses.

The closing of the sale of Profit Harvest and CDE occurred on December 31, 2012; the closing of the sale of Ever Elite and Nollec occurred on April 5, 2013; the sale of TCBD is scheduled to close in the second quarter of 2013.

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CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Mar. 31, 2013	Dec. 31, 2012
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	60,000,000	60,000,000
Common stock, shares issued	29,526,848	29,320,848
Common stock, shares outstanding	29,525,168	29,319,168
Treasury shares, at cost	1,680	1,680

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RELATED PARTY TRANSACTIONS - Note 11

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

RELATED PARTY TRANSACTIONS - Note 11

NOTE 11 - RELATED PARTY TRANSACTIONS

Due from related parties

As of March 31, 2012 and December 31, 2012, due from related parties were:

	March 31,		December 31,
Due from related parties	2013		2012
	(Unaudited)
Beijing Leimone Shengtong Wireless Technology Co., Ltd.	$	71,809	$	91,571
Leimone (Tianjin) Industrial Co., Ltd.		11,075,639		11,034,982
Shenzhen Leimone		344,414		355,564
Raja R Amar - Chief Executive Officer of Portables		429,877		429,877
Spreadzoom		9,046,038		9,046,038
Others		-		5,993
Total due from related parties	$	20,967,777	$	20,964,025

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. The balances are neither collateralized nor personally guaranteed by Gu.

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. As of March 31, 2013 and December 31, 2012, the amounts due from Tianjin Leimone of $11,075,639 and $11,034,982 represented advances for purchases arising in the normal course of business for transaction prior to December 31, 2012. The difference in balances between March 31, 2013 and December 31, 2012, represents the fluctuation of exchange rates between the functional and reporting currency.

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. $344,414 and $355,564 as of March 31, 2013 and December 31, 2012 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 difference in the balances from March 31, 2013 and December 31, 2012 represents payment made by Shenzhen Leimone to the Company to reduce its outstanding balance.

The amount of $429,877 due from Raja R Amar at March 31, 2013 and December 31, 2012, is related to loans made to Raja R Amar by Portables prior to its acquisition by Zoom. The loans are interest free and are unsecured.

The balance due from SpreadZoom represents an advance to SpreadZoom for it to purchase components to manufacture handsets in the normal course of business. The advance bears no interest, and is uncollateralized. The difference in balances between March 31, 2013 and December 31, 2012, represents the fluctuation of exchange rates between the functional and reporting currency. Such advances are only expected to occur during these early setup stages of the business because once the company becomes fully capitalized it will have sufficient working capital to procure components, and advances will be reimbursed in to the Company.

Due to related parties

As of March 31, 2013 and December 31, 2012, due to related parties were:

	March 31,		December 31,
Due to related parties	2013		2012
	(Unaudited)
Mr. Lei Gu	$	2,901,283	$	2,901,283
Anthony Chan		397,901		358,814
Beijing Leimone Shengtong Cultural Development Co., Ltd.		102,500		102,500
Wireless Holdings of Northeast		117,600		117,600
Portables Unlimited International		1,304,864		3,779,864
Portables Unlimited, Inc.		2,559,112		2,559,112
AUM Realty, Inc.		63,364		69,864
Total due to related parties	$	7,446,624	$	9,889,037

Mr. Gu provides fund to the Company with no interest and are due on demand. As of March 31, 2013 and December 31, 2012, the balances of funds provided by Gu was $2,901,283 and $2,901,283 respectively.

Mr. Anthony Chan provides fund to the Company with no interest and are due on demand. As of March 31, 2013 and December 31, 2012, the balances of funds provided by Chan were $397,901 and $358,814, respectively.

In January 2011, the Portables entered into a line of credit agreement with a Portables Unlimited International for a total of $5,000,000. Interest on the line is due and payable on demand at 5.6%. The unpaid balance as of March 31, 2013 and December 31, 2012 was $1,304,864 and $3,779,864 respectively.

Portables received advances from its non-controlling owner, Portables Unlimited, Inc., totaling $3,265,012 and $2,559,112 at March 31, 2013 and December 31, 2012. These advances carry an interest rate of 12% per annum and are due on demand.

