10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

£	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended September 30, 2013

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 333-134883

VELATEL GLOBAL COMMUNICATIONS, INC.

(Exact name of Registrant as specified in its charter)

Nevada	98-0489800
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

5950 La Place Court, Suite 160, Carlsbad, California 92008

(Address of principal executive offices) (Zip code)

760.230.8986

(Registrant's telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that registrant was required to submit and post such files.) Yes x     No o

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.

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o	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 o    No x

APPLICABLE ONLY TO CORPORATE ISSUERS

As of November 19, 2013, the filing date of this Report, Registrant had outstanding 1,113,412,415 shares of its Series A common stock, 130,000,000 shares of its Series B common stock, and 285 shares of its Series B preferred stock. Each class or series of Registrant’s common and preferred stock has a par value of $0.001.

VELATEL GLOBAL COMMUNICATIONS, INC.

INDEX TO QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTER ENDED SEPTEMBER 30, 2013 AND 2012

		PAGE
PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Unaudited Consolidated Balance Sheets as of September 30, 2013 and December 31, 2012	3
	Unaudited Consolidated Statements of Operations and Comprehensive Loss for the three months and nine months ended September 30, 2013 and September 30, 2012	4
	Unaudited Consolidated Statements of Cash Flows for the nine months ended September 30, 2013 and September 30, 2012	5
	Notes to Unaudited Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	32
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	44
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3.	Defaults Upon Senior Securities	49
Item 4.	Removed and Reserved	49
Item 5.	Other Information	49
Item 6.	Exhibits	49

2

PART I - FINANCIAL INFORMATION

Item 1.  Financial Statements.

VELATEL GLOBAL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30,			December 31,
	2013			2012
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	1,077,560		$	207,903
Accounts receivable, net of provision for doubtful accounts of $17,721 and $6,500		227,534			197,349
Receivables, other		18,927			28,439
Inventory		–			–
Prepaid expenses and other current assets		114,135			98,575
Assets held for sale/discontinued operations		–			4,968,902
Total current assets		1,438,156			5,501,168
Property, plant and equipment, net of accumulated depreciation of $916,150 and $692,393 as of September 30, 2013 and December 31, 2012, respectively		268,991			406,387
Other assets:
Intangible assets, net of accumulated amortization of $241,201 and $209,716 as of September 30, 2013 and December 31, 2012, respectively		819,952			819,150
Deposits		38,899			639,654
Total other assets		858,851			1,458,804
Total assets	$	2,565,998		$	7,366,359
LIABILITIES AND DEFICIENCY
Current liabilities:
Accounts payable and accrued expenses	$	15,215,541		$	12,579,399
Due to officers and related parties		64,076			825,845
Unearned revenue		17,477			–
Notes payable, related party		870,138			1,129,122
Notes payable, current portion		11,879,386			9,075,373
Convertible debentures, net		573,868			298,923
Notes payable, other		821,735			821,735
Derivative liability		18,186,760			6,393,863
Liabilities of discontinued operations		612,529			9,346,975
Total current liabilities		48,241,510			40,471,235
Notes payable, net of current portion		3,395,414			3,450,122
Mandatory redeemable Series B common stock; $0.001 par value, 1,000,000,000 shares authorized, 80,000,000 and 20,000,000 issued and outstanding as of September 30, 2013 and December 31, 2012, respectively,		49,281			11,870
Total liabilities		51,686,205			43,933,227
Stockholders' deficiency:
Preferred stock, Series B;$0.001 par value, 2,500 shares authorized, 285 and 120 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively		–			–
Common stock:
Series A common stock; $0.001 par value, 1,000,000,000 shares authorized, 657,160,092 and 105,153,206 shares issued and outstanding as of September 30, 2013 and December 31, 2012, respectively		657,160			105,153
Additional paid in capital		274,176,852			263,199,856
Common stock in escrow		(178,664	)		(178,664	)
Accumulated other comprehensive loss		(43,551	)		(69,398	)
Accumulated deficit		(322,620,767	)		(298,347,524	)
Total Velatel Global Communications, Inc.'s stockholders' deficiency		(48,008,970	)		(35,290,577	)
Non controlling interest		(1,111,237	)		(1,276,291	)
Total deficiency		(49,120,207	)		(36,566,868	)
Total liabilities and deficiency	$	2,565,998		$	7,366,359

The accompanying notes are an integral part of these unaudited financial statements.

3

VELATEL GLOBAL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013			2012			2013			2012
REVENUE	$	462,880		$	214,486		$	1,031,134		$	438,840
Cost of revenue		61,245			36,543			128,472			77,076
Gross profit		401,635			177,943			902,662			361,764
OPERATING EXPENSES:
Selling, general and administrative expenses		2,842,284			2,685,590			6,173,062			8,651,572
Impairment of investments		–			1,010,000			6,387,100			1,010,000
Depreciation and amortization		75,534			197,646			210,375			172,675
Total operating expenses		2,917,818			3,893,236			12,770,537			9,834,247
Net loss from operations		(2,516,183	)		(3,715,293	)		(11,867,875	)		(9,472,483	)
OTHER INCOME (EXPENSES):
Other income (expenses)		(112,107	)		(63,363	)		451,045			(63,342	)
Gain (loss) on settlement of debt		(1,514,810	)		(133,720	)		(6,763,365	)		1,723,817
Gain (loss) on foreign currency transactions		(2,028	)		(64,806	)		(6,028	)		(24,921	)
Gain (loss) on change in fair value of debt derivative		(24,200	)		53,098			(1,151,633	)		14,714
Interest expense		(676,604	)		(243,099	)		(1,517,408	)		(1,151,705	)
Total other income (expense)		(2,329,749	)		(451,890	)		(8,987,389	)		498,563
Loss from continuing operations		(4,845,932	)		(4,167,183	)		(20,855,264	)		(8,973,920	)
Discontinued operations:
Income (loss) from operations of discontinued operation		(308,125	)		168,773			(70,911	)		(502,744	)
Gain on disposition of discontinued operation		5,817,986						5,817,986
Net income (loss)		663,929			(3,998,410	)		(15,108,189	)		(9,476,664	)
(Income) loss attributed to non controlling interest		(306,562	)		(30,477	)		(165,054	)		7,063
NET INCOME (LOSS) ATTRIBUTABLE TO VELATEL GLOBAL COMMUNICATIONS, INC.	$	357,367		$	(4,028,887	)	$	(15,273,243	)	$	(9,469,601	)
Net loss per common share (basic and fully diluted) - continuing operations	$	(0.01	)	$	(0.47	)	$	(0.08	)	$	(1.06	)
Net income (loss) per common share (basic and fully diluted) - discontinued operations	$	(0.00	)	$	0.02		$	(0.00	)	$	(0.06	)
Weighted average number of shares outstanding, basic and fully diluted		431,588,995			8,842,770			266,336,625			8,425,091
Comprehensive Loss:
Net income (loss)	$	663,929		$	(3,998,410	)	$	(15,108,189	)	$	(9,476,664	)
Foreign currency translation gain		(115,661	)		–			25,847			–
Comprehensive Loss:		548,268			(3,998,410	)		(15,082,342	)		(9,476,664	)
Comprehensive gain (loss) attributable to the non controlling interest		(306,562	)		(30,477	)		(165,054	)		7,063
Comprehensive loss attributable to Velatel Global Communications, Inc.	$	241,706		$	(4,028,887	)	$	(15,247,396	)	$	(9,469,601	)

The accompanying notes are an integral part of these unaudited financial statements.

4

VELATEL GLOBAL COMMUNICATIONS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	2013			2012
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(15,108,189	)	$	(9,476,664	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		416,851			575,503
Impairment of investments		6,387,100			1,010,000
Amortization of debt discounts		504,009			–
(Gain) loss on settlement of debt		6,763,365			(1,723,817	)
(Gain) loss on change in fair value of debt derivative		1,151,633			(14,714	)
Allowance for (recovery of) bad debts		11,221			–
Gain on sale of subsidiary		(5,817,986	)		–
(Increase) decrease in:
Accounts receivable		205,246			(1,249,627	)
Inventory		–			(471,024	)
Prepaid expenses and other current assets		40,864			1,020,297
Increase (decrease) in:
Accounts payable and accrued liabilities		4,636,427			15,003,526
Unearned revenue		17,477			–
Net cash used in operating activities		(791,982	)		4,673,480
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property, plant and equipment		(74,126	)		(7,122,626	)
Purchase of intangible assets		(22,117	)		–
Deposit for acquisition		–			–
Proceeds from the sale of subsidiary		1,259,716			–
Cash paid for China Motion		(1,550,000	)		(669,061	)
Cash received with acquisitions					663,226
Net cash used in investing activities		(386,527	)		(7,128,461	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds (payments) on advances from officers		3,626			(225,301	)
Proceeds from issuance of convertible notes		659,500			–
Proceeds from issuance of notes payable		600,000			2,061,635
Proceeds from issuance of Series B preferred stock		900,000			–
Proceeds from issuance of notes payable, related party		46,060			739,749
Payments on notes payable		(101,192	)		–
Payments on notes payable, related party		(61,020	)		(24,527	)
Net cash provided by financing activities		2,046,974			2,551,556
Effect of currency rate change on cash		1,192			–
Net increase (decrease) in cash and cash equivalents		869,657			96,575
Cash and cash equivalents, beginning of the period		207,903			183,457
Cash and cash equivalents, end of the period	$	1,077,560		$	280,032
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for interest	$	7,998		$	10,280
Cash paid during the period for taxes	$	845		$	1,306
NON CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued in settlement of debt	$	6,988,660		$	12,676,088
Common stock issued for acquisitions	$	–		$	424,000

The accompanying notes are an integral part of these unaudited financial statements.

