UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)

[X]       QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
             SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTER ENDED MARCH 31, 2010

OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from ________to _________

Commission file number 0-18672



ZOOM TECHNOLOGIES, INC.



|Delaware                                                       | 51-0448969                             
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

Headquarters:
                                                 Room 708 CEC Building 
                                                 No.6 Zhongguancun South Street 
                                                 Haidian District, Beijing, China 100086

U.S. correspondence office:
                                                  c/o Ellenoff Grossman & Schole LLP
                                                      150 East 42nd Street
                                                       New York, NY    10017(Address of principal executive offices including zip code)

(917) 609-0333

N/A

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a
smaller reporting company. See definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company"
in Rule 12b-2 of the Exchange Act. (Check one):

|Large accelerated filer      ̈ | Accelerated filer     ̈ | Non-accelerated filer     ̈ (Do not check if a smaller reporting company) | Smaller reporting company    x
|----------------------------- | ---------------------- | ------------------------------------------------------------------------ | ------------------------------

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES     ̈ NO    x Applicable only to corporate issuers:

State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:
The number of shares of common stock, par value $0.01, outstanding as of May 10, 2010 is 8,980,634.
Zoom Technologies, Inc.
                                               and Subsidiaries 

FORM 10-Q

For March 31, 2010

TABLE OF CONTENTS

Part I.

Consolidated Financial InformationItem 1.

Consolidated Financial Statements (unaudited)

1Consolidated Balance Sheetsas of March 31, 2010 (unaudited) and December 31, 2009 (audited)

1Consolidated Statements of Income and Other Comprehensive Incomefor The Three-Month Periods ended March 31, 2010 and 2009 (unaudited)

2Consolidated Statements of Cash
Flowsfor The Three-Month Periods ended March 31, 2010 and 2009 (unaudited)

3Notes to Unaudited Consolidated Financial
Statements

4Item 2.

Management's Discussion and Analysis of Consolidated Financial Condition and Results of Operations

27Item 3.

Controls and Procedures

31Part II.

Other InformationItem 1.

Legal Proceedings

32Item 4.

Reserved

32Item 5.

Other Information

32Item 6.

Exhibits

32Signatures



33Exhibits-i-PART I — FINANCIAL INFORMATION

ITEM 1 Consolidated Financial Information - (unaudited) 



ZOOM TECHNOLOGIES, INC.
                                       CONSOLIDATED BALANCE SHEETS


March 31, 2010
December 31, 2009ASSETS
(Unaudited)Current assetsCash and cash equivalents
$             334,784
$          1,472,300Restricted cash
12,975,234
11,993,214Accounts receivable, net
18,907,576
16,835,074Other receivables and prepaid expenses
294,629
311,808Advance to suppliers
40,554,453
27,471,601Inventories, net
1,472,718
1,534,989Due from related parties
6,808,514
12,221,778Deferred tax assets, net
450,611
504,222Total current assets
81,798,519
72,344,986Property, plant and equipment, net
5,269,029
5,673,923Construction in progress
48,196
32,849Goodwill
103,057
103,057TOTAL ASSETS
$        87,218,801
$        78,154,815LIABILITIES AND STOCKHOLDERS' EQUITYCurrent liabilitiesShort-term loans
$        20,962,245
$        16,000,702Notes payable
25,950,469
23,986,427Accounts payable
1,669,082
2,439,925Advance from customers
2,248,447
51,243Dividends payable
579,673
579,579Taxes payable
2,046,570
1,603,557Accrued expenses and other payables
154,270
127,484Due to related parties
2,904,878
5,245,415Total current liabilities
56,515,634
50,034,332TOTAL LIABILITIES
56,515,634
50,034,332STOCKHOLDERS' EQUITYCommon stock: authorized 25,000,000 shares, par value $0.01Issued 8,982,314 shares and outstanding 8,980,634 shares; and     Issued 8,780,988 shares and outstanding
8,779,308 shares      at March 31, 2010 & December 31, 2009 respectively
89,806
87,793Shares to be issued
4,900,526
592Subscription receivable
-
(378)Deferred expenses
(508,500)
-Additional paid-in capital
14,238,719
14,309,538Treasury shares: 1,680 shares at cost
(7,322)
(7,322)Statutory surplus reserve
665,064
633,378Accumulated other comprehensive income
211,161
210,773Retained earnings
8,118,495
6,254,479TOTAL STOCKHOLDERS' EQUITY
27,707,949
21,488,853Noncontrolling interest
2,995,218
6,631,630TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
$        87,218,801
$        78,154,815The accompanying notes are an integral part of these consolidated financial statements.

1ZOOM TECHNOLOGIES, INC.
                                  UNAUDITED CONSOLIDATED STATEMENTS OF INCOME AND 
                                  OTHER COMPREHENSIVE INCOME

Three Months Ended March 31,2010

2009Net revenues
$           50,979,269

$      28,816,557Cost of sales
(46,801,015)

(26,131,951)Gross profit
4,178,254

2,684,606Operating expenses:Sales and marketing expenses
(44,076)

(1,048,323)General and administrative expenses
(904,641)

(787,482)Non-cash equity-based compensation charges - options
(369,659)

-(1,318,376)

(1,835,805)Income from operations
2,859,878

848,801Other income (expenses)Interest income
187

154,170Other income
-

399,158Interest expense
(257,626)

(320,907)Exchange loss
(155)

(24,903)Other expenses
(14,853)

(31,560)Total other income (expenses)
(272,447)

175,958Income before income taxes andnoncontrolling interest
2,587,431

1,024,759Income tax expense
(548,126)

(178,208)Income before noncontrolling interest
2,039,305

846,551Less: Loss (income) attributable tononcontrolling interest
(143,603)

44,781Net income attributable to Zoom Technologies Inc
1,895,702

891,332Other comprehensive income
388

16,660Comprehensive income
$            1,896,090

$         907,992Basic and diluted income/(loss) per common share:Basic

$                              0.21

$                        0.45Diluted

$                              0.20

$                        0.45Weighted average common shares outstanding:Basic

8,903,851

1,978,478Diluted

9,257,582

1,978,478The accompanying notes are an integral part of these consolidated financial statements.

2ZOOM TECHNOLOGIES, INC.
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS


Three Months Ended March 31,2010

2009Cash flows from operating activities:Income including noncontrolling interest
$          2,039,305

$             846,551Adjustments to reconcile net income to cash used in operating activities:Depreciation and amortization
405,019

394,928Non-cash equity-based compensation charges
369,659

-Provision for inventory obsolescence
-

308,350Provision for doubtful receivables
-

39,882Investment income
-

(3,245)Deferred tax assets
53,692

-Changes in operating assets and liabilities:Accounts receivable
(1,636,001)

6,950,079Inventories
62,518

77,581Advances to suppliers
117,715

(11,541,642)Prepaid expenses and other assets
16,724

446,697Accounts payable
(771,267)

(477,465)Advance from customers
2,197,215

5,238,238Related parties-net
(4,472,721)

(3,627,940)Accrued expenses and other current liabilities
470,364

(107,897)Net cash used in operating activities
(1,147,778)

(1,455,883)Cash flows from investing activities:Restricted cash
(980,100)

(3,213,283)Purchase of property and equipment and other long-term assets
(14,843)

(23,333)Net cash used in investing activities
(994,943)

(3,236,616)Cash flows from financing activities:Issuance of shares for cash
170,490

-Proceeds from short-term loans
18,124,528

4,819,925Advance to related parties
(3,637,028)

(7,351,115)Repayment on borrowing from related parties
(10,074,820)

-Proceeds from notes payable
1,960,199

6,426,566Collection on advance to related parties
272

7,954,414Receipt from related parties
7,629,484

108,119Repayments on short-term loans
(13,165,517)

(4,819,925)Net cash provided by financing activities
1,007,608

7,137,984Effect of exchange rate changes on cash & cash equivalents
(2,403)

14,840Net increase (decrease) in cash and cash equivalents
(1,137,516)

2,460,325Cash and cash equivalents, beginning balance
1,472,300

812,769Cash and cash equivalents, ending balance
$             334,784

$          3,273,094SUPPLEMENTARY DISCLOSURES:Interest paid
$             292,422

$             297,134Income tax paid
$                 5,945

$                -The accompanying notes are an integral part of these consolidated financial statements.

3NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
   ZOOM TECHNOLOGIES, INC.
   MARCH 31, 2010 AND 2009

NOTE 1 - ORGANIZATION AND PROPOSED BUSINESS OPERATIONS

The Acquisition

On September 22, 2009, Zoom Technologies, Inc. ("Zoom or the "Company"), pursuant to
the share exchange agreement dated January 28, 2009, (and later amended on May 12, 2009) acquired all the outstanding shares of
Gold Lion Holding Limited ("Gold Lion"), a company organized and existing under the laws of the British Virgin Islands
("BVI").  In connection with the share exchange transaction, the Company spun off its then-existing business to its
stockholders, by distributing and transferring all assets and liabilities of the subsidiary and issuing shares of its then operating
subsidiary as a dividend to its stockholders.

The parties to the share exchange agreement were: (1) Zoom Technologies, Inc., (2) Tianjin Tong Guang
Group Digital Communication Co., Ltd., ("TCB Digital") a company organized under the laws of the People's Republic of
China, ("PRC"); (3) Zoom Telephonics, Inc., or Zoom Telephonics, a wholly owned subsidiary of Zoom; (4) Gold Lion, (5) Lei
(Leo) Gu, a citizen of the PRC; and (6) Songtao Du, a citizen of the PRC.

Gold Lion owns 100% of the outstanding stock of Jiangsu Leimone Electronics Co., Ltd., ("Jiangsu
Leimone"), a foreign investment enterprise organized under the laws of the PRC that engages in the manufacturing, research and
development, and sales of electronic components for 3rd generation mobile phones, wireless communication circuitry, GPS equipment,
and related software products.  Jiangsu Leimone owned 51.03% of the outstanding capital stock of TCB Digital; until March 31, 2010
when Mr. Gu, the Chairman & CEO of the Company, exercised his option to purchase an additional 28.97% of TCB Digital and
transferred such ownership to the Company and resulted in an increase in our Company's ownership of TCB Digital to 80%. Gold Lion
also owns 100% of Profit Harvest Corporation Ltd, ("Profit Harvest"), a marketing and sales company organized and existing
under the laws of Hong Kong.

Mr. Gu owned 70.6% of the outstanding capital stock of Gold Lion and held an option indirectly to acquire
an additional 28.97% of the outstanding capital stock of TCB Digital, which he exercised as of March 31, 2010.

Mr. Du owned 29.4% of the outstanding capital stock of Gold Lion, which was pledged to Mr. Wei Cao.

On September 22, 2009, pursuant to the share exchange agreement and the approval of the majority of the
stockholders of the Company, the Company acquired from the Gold Lion shareholders 100% of Gold Lion for 4,225,219 shares of
Company common stock.  As a result of this issuance, the former Gold Lion shareholders owned approximately 69.3% of the
outstanding stock of the Company and the transaction was recorded as a reverse acquisition. Prior to the reverse acquisition, the
Company had 1,980,978 shares outstanding which were recapitalized as part of the reverse acquisition. Mr. Gu, who holds an
option to acquire an additional 28.97% of the outstanding capital stock of TCB Digital, pursuant to the share exchange agreement and
the approval of the majority of the stockholders of the Company, agreed to provide Mr. Gu the option to exchange the additional
28.97% interest in TCB Digital for an additional 2,402,576 shares of our common stock. As of March 31, 2010, Mr. Gu exercised this option
(See Subsidiary details).

Simultaneous with the closing of the merger, the Company issued a dividend of 100% of the issued and
outstanding stock of Zoom Telephonics to its stockholders of record immediately prior to the closing.  We refer to this as the "spin-off".
In connection with the spin-off, the Company distributed all of its current and future assets and liabilities related to Zoom to
Zoom Telephonics, subject to certain licensing rights discussed below.  Zoom's stockholders immediately prior to the closing retained
their existing shares in Zoom and also received an equal number of new shares in Zoom Telephonics.  After the merger and the spin-off,
the Company and Zoom Telephonics became independent companies.