AUM Realty, Inc. is controlled by certain member of Portables. The outstanding balance represents outstanding rent owed to AUM. The amounts are due upon demand. Refer to "Note 21 - Commitments" for more details.

XML

Document and Entity Information	3 Months Ended
	Mar. 31, 2013	May 20, 2013
Document And Entity Information
Entity Registrant Name	ZOOM TECHNOLOGIES INC
Entity Central Index Key	0000822708
Document Type	10-Q
Document Period End Date	Mar. 31, 2013
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 Common Stock, Shares Outstanding		29,525,168
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2013

XML

LONG-TERM NOTES PAYABLE - Note 12

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

LONG-TERM NOTES PAYABLE - Note 12

NOTE 12 - LONG-TERM NOTES PAYABLE

The note was issued to CNCG as part of its acquisition of Portables, with an original face amount of $500,000, term from October 11, 2011 to October 11, 2014, and annual interest rate of 2%. On October 5, 2012, the Company repaid $182,500 of the outstanding principle.

XML

Income Tax (Schedule of Tax Effects of Temporary Differences in Deferred Tax Assets and Liabilities) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Income Tax Schedule Of Tax Effects Of Temporary Differences In Deferred Tax Assets And Liabilities Details
Accounts receivable allowance	$ 206,308
Net operating loss	1,542,316
Inventory impairment reserve		8,360
Inventory shortage		60,688
Long-term investment impairment		17,676
Total gross deferred assets	1,748,624	86,724
Less: Valuation allowance	(1,748,624)
Total deferred tax assets		86,724
Developed products		(30,575)
Deferred tax assets, net		$ 56,149

XML

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Income Statement [Abstract]
Net revenues	$ 7,365,230	$ 16,082,335
Cost of goods sold	5,893,746	13,338,448
Gross profit	1,471,484	2,743,887
Operating expenses:
Selling, general, and administrative expenses	2,098,166	2,470,904
Non-cash equity-based compensation	193,844	434,249
Total operating expenses	2,292,010	2,905,153
Loss from operations	(820,526)	(161,266)
Other income (expenses)
Interest income	0	6
Interest expense	(219,826)	(111,117)
Change in fair value of warrants	(6,375)	(116,953)
Investment loss	(252,588)	0
Other income (expense), net	7,874	4,091
Other income (expense), net	(470,915)	(223,973)
Loss before income taxes and noncontrolling interest	(1,291,441)	(385,239)
Income taxes for continuing operations	2,250	0
Loss before noncontrolling interest from continuing operations	(1,293,691)	(385,239)
less: (Loss) income attributable to non-controlling interest of continuing operations	(151,873)	239,742
Loss attributable to Zoom Technologies, Inc. from continuing operations	(1,141,818)	(624,981)
Discontinued Operations:
(Loss) income from discontinued operations, net of tax	(358,568)	1,087,685
less: Loss attributable to non-controlling interest from discontinued operations	(37,881)	(62,228)
(Loss) income attributable to Zoom Technologies, Inc. from discontinued operations	(320,687)	1,149,913
Net loss income attributable to Zoom Technologies Inc.	$ (1,462,505)	$ 524,932
Basic and diluted loss per common share from continuing operations:
Basic	$ (0.04)	$ (0.03)
Diluted	$ (0.04)	$ (0.03)
Basic and diluted income (loss) per common share from discontinued operations:
Basic	$ (0.01)	$ 0.05
Diluted	$ (0.01)	$ 0.05
Basic and diluted income per common share:
Basic	$ (0.05)	$ 0.02
Diluted	$ (0.05)	$ 0.02
Weighted average common shares outstanding:
Basic	29,467,946	23,958,988
Diluted	29,467,946	24,020,832

XML

INVENTORIES - Note 6

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

INVENTORIES - Note 6

NOTE 6 — INVENTORIES

Inventories, by major categories, as of March 31, 2013 and December 31, 2012 were as follows:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Finished goods	$	446,416	$	928,881
less: Write down for obsolete inventories		-		-
Inventories, net	$	446,416	$	928,881

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ACCOUNTS RECEIVABLE - Note 5

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

ACCOUNTS RECEIVABLE - Note 5

NOTE 5 - ACCOUNTS RECEIVABLE

As of March 31, 2013 and December 31, 2012, the Company's accounts receivable consisted of the following:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Accounts receivable	$	3,402,407	$	4,032,656
less: Allowance for doubtful accounts		(835,457)		(786,409)
Accountants receivable, net	$	2,566,950	$	3,246,247

XML

INCOME TAX - Note 17

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

INCOME TAX - Note 17

NOTE 17 - 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 $1.89 million and $1.38 million at March 31, 2013 and December 31, 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.