5

VELATEL GLOBAL COMMUNICATIONS, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

SEPTEMBER 30, 2013

NOTE 1     SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies applied in the presentation of the accompanying unaudited Consolidated Financial Statements follows:

General

The accompanying unaudited Consolidated Financial Statements of VelaTel Global Communications, Inc. (formerly China Tel Group, Inc.) (“Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).

Capital Structure

The Company’s capital stock consists of three series of its stock for which there are shares issued and outstanding: (i) Series A common stock (“Series A Common Stock,” “Series A Shares” or “Shares”); (ii) Series B common stock (“Series B Common Stock” or “Series B Shares”); and (iii) Series B Convertible and Redeemable Preferred Stock (“Series B Preferred Shares”). Series A Common Stock, together with Series B Common Stock, are collectively referred to in these Notes as “Common Stock”. The par value of each share of every series of the Company’s capital stock is $0.001.

Series A Shares are quoted on the OTC Link™ quotation platform of OTC Markets Group, Inc. under the symbol “OTCQB:VELA.” The holder of each Series A Share has the right to cast one vote at any duly called meeting of shareholders or pursuant to a written consent of shareholders in lieu of a meeting.

Series B Shares do not participate in any declared dividends, have no rights upon liquidation of the Company and have no conversion rights into shares of Series A Shares. The Company is required to redeem each Series B Share that is issued and outstanding on May 23, 2023, at its par value. The holder of each Series B Share has the right to cast ten votes at any duly called meeting of shareholders or pursuant to a written consent of shareholders in lieu of a meeting. The consent of 80% of the issued and outstanding Series B Shares is required in order to sell, assign or transfer any of the Series B Shares, or to grant proxies or voting rights with respect to any shares of Series B Common Stock, except for any proxies granted to George Alvarez.

Series B Preferred Shares rank, with respect to dividend rights and rights upon liquidation, winding-up or dissolution: (i) senior to Series A Shares with respect to dividends and rights upon liquidation; and (ii) junior to all existing and future indebtedness of the Company. The holder of each Series B Preferred Share has no right to vote at any duly called meeting of shareholders or pursuant to a written consent of shareholders in lieu of a meeting, provided that, without the affirmative approval of the holders of a majority of the Series B Preferred Shares (voting as a class), the Company may not: (i) authorize or issue any class of stock that is not junior to the Series B Preferred Shares in right of dividends and/or liquidation; (ii) change the rights given to Series B Preferred Shares; (iii) liquidate, dissolve or wind-up the business of the Company; or (iv) effect any merger, consolidation or similar transaction the effect of which the capital stock of the Company would not constitute a majority of the voting power of the capital stock of the surviving entity.

Upon any liquidation, after payment or provision for payment of the Company’s debts and other liabilities, the holders of Series B Preferred Shares will be entitled to be paid out of the Company’s assets available for distribution at $10,000 per Series B Preferred Share, plus any accrued but unpaid dividends. Dividends accrue on each Series B Share from the date of issuance at 2.50% compounded annually. Each Series B Preferred Share may be redeemed by the Company or converted by either the Company or the holder of such Series B Preferred Share at the sum of the following: (i) $10,000; plus (ii) the Embedded Derivative Liability (as defined in the Certificate of Designations); less (iii) any dividends that have been paid (“Redemption Price”). Upon a conversion, the Company is required to issue a number of Series A Shares equal to: (iv) the Redemption Price; multiplied by (v) the number of Series B Shares subject to conversion; divided by (vi) $0.20 per Series A Share.

6

Amended and Restated Articles of Incorporation

On July 23, 2013, the Company’s Board of Directors (“Board”), by Unanimous Written Consent, adopted a resolution to file with the Nevada Secretary of State a Certificate of Amended and Restated Articles of Incorporation (“A&R Articles”) containing the following substantive changes to the Articles of Incorporation previously on file with the Nevada Secretary of State: (i) increasing the number of authorized shares of Series A Common Stock from 1,000,000,000 to 10,000,000,000; (ii) increasing the number of authorized shares of Series B Common Stock from 100,000,000 to 1,000,000,000; (iii) withdrawing the designation of up to 20,000,000 authorized shares of Series A Preferred Stock and instead treating such shares as undesignated Preferred Stock; (iv) prescribing that future amendments to the Company’s Articles of Incorporation may, to the maximum extent allowable by Nevada law, be approved by resolution of the Board and without necessity of approval by the Company’s shareholders (provided that future amendments which increase the number of authorized shares of any class or series of the Company’s capital stock for which there are shares outstanding will continue to require shareholder approval); and (v) electing not to be governed by certain provision of the Nevada Revised Statutes governing “acquisition of a controlling interest” and/or “combinations with interested shareholders (collectively, “Action”). In addition, the Board recommended that the shareholders of the Company’s Common Stock approve the Board’s proposal by adopting a majority written consent in lieu of voting at a general or special meeting of shareholders. The Board fixed a record date of July 23, 2013 (“Record Date”) for purposes of determining theshareholders entitled to vote on the proposal to adopt the A& R Articles as detailed above.

On July 23, 2013 and pursuant to section 78.320 of the NRS, the Company received, by written consent in lieu of a regular or special meeting, votes in favor of the Action by shareholders holding 14,213,138 Series A Shares (with a power of one vote per share) and 40,000,000 Series B Shares (with a power of ten votes per share), equaling 54.6% of the total voting power of all of the Common Stock issued and outstanding as of the Record Date. Pursuant to Section 14(c) of the Exchange Act, the Company filed a Preliminary Information Statement with the SEC on July 26, 2013, and a Definitive Information Statement on August 20, 2013. The Definitive Information Statement was also mailed to the Company’s shareholders beginning August 20, 2013. The Action became effective on September 19, 2013 when the A&R Articles were accepted for filing by the Nevada Secretary of State.

Subsidiaries and Consolidation

The unaudited Consolidated Financial Statements include the accounts of the Company, its wholly owned subsidiaries and its majority owned subsidiaries. The wholly owned subsidiaries whose results are reported are Trussnet USA, Inc., a Nevada corporation (“Trussnet Nevada”), Gulfstream Capital Partners, Ltd., a Republic of Seychelles corporation (“Gulfstream Seychelles”), Gulfstream Capital Partners, Ltd., a Cayman Island corporation (“Gulfstream Cayman”) and Beijing Yunji Technology Co., Ltd., a Peoples Republic of China (“PRC” or “China”) corporation (“Beijing Yunji”). The Company’s majority owned subsidiaries are a 75% equity interest of Herlong Investments, Ltd., a Cyprus corporation, and Herlong’s two wholly owned subsidiaries, (collectively, “Herlong”), Novi-Net, d.o.o., a Croatian corporation (“Novi-Net”) and Montenegro Connect, d.o.o., a Montenegro corporation (“Montenegro Connect”).  All significant intercompany balances and transactions have been eliminated in consolidation.

The Company also holds a 100% equity interest in China Motion Telecom (HK) Limited, a Hong Kong corporation (“China Motion”). The accounts of China Motion are not consolidated in the unaudited Consolidated Financial Statements because the Company determined that during the period ending September 30, 2013 it did not have effective control of the operations of China Motion, as further explained in Note 18 – Acquisition.

The Company also held majority interests in two subsidiaries disposed of prior to the filing of this Report, a 95% equity interest in VelaTel Peru, S.A., formerly known as Perusat, S.A., a Peru corporation (“VelaTel Peru”) (disposition transaction described in Note 19 – Dispositions/Discontinued Operations), and a 75% equity interest in Zapna, ApS, a Danish corporation (“Zapna”) (disposition transaction descried in Note 20 – Subsequent Events). The Company has not been able to obtain accurate financial information for VelaTel Peru or Zapna for the three months ended September 30, 2013, which has required the Company to make estimates regarding the third quarter activity.  In the accompanying unaudited Consolidated Statement of Operations, the operating results for VelaTel Peru are presented as income (loss) from operations from discontinued operations and as gain (loss) on disposition of discontinued operation. The operating results for Zapna are presented as income (loss) from operations from discontinued operations. 