4TCB Digital and Zoom Telephonics entered into a license agreement granting TCB Digital licensing rights for
"Zoom" and "Hayes" trademarks for certain products and geographic regions.  Zoom and Zoom Telephonics also
entered into a separation and distribution agreement that allocates responsibility for obligations arising before and after the spin-off,
including, among others, obligations relating to taxes.

Our former directors, entered into founder lock-up agreements pursuant to which they agreed that during the
one-year period commencing on the date of closing that each will not sell, transfer, assign, pledge or hypothecate, in any calendar
month, greater than 3% of the shares of our common stock sold in the previous four calendar weeks.
The Subsidiaries

Gold Lion was founded by Mr. Gu Lei ("Gu") in September 2002 in the BVI.  Pursuant to an
agreement dated June 30, 2007, Mr. Cao Wei ("Cao"), purchased from Gu 29.4% of the outstanding shares of the
Company.  Through a resolution of the Company on November 26, 2008, the Company's issued 705 shares to Gu and 294 shares to
Mr. Du Songtao ("Du"), resulting in 1,000 issued and outstanding shares of Common Stock. Pursuant to a pledge
agreement dated November 26, 2008, Du pledged his 294 shares to Cao, including all rights to such shares.  As such, Gu and Cao
jointly control 100% of Gold Lion.

On August 2, 2007, Gu founded Profit Harvest in Hong Kong, and in December 2008, 100% ownership of Profit
Harvest was transferred to Gold Lion.

Pursuant to the capital injection agreement ("the Agreement") by
and among Tianjin Communication and Broadcasting Group Co., Ltd. ("TCBGCL"), TCBGCL Labour Union,
Hebei Leimone Science and Technology Co., Ltd. ("Hebei Leimone"), Tianjin 712 Communication and
Broadcasting Co., Ltd. ("712"), Beijing Depu Investment Co., Ltd. ("Beijing Depu") and other
natural person shareholders on May 8, 2007 and a resolution of the shareholder's meeting on June 30, 2007, Hebei
Leimone, a company controlled by Gu, acquired 25.13% of TCB Digital from TCBGCL Labour Union and various natural
person shareholders for RMB9,000,000, approximately $1,286,000.  Pursuant to this Agreement, Hebei Leimone and
Beijing Depu, the companies controlled by Gu and Cao respectively, were to invest additional RMB15,928,700 and
RMB10,377,600 respectively in TCB Digital, bringing the total investment from Hebei Leimone and Beijing Depu to
$4,679,111 (RMB35,306,300).  After this additional investment was made as of June 30, 2007, Hebei Leimone and
Beijing Depu held 36.03% and 15% respectively of TCB Digital, or 51.03% ownership in TCB Digital.  Pursuant to an
agreement dated June 30, 2007, Cao irrevocably pledged his 15% interest in TCB Digital through his ownership in
Beijing Depu to Gu in exchange for a 29.4% stake in Gold Lion.  As of March 31, 2010, Gu exercised his option to
transfer an additional 28.97% of TCB Digital to the Company.  The Company will issue 2,402,576 common shares to Mr.
Gu as purchase consideration and 60,000 common shares to an investment banker as compensation cost as part of this
transaction.  This transaction will be recorded under SFAS No. 160 (Included in ASC 810 "Consolidation")
"Noncontrolling Interests in Consolidated Financial Statements", an amendment of ARB No. 51with the
excess of fair value of shares over the carrying value of minority interests will be charged to additional paid in capital.
The Company's ownership interest in TCB Digital is increased to 80% as at March 31, 2010. The Company recorded the
value of shares to be issued as part of this transaction amounting to $4.9 million in the accompanied financial
statements.

On November 30, 2007, Gold Lion and GD Industrial Company signed a share transfer agreement, pursuant to
which, GD Industrial Company transferred 60% of Nantong Zong Yi Kechuang Digital Camera Technology Co., Ltd. ("Nantong
Zong Yi") for $10,273 to the Company.  In July 2008, Nantong Zong Yi changed its name to Jiangsu Leimone Electronic Co., Ltd.
("Jiangsu Leimone").  Before the acquisition, Jiangsu Leimone had no operating activities.  In January 2008, the Company
invested $5,074,226 (HK$38,800,000) in Jiangsu Leimone to increase the Company's ownership in Jiangsu Leimone to 80%.  Pursuant
to the share transfer agreement by and between Gold Lion and Nantong Zong Yi Investment Co., Ltd. dated November 26, 2008, the
Company acquired the remaining 20% of Jiangsu Leimone from Nantong Zong Yi Investment Co., Ltd. for $103,214 (HK$800,000).
After this transaction, the Company owned 100% of Jiangsu Leimone.

Pursuant to the share transfer agreement by and among Hebei Leimone, Beijing Depu Investment Co., Ltd and
Jiangsu Leimone dated December 15, 2008, Hebei Leimone and Beijing Depu Investment Co., Ltd. transferred their 51.03% of TCB
Digital to Jiangsu Leimone on December 30, 2008.

Because TCB Digital and Profit Harvest are under common control with the Company since July 2007 and
August 2007, respectively, we combined their financials at historical cost with the Company from the date the Company acquired
control.  Acquisition method is used when the Company has actual equity investment in TCB Digital and Profit Harvest.

TCB Digital is a high technology company engaged in electronic and telecommunication product design,
development, and manufacturing. TCB Digital started its business in 1999 and was originally established as an Electronic
Manufacturing Service (EMS) factory for mobile phone vendors. TCB Digital was Motorola's first independent outsource manufacturing
vendor responsible for producing Motorola mobile phones in China.5Moreover, TCB Digital was the first EMS factory in China receiving
Motorola's International Quality Product and Qualification certificate. Since 2004, TCB Digital developed and produced GSM and CDMA
mobile phones, wireless data modules and GPS equipment. TCB Digital is headquartered in Tianjin, China. TCB Digital's two main
business operations are EMS for Original Equipment Manufacturer (OEM) customers and the design and production of mobile phone
products.

TCB Digital offers high quality and comprehensive EMS to both domestic and global customers, including,
Samsung, Tianyu, CCT, Danahar and Spreadtrum. TCB Digital's primary products include mobile phones, wireless telecommunication
modules, digital cameras, cable TV set-top boxes and GPS equipment. In addition, TCB Digital has developed various state-of-the-art
mobile phones and Smartphones based on both of the main network technologies: Global System for Mobile Communications, or GSM,
and Code Division Multiple Access, or CDMA. Presently, TCB Digital markets its mobile phone products through distributors in China
and also supplies GSM and CDMA mobile phones to major customers, including China Mobile Communications Corporation, or CMCC,
China UNICOM and China Telecom. See "Information about TCB Digital" for more information.


NOTE 2 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES


Principles of Consolidation

The accompanying consolidated financial statements include the accounts of Gold Lion Holding Ltd, its 100%-owned
subsidiary Profit Harvest, its 100%-owned subsidiary Jiangsu Leimone and its 80%-owned joint venture TCB Digital as of and
for the quarterly period ended March 31, 2010.  As of June 30, 2007, Gu and Cao jointly acquired 51.03% equity of TCB Digital through
Hebei Leimone and Beijing Depu respectively, and Gu controlled 100% of Profit Harvest in 2007.  As Gu and Cao transferred their
51.03% equity interest of TCB Digital into Jiangsu Leimone on December 30, 2008, and 100% equity interest of Profit Harvest was
transferred to Gold Lion on December 22, 2008, and Gu exercised the option to acquire 28.97% equity of TCB Digital on March 31,
2010, the consolidated financial statements as of March 31, 2010 include the consolidation of balance sheets at March 31, 2010 and
December 31, 2009 and operating results for the quarterly periods ended March 31, 2010 and 2009 of TCB Digital, Jiangsu Leimone
and Profit Harvest.

Basis of Presentation

The Consolidated Financial Statements are prepared in accordance with generally accepted accounting
principles in the United States of America ("US GAAP").  The Company's functional currency is the Chinese Renminbi
("RMB"); however the accompanying consolidated financial statements were translated and presented in United States
Dollars ("$").


Use of Estimates

The preparation of consolidated financial statements in conformity with US GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and
liabilities at the dates of the consolidated financial statements and the amount of revenues and expenses during the reporting periods.
Management makes these estimates using the best information available at the time the estimates are made. However, actual results
could differ materially from those results.

Risks and Uncertainties

The Company is subject to substantial risks from, among other things, intense competition associated with the
industry in general, other risks associated with financing, liquidity requirements, rapidly changing customer requirements, limited
operating history, foreign currency exchange rates and the volatility of public markets.

Comprehensive Income

The Company adopted the provisions of ASC 220 "Reporting Comprehensive Income", previously
SFAS No. 130, establishes standards for the reporting and display of comprehensive income, its components and accumulated
balances in a full set of general purpose financial statements.

6ASC 220 defines comprehensive income is comprised of net income and all changes to the statements of
stockholders' equity, except those due to investments by stockholders, changes in paid-in capital and distributions to stockholders,
including adjustments to minimum pension liabilities, accumulated foreign currency translation, and unrealized gains or losses on
marketable securities.
Foreign Currency Transactions

The accounts of the Company's Chinese subsidiaries are maintained in the RMB and the accounts of the U.S.
parent company are maintained in the USD.   The accounts of the Chinese subsidiaries were translated into USD in accordance with
Statement of Financial Accounting Standards ("SFAS") No. 52, "Foreign Currency Translation," (codified in Financial Accounting
Standards ("FASB") Accounting Standards Codification ("ASC") Topic 810) with the RMB as the functional
currency for the Chinese subsidiaries.  According to SFAS 52, all assets and liabilities were translated at the exchange rate on the
balance sheet date, stockholders' equity is translated at historical rates and statement of operations items are translated at the
weighted average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income
in accordance with SFAS No. 130, "Reporting Comprehensive Income" (codified in FASB ASC Topic 220). Gains and
losses resulting from the translations of foreign currency transactions and balances are reflected in the income statement.

Translations adjustments resulting from this process are included in accumulated other comprehensive income
in the consolidated statement of stockholders' equity and were $211,161 and $210,773 as of March 31, 2010 and December 31, 2009,
respectively.

Cash and Cash Equivalents

For Statement of Cash Flows purposes, the Company considers all cash on hand and in banks, including
accounts in book overdraft positions, certificates of deposit and other highly-liquid investments with maturities of three months or less,
when purchased, to be cash and cash equivalents.  The Company maintains cash with various banks and trust companies located in
China.  Cash accounts are not insured or otherwise protected.  Should any bank or trust company holding cash deposits become
insolvent, or if the Company is otherwise unable to withdraw funds, the Company would lose the cash on deposit with that particular
bank or trust company.

Accounts Receivable

The Company's policy is to maintain reserves for potential credit losses on accounts receivable.  Management
reviews the composition of accounts receivable and analyzes historical bad debts, customer concentrations, customer credit
worthiness, current economic trends and changes in customer payment patterns to evaluate the adequacy of these reserves.
Accounts are written off against the allowance when it becomes evident collection will not occur.  The
allowance for doubtful accounts as of March 31, 2010 and December 31, 2009 was $18,911 & $18,908 respectively.

Inventories


Inventories are stated at the lower of cost or market.  Cost is determined on a weighted average basis and
includes all expenditures incurred in bringing the goods to the point of sale and putting them in a saleable condition.  In assessing the
ultimate realization of inventories, the management makes judgments as to future demand requirements compared to current or
committed inventory levels.  Our reserve requirements generally increase as our projected demand requires; or decrease due to market
conditions and product life cycle changes.  The Company estimates the demand requirements based on market conditions, forecasts
prepared by its customers, sales contracts and orders in hand.

In addition, the Company estimates net realizable value based on intended use, current market value and
inventory ageing analyses.  The Company writes down inventories for estimated obsolescence or unmarketable inventory equal to the
difference between the cost of inventories and their estimated market value based upon assumptions about future demand and market
conditions.  Historically, the actual net realizable value has been close to management's estimate.

7Property, Plant and Equipment

Property, plant and equipment are recorded at cost.  Gains or losses on disposals are reflected as gain or loss
in the year of disposal.  All ordinary repair and maintenance costs are expensed as incurred.  Expenditures for maintenance and repairs
are expensed as incurred.  Major renewals and betterments are charged to the property accounts while replacements, maintenance
and repairs, which do not improve or extend the lives of the respective assets, are expensed in the current period.

