DISCONTINUED OPERATIONS - Note 16

9 Months Ended

Sep. 30, 2013

Other income (expenses)

DISCONTINUED OPERATIONS - Note 16

NOTE 16 - DISCONTINUED OPERATIONS

The detailed results of operations for discontinued operations shown below for the three and nine months ended September 30, 2013 include the results of TCB Digital, Ever Elite, Nollec Wireless, and Portables. The detailed results of operations for discontinued operations shown below for the three and nine months ended September 30, 2012 include the results of TCB Digital, Profit Harvest, CDE, Ever Elite, Nollec Wireless, and Portables.

Results of Operations		Three Months Ended September 30,				Nine Months Ended September 30,
		2013		2012		2013		2012
		(Unaudited)		(Unaudited)		(Unaudited)		(Unaudited)
Net revenues	$	49,633,292	$	117,180,898	$	170,083,852	$	306,717,488
Cost of sales		48,002,298		111,193,306		160,180,706		286,251,895
Gross profit		1,630,994		5,987,592		9,903,146		20,465,593
Operating expenses		4,479,634		3,663,827		11,279,690		12,987,224
Operating (loss) income		(2,848,640)		2,323,765		(1,376,544)		7,478,369
Other income (expenses), net		(831,631)		26,893		(2,828,766)		(908,405)
(Loss) income before taxes from discontinued operations		(3,680,271)		2,350,658		(4,205,310)		6,569,964
less: Provision for income taxes		90		601,837		21,277		1,505,386
(Loss) income from discontinued operations, net of tax	$	(3,680,361)	$	1,748,821	$	(4,226,587)	$	5,064,578
Basic and diluted (loss) income per common share from
discontinued operations:
Basic	$	(4.57)	$	0.54	$	(5.42)	$	1.85
Diluted	$	(4.57)	$	0.54	$	(5.42)	$	1.85

Financial Position		September 30,		December 31,
		2013		2012
		(Unaudited)
Cash and equivalents	$	8,730,872	$	3,667,924
Restricted cash		69,630,402		64,467,142
Accounts receivable, net		36,676,226		38,889,208
Inventories, net		13,320,789		7,988,710
Other receivables and prepaid expenses		2,657,549		10,697,074
Advance to suppliers		478,223		5,027,089
Notes receivable		325,924		548,218
Due from related parties		6,471,812		17,144,272
Construction in progress deposit		-		278,996
Property, plant and equipment, net		1,098,498		3,670,327
Intangible assets, net		-		473,772
Goodwill		-		27,031,492
Total current assets		139,390,295		179,884,224
Total Assets of Discontinued Operations	$	139,390,295	$	179,884,224
Short-term loans	$	42,533,081	$	24,707,679
Notes payable		28,957,279		28,156,022
Accounts payable		26,996,853		22,625,660
Accrued expenses and other payables		932,246		3,591,128
Advances from customers		21,802		1,039,775
Taxes payable		(2,422,890)		(2,341,883)
Interest payable		-		110,835
Dividends payable		628,890		628,890
Due to related parties		42,360,470		76,824,918
Total current liabilities		140,007,731		155,343,024
Total Liabilities of Discontinued Operations		140,007,731		155,343,024
Net Assets of Discontinued Operations	$	(617,436)	$	24,541,200

The sale of all of the business operations to Beijing Zhumu Culture Communication Company, Ltd. covered in the Share Purchase Agreement as described in "Note 1 - Organization and Nature of Business Operations" was for approximately $31.7 million (RMB 200 million) in sales proceeds. The Share Purchase Agreement covers the sale of several business operations in different jurisdictions, with differing regulatory requirements regarding the purchase and sale of businesses. The table of above details the portion of the transaction related to the sale of Profit Harvest and CDE, which closed on December 31, 2012, for proceeds of $23.0 million. The portion of the sale covered in the Share Purchase Agreement for Ever Elite and Nollec Wireless generated proceeds of $500,000. This sales transaction closed on April 5, 2013. The balance of the sales proceeds, approximately $8.2 million will be allocated to TCB Digital upon the closing of that transaction. The Company has also included all the assets and liabilities of Portables at December 31, 2012 in discontinued operations.