Segment Reporting

ASC Topic 280, “Segment Report,” requires use of the “management approach” model for segment reporting. The management approach model is based on the way a company’s management organizes segments within the company for making operating decisions and assessing performance.  ASC Topic 280 has no effect on the Company’s consolidated financial statements as the Company consists of one reportable business segment.  All revenue is from telecommunications operations.

7

Use of Estimates

The Company’s unaudited Consolidated Financial Statements have been prepared in accordance with GAAP.  The preparation of these unaudited Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period.  On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, contingencies and litigation.  Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions.  The most significant accounting estimates inherent in the preparation of the Company’s unaudited Consolidated Financial Statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources.  Actual results could differ from the Company’s estimates.

Revenue Recognition

For revenue from product sales and services, the Company recognizes revenue in accordance with ASC subtopic 605, Revenue Recognition, which requires that four basic criteria must be met before revenue can be recognized: (i) persuasive evidence of an arrangement exists; (ii) delivery has occurred or services have been rendered; (iii) the selling price is fixed and determinable; and (iv) collectability is reasonably assured.  Determination of criteria (iii) and (iv) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts.  Provisions for discounts and rebates to customers, estimated returns and allowances and other adjustments are provided for in the same period the related sales are recorded.  The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.  ASC 605-10 incorporates ASC subtopic 605-25, Multiple-Element Arrangements.  ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets.

Revenue arises from sale of local and long distance service access and/or wireless broadband service access where some payments are received before and some payments are received after the service has been rendered.  The Company sells its products separately and in various bundles that contain multiple deliverables.  These revenues include long distance and prepaid telephone cards, prepaid wireless access plans, along with other products and services.  In accordance with ASC 605-25, sales arrangements with multiple deliverables are divided into separate units of accounting, if the deliverables in the arrangement meet the following criteria: (i) the product has value to the customer on a standalone basis; (ii) there is objective and reliable evidence of the fair value of undelivered items; and (iii) delivery or performances of any undelivered item is probable and substantially in the Company’s control.  The fair value of each separate element is generally determined by prices charged when sold separately.  If there is any discount from the combined fair value of the individual elements, the discount is allocated to the portion of the revenues attributable to the individual elements.  In accordance with ASC 605-25, if fair value of all undelivered elements in an arrangement exists, but fair value does not exist for a delivered element, then revenue is recognized using the residual method.  Under the residual method, the fair value of undelivered elements is deferred and the remaining portion of the arrangement fee (after allocation of 100 percent of any discount to the delivered item) is recognized as revenue. 

Cash and Cash Equivalents

For purposes of the unaudited Consolidated Statements of Cash Flows, the Company considers all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents.

Fair Values

ASC subtopic 825-10, Financial Instruments requires disclosure of the fair value of certain financial instruments.  The carrying value of cash and cash equivalents, as well as short-term borrowings, approximate fair value because of the short-term maturity of these instruments.  All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the unaudited Consolidated Financial Statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk.  Where practicable, the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise, only available information pertinent to fair value has been disclosed.

8

Accounting For Bad Debt and Allowances

Bad debts and allowances are provided based on historical experience and management's evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on due date basis.

Inventories

The inventory consists of finished goods ready for resale purposes. The Company purchases the merchandise on delivered duty paid basis.  Inventories are valued at the lower of cost or market, with cost determined using the first-in, first-out method.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and impairment losses. Depreciation is computed over the estimated useful lives of the respective assets.

The estimated useful lives of property, plant and equipment are as follows:

Machinery and equipment	10 years
Vehicles	4 years
Furniture and fixtures	10 years
Leasehold improvements	*
Constructed assets (towers)	10 years
Computers	5 years

* Leasehold improvements are amortized over the shorter of their useful lives or the term of the lease.

The Company evaluates the carrying value of items of property, plant and equipment to be held and used whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. The carrying value of an item of property, plant and equipment is considered impaired when the projected undiscounted future cash flows related to the asset are less than its carrying value. The Company measures impairment based on the amount by which the carrying value of the respective asset exceeds its fair value.  Fair value is determined primarily using the projected future cash flows discounted at a rate commensurate with the risk involved.

Long-Lived Assets

The Company has adopted ASC subtopic 360-10, Property, Plant and Equipment. ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets would be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

Intangible Assets and Goodwill

The Company accounts for acquisitions in accordance with the provisions of ASC 805-10.  The Company assigns to all identifiable assets acquired (including intangible assets) and to all identifiable liabilities assumed a portion of the cost of the acquired company equal to the estimated fair value of such assets and liabilities at the date of acquisition.  The Company records the excess of the cost of the acquired company over the sum of the amounts assigned to identifiable assets acquired less liabilities assumed, if any, as goodwill.

The Company amortized its identifiable intangible assets over the period which the asset is expected to contribute to future cash flows.  The estimated useful life of developed software is ten years.  The Company periodically evaluates the recoverability of intangible assets and takes into account events or circumstances that warrant revised estimates of useful lives or indicate that impairment exists.

9

The Company accounts for and reports acquired goodwill and other intangible assets under ASC subtopic 350-10, Intangibles, Goodwill and Other.  In accordance with ASC 350-10, the Company tests its intangible assets for impairment on an annual basis and when there is reason to suspect that their values have been diminished or impaired.  Any write-downs will be included in results from operations.

Functional Currency

The accounts of Novi-Net are maintained in Croatian Kuna, the accounts of Herlong and Montenegro Connect are maintained in the Euro and the accounts of China Motion are maintained in Hong Kong Dollars. The accounts of these foreign subsidiaries or investments were translated into US dollars in accordance with ASC Topic 830 “Foreign Currency Matters.” According to ASC Topic 830: (i) all assets and liabilities were translated at the exchange rate on the balance sheet dates; (ii) stockholders’ equity is translated at historical rates; and (iii) statement of operation 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 ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statements of income.

Foreign Currency Transactions and Comprehensive Income

GAAP requires that recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. Translation gains are classified as an item of accumulated other comprehensive income in the stockholders’ equity section of the unaudited Consolidated Balance Sheet.

Advertising Costs

Advertising costs, which are included in selling, administrative and general, are expensed as incurred.  Advertising costs for the nine months ended September 30, 2013 and 2012 were not significant.

Net Loss Per Share

The Company has adopted ASC subtopic 260-10, Earnings Per Share. This requires the computation, presentation and disclosure requirements of earnings per Share information. Basic earnings per Share have been calculated based upon the weighted average number of Shares outstanding. Stock options and warrants have been excluded as common stock equivalents in the diluted earnings per Share, because they are anti-dilutive.

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions.  At times, such investments may be in excess of the FDIC insurance limit.

Stock Based Compensation

The Company adopted ASC subtopic 718-10, Compensation. ASC 718-10 requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options and employee stock purchases related to an employee stock purchase plan, based on the estimated fair values.

Research and Development

The Company accounts for research and development costs in accordance with the ASC subtopic 730-10, Research and Development. Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred. Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved. Company sponsored research and development costs related to both present and future products and services are expensed in the period incurred.

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Reclassifications

Certain reclassifications have been made to prior periods’ data to conform to the presentation set forth in this Report. These reclassifications had no effect on reported income or losses.

Recent Accounting Pronouncements

In February 2013, the FASB issued ASU No. 2013-02, which amends the authoritative accounting guidance under ASC Topic 220 Comprehensive Income. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts. The amendments in this update are effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. Adoption of this update is not expected to have a material effect on the Company’s consolidated results of operations, or its financial condition.

NOTE 2     GOING CONCERN MATTERS

The accompanying unaudited Consolidated Financial Statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As shown in the accompanying unaudited Consolidated Financial Statements, the Company incurred a net loss of $15,273,243 for the nine months ended September 30, 2013. In addition, the Company had negative working capital of $46,803,354 and a total deficiency of $49,120,207 as of September 30, 2013.

The Company requires substantial additional capital to finance its planned business operations and expects to incur operating losses in future periods due to the expense of deploying the networks and related businesses that are the core of the Company’s businesses. The Company has not realized material revenue since its commenced doing business in the telecommunications sector, and it is not without doubt that it will be successful in generating revenues in the future.

If the Company is not able to raise substantial additional capital in a timely manner, the Company may lose its rights to participate in one or more of its projects and may be forced to cease operations.