Depreciation for financial reporting purposes is provided using the straight-line method over the estimated
useful lives of assets as set out below.

Estimated Useful LifeMachinery and equipment
4-6 yearsElectronic equipment
4-6 yearsReconstruction of workshop and assembling line
5 yearsTransportation equipment
4-6 yearsCapitalized Interest

Interest associated with major development and construction projects is capitalized and included in the cost of
the project.   When no debt is incurred specifically for a project, interest is capitalized on amounts expended on the project using
weighted-average cost of the Company's outstanding borrowings.  Capitalization of interest ceases when the project is substantially
complete or development activity is suspended for more than a brief period.

Impairment of Long-lived Assets

In accordance with ASC 360, "Property, Plant and Equipment", previously SFAS No. 144, the
Company reviews the carrying values of long-lived assets, including property, plant and equipment and other intangible assets,
whenever facts and circumstances indicate that the assets may be impaired.  Recoverability of assets to be held and used is measured
by a comparison of the carrying amount of an asset to future net undiscounted cash flows expected to be generated by the asset.  If an
asset is considered impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset
exceeds the fair value.  Assets to be disposed of are reported at the lower of the carrying amount or fair value, less costs of disposal.
For 2009, the Company performed an annual impairment review of long-lived assets and concluded that there was impairment loss for
long-term investments of $65,816.

Goodwill

The Company recognizes goodwill for the excess of the purchase price over the fair value of the
identifiable net assets of the business acquired.  ASC 350 "Intangible Assets-Goodwill and Other", previously SFAS No.
142, an impairment test for goodwill is undertaken by the Company at the reporting unit level annually, or more frequently if events or
changes in circumstances indicate that goodwill might be impaired.  As of March 31, 2010 and December 31, 2009, the Company did
not incur any impairment loss for goodwill.
Revenue Recognition

The Company recognizes sales in accordance with the U.S. Securities and Exchange Commission
("SEC") Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements"
and SAB No. 104, "Revenue Recognition."

8The Company recognizes revenue when the following criteria are met:

(i)   persuasive evidence of an arrangement exists;

(ii)  delivery has occurred or services were rendered;

(iii) the price to the customer is fixed or determinable and,

(iv) collection of the resulting receivable is reasonably assured.  Revenue is not recognized until title and risk of
loss is transferred to the customer, which occurs upon delivery of goods, and objective evidence exists that customer acceptance
provisions were met.

The Company bases its estimates on historical experience taking into consideration the type of products sold,
the type of customer, and the type of specific transaction in each arrangement. Revenues represent the invoiced value of goods, net of
value added tax ("VAT").

The Company does not offer promotional payments, customer coupons, rebates or other cash redemption
offers to its customers.  Deposits or advance payments from customers prior to delivery of goods and passage of title of goods are
recorded as advanced from customers.

Income Taxes

The Company accounts for income taxes in accordance with ASC 740 "Income Taxes", previously
SFAS No. 109.  Under this method, deferred income taxes are recognized for the estimated tax consequences in future years of
differences between the tax bases of assets and liabilities and their financial reporting amounts and each year-end based on enacted
tax laws and statutory rates applicable to the periods in which the differences are expected to affect taxable income.  Valuation
allowances are established to reduce deferred tax assets to the amount expected to be realized when, in management's opinion; it is
more likely than not that some portion of the deferred tax assets will not be realized.  The provision for income taxes represents current
taxes payable net of the change during the period in deferred tax assets and liabilities.

Operating Leases

Leases where substantially all the rewards and risks of ownership of assets remain with the leasing company
that do not meet the capitalization criteria of ASC 840 "Leases", previously SFAS No. 13, are accounted for as operating
leases. Rental payables under operating leases are recognized as expenses on the straight-line basis over the lease term.

Research and Development Costs

Research and development costs are expensed as incurred.  Research and development costs during
the three months ended March 31, 2010 and 2009 were $0 and $0 respectively.

Earnings Per Share

The Company reports earnings per share in accordance with the provisions of ASC 260 "Earnings Per
Share", previously SFAS No. 128.  ASC 260 requires presentation of basic and diluted earnings per share in conjunction with the
disclosure of the methodology used in computing such earnings per share.  Basic earnings per share excludes dilution and is computed
by dividing income available to common stockholders by the weighted average common shares outstanding during the period.  Diluted
earnings per share takes into account the potential dilution that could occur if securities or other contracts to issue common stock were
exercised and converted into common stock using the treasury method.

Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock
options and warrants, using the treasury stock method, at either the beginning of the respective period presented or the date of
issuance, whichever is later, and only if the common stock equivalents are considered dilutive based upon the Company's net income
(loss) position at the calculation dates.


9Fair Values of Financial Instruments

ASC 820 "Fair Value Measurements and Disclosures", previously FAS 157, adopted January 1,
2008, defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances
disclosure requirements for fair value measures.  The carrying amounts reported in the balance sheets for current receivables and
payables qualify as financial instruments.  Management concluded the carrying values are a reasonable estimate of fair value because
of the short period of time between the origination of such instruments and their expected realization and if applicable, their stated
interest rate approximates current rates available.  The three levels are defined as follows:

•      Level 1  inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities
in active markets.

•      Level 2  inputs to the valuation methodology include quoted prices for similar assets and liabilities in active
markets, and inputs that are observable for the assets or liability, either directly or indirectly, for substantially the full term of the financial
instruments.

•      Level 3  inputs to the valuation methodology are unobservable and significant to the fair value.
The assets measured at fair value on a recurring basis subject to the disclosure requirements of ASC 820 as of
March 31, 2010 are as follows:

Carrying value asof March 31,

Active  marketsFor identicalAssets

Significant otherObservable
                  Inputs

SignificantUnobservableInputs2010

(Level 1)

(Level 2)

(Level 3)Cash and cash equivalents

$
334,784

$
334,784

-

-Restricted cash

$
12,975,234

$
12,975,234

-

-The Company's financial instruments include cash and cash equivalents, restricted cash, accounts receivable,
notes receivables, other receivables, accounts payable, notes payable, and convertible notes payable.  Cash and cash equivalents
consist primarily of high rated money market funds at a variety of well-known institutions with original maturities of three months or less.
Restricted cash represents time deposits on account to secure short-term bank loans and notes payable. Management estimates that
the carrying amounts of the non related party financial instruments approximate their fair values due to their short-term nature.

Concentration of Risk

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist
principally of cash and cash equivalents and trade and bills receivables.   As of March 31, 2010 and December 31, 2009, substantially
all of the Company's cash and cash equivalents and restricted cash were held by major financial institutions located in the PRC, which
management believes are of high credit quality.  With respect to trade and notes receivables, the Company extends credit based on an
evaluation of the customer's financial condition.  The Company generally does not require collateral for trade receivables and maintains
an allowance for doubtful accounts of trade receivables.

Notes receivable are undertaken by the banks to honor the payments at maturity and the customers are
required to place deposits with the banks equivalent to certain percentage of the notes amount as collateral.  These notes receivable
can be sold to any third party at a discount before maturity.  The Company does not maintain an allowance for notes receivable in the
absence of bad debt experience and the payments are undertaken by the banks.

10Noncontrolling Interests

Effective January 1, 2009, the Company adopted the provisions of ASC 810, previously SFAS No. 160
"Noncontrolling Interests in Consolidated Financial Statements-reported in equity" for reporting noncontrolling interest
("NCI") in a subsidiary.  As a result, the Company reported NCI as a separate component of Stockholders' Equity in the
Condensed Consolidated Balance Sheet. Additionally, the Company reported the portion of net income and comprehensive income
(loss) attributed to the Company and NCI separately in the Condensed Consolidated Statement of Operations.  The Company also
included a separate column for NCI in the Consolidated Statement of Changes in Equity.  All related disclosures were adjusted
accordingly.  Prior year amounts associated with NCI in the financial statements and accompanied footnotes have been retrospectively
adjusted to conform to the adoption.
Noncontrolling interest includes a credit of $567,481 representing its share of increase in additional paid in capital as a result
of certain expenses paid by an entity related to the Company's principal shareholder on behalf of the Company.

Statement of Cash Flows

In accordance with ASC 230, "Statement of Cash Flows", previously AFAS No. 95, cash flows from
the Company's operations are calculated based upon the local currencies.  As a result, amounts related to assets and liabilities
reported on the statement of cash flows may not necessarily agree with changes in the corresponding balances on the balance
sheet.

Recent Accounting Pronouncements

On February 25, 2010, the FASB issued ASU 2010-09 Subsequent Events Topic 855 "Amendments to
Certain Recognition and Disclosure Requirements," effective immediately. The amendments in the ASU remove the requirement
for an SEC filer to disclose a date through which subsequent events have been evaluated in both issued and revised financial
statements. Revised financial statements include financial statements revised as a result of either correction of an error or retrospective
application of US GAAP. The FASB believes these amendments remove potential conflicts with the SEC's literature. The adoption of
this ASU did not have a material impact on the Company's consolidated financial statements.

On March 5, 2010, the FASB issued ASU No. 2010-11 Derivatives and Hedging Topic 815 "Scope
Exception Related to Embedded Credit Derivatives." This ASU clarifies the guidance within the derivative literature that exempts
certain credit related features from analysis as potential embedded derivatives requiring separate accounting. The ASU specifies that
an embedded credit derivative feature related to the transfer of credit risk that is only in the form of subordination of one financial
instrument to another is not subject to bifurcation from a host contract under ASC 815-15-25, Derivatives and Hedging - Embedded
Derivatives - Recognition. All other embedded credit derivative features should be analyzed to determine whether their economic
characteristics and risks are "clearly and closely related" to the economic characteristics and risks of the host contract and
whether bifurcation is required. The ASU is effective for the Company on July 1, 2010. Early adoption is permitted. The adoption of this
ASU will not have a material impact on the Company's consolidated financial statements.


NOTE 3 - MERGER AND ACQUISITION

The Company acquired 60% equity in Jiangsu Leimone on November 30, 2007. As of November 30, 2007,
the net assets of Jiangsu Leimone were Nil.  The purchase consideration was $10,273 which was higher than 60% of total net assets of
Jiangsu Leimone and resulted in goodwill of $10,273.  On January 1, 2008, the Company invested $4,972,466 (HK$38,800,000) in
Jiangsu Leimone.  After this investment, the net assets of Jiangsu Leimone were $4,976,051 and the Company owned 80% of Jiangsu
Leimone.   The fair value of the 80% of equity interest of Jiangsu Leimone Electronic Co., Ltd on January 1, 2008 was $3,981,085. The
agreed purchase consideration was $4,972,466 (HK$38,800,000) which was higher than 80% of total net assets of Jiangsu Leimone
and resulted in goodwill of $991,381. The Company acquired the remaining 20% of equity of Jiangsu Leimone on November 30, 2008.
As of November 30, 2008, the net assets of Jiangsu Leimone were $5,001,783 and therefore 20% of total assets of Jiangsu Leimone
were $1,000,357.  The agreed purchase consideration was $101,760 which was lower than 20% of total net assets of Jiangsu Leimone
and resulted in negative goodwill of $898,597.  Therefore, the total goodwill resulting from the acquisition of Jiangsu Leimone was
$103,057.  As of March 31, 2010 and December 31, 2009, goodwill amounted to $103,057 and $103,057 respectively.

11The following table summarizes goodwill resulting from the acquisition of Jiangsu Leimone:

November 30, 2007

$
10,273January 1, 2008

991,381November 30, 2008

(898,597)Total goodwill

$
103,057The following table summarizes the fair values of the assets acquired and liabilities assumed from
Jiangsu Leimone as of the dates of acquisition.  The total consideration for the acquisition exceeded the fair value of the
net assets acquired by $103,057.

November 30, 2007

January 1, 2008

November 30, 2008Cash
$
39,231

$
5,010,704

$
79,411Accounts receivable
-

-

18,475Other receivables
-

-

(4,750)Advance to suppliers
-

-

4,665,134Inventories
-

-

246,854Due from related parties
-

-

45,431Other assets
-

-

217,569Fixed assets




1,708,102Accounts payable




(388,235)Advance from customers




(115,716)Salary payable


(21,401)

(52,961)Taxes payable




(5,138)Other Payable




(1,111,614)Due to related parties
(39,231)

(39,648)Affect from foreign currency translation
-

200

(258,357)Net assets acquired
$                   -

$                 4,949,855

$                 5,001,783There was no impairment of goodwill as at March 31, 2010 and December 31, 2009.

