RELATED PARTY TRANSACTIONS - Note 11

12 Months Ended

Dec. 31, 2013

Notes to Financial Statements

RELATED PARTY TRANSACTIONS - Note 11

NOTE 11 - RELATED PARTY TRANSACTIONS

Due from related parties

As of December 31, 2013 and 2012, the amounts due from related parties were:

		December 31,		December 31,
Due from related parties		2013		2012
				(Restated)
Beijing Leimone Shengtong Wireless Technology Co., Ltd.	$	17,997	$	91,571
Leimone (Tianjin) Industrial Co., Ltd.		-		11,034,982
Shenzhen Leimone		293,998		355,564
Spreadzoom		9,046,038		9,046,038
Total due from related parties	$	9,358,033	$	20,528,155

Beijing Leimone Shengtong Wireless Technology Co., Ltd. ("Beijing Leimone") was founded by Gu, the largest shareholder of the Company. Beijing Leimone borrowed 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.

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 December 31, 2012, the amount due from Tianjin Leimone of $11,034,982 represented advances for purchases arising in the normal course of business for transactions prior to December 31, 2012. The balance was net off against the capital injection detailed in Due to related parties below.

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. $293,998 and $355,564 as of December 31, 2013 and 2012 was a loan to Shenzhen Leimone for setup costs. The balance is expected to be repaid in full.

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. Upon completion of the sale of TCB Digital, the Company expects to be repaid these advances.

Due to related parties

As of December 31, 2013 and 2012, the amounts due to related parties were:

		December 31,		December 31,
Due to related parties		2013		2012
				(Restated)
Mr. Lei Gu	$	1,063,500	$	2,901,283
Anthony Chan		-		358,814
Leimone (Tianjin) Industrial Co., Ltd.		2,283,922		-
Beijing Leimone Shengtong Cultural Development Co., Ltd.		102,500		102,500
Portables Unlimited, Inc.		-		2,000,000
Total due to related parties	$	3,449,922	$	5,362,597

Mr. Gu provided funds to the Company with no interest and are due on demand. As of December 31, 2013 and 2012, the balances of funds provided by Gu was $1,063,500 and $2,901,283 respectively.

Mr. Anthony Chan provided funds to the Company with no interest and they were due on demand. As of December 31, 2012, the balances of funds provided by Chan and certain accrued compensation for services rendered was $358,814. As of December 31, 2013, the amounts owed to Mr. Chan have been repaid in full.

Leimone (Tianjin) Industrial Co., Ltd. ("Tianjin Leimone") was controlled by Gu, the largest shareholder of the Company. As of December 31, 2013, the amount owed to Tianjin Leimone was $2,283,922. This balance is the result of a transfer from Tianjin Leimone of $10,719,532 (RMB 66,400,000) for Jiangsu Leimone to inject as capital into its discontinued operation TCB Digital. The transfer of funds from Tianjin exceeded the then outstanding balance of $8,435,610 owed by Tianjin Leimone; therefore, the remaining balance is a net due to Tianjin Leimone.

The balance owed to Beijing Lemone Shengtong Cultural Development Co, Ltd ("Beijing Shentong") arose in the normal course of business, as certain corporate staff expenses in Beijing were paid by Beijing Shentong on behlf of the Company.

The balance owed of $2 million was for a promissory note issued to Portables Unlimited, Inc. The Company defaulted on this loan and forfeited its ownership in Portables. See Note 1 in the accompanying financial statements for details.