ACCRUED EXPENSES AND OTHER PAYABLES - Note 16

3 Months Ended

Mar. 31, 2012

Notes to Financial Statements

ACCRUED EXPENSES AND OTHER PAYABLES - Note 16

NOTE 16 — ACCRUED EXPENSES AND OTHER PAYABLES

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

	March 31, 2012			December 31, 2011
	(Unaudited)			(Audited)
Accrued filing fees	$	469,668		$	445,391
Accrued rework cost		215,596			215,560
Accrued commission payable		8,692,279			4,616,079
Acquisition payable*		312,500			1,662,500
Accrued expenses		3,218,358			2,686,016
Welfare & salary payable		378,978			341,137
Others		127,003			207,029
Total accrued expenses and other payables	$		13,414,382	$	10,173,712

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

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

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

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