NOTE 4 - RESTRICTED CASH

Restricted cash as of March 31, 2010 and December 31, 2009 was $12,975,234and $ 11,993,214 respectively.  Restricted
cash was deposits in banks representing collateral for the banks to issue banker's acceptances.  Restricted cash may not be recovered
when the secured notes payable cannot be paid.

NOTE 5 - ACCOUNTS RECEIVABLE

As of March 31, 2010 and December 31, 2009, the Company's accounts receivable consisted of the
following:

|                                      |  | March 31, 2010 |            | December 31, 2009
|------------------------------------- |  | -------------- | ---------- | -----------------
|                                      |  | (Unaudited)    |            |                  
|Accounts receivable                   |  | $              | 18,926,427 |                  
|Less: Allowance for doubtful accounts |  |                | (18,911)   |                  
|                                      |  |                |            |                  
|Accountants receivable, net           |  | $              | 18,907,576 |                  

12

---

NOTE 6 - INVENTORIES

Inventories, by major categories, as of March 31, 2010 and December 31, 2009 were as follows:

|                                          |  | March 31, 2010 |           | December 31, 2009
|----------------------------------------- |  | -------------- | --------- | -----------------
|                                          |  | (Unaudited)    |           |                  
|Raw materials                             |  | $              | 1,302,299 |                  
|Work in progress                          |  | 44             |           | 44               
|Low value consumables                     |  | 15,013         |           | 15,332           
|Finished goods                            |  |                | 288,934   |                  
|                                          |  |                | 1,606,220 |                  
|Less: Allowance for obsolete  inventories |  |                | (133,502) |                  
|                                          |  |                |           |                  
|Inventories, net                          |  | $              | 1,472,718 |                  

NOTE 7 - ADVANCE TO SUPPLIERS

As of March 31, 2010 and December 31, 2009, the Company's advance to suppliers consisted of the
following:



|                                                          |  | March 31, 2010 |            | December 31, 2009
|--------------------------------------------------------- |  | -------------- | ---------- | -----------------
|                                                          |  | (Unaudited)    |            |                  
|Beijing Orsus Xelent Technology & Trading Company Limited |  | $              | 2,331,320  |                  
|Yuechangrui                                               |  | 1,960,000      |            | -                
|CEC CoreCast  Technology Co., Ltd.                        |  |                | 8,609,289  |                  
|Beijing HYT Technology & Trade Co., Ltd.,                 |  |                | -          |                  
|Beijing Zhongdian Yiren Information Technology Co., Ltd.  |  |                | 10,637,064 |                  
|Shanghai Spreadbridge Information Technology Co., Ltd.    |  |                | 13,197,264 |                  
|Shunming                                                  |  |                | 3,223,890  |                  
|Ytone Co., Ltd.                                           |  |                | -          |                  
|Sibo Technologies Limited                                 |  |                | -          |                  
|Shenzhen Huirongyuan Industrial Co., Ltd.                 |  |                | 155,059    |                  
|Others                                                    |  |                | 440,567    |                  
|                                                          |  |                |            |                  
|Total advance to suppliers                                |  | $              | 40,554,453 |                  

The Company made bank note payments to CEC CoreCast Technology Co., Ltd in advance of purchasing of
material.  The advance payments are meant to ensure preferential pricing.  The amounts advanced under such arrangements totaled
$8,609,289

NOTE 8 - OTHER RECEIVABLES & PREPAID EXPENSES

As of March 31, 2010 and December 31, 2009, the Company's other receivables and prepaid expenses
consisted of the following:

|                                      |  | March 31, 2010 |         | December 31, 2009
|------------------------------------- |  | -------------- | ------- | -----------------
|                                      |  | (Unaudited)    |         |                  
|Advance to employees                  |  | $              | 74,812  |                  
|Deposit for rental of equipment lease |  | 43,885         |         | 49,730           
|Prepaid expenses                      |  |                | 43,105  |                  
|Others                                |  | 132,827        |         | 79,875           
|                                      |  |                |         |                  
|Total other receivables               |  | $              | 294,629 |                  

13

---

The loan to third parties bears no interest.

The deposit for rental of equipment lease will be recovered in one year.

NOTE 9 - PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment as of March 31, 2010 and December 31, 2009 consisted of the following:

March 31, 2010

December 31, 2009(Unaudited)Machinery and Equipment

$
8,471,311

$
8,462,827Electronic Equipment

1,685,451

1,693,094Transportation Equipment


169,683


169,655Workshop reconstruction


60,956


60,946Assembly line reconstruction


119,489


119,470Office equipment


18,602


18,59910,525,492


10,524,591Less: Accumulated depreciation


(5,256,463)


(4,850,668)Total property, plant and equipment, net

$
5,269,029

$
5,673,923Depreciation for the three months ended March 31, 2010 and 2009 was $404,729 and $394,928 respectively.



NOTE 10 - SHORT-TERM  LOANS

Short-term loans represent amounts due to various financial institutions which are normally due within one year.
As of March 31, 2010 and December 31, 2009, the Company's short term loans consisted of the following:

March 31, 2010

December 31, 2009(Unaudited)Bank of Communications Tianjin Branch ("BOCTB"), due from March 3, 2009 to March 2, 2010
with interest at 5.841%, guaranteed by TCBGCL, the common shareholder of TCB Digital.

$
-

$
4,387,762BOCTB, due from May 15, 2009 to February 14, 2010 with interest at 5.310%, guaranteed by
TCBGCL, the common shareholder of TCB Digital.


-


2,925,174BOCTB, due from May 25, 2009 to January 24, 2010 with interest at 5.310%, guaranteed by
TCBGCL, the common shareholder of TCB Digital.


-


2,925,174BOCTB, due from June 15, 2009 to March 14, 2010 with interest at 5.310%, guaranteed by
TCBGCL, the common shareholder of TCB Digital.


-


2,925,174Northern International Trust & Investment Co., Ltd, due from October 14, 2009 to October
14, 2010 with interest at 8.400%, guaranteed by Small & Medium Enterprises Guarantee Center Co., Ltd.


1,755,387


1,755,104BOCTB, due from December 04, 2009 to August 14, 2010 with interest  at 5.841%, secured by
production machinery


1,082,488


1,082,314BOCTB, due from January 25, 2010 to July 21, 2010 with floating interest,secured by  production
machinery


2,925,645


-BOCTB, due from January 28, 2010 to June 15, 2010 with floating interest,secured by  production
machinery


2,925,645


-14BOCTB, due from March 4 to November 3, 2010 with floating interest, guaranteed by
TCBGCL, the common shareholder of TCB Digital.


4,388,467


-BOCTB, due from March 8, 2010 to January 7, 2011 with floating interest, guaranteed by
TCBGCL, the common shareholder of TCB Digital.


2,925,645


-BOCTB, due from December 25, 2009 to August 14, 2010 with floating interest, guaranteed by
TCBGCL, the common shareholder of TCB Digital.


2,033,323


-China Bohai Bank, due from January 7 to April 6, 2010 with interest  at 5.832%, Guaranteed
by Tianjin Zhonghuan Electronic Communication Group, paid onApril 6, 2010


2,925,645


-Total short-term loans

$
20,962,245

$
16,000,702NOTE 11 - NOTES PAYABLEThese notes are payable in three or six months and bear no interest.  The balance of notes payable as of
March 31, 2010 and December 31, 2009 consisted of the following (all were bankers' acceptances):

March 31, 2010

December 31, 2009(Unaudited)CoreCast, honored by the BOCTB,  from July 10, 2009 to January 10, 2010, secured by
$2,193,881 of cash in bank, paid on January 10, 2010.

$
-

$
4,387,761CoreCast, honored by the BOCTB,  from August 10, 2009 to February 10, 2010, secured by
$877,552 of cash in bank.


-

1,755,104Beijing Orsus, honored by the BOCTB,  from August 17, 2009 to February 18, 2010, secured
by $731,294 of cash in bank.


-

1,462,587CEC CoreCast  Technology Co., Ltd., ("CoreCast Tech.") honored by the BOCTB,
from September 21, 2009 to March 21, 2010, secured by $1,813,608 of cash in bank.


-

3,627,216CoreCast Tech., honored by the BOCTB, from September 23, 2009 to March 23, 2010,
secured by $2,720,412 of cash in bank.


-

5,440,824CoreCast Tech., honored by the BOCTB, from September 25, 2009 to March 25, 2010,
secured by $1,170,070 of cash in bank.


-

2,340,139CoreCast Tech., honored by the BOCTB, from September 27, 2009 to March 27, 2010,
secured by $1,755,104 of cash in bank.


-

3,510,209Beijing Orsus., honored by the BOCTB, from October 21, 2009 to April 21, 2010, secured by
$292,564 of cash in bank, paid on April 21, 2010


585,129

585,035Beijing Orsus., honored by the BOCTB, from December 10, 2009 to June 10, 2010, secured by
$438,847 of cash in bank


877,693

877,55215CoreCast Tech., honored by the BOCTB, from January 12 to July 12, 2010, secured by
$877,693 of cash in bank.


1,755,387

-CoreCast Tech., honored by the BOCTB,  from January 14 to July 14, 2010, secured by
$1,316,540 of cash in bank.


2,633,080

-Beijing Orsus., honored by the BOCTB,  from March 04 to September 04, 2010, secured by
$438,847 of cash in bank.


877,693

-CoreCast Tech., honored by the BOCTB, from March 16 to September 16, 2010, secured by
$219,423 of cash in bank.


438,847

-Beijing Orsus., honored by the BOCTB, from March 16 to September 16, 2010, secured by
$292,564 of cash in bank


585,129

-CoreCast Tech., honored by the BOCTB, from March 18 to September 18, 2010, secured by
$329,135 of cash in bank.


658,270

-CoreCast Tech., honored by the BOCTB, from March 16 to September 16, 2010, secured by
$511,988 of cash in bank.


1,023,976

-CoreCast Tech., honored by the BOCTB, from March 22 to September 22, 2010, secured by
$731,411 of cash in bank.


1,462,822

-CoreCast Tech., honored by the BOCTB, from March 22 to September 22, 2010, secured by
$767,982 of cash in bank.


1,535,964

-CoreCast Tech., honored by the BOCTB, from March 23 to September 23, 2010, secured by
$1,097,117 of cash in bank.


2,194,234

-CoreCast Tech., honored by the BOCTB, from March 24 to September 24, 2010, secured by
$1,562,295 of cash in bank.


3,124,589

-CoreCast Tech., honored by the BOCTB, from March 25 to September 25, 2010, secured by
$2,343,441 of cash in bank.


4,686,883

-CoreCast Tech., honored by the BOCTB, from March 29 to September 29, 2010, secured by
$702,155 of cash in bank.


1,404,309

-CoreCast Tech., honored by the BOCTB, from March 30 to September 30, 2010, secured by
$1,053,232 of cash in bank.


2,106,464

-Total notes payable

$
25,950,469

$
23,986,427NOTE 12 - ACCRUED EXPENSES AND OTHER PAYABLESAs of March 31, 2010 and December 31, 2009, the accrued expenses and other payables of the Company
were summarized as follows:

March 31, 2010

December 31, 2009(Unaudited)Accrued machinery rent

$
135,420

$
116,515Welfare & salary payable

18,850

10,969Total accrued expenses and other payables

$
154,270

$
127,484NOTE 13 - DIVIDENDS PAYABLEIn June 2007, before the Company acquired 51.03% of TCB Digital, TCB Digital decided to distribute
dividends to its original shareholders of $1,074,068 (RMB7,862,700).  The Company paid dividends of $495,926 (RMB3,900,000) in
July 2007 to its original shareholders.  The balance of dividends payable was $579,673 and $579,579 as of March 31, 2010 and
December 31, 2009 respectively, representing the dividend payable to TCBGCL of RMB3,962,700.  The specific due date of the
dividend will be negotiated between the current shareholders and original shareholders of the Company.  The fluctuation of the balance
of dividend payable represents the fluctuation of currency exchange rate.