The discontinued operations of TCB Digital and Nollec Wireless, and the continuing operation of Jiangsu Leimone 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.  2012, is the last year that Jiangsu Leimone will afforded the 50% exemption from PRC incomes taxes.

SpreadZoom in subject to 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 profit that is reported in the statutory financial statements after appropriate tax adjustments.

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.

Nollec had pre-tax loss for the three months ended March 31, 2013. The Company's net income and earnings per share had no effect due to its income tax exemption.

The discontinued and disposed operations 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 graduated statutory tax rate of 34%.

U.S. NOL carryforwards are only those arising after September 22, 2009, which was the date when a more-than-50% ownership change occurred.

The following table summarizes the temporary differences which result in deferred tax assets and liabilities as at March 31, 2013 and December 31, 2012:

		March 31,		December 31,
		2013		2012
Deferred tax assets:
Net operating loss	$	310,093	$	511,035
less: Valuation allowance		(310,093)		(511,035)
Total deferred tax assets		-		-
Deferred tax liabilities:		-		-
Deferred tax assets, net	$	-	$	-

The following table reconciles the U.S. statutory rates to the Company's effective tax rates for the years ended March 31, 2013 and 2012:

	For the Three Months Ended March 31,
	2013	2012
US statutory rates	34.00%	34.00%
Tax rate difference	-1.98%	-2.12%
Valuation allowance	-24.01%	-74.63%
State taxes	-0.17%	0.00%
Non-taxable income of pass through entity	-8.01%	42.75%
Tax per financial statements	-0.17%	0.00%

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LONG-TERM LOANS - Note 13

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

LONG-TERM LOANS - Note 13

NOTE 13 - LONG-TERM LOANS

On February 5, 2013, Portables entered into a loan agreement with M&T Bank for a monthly amortizing loan for $2,500,000 with an interest rate of 1-month LIBOR plus 3.50%. The loan matures in four years from date of inception.

As of March 31, 2013, the outstanding balance of the loan is $2,451,069 of which $587,172 has been classified as short term and $1,863,897 has been classified as long term.

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Commitments (Operating Leases Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013
Commitments Operating Leases Narrative Details
Sublease income	$ 197,749
Rent expense, net	1,004,847
Rent paid to company member	$ 215,885

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INTANGIBLE ASSETS - Note 9

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

INTANGIBLE ASSETS - Note 9

NOTE 9 - INTANGIBLE ASSETS

As of March 31, 2013 and December 31, 2012, the Company's intangible assets were summarized as follows:

	Estimated	March 31,		December 31,
	Useful life	2013		2012
		(Unaudited)
Domain name, logo and trade mark	Indefinite	$	349,600	$	349,600
Customer list	15 years		1,269,416		1,269,416
Total cost			1,619,016		1,619,016
less: Accumulated amortization			(1,141,577)		(1,138,326)
Intangible assets, net		$	477,439	$	480,690

Intangible assets are stated at cost less accumulated amortization. The Company acquired domain name "zoom.com" and related logo and 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 three months ended March, 2013 and 2012 was $3,251 and $3,251 respectively. The estimated amortization for the next five years as of March 31, 2013 and thereafter is expected to be as follows by years:

Remainder of 2013	$	5,488
2014		8,739
2015		8,739
2016		8,739
2017		8,739
Thereafter		87,395
Total	$	127,839

