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

NOTE 14 - SHORT-TERM LOANS

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

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

 

 

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