16NOTE 14 - RELATED PARTY TRANSCATIONS

Due from related parties

As of March 31, 2010 and December 31, 2009, due from related parties were:

March 31, 2010

December 31, 2009(Unaudited)Due from related parties - short termTianjin Tong Guang Group Electronics Science  & Technology Co., Ltd.

$
5,626

$
5,625Hebei Leimone

329,135

329,082Shanghai Spreadbridge Information Technology Co., Ltd.

-

9,864,476Beijing Leimone Shengtong Wireless Technology Co., Ltd.

224,982

247,909Leimone (Tianjin) Industrial Co., Ltd.

5,723,445

1,206,832Beijing Leimone Shengtong Cultural Development Co., Ltd.

-

133,739TCBGCL (Shareholder)

396,573

-Gu Lei (Shareholder)

106,811

-Tianjin Tong Guang Group Special Equipment Co., Ltd.

4,388

-Shenzhen Leimone

17,554

-712 (Shareholder)

-

434,115Total due from related parties

$
6,808,514

$
12,221,778Tianjin Tong Guang Group Electronics Science & Technology Co., Ltd. ("Electronics Science &
Tech"), an entity related to the Company through a common shareholder of TCB Digital, purchased products from the Company.
For the three months ended March 31, 2010 and 2009, the Company recorded net revenues of Nil and $481,700 from sales to
Electronics Science & Tech respectively.

Hebei Leimone is controlled by Gu, the majority shareholder of the Company.	The Company sells certain
products and provides some technical services to Hebei Leimone.  For the three months ended March 31, 2010 and 2009, the
Company recorded net revenues of Nil and $219,088 respectively from sales to Hebei Leimone; and as of March 31, 2010 and
December 31, 2009, the balances due from Hebei Leimone regarding such sales were $329,135 and $329,082 respectively.

Shanghai Spreadbridge Information Technology Co., Ltd. ("Shanghai Spreadbridge")
was controlled by Gu, the majority shareholder of the Company, before March 1, 2010.   Shanghai Spreadbridge sells
components and raw materials to the Company.  For the three months ended March 31, 2010 and 2009, the Company
recorded total purchases from Shanghai Spreadbridge of $2,874,711 and nil respectively.  Gu transferred all of his
ownership of Shanghai Spreadbridge on March 1, 2010 to Zhu Jianying.  Shanghai Spreadbridge is no longer a related
party as the Company's principal shareholder sold his interest on March 1, 2010.  TCB Digital holds 70% shares in
Shanghai Spreadbridge, as nominee of the Company's principal shareholder but does not control its operations.

Beijing Leimone Shengtong Wireless Technology Co., Ltd. ("Beijing Leimone") was founded by Gu,
the majority shareholder of the Company.  Beijing Leimone borrows money from the Company.  The borrowings bore no interest and
had a maturity of 12 months or more.  As of March 31, 2010 and December 31, 2009, the balance of such loans was $224,982 and
$247,909 and is due on March 30, 2011.

The majority shareholder of the Company Gu borrowed money from the Company, these borrowings bore
no interest.  As of March 31, 2010 and December 31, 2009, the balances of such loans were $106,811 and Nil respectively.  Mr. Gu
exercised an option to acquire 28.97% interest in TCB Digital as of March 31, 2010.  (Please refer to Note 1.)  Since TCB Digital is
under Zoom's control, this acquisition was a related party transaction.

Leimone (Tianjin) Industrial Co., Ltd. ("Tianjin Leimone") was controlled by Gu, the majority
shareholder of the Company.  Tianjin Leimone sells raw materials to the Company.  For the three months ended March 31, 2010 and
2009, the Company recorded total purchases from Tianjin Leimone of $12,468,181 and Nil respectively.  The amount due from Tianjin
Leimone represented advances made of $2,505,236 and $1,206,832 as of March 31, 2010 and December 31, 2009 respectively.  In
addition, Tianjin Leimone borrowed money from the Company and these borrowings bore no interest. As of March 31, 2010 and
December 31, 2009, the balance of such loans was $3,218,209 and nil respectively.

17The amount due from Beijing Leimone Shengtong Cultural Development Co., Ltd. ("Beijing Leimone
Cultural") represented short term loan granted by the Company. Beijing Leimone Cultural was controlled by Gu. The borrowing
bore no interest and no maturity date.

The amount due from TCBGCL represented the advance payment.  TCBGCL is a shareholder of TCB Digital.

712 is a minority shareholder of TCB Digital before Mr. Gu exercised the option to acquire 28.97% of TCB
Digital.  (Please refer to Note 1.)  712 purchases raw materials from the Company.  For the three months ended March 31, 2010 and
2009, the Company recorded total revenues from such sales to 712 of $1,294,629 and $75,051 respectively.  712 was no longer a
related party of the Company after Mr. Gu exercised his option to acquire the additional 28.97% of TCB Digital.  Due from 712 as of
December 31, 2009 amounted to $434,115.

Due to related parties

As of March 31, 2010 and December 31, 2009, due to related parties was:

March 31, 2010

December 31, 2009(Unaudited)Shanghai Spreadbridge

$
-

$
815Zhejiang Leimone


6,147


6,146Tianjin Tong Guang Group


-


1,791,193Gu


2,898,731


3,447,261Total due to related parties

$
2,904,878

$
5,245,415Zhejiang Leimone transferred fixed assets to the Company of $37,092. The amount due to Zhejiang Leimone
was $6,147 and $6,146 as of March 31, 2010 and December 31, 2009 respectively.

The Company borrowed money from Tianjin Tong Guang Group.  The borrowings bear no interest and have no
repayment term. As of March 31, 2010 and December 31, 2009, the balance of such loans was Nil and $1,791,193 respectively.

Gu provides fund to the Company with no interest and no repayment term.  As of March 31, 2010 and
December 31, 2009, the balances of funds provided by Gu was $2,898,731and $3,447,261 respectively.

NOTE 15 - STOCKHOLDERS' EQUITY

COMMON STOCK

During the quarterly period ended March 31, 2010, 26,650 options held by the previous employees, executives,
and directors of the Company prior to the merger transaction on September 22, 2009, were exercised at the weighted average price of
$2.89 per share.

During the first quarter of 2010, there were 100,000 shares of common stock issued to two consultants for their
12 months of service to the Company from January 1, 2010.  The shares were valued at $6.78 per share, the closing price on January
10, 2010 which is the date of the consulting agreement.  The amounts recorded were a) non-cash compensation charge for the three
months ended March 31, 2010 of $169,500 and b) deferred expenses as of March 31, 2010 of $508,500.

The Company issued 59,159 shares of common stock during the period ended March 31, 2010 for the exercise
of Series B warrants which were exercised during the year ended December 31, 2009 and were part of shares to be issued as at
December 31, 2009.

During the period ended March 31, 2010, 15,157 of Series A warrants were exercised at an exercise price of $6
per share.

18

---



The Company received subscription receivable of $378 during the period ended March 31, 2010.

Mr. Gu exercised his option to acquire 28.97% interest in TCB Digital on March 31, 2010 (See Note 1).
We have recorded shares to be issued of $4.9 million in the accompanied financial statements.

WARRANTS

The Company granted Series A, B, C, D & E warrants to the accredited investors as part of its private
place offering on October 16, 2009 and November 18, 2009.

Following is the brief description of warrants:

Series A Warrants: The Series A warrants shall have an exercise price of $6.00 and a term of 5 years
from the issue date subject to the Exchange Cap (as defined in the agreement).

Series B Warrants: The Series B warrants shall have an exercise price of $0.01 and a term of three (3)
months from the issue date provided, however, that such date shall be extended indefinitely if the warrant cannot be
exercised due to the Beneficial Ownership Limitation (as defined in the agreement) or the Exchange Cap Limitation (as defined in the
agreement) until the warrant can be exercised in full by the holder thereof without breaching the Beneficial Ownership Limitation (as
defined in the agreement) or the Exchange Cap Limitation (as defined in the agreement).  All B Warrants were exercised in December
2009.

Series C Warrants: The Series C warrants shall be exercisable only upon the exercise of the Series B
warrants. The Series C warrants shall have an exercise price of $6.00 and a term of 5 years from the issue date.

Series D Warrants: The Series D warrants shall be exercisable if the Company fails to meet certain
performance criteria for the year 2009. The Series D warrant shall have an exercise price of $0.01 and a term of exercise equal to three
(3) months from the date the Maximum Eligibility Date (as defined in the agreement); provided, however, that such date shall be
extended indefinitely if the warrant cannot be exercised due to the Beneficial Ownership Limitation (as defined in the agreement) or the
Exchange Cap (as defined in the agreement) until the warrant can be exercised in full by the holder without breaching the Beneficial
Ownership Limitation (as defined in the agreement) or the Exchange Cap Limitation (as defined in the agreement).  Due to the Net
Income of Zoom as reported in the Company's annual report for the year 2009 exceeded the eligibility threshold pursuant to the
agreement, the Series D Warrants became ineligible for exercise.

Series E Warrants:  The Series E warrants shall be exercisable if the Company fails to meet certain
performance criteria for the year 2010. The Series E warrants shall have an exercise price of $0.01 and a term of three (3) months from
the date the Maximum Eligibility Date (as defined in the agreement); provided, however, that such date shall be extended indefinitely if
the warrant cannot be exercised due to the Beneficial Ownership Limitation (as defined in the agreement) until the Warrant can be
exercised in full by the holder thereof without breaching the Beneficial Ownership Limitation (as defined in the agreement).

19

---



The following summary represents warrants activity during the year ended December 31, 2009 and the quarter ended March 31,
2010:

|                           |  |           |  | Weighted        |  |   |          
|-------------------------- |  | --------- |  | --------------- |  | - | ---------
|                           |  |           |  | Average         |  |   | Aggregate
|                           |  | Number of |  | Exercise        |  |   | Intrinsic
|                           |  | Warrants  |  | Price           |  |   | Value    
|                           |  |           |  |                 |  |   |          
|Balance, December 31, 2008 |  | -         |  | -               |  |   |          
|                           |  |           |  |                 |  |   |          
|Granted                    |  | 1,442,127 |  | $          6.00 |  |   |          
|Lapsed                     |  | -         |  | -               |  |   |          
|Exercised in 4th quarter   |  | (18,881)  |  | $          6.00 |  |   |          
|                           |  |           |  |                 |  |   |          
|Balance, December 31, 2009 |  | 1,423,246 |  | $          6.00 |  | $ | 256,184  
|                           |  |           |  |                 |  |   |          
|Granted                    |  | -         |  | -               |  |   |          
|Lapsed                     |  | -         |  | -               |  |   |          
|Exercised in 1st quarter   |  | (15,517)  |  | $          6.00 |  |   |          
|                           |  |           |  |                 |  |   |          
|Balance, March 31, 2010    |  | 1,407,729 |  | $          6.00 |  | $ | 2,027,130

The following presents warrants summary as of March 31, 2010:

|         |  | Warrants Outstanding |  | Warrants Exercisable
|-------- |  | -------------------- |  | --------------------
|         |  |                      |  | Weighted Average    
|         |  |                      |  | Remaining           
|         |  | Number               |  | Contractual         
|         |  | Outstanding          |  | Life                
|         |  |                      |  |                     
|Warrants |  | 1,407,729            |  | 4.55 years          

The Company determined the grant date fair value of A, C and placement agent warrants of $3.26 per share
which was calculated using the Black Scholes Options Pricing Model as follows: Stock price of $6.87 per share, exercise price of $6 per
share, expected life of 5 years, volatility of 46.63% and discount rate of 2.37%. These warrants were recorded net off the value of
proceeds.

NOTE 16 - STOCK OPTIONS

Previous Plan

Prior to the acquisition of Gold Lion, the Company issued stock options to its previous employees, officers
and directors.  Pursuant to terms of the Share Exchange Agreement, outstanding stock options at the closing of the acquisition will
remain valid for the full life of the options regardless if the employee, officer and director will or will not remain in any capacity with the
Company.  There are 423,100 shares of options outstanding as of September 22, 2009, the effective date of the reverse merger
between Zoom and Gold Lion, with expiration in 3 years from the date of grant and in various stages of vesting.  The non-cash
compensation charges of these stock options will be recorded by the spun-off subsidiary, Zoom Telephonics, and shall not be expensed
by the Company.