XML

Property, Plant and Equipment (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Balance Sheet Related Disclosures [Abstract]
Machinery and equipment	$ 1,109,206	$ 1,103,169
Electronic equipment	90,138	89,645
Transportation equipment	50,525	50,248
Leasehold improvements	2,864,328	2,791,278
Computer equipment	255,406	255,406
Office equipment	271,453	256,828
Property and equipment, gross	4,641,056	4,546,574
Less: Accumulated depreciation	(2,248,627)	(2,169,935)
Property, plant and equipment, net	$ 2,392,429	$ 2,376,639

XML

OTHER RECEIVABLES AND PREPAID EXPENSES - Note 7

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

OTHER RECEIVABLES AND PREPAID EXPENSES - Note 7

NOTE 7 - OTHER RECEIVABLES & PREPAID EXPENSES

As of March 31, 2013 and December 31, 2012, the Company's other receivables and prepaid expenses consisted of the following:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Deposit	$	93,353	$	90,091
Advance to employees		522		-
Prepaid expenses		188,840		116,381
Others		3,950,081		4,307,962
Total other receivables and prepaid expenses	$	4,232,796	$	4,514,434

The balances of $3,950,081 and $4,307,962 labeled as "Others" as of March 31, 2013 and December 31, 2012 were primarily comprised of receivables of $3,949,693 and $4,297,253 owed to the Company by Profit Harves that arose in the normal course of business where the Company paid for expenses and professional fees on behalf of Profit Harvest. Profit Harvest was previously a subsidiary of the Company. In 2012, it was sold to Beijing Zhumu Culture Communication Company, Ltd. These amounts are expected to be recovered by the Company.

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PROPERTY, PLANT AND EQUIPMENT - Note 8

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

PROPERTY, PLANT AND EQUIPMENT - Note 8

NOTE 8 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of March 31, 2013 and December 31, 2012 consisted of the following:

	Estimated	March 31,		December 31,
	Useful Lives	2013		2012
		(Unaudited)
Machinery and equipment	4-6 years	$	1,109,206	$	1,103,169
Electronic equipment	4-6 years		90,138		89,645
Transportation equipment	4-6 years		50,525		50,248
Leasehold improvements	5 years		2,864,328		2,791,278
Computer equipment	4-6 years		255,406		255,406
Office equipment	4-6 years		271,453		256,828
Total			4,641,056		4,546,574
less:Accumulated depreciation			(2,248,627)		(2,169,935)
Property, plant and equipment, net		$	2,392,429	$	2,376,639

Depreciation for the three months ended March 31, 2013 and 2012 was $71,773 and $91,046 respectively.

XML

SHORT-TERM LOANS - Note 10

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

SHORT-TERM LOANS - Note 10

NOTE 10 - SHORT-TERM LOANS

Short-term loans are due to various financial institutions which are normally due within one year. As of March 31, 2013 and December 31, 2012, the Company's short term loans consisted of the following:

	March 31,		December 31,
	2013		2012
	(Unaudited)
M&T Bank line of credit for up to $3.0 million is collateralized by real property, a certificate of deposit, and guarantees of Portables Unlimited, Inc. (the 49.9% owner of Portables); at 1 month LIBOR plus 3.00%.	$	2,488,424	$	2,994,999
SKAVYNIA HOLDINGS LTD		525,000		525,000
M&T Bank short term portion of $2.5 million loan at 1-month LIBOR plus 3.50% due in 4 years from February 5, 2013, amortizing monthly.		587,172		-
Total	$	3,600,596	$	3,519,999

XML

Intangible Assets (Narrative2) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013
Finite-Lived Intangible Assets, Future Amortization Expense [Abstract]
2013	$ 222,905
2014	140,324
2015	90,194
2016	28,003
2017	19,580
Thereafter	48,848
Total	$ 549,854

XML

Investment in Spreadzoom (Narrative) (Details) (USD $)

3 Months Ended

Mar. 31, 2013

Dec. 31, 2012

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

$ 11,660,368

$ 11,912,956

Prepayment refund for the purchase of raw material

$ 2,171,549

XML

Notes Payable (Details) (USD $)

3 Months Ended

Mar. 31, 2013

Dec. 31, 2012

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 March 30 to September 30, 2012, secured by $3,955,884 of cash in bank; 