To attain profitable operations, management continues to focus its efforts on the deployment and operation of wireless broadband networks and related businesses. The Company typically contributes its technical expertise in deploying and operating wireless broadband networks, as well as the capital required to deploy the networks, in exchange for its equity interest in each project. The Company will continue to be dependent on outside capital to fund its operations for the foreseeable future. Any financing obtained may further dilute or otherwise impair the ownership interest of the current stockholders. If the Company fails to generate positive cash flows or fails to obtain additional capital when required, the Company could modify, delay or abandon some or all of its business plans.

The accompanying unaudited Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

NOTE 3     INVESTMENTS

Sino Crossings Joint Venture

On November 11, 2010, the Company entered into two related subscription and shareholder agreements, collectively the “Sino Crossings Agreements.” Under the Sino Crossings Agreements, the parties will each contribute certain defined resources in order to upgrade existing installed but unimproved by infrastructure equipment fiber optic cable located in China with engineering services and equipment that will make it suitable for transmission of data and to charge market rate transport fees to telecommunications operators who use the lit fiber comprising the “Sino Crossings Network.” On December 2, 2010, the Company issued to Azur 90,000 shares of its Series A Common Stock valued at $1,431,000.

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The Company expects to utilize the fiber for the same purposes for its China based projects, but at a discount compared to amounts charged to third party telecommunication providers.  On December 2, 2011, the Company and Azur amended their agreement to require Azur to undertake additional duties. On that same date, the Company issued to Azur 150,000 additional shares of its Series A Common Stock valued at $1,230,000. The Company will record its equity interest in the profit and loss of the operating company to be formed pursuant to the Sino Crossings Agreements once the entity is formed and operations commence.

On July 13, 2012, Azur served a Notice of Arbitration on the Company.  The arbitration was filed with the Hong Kong International Arbitration Centre and was brought pursuant to Article 3 of the United Nations Commission on International Trade Law Arbitration Rules for breach of the Sino Crossings Agreements. The Notice of Arbitration alleges that Azur suffered damages and losses due to breaches by the Company in implementing the terms of the Sino Crossings Agreements.  In the Notice of Arbitration, Azur demanded acknowledgment of termination and a declaration of rescission of the Sino Crossings Agreements.  Further, it demanded indemnification by the Company for Azur’s claimed damages, including $2,000,000 Azur paid to Shanghai Ying Yue Network Technology Ltd. (“YYNT”) pursuant to the first Sino Crossings Agreement. On August 11, 2012, the Company responded to the allegations of Azur, asserted counterclaims against Azur and named additional parties the Company requested be joined into the arbitration proceeding.  An arbitrator has been appointed, but there have been no rulings on the Company’s request to join additional parties or on any substantive matters. During the year ended December 31, 2012, the Company wrote off its entire investment in the Sino Crossings joint venture of $2,661,000 which is included in “impairment of investments” in the accompanying statement of operations.

VN Tech Fuel Cell Business

On April 22, 2012, Gulfstream Seychelles and the Company entered into an Amended and Restated VN Tech Subscription and Shareholder Agreement with Shenzhen VN Technologies Co., Ltd (“VN Tech”) and Luo (“VN Tech Amended Shareholder Agreement”). Under the VN Tech Amended Shareholder Agreement, the parties deemed it no longer necessary to form a wholly owned foreign enterprise (“WOFE”) in connection with this transaction. Instead, VN Tech will become the wholly owned subsidiary of VN Tech HK, which in turn will become a wholly owned subsidiary of VN Tech Cayman. Under the VN Tech Amended Shareholder Agreement, the Company’s equity interest in the entities comprising the joint venture is increased from 51% to 75%, and Luo is subscribing to the remaining 25% in the entities directly instead of through VN Tech. In addition, under the VN Tech Amended Shareholder Agreement, the consideration the Company is paying Luo instead of VN Tech is increased from 50,000 to 100,000 shares of the Company’s Series A Common Stock. The terms of the VN Tech Amended Shareholder Agreement are otherwise similar, but not identical to, the VN Tech Shareholder Agreement, which the VN Tech Amended Shareholder Agreement supersedes entirely.

The VN Tech Amended Shareholder Agreement became effective on April 22, 2012, when it was signed by all parties. All transfers of stock and other formalities described in the VN Tech Amended Shareholder Agreement are considered contractual obligations subsequent, not conditions precedent, to the rights and obligations of the parties contemplated in the VN Tech Amended Shareholder Agreement. On April 22, 2012, the Company issued 100,000 shares of the Company’s Series A Common Stock valued at $224,000 to Luo pursuant to the VN Tech Amended Shareholder Agreement. As of December 31, 2012, the Company made the determination that the full amount of this investment was impaired.

Herlong and its Operating Subsidiaries Novi-Net and Montenegro Connect

On December 6, 2011, the Company entered into a Business Cooperation Agreement with 7L Capital Partners Emerging Europe, L.P. (“7L”) and others to acquire a 75% equity interest in Herlong and its wholly owned operating subsidiaries Novi-Net and Montenegro Connect. In exchange for its 75% equity interest in Herlong, the Company agreed to contribute all capital and operating expenditures necessary to deploy and operate the “Novi-Net Network” and the “Montenegro Network” until each of Novi-Net and Montenegro Connect attain a positive cash flow.

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On April 2, 2012, the Company closed its acquisition of 75% of Herlong by paying a €500,000 ($668,402 based on the exchange rate on the closing date), plus credit for a €528,086 ($649,546 based on the exchange rate on the closing date) deposit on an initial equipment order placed with ZTE Corporation (“ZTE”) described below. Herlong issued the Company 48,843 shares of its common stock, which represents 75% of Herlong’s total number of its shares of common stock that are issued and outstanding. The BCA calls for minimum installments towards the Company’s total investment of €500,000 each within 90, 180 and 270 days following the closing date, plus €271,904 within 360 days of the closing date (a total of approximately $2,272,000 based on the exchange rate as of September 30, 2013). The Company’s obligation to make these additional investment installments is secured by a pledge of it 48,843 shares of Herlong’s common stock pursuant to a stock pledge and an escrow agreement. The Company has made additional payments toward its Herlong acquisition in the form of: (i) $850,454 as additional down payment to ZTE related to the equipment contracts described below; and (ii) $105,128 paid to Joinmax Engineering & Consulting Services (HK), Ltd. (“Joinmax”) for shipping logistics services. Of that, $500,000 of the down payments to ZTE and $105,128 of the consulting services to Joinmax were in the form of liabilities relieved through assignment of those creditors’ receivables with the Company through assignment to Ironridge Global.

On July 3, 2012, 7L delivered a notice of default to the Company contending the Company had failed to timely pay the €500,000 investment installment called for under the BCA to be made within 90 days of closing. The Company contended that the additional payments made to ZTE and Joinmax on Herlong’s behalf satisfied this requirement. The Company prepared and delivered to 7L but did not file a notice of arbitration pursuant to the BCA. On October 8, 2012, the Company and 7L entered into a compromise agreement whereby the €500,000 installment due within 90 days of closing, as well as the €271,904 installment due within 360 days of closing would be deemed paid provided the Company paid in cash directly to Herlong by October 19, 2012 the €500,000 installment due within 180 days of closing. The deadline for this payment was later extended to November 26, 2012. The compromise agreement provides that if the €500,000 is not timely made, both parties reserve all rights under their respective notices of default and arbitration. To date, the Company has not fully paid the €500,000 installment called for under the compromise agreement, or the additional €500,000 installment called for under the BCA to be made within 270 days of closing. Since the extended deadline under the compromise agreement, the Company has paid $144,710 directly to Herlong in various installments and on various dates through the period ended September 30, 2013. Neither the Company nor 7L have proceeded further in exercising the rights each reserved under their respective notices of default and arbitration.

NOTE 4     INTANGIBLE ASSETS

Intangible assets are comprised of software and other licenses and are amortized over the estimated life of ten years. The Company periodically evaluates the recoverability of intangible assets and takes into account events or circumstances that warrant revised estimates of useful lives or indicate that impairment exists.