On the closing of the acquisition, 30,000 stock options were granted to 4 exiting directors of the Company, in
exchange for their anticipated cooperation with post-acquisition management, including the provision of any historical information about
the Company that may be needed in future activities.  Such options are exercisable at $10.14 per share, vest in 6 months from the date
of grant and will expire in 2 years.  The non-cash compensation charges of these 30,000 shares of options will be expensed by the
Company.

During the last quarter of 2009, 113,050 options held by the previous employees, executives and directors of
the Company prior to the merger transaction on September 22, 2009, were exercised at the weighted average price of $4.60 per
share.

20

---



During the period ended March 31, 2010, 26,650 options held by the previous employees, executives, and
directors of the Company prior to the merger transaction on September 22, 2009, were exercised at the weighted average price of
$2.89 per share.

The following summary represents options activity during the year ended December 31, 2009 and the quarter ended March 31,
2010, under the previous plan.

|                           |  |           |  | Weighted        |  |   |          
|-------------------------- |  | --------- |  | --------------- |  | - | ---------
|                           |  | Under     |  | Average         |  |   | Aggregate
|                           |  | Previous  |  | Exercise        |  |   | Intrinsic
|                           |  | Plan      |  | Price           |  |   | Value    
|                           |  |           |  |                 |  |   |          
|Balance, December 31, 2008 |  | 231,300   |  | $          4.09 |  |   |          
|                           |  |           |  |                 |  |   |          
|Granted                    |  | 193,400   |  | $          3.03 |  |   |          
|Lapsed                     |  | -         |  | -               |  |   |          
|Exercised                  |  | (113,050) |  | $          4.60 |  |   |          
|                           |  |           |  |                 |  |   |          
|Balance, December 31, 2009 |  | 311,650   |  | $          3.25 |  | $ | 913,134  
|                           |  |           |  |                 |  |   |          
|Granted                    |  | -         |  | -               |  |   |          
|Lapsed                     |  | -         |  | -               |  |   |          
|Exercised                  |  | (26,650)  |  | $          2.89 |  |   |          
|                           |  |           |  |                 |  |   |          
|Balance, March 31, 2010    |  | 285,000   |  | $          3.28 |  | $ | 1,185,600

The following represents options summary as of March 31, 2010 under the previous plan.

|        |  | Options Outstanding |  | Options Exercisable
|------- |  | ------------------- |  | -------------------
|        |  |                     |  | Weighted Average   
|        |  |                     |  | Remaining          
|        |  | Number              |  | Contractual        
|        |  | Outstanding         |  | Life               
|        |  |                     |  |                    
|Options |  | 285,000             |  | 1.39 years         

The Company determined the grant date fair value of 30,000 options of $2.77 per share which was calculated
using the Black Scholes Options Pricing Model as follows: Stock price of $10.14 per share, exercise price of $10.14 per share,
expected life of 2 years, volatility of 47.26% and discount rate of 1.54%.

THE 2009 EQUITY INCENTIVE COMPENSATION PLAN

On December 10, 2009, the Company's Board of Directors approved and adopted the 2009 Equity
Incentive Compensation Plan (the "New Plan"), and a total of 1,100,000 options were granted on the same day to current employees,
executives and directors of the Company, with an exercise price of $6.18 per share, expiration between 1 and 3 years, and vesting over
the life of the options.

21

---



The following summary represents options activity during the year ended December 31, 2009 and the quarter
ended March 31, 2010, under the New Plan.

|                           |  | Under     |  | Weighted        |  |   |          
|-------------------------- |  | --------- |  | --------------- |  | - | ---------
|                           |  | the       |  | Average         |  |   | Aggregate
|                           |  | New       |  | Exercise        |  |   | Intrinsic
|                           |  | Plan      |  | Price           |  |   | Value    
|                           |  |           |  |                 |  |   |          
|Balance, December 31, 2008 |  | -         |  | -               |  |   |          
|                           |  |           |  |                 |  |   |          
|Granted                    |  | 1,100,000 |  | $          6.18 |  |   |          
|Lapsed                     |  | -         |  | -               |  |   |          
|Exercised                  |  | -         |  | -               |  |   |          
|                           |  |           |  |                 |  |   |          
|Balance, December 31, 2009 |  | 1,100,000 |  | $          6.18 |  | $ | -        
|                           |  |           |  |                 |  |   |          
|Granted                    |  | -         |  | -               |  |   |          
|Lapsed                     |  | -         |  | -               |  |   |          
|Exercised                  |  | -         |  | -               |  |   |          
|                           |  |           |  |                 |  |   |          
|Balance, March 31, 2010    |  | 1,100,000 |  | $          6.18 |  | $ | 1,386,000

The following represents options summary as of March 31, 2010 under the New Plan.

|        |  | Options Outstanding |  | Options Exercisable
|------- |  | ------------------- |  | -------------------
|        |  |                     |  | Weighted Average   
|        |  |                     |  | Remaining          
|        |  | Number              |  | Contractual        
|        |  | Outstanding         |  | Life               
|        |  |                     |  |                    
|Options |  | 1,100,000           |  | 2.57 years         

The Company determined the grant date fair value of 865,000 options of $1.80 per share which was calculated
using the Black Scholes Options Pricing Model as follows: Stock price of $6.18 per share, exercise price of $6.18 per share, expected
life of 3.25 years, volatility of 39.18% and discount rate of 1.26%.

The Company determined the grant date fair value of 235,000 options of $1.20 per share which was
calculated using the Black Scholes Options Pricing Model as follows: Stock price of $6.18 per share, exercise price of $6.18 per share,
expected life of 1.5 years, volatility of 39.18% and discount rate of 0.78%.

NOTE 17 - INCOME TAX

TCB Digital and Jiangsu Leimone are governed by the Income Tax Law of the PRC concerning the private-run enterprises,
which are generally subject to tax at a statutory rate of 25% on income reported in the statutory financial statements
after appropriate tax adjustments.

Jiangsu Leimone is exempt from income tax in PRC for two years starting from the first profitable year or the
year 2008, whichever is earlier, and is subject to a 50% discount on normal income tax rate for the following three years.

TCB Digital had pre-tax profit (loss) of $358,732 and ($65,567) for the three months ended
March 31, 2010 and 2009 respectively, while Jiangsu Leimone had pre-tax profit of $29,889 and $36,153 for the three
months ended March 31, 2010 and 2009 respectively, while Profit Harvest had pre-tax profit of $2,887,075 and
$1,080,051 for the three months ended March 31, 2010 and 2009 respectively.

22

---



The following table summarizes the temporary differences which result in deferred tax assets and liabilities as at
March 31, 2010 and December 31, 2009:

|                                       |  | March 31, 2010 |         | December 31, 2009
|-------------------------------------- |  | -------------- | ------- | -----------------
|Deferred tax assets:                   |  | (Unaudited)    |         |                  
|Inventory impairment reserve           |  | $              | 33,375  |                  
|Buy-back reverse                       |  | 12,785         |         | 63,175           
|Bad debt allowance                     |  | 8,186          |         | 8,185            
|Expenses deductible in next year       |  | 223,975        |         | 304,524          
|Inventory shortage                     |  | 82,647         |         |                  
|Long-term investment impairment        |  | 16,457         |         | 16,454           
|Carryforward operating loss            |  | 99,452         |         | 99,437           
|Accrued rental deductible in next year |  | 823            |         | 823              
|                                       |  | 477,700        |         | 525,967          
|Less: Valuation allowance              |  |                |         |                  
|                                       |  | -              |         | -                
|                                       |  |                |         |                  
|Total deferred tax assets              |  | 477,700        |         | 525,967          
|                                       |  |                |         |                  
|Deferred tax liabilities               |  |                |         |                  
|Understated sales                      |  | (27,089)       |         | (21,746)         
|                                       |  |                |         |                  
|Deferred tax assets, net               |  | $              | 450,611 |                  

The following table reconciles the U.S. statutory rates to the Company's effective tax rate for the three months
ended March 31, 2010 and 2009:

|                             | March 31, 2010 |  | March 31, 2009
|---------------------------- | -------------- |  | --------------
|                             | (Unaudited)    |  | (Unaudited)   
|US statutory rates           | 34.0%          |  | 34.0%         
|Tax rate difference          | (11.8)%        |  | (18.0)%       
|Valuation allowance          | -              |  | (2.2)%        
|Effect of tax holiday        | -              |  | (0.9)%        
|Tax for prior year           | (1.0)%         |  | -             
|                             |                |  |               
|Tax per financial statements | 21.2%          |  | 17.3%         

NOTE 18 - STATUTORY RESERVES

As stipulated by the Company Law of the PRC, net income after taxation can only be distributed as dividends
after appropriation has been made for the following:

i) Making up cumulative prior years' losses, if any;

ii) Allocations to the "Statutory surplus reserve" of at least 10% of income after tax, as determined under PRC
accounting rules and regulations, until the fund amounts to 50% of the Company's registered capital;

iii) Allocations of 5-10% of income after tax, as determined under PRC accounting rules and regulations, to the
Company's "Statutory common welfare fund", which is established for the purpose of providing employee facilities and other collective
benefits to the Company's employees; and Statutory common welfare fund is no longer required per the new cooperation law executed
in 2006.

iv) Allocations to the discretionary surplus reserve, if approved in the shareholders' general meeting.

In accordance with the Chinese Company Law, the Company allocated 10% of its net income to surplus.  For the three months ended
March 31, 2010 and 2009, the Company appropriated $31,686 and Nil to statutory surplus reserve respectively.  As of March 31, 2010
and December 31, 2009, the Company's statutory surplus reserve amounted to $665,064 and $633,378 respectively.

23

---



NOTE 19 - CONCENTRATION DISCLOSURE

(a) During the reporting periods, the customers representing 10% or more of the Company's consolidated
sales were:

|Three months ended March 31, 2010                         |  | Sales revenue |            | % to Total sales
|--------------------------------------------------------- |  | ------------- | ---------- | ----------------
|                                                          |  |               |            |                 
|                                                          |  |               |            |                 
|Beijing Tianyu Langtong Communication Equipment Co., Ltd. |  | $             | 9,577,516  |                 
|                                                          |  |               |            |                 
|Leimone (Tianjin) Industrial Co., Ltd.                    |  |               | 8,236,417  |                 
|                                                          |  |               |            |                 
|Hong Kong  Newway International Industrial Limited        |  |               | 9,992,819  |                 
|                                                          |  |               |            |                 
|Larson Limited                                            |  |               | 8,454,425  |                 
|                                                          |  |               |            |                 
|Beijing Baina Wei'er Science And Technology Co., Ltd.     |  |               | 7,759,787  |                 
|                                                          |  |               |            |                 
|Total                                                     |  | $             | 44,020,964 |                 



|Three months ended March 31, 2009                         |  | Sales revenue |            | % to Total sales
|--------------------------------------------------------- |  | ------------- | ---------- | ----------------
|                                                          |  |               |            |                 
|                                                          |  |               |            |                 
|CLP Guangtong Beijing Science and Technology Co., Ltd.    |  | $             | 9,211,255  |                 
|                                                          |  |               |            |                 
|Shenzhen Pengxiang Huateng Electronic Technology Co., Ltd |  |               | 4,724,633  |                 
|                                                          |  |               |            |                 
|Kingbong International (HK) Group Co., Ltd                |  |               | 3,184,821  |                 
|                                                          |  |               |            |                 
|Total                                                     |  | $             | 17,120,709 |                 

(b) During the reporting periods, the suppliers represented 10% or more of the Company's consolidated
purchases are:



|Three months ended March 31, 2010              |  | Total        purchases |            | % to Total purchases
|---------------------------------------------- |  | ---------------------- | ---------- | --------------------
|                                               |  |                        |            |                     
|                                               |  |                        |            |                     
|Beijing Beny Wave Science & Technology Co. Ltd |  | $                      | 15,455,579 |                     
|                                               |  |                        |            |                     
|Leimone (Tianjin) Industrial Co., Ltd.         |  |                        | 11,358,591 |                     
|                                               |  |                        |            |                     
|Total                                          |  | $                      | 26,814,170 |                     



|Three months ended March 31, 2009 |  | Total        purchases |            | % to Total purchases
|--------------------------------- |  | ---------------------- | ---------- | --------------------
|                                  |  |                        |            |                     
|                                  |  |                        |            |                     
|CEC CoreCast Corporation Limited  |  | $                      | 10,463,270 |                     
|                                  |  |                        |            |                     
|Hong Kong Westdragon Co., Ltd     |  |                        | 3,529,528  |                     
|                                  |  |                        |            |                     
|Total                             |  | $                      | 13,992,798 |                     

24

---

NOTE 20 - OPERATING RISK

Industry risk

The industry in which we compete is a rapidly evolving, highly competitive and fragmented market
driven by consumer preferences and quickly evolving technology.  Increased competition may result in price reductions, reduced gross
margin and loss of market share.  Failure to compete successfully against current or future competitors could have a material adverse
effect on the Company's business, operating results and financial condition.



