EQUITY METHOD INVESTMENTS - Note 19

12 Months Ended

Dec. 31, 2013

Investments, Debt and Equity Securities [Abstract]

EQUITY METHOD INVESTMENTS - Note 19

NOTE 19 - EQUITY METHOD INVESTMENTS

On May 10, 2012, the Company along with Spreadtrum Communications (Tianjin) Co., Ltd, Tianjin Baoshui District Investment Co, Ltd, and Han & Qin International (BVI) Limited invested in the joint venture SpreadZoom Technologies, Inc ("SpreadZoom"). SpreadZoom is domiciled in Tianjin, China with a registered capital of $47,352,700 (RMB 300,000,000). As of June 30, 2012, $17,520,500 (RMB 111,000,000) in capital had been contributed to SpreadZoom; the Company contributed $12,342,542 (RMB 78,000,000). The Company had committed to invest an additional $10,117,700 (RMB 64,100,000) in SpreadZoom. Management and control of the business have not been fully determined. The Company has used the equity method to account for its investment in SpreadZoom and has recorded a loss from investment of $ 1,031,979 and $ 429,586 for the years ended December 31, 2013 and 2012, respectively.

Changes in Equity Method Investments
		Portables		SpreadZoom		Total
Balance December 31, 2011 (Restated)	$	9,160,273	$	-	$	9,160,273
Initial investment				12,342,542		12,342,542
Equity method investment income (loss)		425,746		(429,586)		(3,840)
Increase in investment through co-borrowing on bank line of credit		3,000,000				3,000,000
Reduction in equity interest from 55.0% to 50.1%		(735,000)				(735,000)
Reduction from repayment of bank line of credit		(5,001)				(5,001)
Balance December 31, 2012 (Restated)	$	11,846,018	$	11,912,956	$	23,758,974
Balance December 31, 2012 (Restated)		11,846,018		11,912,956		23,758,974
Equity method investment loss		105,606		(1,031,979)		(926,373)
Increase in investment through co-borrowing on bank term note		2,500,000				2,500,000
Reduction in investment through repayment of line of credit		(500,000)				(500,000)
Reduction from repayment on bank term note		(489,310)				(489,310)
Gain from default of promisssry note leading for fofeiture of ownership		(2,000,000)				(2,000,000)
Loss on disposal		(11,462,314)				(11,462,314)
Balance December 31, 2013	$	-	$	10,880,977	$	10,880,977

		December 31,		December 31,
		2013		2012
Financial Position of SpreadZoom				(Restated)
Current assets	$	17,811,982	$	42,772,581
Non-current assets		6,558,367		1,775,661
Total assets		24,370,349		44,548,242
Current liabilities		9,353,001		27,839,474
Non-current liabilities		-		-
Total liabilities		9,353,001		27,839,474
Net asset value	$	15,017,348	$	16,708,768
		For Years Ended
Results of Operations of SpreadZoom		December 31,
		2013		2012
				(Restated)
Net revenues	$	66,920,617	$	46,025,192
Cost of goods sold		65,000,788		45,859,806
Gross profit		1,919,829		165,386
Operating expenses		4,152,403		1,327,593
Operating loss		(2,232,574)		(1,162,207)
Other income (expenses), net		54,025		255,721
Income (loss) before taxes		(2,178,549)		(906,486)
less: Provision for income taxes		-		-
Net loss	$	(2,178,549)	$	(906,486)
Investment loss attributable to Zoom Technologies, Inc.	$	(1,031,979)	$	(429,586)

The Company accounted for its investment in Portables Unlimited, LLC using the equity method. The following are operating results of Portables for the year ended December 31, 2012 and from January 1, 2013 to July 15, 2013, the date of disposition.

		July 15,		December 31,
		2013		2012
Financial Position of Portables				(Restated)
Current assets	$	6,283,761	$	7,145,668
Non-current assets		2,515,896		2,542,977
Total assets		8,799,657		9,688,645
Current liabilities		14,570,582		16,994,165
Non-current liabilities		1,708,928		-
Total liabilities		16,279,510		16,994,165
Net asset value	$	(7,479,853)	$	(7,305,520)
		For the Period Ended		For Year Ended
Results of Operations of Portables		July 15,		December 31,
		2013		2012
				(Restated)
Net revenues	$	14,130,111	$	49,773,552
Cost of goods sold		10,341,986		40,813,304
Gross profit		3,788,125		8,960,248
Operating expenses		3,309,640		7,215,081
Operating income		478,485		1,745,167
Other income (expenses), net		(267,695)		(895,374)
Income (loss) before taxes		210,790		849,793
less: Provision for income taxes		-		-
Net loss	$	210,790	$	849,793
Investment loss attributable to Zoom Technologies, Inc.	$	105,606	$	425,746