NOTE 5     ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities are comprised of the following:

	September 30,		December 31,
	2013		2012
Accounts payable and accrued compensation	$	13,796,261	$	11,436,882
Accrued interest on indebtedness		1,419,280		923,538
Attorney fees and court costs		218,979		218,979
	$	15,215,541	$	12,579,399

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NOTE 6     CONVERTIBLE NOTES

Convertible notes as of September 30, 2013 and December 31, 2012 are comprised of the following:

	September 30,			December 31,
	2013			2012
10% Convertible Note Purchase Agreements (“Convertible Notes”) were due and payable December 31, 2008; accrued and unpaid interest was due at maturity; convertible note holder had the option to convert note principal together with accrued and unpaid interest to the Shares at a rate of $95.00 per Share. The Company is currently in default.	$	80,000		$	80,000
10% Amended and Restated Convertible Note Purchase Agreements (“Amended Convertible Notes”) were due and payable December 31, 2009, with interest payable at maturity.  The Amended Convertible Notes were convertible into Shares at the lesser of: (i) $0.95 per Share; or (ii) 80% of the volume weighted average of the closing bid price for the Shares on the Over The Counter Bulletin Board quotation system (“OTCBB”) for the ten day period prior to the convertible note holder’s election to convert.  The Company is currently in default.		218,923			218,923
8% convertible note dated January 28, 2013.  The note matures on January 23, 2014 and is convertible into shares of the Company's Series A common stock at a conversion price equal to 65% of the market value at the date of conversion.		8,000			–
12% convertible note dated June 26, 2013.  The note matures on June 26, 2014 and is convertible into shares of the Company's Series A common stock at a conversion price equal to 70% of the market value at the date of conversion.		123,200			–
12% convertible note dated June 26, 2013.  The note matures on December 26, 2013 and is convertible into shares of the Company's Series A common stock at a conversion price equal to 60% of the market value at the date of conversion.		25,000			–
12% convertible note dated July 5, 2013.  The note matures on January 6, 2014 and is convertible into shares of the Company's Series A common stock at a conversion price equal to 60% of the market value at the date of conversion.		75,000			–
12% convertible note dated September 6, 2013.  The note matures on March 6, 2014 and is convertible into shares of the Company's Series A common stock at a conversion price equal to 60% of the market value at the date of conversion.		50,000			–
12% convertible note dated September 6, 2013.  The note matures on March 6, 2014 and is convertible into shares of the Company's Series A common stock at a conversion price equal to 60% of the market value at the date of conversion.		150,000			–
10% convertible note dated July 5, 2013. The note matures on April 1, 2014 and is convertible into shares of the Company's Series A common stock at a conversion price equal to 80% of the market value at the date of conversion.		81,000			–
Total		811,123			298,923
Less debt discounts		(237,255	)		–
		573,868			298,923
Less current maturities		(573,868	)		(298,923	)
Long term portion	$	–		$	–

The convertible notes issued in 2013 converted into shares of the Company’s Series A Shares at a discount to the market price which gives rise to a beneficial conversion feature. The Company calculated the beneficial conversion feature to be $741,264 which has been recorded as a debt discount. The Company amortized $504,009 of this debt discount during the three months ended September 30, 2013.

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NOTE 7     NOTES PAYABLE

On August 16, 2013, the Company entered into a loan agreement (“AQT Loan Agreement”) with AQT, LLC (“AQT”) for repayment of $600,000 that AQT advanced to the Company on June 27, 2013 and paid directly to China Holdings as the principal only installment called for under the promissory note with the sellers of China Motion (transaction described in Note 18 – Acquisition). Under the AQT Loan Agreement, the Company agreed: (i) to repay $600,000, together with interest accruing at 5% per annum, on or before January 27, 2014; and (ii) to cause the Company’s subsidiary VelaTel Peru to transfer to Inversiones Balesia, S.A. (“IB”), an affiliate of AQT, 30 cellular towers designed, constructed and owed by VelaTel Peru (transaction described in Note 19 – Dispositions). The Company is entitled to repay $600,000 plus accrued interest in any combination of: (iii) cash; and/or (iv) transfer to AQT of shares of the capital stock of China Motion. One hundred percent of the stock of China Motion is valued for purposes of repayment at $6,437,100.

Notes payable at September 30, 2013 and December 31, 2012 were comprised of the following:

	September 30,			December  31,
	2013			2012
Note payable, dated December 12, 2012; due June 12, 2013 unsecured and accrues interest at 8% per annum	$	–		$	103,500
Note payable, due January 1, 2015, secured by equipment; interest at LIBOR (at rate of 0.3804% at September 30, 2013) plus 2.5% per annum with three semi-annual principal payments beginning January 1, 2014		5,501,870			5,501,870
Note payable, dated February 24, 2012 is unsecured, due on February 24, 2013 and accrues interest at 10% per annum, and is in default		669,211			684,210
Note payable, dated April 12, 2012 is unsecured, due on April 12, 2013 and accrues interest at 10% per annum, and is in default		15,789			38,653
Note payable, dated July 26, 2006 is due on October 1, 2016 and accrues interest at 8% per annum		50,921			63,782
Note payable, dated February 1, 2012 is due on March 1, 2015 and accrues interest at 8.7% per annum		71,138			106,662
Note payable, dated September 2, 2010 is secured by an automobile, due on August 15, 2015 and accrues interest at 10.45% per annum		5,335			7,229
Note payable, dated December 30, 2010 is secured by an automobile, due on February 1, 2014 and accrues interest at 8.8% per annum		6,981			20,031
Line of Credit Loan Agreement and Promissory Note (“First Note”), due December 31, 2011, and Second Note, all unsecured, interest at 10% per annum. During 2012, the First Note was split into 15 separate notes. As of December 31, 2012, two notes had been paid in full, two were partially paid, and the unpaid balance is in default.		4,116,055			5,999,558
Note payable issued in connection with acquisition of China Motion. The note calls for a final payment of $4,237,500 due on August 31, 2013, which is in default.		4,237,500			–
Note payable, dated June 24, 2013 and is due on January 27, 2014 and accrues interest at 5% per annum.		600,000			–
Total		15,274,800			12,525,495
Less current maturities		(11,879,386	)		(9,075,373	)
Long term portion	$	3,395,414		$	3,450,122

NOTE 8     NOTES PAYABLE, OTHER

During the year ended December 31, 2009, three judgments were entered against the Company relating to certain Convertible Notes currently in default.  The judgments are accruing interest at rates between 3.6% and 10% per annum. The principal balance of the three judgments totaled $821,735 and $821,735 as of September 30, 2013 and December 31, 2012, respectively. The judgments are deemed current (as opposed to long-term) but are in default.

NOTE 9     DERIVATIVE FINANCIAL INSTRUMENTS

The Company's derivative financial instruments consisted of embedded derivatives related to the Amended Convertible Notes, the convertible notes issued in 2013 and the Series B Preferred Stock. The embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments required that the Company record the derivatives at their fair values as of the inception date and at fair value as of each subsequent balance sheet date. Any change in fair value was recorded as non-operating, non-cash income or expense at each reporting date.  If the fair value of the derivatives was higher at the subsequent balance sheet date, the Company recorded a non-operating, non-cash charge. If the fair value of the derivatives was lower at the subsequent balance sheet date, the Company recorded non-operating, non-cash income. The derivatives were classified as short-term liabilities.  The derivative liability at September 30, 2013 and December 31, 2012 was $18,186,760 and $6,393,863, respectively.

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NOTE 10    NON-CONTROLLING INTEREST

The following table summarizes the changes in Non-Controlling Interest from December 31, 2012 to September 30, 2013:

	Vela Tel
	Peru			Herlong			Zapna			Total
Balance as of December 31, 2012	$	(504,258	)	$	(755,327	)	$	(16,706	)	$	(1,276,291	)
Period income (loss) applicable to non-controlling interest for the nine months ended September 30, 2013		504,258			(202,359	)		(136,845	)		165,054
Balance as of September 30, 2013	$	–		$	(957,686	)	$	(153,551	)	$	(1,111,237	)
Non-Controlling interest percentage		5%			25%			25%

NOTE 11    MANDATORY REDEEMABLE SERIES B COMMON STOCK

As of September 30, 2013, Company has issued and outstanding 80,000,000 shares of its Series B Common Stock, with a par value of $0.001 per share.  The general attributes of the Company’s Series B Common Stock are:

Voting Rights. Each share of Series B Share is entitled to ten votes in all matters for any action that each Series A Share is entitled to vote.

Non Participatory. Series B Shares do not participate in any declared dividends for any class or series of stock, have no rights upon voluntary or involuntary liquidation or winding up of the Company and have no conversion rights into any other class or series of stock.

Transferability. The consent of 80% of Series B Shares outstanding is required in order to sell, assign or transfer any Series B Shares to any third party or to grant proxies or voting rights with respect to Series B Shares, except proxies granted to George Alvarez.

Mandatory Redemption. Series B Shares will be redeemed in 2023, at their par value $0.001 per share, and are therefore classified outside of equity for reporting purposes.  The present value balance of liability for redemption of Series B Shares at September 30, 2013 was $49,281, which is the deemed fair value of Series B Shares issued and outstanding.