The Company can not guarantee the Renminbi and US dollars exchange rate will remain steady,
therefore the Company could post the same profit for two comparable periods and post higher or lower profit depending on exchange
rate of Renminbi and US dollars. The exchange rate could fluctuate depending on changes in the political and economic environments
without notice.



Currently, PRC is in a period of growth and is openly promoting business development in order to
bring more business into PRC.  Additionally PRC currently allows a Chinese corporation to be owned by a United States corporation.  If
the laws or regulations relating to ownership of a Chinese corporation are changed by the PRC government, the Company's ability to
operate the PRC subsidiaries could be affected.



The Company is exposed to interest rate risk arising from short-term variable rate borrowings from time to
time.  The Company's future interest expense will fluctuate in line with any change in borrowing rates.  The Company does not have
any derivative financial instruments as of March 31, 2010 and December 31, 2009 and believes its exposure to interest rate risk is not material.

NOTE 21 - Commitment

Operating lease commitments

The Company has an operating lease of the TCB Digital premises through TCBGCL, a common shareholder of
TCB Digital.  Pursuant to these leases which rates of rent are all at Rmb 8 per square meter per month for production facilities and
dormitory space, the commitments of the Company as of March 31, 2010 for the next 3 years are:



|                                |  |         |        
|------------------------------- |  | ------- | -------
|                                |  |         |        
|12 months
ending March 31, 2011 |  | $       | 229,520
|12 months ending March 31, 2012 |  | 222,443
|12 months ending March 31, 2013 |  | 61,120 
|                                |  |         |        
|Total minimum lease payments    |  | $       | 513,083

25

---

NOTE 22 - SUBSEQUENT EVENTS
Waiver of Right of Participation
On April 23, 2010 the Company executed agreements with investors from the private sale of equity
transaction in October 2009 (the "PIPE Investors") that effectively amended the Securities Purchase Agreement dated as of October
15, 2009.  Pursuant to such agreements, the Right of Participation from these investors is postponed for a period of up to 8 months for
the Company to more easily conduct fundraising activities during the period of postponement, and the Company will issue a total of
375,000 warrants on a prorate basis to the PIPE Investors. The exercise price of the warrants is initially set at $6.85 per share and can
be adjusted to the lower of $6.85 or the offering price per share in a registered offering, if consummated, by the Company pursuant to
the Company's Registration Statement on Form S-3 File No. 333-156873.  There is no registration right attached to the common stock
underlying the warrants.
Acquisition of Nollec Wireless
On April 29, 2010, the Company executed a share exchange agreement (the "Nollec Agreement") to
acquire 100% of the shares of Nollec Wireless Company Ltd., ("Nollec Wireless") a mobile phone and wireless communication design
company located in Beijing, China.  The consideration paid for Nollec Wireless will be US$10.96 million in cash and stock. The
consideration agreed upon by the Company and the owners of Nollec Wireless is based on the fair value.  Pursuant to the Nollec
Agreement, $1.37 million of the total consideration will be paid in cash by the Company and the balance of $9.59 million will be paid by
the issuance of 1,342,599 shares of the Company's common stock ("Payment Shares"). The price of the Payment Shares was based
on the weighted average closing price of Zoom shares as traded on Nasdaq for the 10 consecutive trading days prior and leading up to
the day immediately before the date of the Agreement. The sellers in the transaction will execute lock up agreements which restrict
them from transferring the Payment Shares for a period of 6 months from the closing date of the transaction. Closing of the transaction
is subject to customary closing conditions and deliverables by the Company and the sellers.
Capital increase of Jiangsu Leimone
On April 16, 2010, Jiangsu Leimone received capital contribution of $300,000 (HK$2,328,650) in cash
from Gold Lion. The remaining balance of registered capital of Jiangsu Leimone yet to be contributed, which amounts to approximately
$884,162 (HK$6,871,350) shall be made by June 20, 2010.

26Item 2. Management's Discussion And Analysis Of Financial Condition And Results Of Operations
Forward Looking Information
The following discussion contains forward-looking statements. Forward looking statements are identified by
words and phrases such as "anticipate", "intend", "expect", and words and phrases of similar import. We caution investors that
forward-looking statements are only predictions based on our current expectations about future events and are not guarantees of future
performance. Actual results, performance or achievements could differ materially from those expressed or implied by the
forward-looking statements due to risks, uncertainties and assumptions that are difficult to predict. We encourage you to read those risk factors
carefully along with the other information provided in this current report on Form 8-K and in our other filings with the SEC before
deciding to invest in our stock or to maintain or change your investment. We undertake no obligation to revise or update any
forward-looking statement for any reason, except as required by law.
You should read this Management's Discussion and Analysis in conjunction with the Consolidated Financial
Statements and Related Notes.
Business Overview
Gold Lion was founded by Mr. Gu Lei in September 2002 in the British Virgin Islands, and Gu
was the sole owner of one issued and outstanding share of common stock. Through a resolution of Gold Lion on November 26,
2008, Gold Lion issued 705 shares to Gu and 294 shares to Mr. Du Songtao, resulting in a total of 1,000 issued and outstanding
shares of common stock. Pursuant to a pledge agreement dated November 26, 2008, Du pledged his 294 shares to
Mr. Cao Wei, with all rights to such shares including voting rights. Consequently, Gu and Cao jointly control 100% of Gold
Lion.
On August 2, 2007, Gu founded Profit Harvest in Hong Kong, and in December 2008, 100% ownership of
Profit Harvest was transferred to Gold Lion. Profit Harvest is engaged in sale of mobile phone products and components to retailers and
other wholesalers.
Pursuant to a capital injection agreement (the "Agreement") by and among Tianjin Communication and
Broadcasting Group Co., Ltd. ("TCBGCL"), TCBGCL Labour Union, Hebei Leimone Science and Technology Co., Ltd.("Hebei
Leimone"), Tianjin 712 Communication and Broadcasting Co., Ltd.("712"), Beijing Depu Investment Co., Ltd. and other natural person
shareholders on May 8, 2007 and a resolution of the shareholder's meeting on June 30, 2007, Hebei Leimone, a company
controlled by Gu, acquired 25.13% of TCB Digital from TCBGCL Labour Union and various natural person shareholders for cash
consideration of RMB9,000,000. Pursuant to this Agreement, Hebei Leimone and Beijing Depu Investment Co., Ltd., a company
controlled by Cao, were to invest additional RMB15,928,700 and RMB10,377,600 respectively in TCB Digital, bringing the total
investment from Hebei Leimone and Beijing Depu Investment Co., Ltd to $4,679,111 (RMB35,306,300). After this additional investment
was made as of June 30, 2007, Hebei Leimone and Beijing Depu held 36.03% and 15% equity interests respectively of TCB
Digital, a total of 51.03% ownership in TCB Digital. Pursuant to an agreement dated June 30, 2007, Cao irrevocably pledged his 15%
equity interest in TCB Digital to Gu in exchange for a 29.4% stake in Gu's company.  TCB Digital is mainly engaged in research
& development, processing, manufacturing, servicing and marketing of mobile handsets, electronic products and communication
equipment.
On November 30, 2007, Gold Lion and GD Industrial Company signed a share transfer agreement pursuant to
which GD Industrial Company transferred 60% equity of Nantong Zong Yi Kechuang Digital Camera Technology Co., Ltd. for $10,273
to Gold Lion. In July 2008, the company's name was changed to Jiangsu Leimone Electronic Co., Ltd., or Jiangsu Leimone. In January
2008, Gold Lion invested $5,074,226 (HK$38,800,000) in Jiangsu Leimone to increase Gold Lion's ownership in Jiangsu Leimone to
80%. Pursuant to the share transfer agreement by and between Gold Lion and Nantong Zong Yi Investment Co., Ltd. dated November
26, 2008, Gold Lion acquired the remaining 20% equity interest of Jiangsu Leimone from Nantong Zong Yi Investment Co., Ltd. for
cash consideration of $103,214 (HK$800,000). After this transaction, Gold Lion obtained 100% ownership of Jiangsu Leimone. Jiangsu
Leimone is engaged in the R&D and production of electronic assemblies, 3G mobile handsets, wireless communication modules,
GPS receivers and computer software.

27Pursuant to the share transfer agreement by and among Hebei Leimone, Beijing Depu Investment Co., Ltd and
Jiangsu Leimone dated December 15, 2008, Hebei Leimone and Beijing Depu Investment Co., Ltd. transferred their 51.03%
equity interest of TCB Digital to Jiangsu Leimone on December 30, 2008.
Increased ownership in TCB Digital

Mr. Gu exercised an option to acquire an additional 28.97% of TCB Digital.  Under
the terms of the Share Exchange Agreement dated January 28, 2009, amended on May 12, 2009, and approved by our shareholders
on September 8, 2009, at such time as Mr. Gu completes his acquisition of 28.97% of TCB Digital, Mr. Gu has the option to transfer this
stake in TCB Digital for an aggregate of 2,402,576 shares of Zoom common stock.  As of March 31, 2010, Mr. Gu exercised his option
to acquire the addition 28.97% of TCB Digital and exchanged this ownership in TCB Digital for 2,402,576 shares on our common stock,
which increased the Company's ownership of TCB Digital from 51.03% to 80%.

Plan of Operation
During the next twelve months, Zoom, together with Gold Lion and its subsidiaries, expects to take the
following steps in connection with the development of our business and the implementation of our plan of operations:

Zoom intends to continue to manufacturer and deliver its products and services in China, including EMS business for OEM
customers and development of our brand of "Leimone" phones;







Planned Acquisition of Leimone Culture

On January 26, 2010, the Company announced its intent to acquire a Chinese handset
mobile video and value-added service company, Beijing Leimone Shengtong Culture Development Company ("Leimone Culture").  Lei
Gu, our Chairman, CEO and largest shareholder, owns approximately seventy percent of Leimone Culture.  Founded in 2004, Leimone
Culture was granted licenses by the State Administration of Radio Film and Television ("SARFT") to provide web-based broadcast
audiovisual programs and to produce radio and television content for mobile devices. Leimone Culture has been a provider of mobile
video services to China Mobile since 2005 and China Unicom since 2007.

On March 25, 2010, Leimone Culture signed an agreement with China Central
Television (CCTV), the major state television broadcaster in China, with 19 channels broadcasting to more than one billion viewers.
Under the agreement, Leimone Culture will provide approved media content to CCTV's mobile users and will bundle CCTV.com's
mobile TV access link onto Zoom's branded "Leimone" mobile phones and onto Zoom Original Equipment Manufacturer (OEM)
customers' phones.



The Company has the option of purchasing Mr. Gu's shares in
Leimone Culture and on December 1, 2009, Zoom's Board of Directors approved to pursue the acquisition of 100% of Leimone Culture
in the event the minority shareholders of Leimone Culture decides to sell their interests. Upon further due diligence and negotiation,
terms of the acquisition are expected to be finalized by mid-year 2010.

Critical Accounting Policies and Estimates

The preparation of Gold Lion's consolidated financial statements in conformity with accounting principles
generally accepted in the United States ("US GAAP") requires it to make estimates and judgments that affect its reported assets,
liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. Gold Lion based its estimates and judgments
on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. Future events,
however, may differ markedly from current expectations and assumptions. While there are a number of significant accounting policies
affecting Gold Lion's consolidated financial statements; Gold Lion believes the following critical accounting policies involve the most
complex, difficult and subjective estimates and judgments: allowance for doubtful accounts; income taxes; asset impairment.

