RELATED PARTY TRANSACTIONS - Note 18

6 Months Ended

Jun. 30, 2012

Notes to Financial Statements

RELATED PARTY TRANSACTIONS - Note 18

NOTE 18 — RELATED PARTY TRANSACTIONS

Due from related parties

As of June 30, 2012 and December 31, 2011, due from related parties were:

	June 30, 2012		December 31, 2011
	(Unaudited)		(Audited)
Due from related parties - short term
Tianjin Tong Guang Group Electronics Science & Technology Co., Ltd.	$	8,505,151	$	3,883,641
Beijing Leimone Shengtong Wireless Technology Co., Ltd.		128,487		167,172
Leimone (Tianjin) Industrial Co., Ltd.		7,367,123		20,473,338
Beijing Leimone Shengtong Cultural Development Co., Ltd.		1,727,525		2,744,697
Tianjin Tong Guang Group		712,850		379,994
Shenzhen Leimone		400,893		429,170
712 (Prior Shareholder)		758,774		992,815
Raja R Amar - Chief Executive Officer of Portables		334,634		741,448
AUM Realty		2,332,556		-
Others		-		613,425
Total due from related parties	$	22,267,993	$	30,425,700

Tianjin Tong Guang Group Electronics Science & Technology Co., Ltd. ("Electronics Science & Tech"), an entity related to the Company through a common shareholder of TCB Digital, purchased products from the Company. For the six months ended June 30, 2012 and 2011, the Company recorded revenues of $29,728,814 and $12,541,921 from sales to Electronics Science & Tech respectively. For the three months ended June 30, 2012 and 2011, the Company recorded revenues of $20,259,709 and $6,270,484 from sales to Electronics Science & Tech respectively.

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.

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. For the six months ended June 30, 2012 and 2011, the Company recorded total purchases from Tianjin Leimone of $72,137,320and $23,684,030 respectively. The amount due from Tianjin Leimone represented advances of $553,641 and $13,708,030 as of June 30, 2012 and December 31, 2011 respectively. The Company also sold certain products to Tianjin Leimone. In addition, Tianjin Leimone borrowed money from the Company and these borrowings bore no interest. As of June 30, 2012 and December 31, 2011, the balance of such loans was $6,813,482 and $6,765,308 respectively.

The amount due from Beijing Leimone Shengtong Cultural Development Co., Ltd. ("Beijing Leimone Cultural") for short term loan granted by the Company. Beijing Leimone Cultural was controlled by Gu. The borrowing bore no interest and is due on demand.

Tianjin Tong Guang Group, a 20% shareholder of our TCB subsidiary, borrowed money from the Company. The borrowings bear no interest and are due on demand.

712 was a minority shareholder of TCB Digital before Mr. Gu exercised the option to acquire 29.0% of TCB Digital. (See note 1.) 712 purchases raw materials from the Company. For the six months ended June 30, 2012 and 2011, the Company recorded revenues from sales to 712 of $316,870 and $15,757,425 respectively. For the three months ended June 30, 2012 and 2011, the Company recorded revenues from sales to 712 of $316,870 and $7,838,896 respectively. As of June 30, 2012 and December 31, 2011, the balance of such sales was $560,980 and $796,419 respectively. In addition, the Company purchases raw materials from 712. For the six months ended June 30, 2012 and 2011, the Company recorded purchases from 712 of Nil and $15,523,282 respectively. For the three months ended June 30, 2012 and 2011, the Company recorded total purchases from 712 of Nil and $6,399,926 respectively. 712 was no longer a related party of the Company after Mr. Gu exercised his option to acquire the additional 29.0% of TCB Digital in March 2010.

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. $400,893 and $408,831 as of June 30, 2012 and December 31, 2011 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 Company purchased raw materials from Shenzhen Leimone in 2011. The balance as of December 31, 2011 was advance to Shenzhen Leimone amounted to $20,339. In addition, for the six months ended June 30, 2012 and 2011, the Company recorded revenues from sales to Shenzhen Leimone of $16,024 and Nil respectively. For the three months ended June 30, 2012 and 2011, the Company recorded total revenue from sales to Shenzhen Leimone of Nil and Nil respectively.

The amounts due from Raja R Amar are related to loans made to Raja R Amar by Portables prior to its acquisition by Zoom.

The loans are interest free and are unsecured and are expected to be repaid by December 31, 2012.

Due to related parties

As of June 30, 2012 and December 31, 2011, due to related parties was:

	June 30, 2012		December 31, 2011
	(Unaudited)		(Audited)
Gu	$	2,926,135	$	2,788,635
Tianjin Tong Guang Group		598,063		-
Leimone (Tianjin) Industrial Co., Ltd.		15,871,694		-
AUM Realty, Inc.		-		269,049
Wireless Holdings of Northeast		-		117,600
Portables Unlimited International		4,620,665		2,633,147
Portables Unlimited, Inc.		1,110,000		650,000
Others		317,852		283,943
Total due to related parties	$	25,444,409	$	6,742,373

The Company borrowed money from Hui Pak Kong, a prior shareholder of CDE before the Company's acquisition on January 4, 2011. The borrowings bear no interest and are due on demand. As of June 30, 2012 and December 31, 2011, the balance of such loans was Nil and $277,943 respectively. The loan owed to Hui Pak Kong was forgiven and the amount was added to the additional paid in capital during the six months ended June 30, 2012.

Gu provides fund to the Company with no interest and are due on demand. As of June 30, 2012 and December 31, 2011, the balances of funds provided by Gu was $2,926,135 and $2,788,635 respectively.

TCB Digital had outstanding related party payable of $15,871,694 owed to Tianjin Leimone for raw materials that TCB Digital purchased through Tianjin Leimone for its manufacturing in the normal course of business. During the six months ended June 30, 2012, the TCB Digital purchased approximately $72.1 million of material from Tianjin Leimone.

In January 2011, the Portables entered into a line of credit agreement with a Portables Unlimited International for $3,000,000. Interest on the line is due and payable on demand at 5.6%. The unpaid balance as of June 30, 2012 and December 31, 2011 was $4,620,665 and $2,633,147 respectively.

Portables received advances from one of its non-controlling owner, Portables Unlimited, Inc., totaling $1,110,000. The advance has an interest rate of 12% per annum and is due on demand.