NOTE 12    DEFICIENCY

Equity Funding Agreements

Ironridge Technology Preferred Stock Purchase Agreement

On December 14, 2012, the Company entered into a Stock Purchase Agreement (“Ironridge Technology SPA”) with Ironridge Technology Co., a division of Ironridge Global, IV, Ltd (“Ironridge Global” and collectively, “Ironridge Technology”), for the sale of 1,200 shares of the Company’s Series B Preferred Stock (“Series B Preferred Shares”), at a price of $10,000 per share, for a total purchase price of $12,000,000. The first closing occurred on December 17, 2012 by direct wire transfer of $600,000 to the designated escrow holder under the China Motion SPA (defined below), as the down payment deposit for this acquisition. Each successive closing is to occur on the first day of each calendar month, subject to fulfillment of designated equity conditions as defined in the Certificate of Designations. Ironridge Technology was received a one-time non-refundable commitment fee of 60 shares of Series B Preferred Stock in consideration for providing the $12 million irrevocable funding commitment.

In addition on December 14, 2012, the Company filed a Certificate of Designations with the Nevada Secretary of State in order to fix the dividend, conversion, redemption, voting rights and other attributes of the Series B Preferred Shares called for under the Ironridge Technology SPA. The Company may redeem or the Company or any shareholder of any share of Series B Preferred Shares may convert one or more Series B Preferred Shares into Series A Shares at $10,000 per Series B Preferred Share being redeemed or converted, divided by the fixed conversion price of $0.20 per Series A Share together with the sum of accrued dividends, plus an embedded derivative liability, divided by 81% of the closing bid price for such Series A Shares during an equity conditions measuring period. The attributes of the Series B Preferred Shares are set forth in the Certificate of Designations (discussed in Note 1, Significant Accounting Policies).

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Ironridge Technology Registration Rights Agreement

On December 14, 2012, the Company and Ironridge Technology also entered into a Registration Rights Agreement (“RRA”). Under the RRA, the Company is required to file an S-1 Registration Statement with the SEC to cover the resale of any Series A Shares issued upon conversion of Series B Preferred Shares (collectively, “Registrable Securities”). The Company is required to use its best efforts to cause an S-1 Registration Statement to become effective under the Securities Act and to file such amendments as are necessary for the S-1 Registration Statement is to remain continuously effective for registration of such additional Registrable Securities as are subsequently issued under the Ironridge Technology SPA.

On December 17, 2012, the Company issued Ironridge 120 Series B Preferred Shares in exchange for $600,000 that the Company paid as a deposit for its China Motion acquisition. The Series B Preferred Shares can be converted into Series A Shares. The conversion feature was determined by the Company to be a derivative instrument and will be adjusted to fair value at each balance sheet date. The initial derivative liability was determined to be $2,133,333 which was recorded as a liability. The carrying value of the Series B Preferred Shares was reduced by $600,000, and the remaining $1,533,333 was recorded to accumulated deficit.

On January 30, 2012, the Company filed an S-1 Registration Statement with the United States Securities and Exchange Commission (“SEC”) contemplated by the RRA. The S-1 Registration Statement seeks to register 32,000,000 Series A Shares issuable upon conversion of shares of its Series B Preferred Shares. The number of Series A Shares to be registered was determined based on one-third of the Company’s public float as of January 27, 2013. On February 25, 2013, the SEC submitted its first comment letter in response to the filing. The SEC requested the Company to provide updated Financial Statements for the S-1 Registration Statement and indicated that it believed the Ironridge Technology SPA is an “equity line agreement” and, therefore, constitutes an “indirect primary offering” which the SEC does not permit. The Company has not taken any further steps to attempt to resolve the concerns raised by the SEC.

Ironridge Technology Waiver Agreement

On February 26, 2013, the Company and Ironridge Technology entered into a Waiver Agreement, pursuant to which Ironridge Technology waived completion of certain conditions described in the Ironridge Technology SPA to allow the Company to call for a closing to occur. Pursuant to and on the date of the Waiver Agreement, Ironridge Technology agreed to purchase 75 Series B Preferred Shares and to pay the Company $750,000. The Company also agreed to issue Ironridge Technology 75 Series B Preferred Shares as a non-refundable fee for entering into the Waiver Agreement. The Waiver Agreement also provides for certain restrictions on the Company’s right to negotiate or enter into financing arrangements with potential investors other than Ironridge Technology or its affiliates while any Series B Preferred Shares are outstanding and for six months after their conversion to Series A Shares. The Waiver Agreement requires the Company to immediately reserve 492,000,000 Series A Shares for potential issuance to Ironridge Technology and to, as soon as possible, amend its articles of incorporation to increase the number of authorized Series A Shares to a number sufficient to also cover subsequent closings and future conversions of Series B Preferred Shares into Series A Shares as contemplated in the Ironridge Technology SPA.

On February 27, 2013, Ironridge Technology paid the Company $750,000 and the Company issued Ironridge Technology 150 Series B Preferred Shares. The conversion feature was determined by the Company to be a derivative instrument and will be adjusted to fair value at each balance sheet date. The initial derivative liability was determined to be $9,000,000 which was recorded as a liability. The carrying value of the Series B Preferred Shares was reduced by $750,000 and the remaining $8,250,000 was recorded to accumulated deficit.

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NOTE 13    WARRANTS

The following table summarizes the changes in warrants outstanding and the related prices for the Series A Shares issued to non-employees of the Company.  These warrants were in connection with the sale of the Company’s Series A Shares.

		Warrants Outstanding						Warrants Exercisable
Exercise Price		Number Outstanding		Weighted Average Remaining Contractual Life (Years)		Weighted Average Exercise Price		Number Exercisable		Weighted Average Exercise Price
$	21.00		265,453		1.75	$	21.00		265,453	$	21.00
$	21.00		344,887		2.25	$	21.00		344,887	$	21.00
$	21.00		37,732		2.50	$	21.00		37,732	$	21.00
$	21.00		102,279		2.75	$	21.00		102,279	$	21.00
$	20.00		301,168		1.00	$	20.00		301,168	$	20.00
$	18.00		86,444		1.25	$	18.00		86,444	$	18.00
$	0.01-.012		314,005,369		2.00	$	0.01-.012		314,005,369	$	0.01-.012
			315,143,332						315,143,332

Transactions involving warrants are summarized as follows:

			Weighted
			Average
	Number of		Price
	Shares		Per Share
Outstanding at December 31, 2012		60,051,772	$	0.45
Issued		255,091,560		0.01
Exercised		–		–
Canceled or expired		–		–
Outstanding at September 30, 2013		315,143,332	$	0.09

The assumptions used in calculating the fair value of warrants granted using the Black-Scholes option- pricing model for warrants granted in 2013 are as follows:

Risk-free interest rate	0.40%
Expected life of the warrants	3 years
Expected volatility	248%
Expected dividend yield	0%

The weighted-average fair value of the Warrants and Adjusted Warrants to be issued during the period ended September 30, 2013 was $0.02.

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NOTE 14    RELATED PARTY TRANSACTIONS

The Company has the following material related party transactions:

	September 30,		December 31,
	2013		2012
Note payable dated April 15, 2009, non-interest bearing, due on demand, unsecured	$	–	$	473
Note payable dated February 24, 2012, 10% per annum interest, payable upon demand		81,343		81,343
Note payable dated May 20, 2009, 8% per annum interest, due December 1, 2009, unsecured, currently in default		200,000		200,000
Note payable dated April 1, 2009, 8% per annum interest, due originally October 1, 2009, unsecured, currently in default		100,000		100,000
Note payable dated July 1, 2009, 8% per annum interest, due March 17, 2010, currently in default		100,000		100,000
Note payable dated December 10, 2012, 10% per annum interest		200,000		200,000
Line of Credit Promissory Note, due March 13, 2013, unsecured, interest at 10% per annum, currently in default		188,795		447,306
Total	$	870,138	$	1,129,122

Advances from Officers and Related Parties

Officers of the Company or its subsidiaries have advanced certain operating expenses, including business travel, which is non-interest bearing and expected to be repaid within 12 months:

	September 30,		December 31,
	2013		2012
Advances to VelaTel	$	19,765	$	785,715
Advances to Gulfstream Seychelles		44,311		40,130
	$	64,076	$	825,845

Agreements with Related Parties

For the period from December 31, 2012 through the date this Report is filed with the SEC, there have been no transactions, nor are there any currently proposed transactions, to which the Company was or is a participant in which the amount involved exceeds $25,660 (1% of the average of the Company’s total assets as of September 30, 2013 and December 31, 2012) and in which any director or executive officer, or any security holder who is known by the Company to own of record or beneficially more than 5% of any class of the Company’s common stock, or any member of the immediate family of any of the foregoing persons, has an interest.

For the period from the May 21, 2008 (the date the Company changed its business purpose and commenced concentrating on the telecommunications industry) through May 17, 2013 (the date the Company filed it SEC Form 10-K for the period ended December 31, 2012), all agreements with related parties have been summarized and reported to the public in the Company’s Form 10-K for the period ended December 31, 2012.