Notes payable

7,912,644

0

NP10

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

8,450,704

0

NP11

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

4,114,575

0

NP12

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

2,848,552

0

NP13

Short-term Debt, Lender

CECCC, honored by the BOCTB

Short-term Debt, Terms

CECCC, honored by the BOCTB, from July 13, 2012 to January 13, 2013, secured by $2,373,793 of cash in bank; Repaid January 16, 2012

Notes payable

4,747,587

0

NP14

Short-term Debt, Lender

CNCG

Short-term Debt, Terms

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%

Notes payable

$ 500,000

$ 0

XML

Intangible Assets (Narrative1) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Intangible Assets Narrative1 Details
Amortization of intangible assets	$ 216,752	$ 42,446

XML

Merger and Acquisitions (Tables)

3 Months Ended

Mar. 31, 2013

Property, Plant and Equipment [Abstract]

Schedule of goodwill

The following table summarizes goodwill as of March 31, 2013 and December 31, 2012 resulting from the acquisitions of Jiangsu Leimone, Silver Tech, and CDE:

	March 31,		December 31,
	2013		2012
	(Unaudited)
Jiangsu Leimone	$	103,057	$	103,057
Silver Tech		8,395,840		8,395,840
CDE		1,861,409		1,861,409
Portables		27,031,492		27,031,492
Total		37,391,798		37,391,798
Less: Impairment		(10,360,306)		(10,360,306)
Total goodwill	$	27,031,492	$	27,031,492

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Accounting Policies (Fair Value of Financial Instruments) (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012	Mar. 31, 2012	Dec. 31, 2011
Cash and cash equivalents	$ 212,665	$ 430,746	$ 11,632	$ 214,684
Restricted cash	19,149,140	19,044,294
Warrants	13,715	7,340
Marketable investment securities
Cash and cash equivalents	3,803,966	1,131,109
Restricted cash	16,410,824	15,507,408
Marketable investment securities
Cash and cash equivalents	0	0
Restricted cash	0	0
Warrants	327,763	850,841
Marketable investment securities
Cash and cash equivalents	0	0
Restricted cash	0	0
Warrants	$ 0	$ 0

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WARRANTS - Note 15

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

WARRANTS - Note 15

NOTE 15 - WARRANTS

The Company granted Series A, B, C, D and E warrants to the accredited investors as part of its private placement 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 three months ended March 31, 2013:

			Weighted		Aggregate
	Number of		Average Exercise		Intrinsic
	Warrants		Price		Value
Balance, December 31, 2012	8,638,604	$	2.30	$	-
Granted	-		-
Lapsed	-		-
Exercised	-		-
Cancelled	-		-
Balance, March 31, 2013	8,638,604	$	2.30	$	-

The following presents warrants summary as of March 31, 2013:

	Warrants Outstanding				Warrants Exercisable
		Weighted Average		Weighted Average			Weighted Average
	Number	Remaining		Exercise	Number		Exercise
	Outstanding	Contractual Life		Price	Exercisable		Price
Warrants	8,638,604	1.84 years	$	2.30	8,638,604	$	2.30

The Company has accounted for all of the outstanding Series A, C, F, G, and related placement warrants as liabilities. The Company assessed the value of these warrants by using the binomial lattice model. When the Company valued the warrants it used the following assumptions as part of inputs into the valuation model. US treasury rates as measure of the risk free rate of return. The Company also used the mean of the annualized standard deviation of the log normal returns of comparable companies in the same line of business as measure of volatility. The Company controls whether dilution may occur, so it did not add additional assumptions regarding dilutive events into the future discrete outcomes found in the model. The warrants values were adjusted for the dilutive effect as ratio of the outstanding common stock at the time of measurement. In determining the probabilities of an up movement or down movement in the discrete outcomes, as well as the related magnitude of such up or down movements, the Company used a Cox-Ross-Rubenstein approach in applying the binomial lattice model.

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OPERATING RISK - Note 20

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

OPERATING RISK - Note 20

NOTE 20 - 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 s

• 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 had outstanding warrants that are accounted for as derivative securities. Their values are re-measured at each reporting period. The quoted U.S. treasury rates with the maturities similar to those of the warrants are used as inputs in calculating their value; accordingly, the value of the warrants, are subject to fluctuations interest rates.

