COMMITMENTS - Note 27

12 Months Ended

Dec. 31, 2011

Notes to Financial Statements

COMMITMENTS - Note 27

NOTE 27 — COMMITMENTS

Operating lease commitments

The Company has an operating lease for TCB Digital's premises through TCBGCL, a common shareholder of TCB Digital; pursuant to this lease, the rate of rent is at Rmb 8 ($1.25) per square meter per month for production facilities and dormitory space. The Company also has an operating lease in Beijing for office space shared with Nollec Wireless, with rent at Rmb 137 ($21.37) per square meter per month for 1,409 square meters and with rent at Rmb 131 ($20.44) per square meter per month for 388 square meters. The Company has an operating lease in Hong Kong for the office of CDE, rental and property management fees are HKD10,588 ($1,363) and HKD3,402 ($438) respectively per month. The commitments of the Company (except for Portables which is disclosed separately below) as of December 31, 2011 for the next 2 years are as follows:

Year
2012	$	578,964
2013		137,943
Total minimum lease payments	$	716,907

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

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

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

The future minimum annual rental commitments of Portables as of December 31, 2011 are as follows:

Year
2012	$ 1,016,061
2013	325,521
2014	195,044
2015	114,189
Total Minimum Lease Payments	$ 1,650,815

Rent expense, net of sublease income for retail locations of $415,637, amounted to $164,930 of which $47,974 was paid to one of the Company's members under the sublease agreement for the period October 12, 2011 through December 31, 2011.