NOTE 15    COMMITMENTS AND CONTINGENCIES

Legal Proceedings

The Company is subject to the following legal proceedings that arise in the ordinary course of its business.  

The Fischer Litigation

On May 22, 2009, a complaint was filed by Michael Fischer (“Fischer”) against the Company in the Central District of California of the United States District Court, identified as Case No. CV09-3682 VBF. The complaint alleged a claim for breach of contract relating to the Company’s default of a Convertible Note in favor of Fischer. The complaint requested damages in the amount of $1,000,000 plus interest, court costs and attorneys’ fees. The Company settled this case for $960,000. Through the date of this Report, the Company has paid $560,000 of the settlement amount. The Company intends to complete the settlement when sufficient funds are available to do so.

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The Gomez Litigation

On July 17, 2009, a complaint was filed by Edgar Pereda Gomez (“Gomez”) against the Company in the County of San Diego Superior Court of the State of California, identified as Case No. 37-2009-00094247-CU-BC-CTL. The complaint alleged a claim for breach of contract relating to the Company’s default of a Convertible Note in favor of Gomez. The complaint requested damages in the amount of $525,000 plus interest, court costs and attorneys’ fees. The Company settled this case for approximately $684,000. Through the date of this Report, the Company has paid approximately $455,950 of the settlement amount. The Company intends to complete the settlement when sufficient funds are available to do so.

The Olaechea Litigation

On December 13, 2010, a complaint was filed by Estudio Olaechea SOC. Civil DE R.L. (“Olaechea”) against the Company in the County of San Diego Superior Court of the State of California, identified as Case No. 37-2010-00105897.  The complaint alleged a breach of contract arising from the Company’s default under a promissory note in favor of Olaechea in the amount of approximately $149, 500. The complaint requested damages in the amount of approximately $149,500 plus interest, court costs and attorneys’ fees.  The Company settled this case for approximately $188,500. The Company has paid $47,500 of the settlement. The Company intends to complete the settlement when sufficient funds are available to do so.

The Chinacomm Litigation

On November 18, 2011, the Company and TCP (collectively, “Plaintiffs”), filed a complaint against Chinacomm Limited, Thrive Century International Limited, Newtop Holdings Limited, Smart Channel Development Limited, Mong Sin, Qiu Ping, Yuan Yi, Chinacomm and CECT Chinacomm Shanghai Co. Ltd. (collectively, “Defendants”) in The High Court of the Hong Kong Special Administrative Region, Court of First Instance, Action No. 1978 of 2011 (“Chinacomm Litigation”). The complaint was later amended to add Feng Xiao Ming as a defendant.

The Chinacomm Litigation arises out of the breach of numerous agreements between Plaintiffs and some Defendants, including, but not limited to, the Framework Agreement and the Subscription and Shareholders Agreements, related to the joint venture between the parties to those agreements for the deployment of the Chinacomm Network. In addition, the Chinacomm Litigation arises out of the deceitful representations by certain Defendants in connection with the issuance of licenses by certain regulatory agencies in China for the operation of the Chinacomm Network. Finally, the Chinacomm Litigation involves the unauthorized removal of Colin Tay as an authorized signatory to a joint bank account Chinacomm Cayman has with Standard Chartered Bank (HK) Limited (“Standard Chartered”), one of three Standard Chartered bank accounts in the name of Chinacomm Cayman and into which Plaintiffs deposited $4,749,599. The Chinacomm Litigation seeks injunctive relief to prevent Defendants from utilizing or dissipating the deposited funds pending the trial of the action and compensatory damages in excess of $1 million plus interest and court costs. Injunction orders have been issued and remain in place prohibiting Defendants from utilizing or dissipating the deposited funds. The parties are currently engaged in discovery related to their respective positions in the case.

The Sino Crossings Arbitration

On July 13, 2012, Azur served a notice of arbitration against the Company. On July 31, 2012, Azur filed a Notice of Arbitration with the Hong Kong International Arbitration Centre (“HKIAC”). The Notice of Arbitration alleged that Azur suffered damages and losses due to breaches by the Company in implementing the terms of the Sino Crossings Agreements.  In the claim, Azur demanded acknowledgment of termination and a declaration of rescission of the Sino Crossings Agreements.  Further, it demanded indemnification by the Company for Azur’s claimed damages, including $2,000,000 Azur paid to YYNT pursuant to the first Sino Crossings Agreement.  On August 11, 2012, the Company responded to the allegations of Azur. It asserted counterclaims against Azur and named additional parties, including YYNT. The Company requested HKIAC to permit the Company to join YYNT and others into the arbitration proceeding.  An arbitrator has been appointed, but there have been no rulings on the Company’s request to join additional parties or on any substantive matters.

The Ace Litigation

On January 15, 2013, a complaint was filed by Ace American Insurance Company (“Ace”) against the Company in in the County of San Diego Superior Court of the State of California, identified as Case No. 37-2013-00029913. The complaint alleged breach of contract for the Company’s failure to pay $37,603 as premium due on a commercial general liability insurance policy in force from March 30, 2012 through May 30, 2012, plus interest. The Company is waiting for Ace to provide a copy of the insurance policy it issued to the Company and the amount allegedly due thereunder.

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The Westmoore Receiver Litigation

On March 22, 2013, David Gill (“Receiver Gill”), in his capacity as Court-Appointed Receiver for Westmoore Management, LLC, Westmoore Investment, LP, Westmoore Capital Management, Inc., Westmoore Securities, Inc., Westmoore Capital, LLC, Westmoore Lending Opportunity Fund and Westmoore Holdings, Inc. (collectively, the “Westmoore Entities”), et al. filed a First Amended Complaint against Active Resources, Inc., Ceralta Medical Institute, Inc., Sam J. Arrietta, Michael Wall, Hodgson Russ, LLP, Mobile Truss, Inc., Trussnet Delaware, Trussnet Nevada, the Company, Capital Truss, Inc., George Alvarez, Changestar Corporation, Primetech Consulting, Inc., Servimax Financial, Inc., Servimax Financial, LLC, Waters Winery, LLC, The Tippet Fund, LP, TSB Company, Inc., Craig Brod, Factory MX Parts, LLC, Maplewood Solutions, LLC, Jason D. Huntley, Fix N Flex, LLC, Christine Hasir, Lighthorse Ventures, LLC, Paul Bickford, Linas Kleiza, Nita Criswell, Scott Leventhal, Sugarman Family Partners L.P., and Quartz Rock, LLC. The First Amended Complaint was filed in the Central District of California of the United States District Court, identified as Case No. SACV-12-02236 AG. It arises out of an alleged “Ponzi scheme” by the Westmoore Entities pursuant to which the Westmoore Entities transferred funds to one or more of the defendants while the Westmoore Entities were insolvent. The First Amended Complaint seeks damages in an undisclosed amount, injunctive relief and foreclosure of a real estate lien related to Active Resources, Inc. The Company has voluntarily produced documents to Receiver Gill in an effort to show that the alleged claims against the Company, Mr. Alvarez and others are without merit and has formally requested Receiver Gill voluntarily dismiss the claims against them.

The China Holdings Arbitration

On July 20, 2013, the Company and Gulfstream Seychelles (collectively, “Claimants”) commenced an arbitration proceeding (“China Holdings Arbitration”) by filing a Notice of Arbitration with Hong Kong International Arbitration Centre against the sellers (collectively “Respondents”) from whom the Company acquired its equity interest in China Motion. The terms of the stock purchase agreement (“SPA”) and related transaction documents (“China Motion SPA Documents”) between Claimants and Respondents for the Company’s acquisition of 100% of the capital stock of China Motion are further described in Note 18 – Acquisition). Claimants alleged Respondents breached the China Motion SPA Documents by interfering in the day-to-day management of  China Motion in various ways that exceeded the limited oversight granted to Respondents while a portion of the purchase price remains unpaid, pursuant to the terms of the China Motion SPA Documents. Such interference by Respondents includes: (i) delaying and interfering with China Motion’s processing of the Company’s invoices for technical services rendered to China Motion; and (ii) refusing to change signature authority on the bank accounts maintained by China Motion in a manner that would allow the Company’s representatives to approve or issue payments from those accounts without also obtaining the authority or counter-signature of a representative of the Seller. Claimants sought the following relief in the arbitration: (iv) declaring Respondents had breached the China Motion SPA Documents; (v) enjoining Respondents from future interference in the management of China Motion; and (vi) for recovery of Claimants past and future damages caused by Respondents’ breach of the China Motion SPA Documents. The Notice of Arbitration did not quantify Claimants’ damages, but Claimants alleged such damages may include the following categories of damage: (a) additional audit and legal fees associated with restating the Company’s past financial statements, (b) diminution in value of Claimants’ equity or capital raising ability as a result of restating the Company’s past financial statements or inability to include the current financial results of China Motion in the Company’s future consolidated financial statements; (c) diminution in value of China Motion’s equity; (d) harm to China Motion’s business reputation, corporate opportunities or potential concession opportunities; (e) other incidental and consequential damages; and (f) attorney fees and other costs and disbursements Claimants incurred in prosecuting the Arbitration.