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Revenue Recognition

In accordance with US GAAP, revenue is recognized only when the price is fixed or determinable, persuasive
evidence of an arrangement exists, the service is performed, and collection of the resulting receivable is reasonably assured. Noted
below are brief descriptions of the product or service revenues that Gold Lion recognizes in the financial statements contained
herein.

Sale of goods

Revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is
fixed or determinable, the delivery is completed, no other significant obligations of Gold Lion exists and collectability is reasonably
assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as advances from
customers.

Allowance for doubtful accounts

Gold Lion maintains an allowance for doubtful accounts to reduce amounts to their estimated realizable value. A
considerable amount of judgment is required when Gold Lion assesses the realization of accounts receivables, including assessing the
probability of collection and the current credit-worthiness of each customer. If the financial condition of customers were to deteriorate,
resulting in an impairment of their ability to make payments, an additional provision for doubtful accounts could be required. Gold Lion
initially records a provision for doubtful accounts based on its historical experience, and then adjusts this provision at the end of each
reporting period based on a detailed assessment of its accounts receivable and allowance for doubtful accounts. In estimating the
provision for doubtful accounts, Gold Lion considers: (i) the aging of the accounts receivable; (ii) trends within and ratios involving the
age of the accounts receivable; (iii) the customer mix in each of the aging categories and the nature of the receivable; (iv) its historical
provision for doubtful accounts; (v) the credit worthiness of the customer; and (vi) the economic conditions of the customer's industry as
well as general economic conditions, among other factors.

Income taxes

Gold Lion accounts for income taxes in accordance with SFAS No. 109, "Accounting for Income Taxes".
Under this method, deferred income taxes are recognized for the estimated tax consequences in future years of differences between
the tax bases of assets and liabilities and their financial reporting amounts and each year-end based on enacted tax laws and statutory
rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established to
reduce deferred tax assets to the amount expected to be realized when, in management's opinion; it is more likely than not that some
portion of the deferred tax assets will not be realized. The provision for income taxes represents current
taxes payable net of the change during the period in deferred tax assets and liabilities. Gold Lion adopted FIN 48, Accounting for
Uncertainty in Tax Positions.

Asset Impairment

Gold Lion periodically evaluates the carrying value of other long-lived assets, including, but not limited to,
property and equipment and intangible assets, when events and circumstances warrant such a review. The carrying value of a long-lived asset
is considered impaired when the anticipated undiscounted cash flows from such asset is less than its carrying value. In that
event, a loss is recognized based on the amount by which the carrying value exceeds the fair value of the long-lived asset. Fair value is
determined primarily using the anticipated cash flows discounted at a rate commensurate with the risk involved. Significant estimates
are utilized to calculate expected future cash flows utilized in impairment analyses. Gold Lion also utilizes judgment to determine other
factors within fair value analyses, including the applicable discount rate.  The Company's long-term investment of $65,816 in Tianjin
Tong Guang Microelectronics Co., Ltd. ("TTGM") was entirely impaired as of December 31, 2009.

Results of Operations for the Quarter ended March 31, 2010

Revenues

Our revenues were $50,979,269 for the quarter ended March 31, 2010, an increase of 77% or
$22,162,712 compared to $28,816,557 in the corresponding period in 2009. The increase of revenues in 2010 as compared to 2009
was mainly due to increase in orders from our domestic EMS customers and also increase in the sales of our own branded phones.  In
the first quarter of 2010, we sold a total of 71,069 units of our Leimone brand phones of which 6,244 were 3G handsets.  Revenues
from sales of our own branded products in the first quarter of 2010 totaled $4.63 million while that for the same period a year ago was
insignificant.

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Cost of sales

For the first quarter of 2010, our cost of sales was $46,801,015 or 91.8% of revenues, while cost of
sales for the corresponding period in 2009 was $26,131,951 or 90.7% of revenues. Our competitive pricing for the contract
manufacturing was instrumental in capturing significantly increased business activities.

Gross Profit

Gross profit for the first quarter of 2010 rose 56% to $4,178,254 compared to $2,684,606 for the 2009
quarter. Gross profit as a percentage of revenues for the first quarter of 2010 was 8.2%, compared to 9.3% for the 2009 quarter and
6.0% for the whole year of 2009.  The reasons for the increase in gross margins for the first quarter of 2010 over that for
the year 2009 are:  a) the demand for EMS services has increased from last year and pricing of our processing fess has been relaxed,
and b) sales of our own branded products generally carry a higher margin than the EMS activities.

Selling, general and administrative expenses

Sales and marketing expenses mainly represent salaries of sales personnel, and marketing and
transportation costs; and this was $44,076 for the first quarter in 2010 compared to $1,048,323 for the 2009 period.  This
expense has been relative stable compared to the 4th quarter of 2009.  The higher amount in the first quarter of 2009 was a result of
the gearing up of Profit Harvest's in its preparation to make sales in Hong Kong and the southern cities of China.

General and administrative expenses primarily consisted of compensation for administrative personnel,
depreciation, travel expenses, rental, materials expenses related to ordinary administration, and fees for professional services; and this
was $904,641 for the first quarter of 2010 compared to $787,482 for the same 2009 period.

Non-cash compensation charges include stock option charges based on a Black-Scholes pricing model and
values of common stock issued to consultants for services.  Such charges for the first quarter of 2010 and 2009 were $369,659 and $0,
respectively.

For the first quarter of 2010, total operating expenses were $1,318,376 or 2.6% of revenues, which was a decrease of $517,429
from $1,835,805 and a reduction from 6.4% of revenues for the 2009 period. This was a result of management's continued emphasis on
cost control and operational efficiency.

Research and development expense

We did not record R&D expenditures in the first quarter of 2010 as we either built in such charges
to our customers or absorbed such costs into our general and administration expenses.

Other income/(expenses)-net

The Company's other expenses-net was $272,447 for the first quarter of 2010, was mainly comprised
of interest expense of $257,626.  For the corresponding 2009 period, other income-net was $175,958 mainly included interest
expense of $320,907 offset by interest income of $154,170 and a non-recurring debt relief of $425,038.

Net income

For the quarter ended March 31, 2010, the Company's net income from operations was $1,895,702 or
an increase of $1,004,370 or 113% compared to $891,332 for the 2009 period. Net margins, the ratio of net income over revenues, for
the first quarter of 2010 and 2009 were 3.8% and 3.1% respectively.

Other comprehensive income

For the first quarter of 2010, the Company's other comprehensive income was $388 compared to
$16,660 for the 2009 period. Other comprehensive income in 2010 and 2009 resulted from foreign currency exchange changes
particularly the Renminbi against the U.S. dollar. This gain for the first quarter of 2010 can result in a loss in future periods if the trend in
the exchange rate of the Reminbi to the U.S. dollar reverses.

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Liquidity and Capital Resources

Zoom generally finances its operations from cash flow generated internally, interest-free credit lines in the
form of banker acceptances and short-term loans from domestic banks. As of March 31, 2010, the Company had cash and cash
equivalents of $334,784. This represented a decrease of $1,137,516 from $1,472,300 as of December 31, 2009.

Net cash used in operating activities for the three months ended March 31,
2010 was $1,147,778 compared to net cash used in operating activities for the 2009 period of $1,455,883. In the first
three months of 2010, operational use of funds included an increase in accounts receivable of $1,636,001 and advances
made to related parties of $4,472,721 and a decrease in accounts payable of $771,267;  while offset by an increase in
advances from customers of $2,197,215 and an increase in accrued expenses and other current liabilities of
470,364.

Net cash used for investing activities was to $994,943 in the first quarter of 2010 which was
primarily cash used as deposits in the amount of $980,100 for securing interest free credit facilities such as banker
acceptances.

Net cash provided by financing activities was $1,007,608 in the first quarter of 2010 which
included proceeds from short-term loans of $18,124,528, proceeds from notes payable of $1,960,199, receipts from
related parties in the amount of $7,629,484. During this period, there was an outflow due to advance to related parties of
$3,637,028 and repayment of short-term loans of $13,165,517 and also an outflow of $10,074,820 for repayment of
borrowing from related parties.

On going forward basis over the next 12 months, Zoom intends to continue to rely on short-term loans to fund
its operational cash needs.  The Company may also contemplate one or more equity fundraises for its expansion needs, provided that
conditions of the capital market allow for financing at acceptable terms.

Off Balance Sheet Arrangements

As of March 31, 2010, Zoom had no off balance sheet arrangements.

Item 3. Controls and Procedures

(a) Disclosure Controls and Procedures.

The Company's disclosure controls and procedures are designed to ensure that information required to be
disclosed in the Company's reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized, and reported
within the time periods specified in the SEC's rules and forms, including, without limitation, that such information is accumulated and
communicated to Company management, including the Company's principal executive and financial officer, as appropriate to allow
timely decisions regarding required disclosures.

Limitations on the Effectiveness of Disclosure Controls. In designing and evaluating the Company's
disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived
and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are
met. Additionally, in designing disclosure controls and procedures, Company management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure
controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Evaluation of Disclosure Controls and Procedures. The Company's principal executive and financial
officers have evaluated the effectiveness of the design and operation of the Company's disclosure controls and procedures as defined
in Exchange Act Rules 13a-15(e) and 15d-15(e) as of December 31, 2009, and based on this evaluation, the Company's principal
executive and financial officers have concluded that the Company's disclosure controls and procedures were not effective to ensure
that material information is recorded, processed, summarized and reported by management of the Company on a timely basis in order
to comply with the Company's disclosure obligations under the Exchange Act and the rules and regulations promulgated thereunder.
The Company's principal executive and financial officers conclusion regarding the Company's disclosure controls and procedures is
based solely on management's conclusion that the Company's internal control over financial reporting are ineffective as identified in our
Annual Report on Form 10-K for the fiscal year ended December 31, 2009 continues to be ineffective as

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of March 31, 2010. In
connection with our Annual Report on Form 10-K for the fiscal year ended December 31, 2009, our management assessed the
effectiveness of the Company's internal control over financial reporting was not effective based on management's identification of the
material weaknesses as follows:

- Insufficient Human Resources.  There is a lack of employees at our operating subsidiaries,
namely, TCB Digital, Jiangsu Leimone, and Profit Harvest who have adequate knowledge of US GAAP principles. Furthermore, the
Company's Chief Financial Officer is the only person at the parent level with an appropriate knowledge experience and training in the
selection, application and implementation of US GAAP as it relates to complex transactions and financial reporting
requirements.

- Lack of Segregation of Duties.  There is a lack of segregation of duties at the Company
due because only one employee, the Chief Financial Officer of the Company, is charged with the responsibilities of general
administrative and financial matters.

Management will continue to evaluate the material weaknesses identified above and have already engaged
Sarbanes Oxley compliance consultants to identify the areas of weakness and to suggest remedial measures.

(b) Changes in Internal Control over Financial Reporting.

There were no significant changes in the Company's internal control over financial reporting that occurred
during the first quarter of fiscal 2010 that have materially affected, or are reasonably likely to materially affect, such control.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings. None

Item 4. Reserved.

Item 5. Other Information. None

Item 6. Exhibits.

The following exhibits are included with this report.

Exhibit 31.1 Rule 13a-14(a) / 15d-14(a) Certification of Lei Gu, CEO.
Exhibit 31.1 Rule 13a-14(a) / 15d-14(a) Certification of Anthony K. Chan, CFO.
Exhibit 32.0 Section 1350 Certifications.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf on May 12, 2010 by the undersigned, thereunto duly authorized.

Zoom Technologies, Inc.
   (Registrant)

By: /s/ Lei Gu
Lei Gu
Chief Executive Officer

















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INDEX TO EXHIBITS

Exhibits filed herewith:

31.1    Rule 13a-14(a) / 15d-14(a) Certification of Lei Gu, CEO     PDF 
31.1    Rule 13a-14(a) / 15d-14(a) Certification of Anthony K. Chan, CFO     PDF 
32.0    Section 1350 Certifications     PDF













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