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ORGANIZATION AND NATURE OF BUSINESS OPERATIONS - Note 1 (Details Narrative) (USD $)	3 Months Ended
	Jun. 30, 2010	Mar. 31, 2013	Dec. 31, 2012	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, 2012 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	Mar. 31, 2013 Zoom Technologies Silver Tech Enterprises Acquisition Other Note Payable	Mar. 31, 2013 Zoom Technologies Silver Tech Enterprises Acquisition Long Term Debt	Jan. 04, 2011 Zoom Technologies Celestial Digital Acquisition SoftwareTitles	Mar. 31, 2013 Zoom Technologies Portables Acquisition	Oct. 11, 2011 Zoom Technologies Portables Acquisition Y	May 20, 2013 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		29,526,848	29,320,848							1,676,300										1,342,599	1,342,599			484,800		1,494,688
Consideration in shares of common stock		295,252	293,192							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%			0.10%													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																												50.10%
Portables ownership percentage of company																												49.90%
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)

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Related Party Transactions (Tables)

3 Months Ended

Mar. 31, 2013

Related Party Transactions Tables

Due From Related Parties

As of March 31, 2012 and December 31, 2012, due from related parties were:

	March 31,		December 31,
Due from related parties	2013		2012
	(Unaudited)
Beijing Leimone Shengtong Wireless Technology Co., Ltd.	$	71,809	$	91,571
Leimone (Tianjin) Industrial Co., Ltd.		11,075,639		11,034,982
Shenzhen Leimone		344,414		355,564
Raja R Amar - Chief Executive Officer of Portables		429,877		429,877
Others		-		5,993
Spreadzoom		9,046,038		9,046,038
Total due from related parties	$	20,967,777	$	20,964,025

Due To Related Parties

As of March 31, 2013 and December 31, 2012, due to related parties were:

	March 31,		December 31,
Due to related parties	2013		2012
	(Unaudited)
Mr. Lei Gu	$	2,901,283	$	2,901,283
Anthony Chan		397,901		358,814
Beijing Leimone Shengtong Cultural Development Co., Ltd.		102,500		102,500
Wireless Holdings of Northeast		117,600		117,600
Portables Unlimited International		1,304,864		3,779,864
Portables Unlimited, Inc.		2,559,112		2,559,112
AUM Realty, Inc.		63,364		69,864
Total due to related parties	$	7,446,624	$	9,889,037

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012
Statement of Other Comprehensive Income [Abstract]
Net (loss) income attributable to Zoom Technologies Inc.	$ (1,462,505)	$ 524,932
Net (loss) income attributable to noncontrolling interest	(189,754)	177,514
Other comprehensive income:
Foreign currency translation adjustments - Zoom Technologies Inc.	331,873	309,578
Foreign currency translation adjustments - noncontrolling interest	82,968	21,273
Comprehensive (loss) income - Zoom Technologies Inc.	(1,130,632)	834,510
Comprehensive (loss) income - noncontrolling interest	$ (106,786)	$ 198,787

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RESTRICTED CASH - Note 4

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

RESTRICTED CASH - Note 4

NOTE 4 - RESTRICTED CASH

Restricted cash was part of the funds deposited with the Company for sale to Beijing Zhumu Culture Communication Company, Ltd. of Profit Harvest, CDE, Ever Elite, Nollec Wireless, and TCB Digital. The funds become unrestricted upon closing of the disposition transaction.

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Costs in Excess of Revunue - R&D Contracts (Details) (USD $)	Mar. 31, 2013	Dec. 31, 2012
Costs In Excess Of Revunue - Rd Contracts Details
Costs in excess of revenue - R&D contracts	$ 698,597	$ 91,880

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Statutory Reserves (Narrative) (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Mar. 31, 2012	Dec. 31, 2012
Statutory Reserves Narrative Details
Statutory surplus reserve	$ 702,539		$ 702,539
Increase in statutory surplus reserve	$ 19,996	$ 3,667

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Long-Term Payables (Narrative) (Details) (USD $)	Mar. 31, 2013
Long-Term Payables Narrative Details
Long-term payables	$ 0

