ADVANCE TO SUPPLIERS - Note 7

6 Months Ended

Jun. 30, 2011

Notes to Financial Statements

ADVANCE TO SUPPLIERS - Note 7

NOTE 7 — ADVANCE TO SUPPLIERS

As of June 30, 2011 and December 31, 2010, the Company's advance to suppliers consisted of the following:

	June 30, 2011		December 31, 2010
			(Audited)
Yuechangrui	$	4,409,279	$	-
Media Tak Inc.	121,711		-
CEC CoreCast Technology Co., Ltd. ("CECCC")		8,283,950		7,734,980
Shenzhen Nanxin Communication Equipment Co., Ltd.		773,515		-
Shenzhen Futian District Longchengfa Electronic Co., Ltd.		618,812		-
Shenzhen Baoan District Shiyan Jixintong Commercial & Trade Co. ("SBDSJCTC")		-		6,851,051
TSINGTAO Hisense Portable Communication Tech Co.,Ltd.		-		245,762
Longcheer Telecommunication Limited		150,547		-
Shenzhen Wuxing Commercial & Trade Co.		9,280,288		3,729,695
Shenzhen Fudian District Longchengfa Electronic Commercial Co.		-		604,979
Guolong Information Technology Co., Ltd.		162,643		-
Foshan Import and Export		1,778,985		-
SINOEMBED SYSTEM		690,322		-
FOSHAN TIANJIA IMPORT		2,513,000		-
Beijing Pengyucheng science and technology development Co., LTD		123,762		-
Konka		105,920		-
Arrow Electronics China Ltd.		102,580		-
Others		836,403		555,825
Total advance to suppliers	$	29,961,717	$	32,776,983

The Company made bank note payments to CECCC in advance of purchasing of material. The advance payments are intended to ensure preferential pricing. The amounts are advanced under such arrangements. See Note 14 for notes payable details.

The Company purchased parts for mobile phone manufacturing from SBDSJCTC which delivered those parts to the Company according to the purchase terms.

The Company purchased mobile phones from Yuechangrui which delivered those mobile phones to the Company according to the purchase terms.

The Company signed a purchase agreement with Shenzhen Wuxing Commercial & Trade Co. for the supply of components for the E33 mobile phone. The amounts are advances under such agreement.