RELATED PARTY TRANSACTIONS - Note 11

3 Months Ended

Mar. 31, 2014

Notes to Financial Statements

RELATED PARTY TRANSACTIONS - Note 11

NOTE 11 - RELATED PARTY TRANSACTIONS

Due from related parties

As of March 31, 2014 and December 31, 2013, the amounts due from related parties were:

		March 31,		December 31,
Due from related parties		2014		2013
		(Unaudited)
Beijing Leimone Shengtong Wireless Technology Co., Ltd.	$	-	$	17,997
Shenzhen Leimone		280,303		293,998
Spreadzoom		9,250,394		9,046,038
Total due from related parties	$	9,530,697	$	9,358,033

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 has been repaid in full.

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. As of March 31, 2014 and December 31, 2013, $208,303 and $293,998 of loans made to Shenzhen Leimone to be used for setup costs were still outstanding. 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. If the Company is able to successfully complete a sale of SpreadZoom, the Company expects to be repaid these advances.

Due to related parties

As of March 31, 2014 and December 31, 2013, the amounts due to related parties were:

		March 31,		December 31,
Due to related parties		2014		2013
		(Unaudited)
Mr. Lei Gu	$	1,063,500	$	1,063,500
Leimone (Tianjin) Industrial Co., Ltd.		2,176,294		2,283,922
Beijing Leimone Shengtong Cultural Development Co., Ltd.		102,500		102,500
Total due to related parties	$	3,342,294	$	3,449,922

Mr. Gu provided funds to the Company with no interest and are due on demand. As of March 31, 2014 and December 31, 2013, the balances of funds provided by Gu was $1,063,500.

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 due to Tianjin Leimone of $2,283,922 at December 31, 2013 was reduced to $2,176,294 at March 31, 2014.

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 behalf of the Company.