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COMMITMENTS - Note 21

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

COMMITMENTS - Note 21

NOTE 21 - COMMITMENTS

Operating lease commitments

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. A member of the Company, 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 Real Estate Property Tax payments. In addition, AUM borrowed $1,628,000 from a bank secured by a first mortgage on the property. This loan is guaranteed by the Company's member. As of March 27, 2012 the Chase Mortgage was paid in full in order for the property to be used as collateral in the amount of $1.7M for a Line of Credit for the Company. The mortgage balance that resulted in this transaction is now due to Portables Unlimited, LLC in the amount of $885,000. AUM continues to pay down this balance at $15,000 per month as per the agreement.

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

The Company also leases two other warehouses and 13 retail stores and kiosks. These leases require monthly payments and expire at various dates through 2017. The Company has operating agreements in place with the 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.

The future minimum annual rental commitments as of March 31, 2013 are as follows:

Year
Remainder of 2013		831,719
2014		602,966
2015		225,255
Total	$	1,659,940

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Stockholders' Equity Summary of Warrants Outstanding and Exercisable (Details) (USD $)	3 Months Ended
	Mar. 31, 2013	Dec. 31, 2012
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	2.34
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

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Property, Plant and Equipment (Tables)

3 Months Ended

Mar. 31, 2013

Property Plant And Equipment Tables

Components of Property, Plant and Equipment

Property, plant and equipment as of March 31, 2013 and December 31, 2012 consisted of the following:

	Estimated	March 31,		December 31,
	Useful Lives	2013		2012
		(Unaudited)
Machinery and equipment	4-6 years	$	1,109,206	$	1,103,169
Electronic equipment	4-6 years		90,138		89,645
Transportation equipment	4-6 years		50,525		50,248
Leasehold improvements	5 years		2,864,328		2,791,278
Computer equipment	4-6 years		255,406		255,406
Office equipment	4-6 years		271,453		256,828
Total			4,641,056		4,546,574
less:Accumulated depreciation			(2,248,627)		(2,169,935)
Property, plant and equipment, net		$	2,392,429	$	2,376,639

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STOCKHOLDERS' EQUITY - Note 14

3 Months Ended

Mar. 31, 2013

Notes to Financial Statements

STOCKHOLDERS' EQUITY - Note 14

NOTE 14 - STOCKHOLDERS' EQUITY

COMMON STOCK

On January 25, 2013 the Company issued 186,000 shares of its common stock to its Board of Directors for the service period from January 1, 2013 to December 31, 2013. These shares were valued at $0.65 per share which was the closing price on the date of Board Approval. The Company recorded non-cash compensation expense of $30,225 for the three months ended March 31, 2013. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $90,675.

On January 25, 2013 the Company issued 20,000 shares of its common stock to consultants for the service period from January 1, 2013 to December 31, 2013. These shares were valued at $0.65 per share which was the closing price on the date of Board Approval. The Company recorded non-cash compensation expense of $3,250 for the three months ended March 31, 2013. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $9,750.

On November 12, 2012, the Company issued 100,000 shares of its common stock to consultants for the service period from November 1, 2012 to October 31, 2013. These shares were valued at $0.80 per share which was the closing price on the date of Board Approval. The Company recorded non-cash compensation expense of $20,000 for the three months ended March 31, 2013. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $46,667.

On October 8, 2012, the Company issued 30,000 shares of its common stock to legal counsel for services rendered and a consultant for the service period from October 1, 2012 to September 30, 2013, respectively. These shares were valued at $0.90 per share which was the closing price on the date of Board Approval. The Company recorded non-cash compensation expense of $6,750 for the three months ended March 31, 2013. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $13,500.

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 October 4, 2011, the Board of Directors approved 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. The Company recorded non-cash compensation expense of $79,050 for the three months ended March 31, 2013. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $632,400.

On November 29, 2011, the BOD approved 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. For the three months ended March 31, 2013, the Company recorded non-cash compensation expense of $19,750. At March 31, 2013, the balance of unamortized stock compensation expense to be recognized in future periods related to such shares issuances was $52,667.