RELATED PARTY TRANSACTIONS - Note 8

9 Months Ended

Sep. 30, 2013

Notes to Financial Statements

RELATED PARTY TRANSACTIONS - Note 8

NOTE 8 - RELATED PARTY TRANSACTIONS

Due from related parties

As of September 30, 2013 and December 31, 2012, due from related parties were:

		September 30,		December 31,
Due from related parties		2013		2012
		(Unaudited)
Beijing Leimone Shengtong Wireless Technology Co., Ltd.	$	35,852	$	91,571
Leimone (Tianjin) Industrial Co., Ltd.		4,212,356		11,034,982
Shenzhen Leimone		324,950		355,564
Spreadzoom		9,046,040		9,046,038
Total due from related parties	$	13,619,198	$	20,528,155

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. The balances are neither collateralized nor personally guaranteed by Gu. The balance is expected to be repaid in full by December 31, 2013.

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. As of September 30, 2013 and December 31, 2012, the amounts due from Tianjin Leimone of $4,212,356 and $11,034,982 represented advances for purchases arising in the normal course of business for transactions prior to December 31, 2012. The difference in balances between September 30, 2013 and December 31, 2012, represents the repayment of related party advances. The outstanding balance is expected to begin to reduce materially when the Company has completed its sale of TCB Digital.

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. $324,950 and $355,564 as of September 30, 2013 and December 31, 2012 was a loan to Shenzhen Leimone for setup costs. The balance is expected to be repaid in full by December 31, 2013.

The balance due from SpreadZoom represents an advance to SpreadZoom for it to purchase components to manufacture handsets in the normal course of business. The advance bears no interest, and is uncollateralized. The difference in balances between September 30, 2013 and December 31, 2012, represents the fluctuation of exchange rates between the functional and reporting currency. Such advances occurred during the early stages of the business. The SpreadZoom has not yet been fully capitalized. Upon completion of the sale of TCB Digital, the Company expects to be repaid these advances.

Due to related parties

As of September 30, 2013 and December 31, 2012, due to related parties were:

		September 30,		December 31,
Due to related parties		2013		2012
		(Unaudited)
Mr. Lei Gu	$	2,863,500	$	2,901,283
Anthony Chan		-		358,814
Beijing Leimone Shengtong Cultural Development Co., Ltd.		102,500		102,500
Portables Unlimited, Inc.		-		2,000,000
Total due to related parties	$	2,966,000	$	5,362,597

Mr. Gu provides funds to the Company with no interest and are due on demand. As of September 30, 2013 and December 31, 2012, the balances of funds provided by Gu was $2,863,500 and $2,901,283 respectively.

At December 31, 2012, the Company owed to Mr. Anthony Chan certain accrued compensation for services rendered in the amount of $358,814. As of September 30, 2013, the balance owed to Mr. Chan has been fully settled.

At December 31, 2012, the Company owed to Portables Unlimited, Inc. a promissory note for $2,000,000. As of July 15, 2013, the Company was in default of this note. Refer to "Note 1 - Organization and Nature of Business Operations" for further details.