The China Holdings Arbitration was resolved and dismissed as a result of transactions with Respondents and others that occurred after the period ending September 30, 2013, which events are described in Note 18 – Acquisition.

Material Contracts

NGSN Exclusive Business and Services Agreements

On October 21, 2011, the Company entered into the NGSN Business Agreement with Next Generation Special Network Communications Technology Co. Ltd., a PRC corporation (“NGSN”), in China. Under the NGSN Business Agreement, the Company is required to form a PRC operating company to be jointly owned with NGSN subject to the Company’s control. The operating company is required to enter into an exclusive services contract with NGSN to deliver the information services and deploy and operate a 4G wireless broadband network that will utilize TD-LTE technology. The Company will finance the first phase of the joint venture’s deployment, and the joint venture will own the infrastructure equipment. The operating company will initially provide its services to consumers, wireless carriers, enterprises, automobile manufacturers and original equipment manufacturers in two regions of China.

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On February 1, 2012, the Company and NGSN entered into the NGSN Exclusive Services Agreement contemplated by the NGSN Business Agreement. The Company has completed the formation of the holding company entities contemplated by the NGSN Business Agreement, specifically NGSN Communications Network Co., Ltd. a Cayman Islands corporation (“NGSN Cayman”), and NGSN Communications Network (HK) Co., Ltd., a Hong Kong corporation (“NGSN HK”).  Pending formation of a WOFE that will be an operating subsidiary of NSGN HK, the Company may begin providing services to NGSN through Beijing Yunji.

Aerostrong Business Agreement

On November 11, 2011, the Company entered into a Business Agreement (“Aerostrong Business Agreement”) with Aerostrong Company Limited (“Aerostrong”).  The Company will partially meet its contractual obligations with Aerostrong through Beijing Yunji, which is a technical service company engaged mainly in the business of telecommunication service related technology development, consulting, design, deployment management and operation management. Aerostrong is a subsidiary of China Aerospace Science and Technology Group (“China Aerospace”).  Aerostrong holds a PRC-issued license for value added telecommunication services by which Aerostrong is authorized to provide these services throughout China and internet services in 18 major cities in China. Aerostrong has been commissioned by Beijing Zhengzhou Software Technology Co., Ltd., a subsidiary of the China Aerospace, to deploy an internal wireless broadband network (“Commercial Network”) and application platform for China Aerospace.  The Commercial Network will cover the companies, research institutions and other entities owned by or affiliated with China Aerospace.  The preliminary estimated total investment in the Commercial Network is approximately $32.15 million, and the estimated investment for Phase 1 of the Commercial Network is approximately $8.4 million.

Aerostrong and Beijing Yunji will enter into agreements for the implementation of projects and for Beijing Yunji to act as the exclusive contractor for Aerostrong to provide deployment management, operation management and other services for the projects. Beijing Yunji and/or the Company will pay for all capital expenditures, operating expenditures and other negative cash flow in connection with the projects and will arrange financing for the projects.  The revenue generated by the telecommunication business will be used in priority to reimburse Beijing Yunji and/or the Company for any amounts paid for by either of them and to repay any financing arranged by Beijing Yunji and/or the Company.  Aerostrong and Beijing Yunji will share the profit generated from the telecommunication business in a manner to be agreed to in the services agreement.

Aerostrong Strategic Agreement

On April 19, 2011, Beijing Yunji entered into a strategic business agreement with Aerostrong (“Aerostrong Strategic Agreement”), which is the exclusive services agreement contemplated under the Aerostrong Business Agreement. The term of the Aerostrong Strategic Agreement is from April 19, 2012 until all projects agreed upon between the parties are completed and Beijing Yunji receives the last payment from Aerostrong. The parties will cooperate on application of jointly approved wireless broadband projects for which the rights and obligations of each party will be set forth in a separate project agreement. The agreed upon initial cooperation projects are: (i) the Digital Lijiang management platform project in Guangxi Autonomous Region; (ii) the Shen Hua wireless broadband special network project for railway; and (iii) the overload wireless broadband surveillance projects in Shanxi Province. Aerostrong is responsible for the development and follow-up of governmental markets and industrial markets. The Company is responsible to provide each component usually associated with the design, deployment and operation of a wireless broadband telecommunications network in China.

Equipment Contracts for Montenegro Connect and Novi-Net Wireless Broadband Networks

On May 10, 2012, the Company entered into three related contracts and three purchase orders with ZTE for the supply of infrastructure equipment and software for the Company’s wireless broadband network projects in Croatia and Montenegro. The aggregate price of the goods covered by the three contracts and the purchase order associated with each contract is $7,001,870. The components of each purchase order are described as follows:

Equipment Contract and Purchase Order for Montenegro Connect. Approximate total contract price - $820,300 for 25 base transceiver stations, including their back up power supply and installation materials, 32 microwave radios and antennae, and data center core equipment including back up power supply, gateway equipment, servers, routers, switches and racks.

Equipment Contract and Purchase Order for Novi-Net. Approximate total contract price - $1,280,250 for 50 base transceiver stations, including their back up power supply and installation materials, nine microwave radios and antennae and data center core equipment, including back up power supply, gateway equipment, servers, routers, switches and racks.

22

Software Contract and Purchase Order for Herlong. Approximate Total Contract Price - $4,901,300 for all software associated with the equipment described above, including access gateways, lawful interception gateways, elements management, network management systems, operations maintenance, universal subscriber databases, switching and router software, and mobile broadband wireless base transceiver stations software systems.

Terms Common to or Combined for all Contracts Each of Montenegro Connect, Novi-Net and Herlong are contracting parties to one contract and its associated purchase order for purposes of delivery of goods and allocation of value on the balance sheets of the Company’s subsidiaries. Herlong will license the software it has contracted to purchase to Montenegro Connect and Novi-Net. The Company is a contracting party to all contracts and purchase orders for purposes of guaranteed payment of the purchase price. The Company had previously paid $1 million as a deposit to ZTE that was applied against the aggregate down payment for all contracts, and has since paid an additional $500,000 down payment. Each installment of down payment has been allocated pro rata in relation to the total contract price for each contract.

The contract terms common to all three contracts and all three purchase orders are as follows: (i) all equipment and software includes a one-year warranty; (ii) the delivery terms are “FCA Hong Kong,” under which term the Company is responsible for payment of shipping and other costs of transport to final destination, customs, duty and value added tax; and (iii) the purchase price, net of the down payment described above, is financed by ZTE for 2.5 years with a one-year grace period commencing on the bill of lading date for each purchase order. The principal amount financed is payable in three equal semi-annual installments, with the first installment due 180 days after expiration of the grace period. Interest accrues on the unpaid balance at an interest rate equal to the 6-month LIBOR rate plus a margin of 2.5%. Each installment will include principal repayment plus the interest accrued. ZTE has a mortgage on 100% of the goods covered under each contract. The Company believes all of the terms of each contract are standard in commercial contracts of a similar nature.

NOTE 16    FAIR VALUE MEASUREMENT

The Company adopted the provisions of ASC 825-10 on January 1, 2008.  ASC 825-10 defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.  When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.  ASC 825-10 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.  ASC 825-10 establishes three levels of inputs that may be used to measure fair value:

Level 1 - Quoted prices in active markets for identical assets or liabilities;

Level 2 - Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets with insufficient volume or infrequent transactions (less active markets); or model-derived valuations in which all significant inputs are observable or can be derived principally from or corroborated by observable market data for substantially the full term of the assets or liabilities; and

Level 3 - Unobservable inputs to the valuation methodology that are significant to the measurement of fair value of assets or liabilities.

To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment.  In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.  In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is disclosed and is determined based on the lowest level input that is significant to the fair value measurement.

Upon adoption of ASC 825-10, there was no cumulative effect adjustment to beginning retained earnings and no impact on the unaudited Consolidated Financial Statements.

The carrying value of the Company’s cash and cash equivalents, accounts receivable, accounts payable, short-term borrowings (including convertible notes payable), and other current assets and liabilities approximate fair value, because of their short-term maturity.

23

Items recorded or measured at fair value on a recurring basis in the accompanying unaudited Consolidated Financial Statements consisted of the following items as of September 30, 2013:

	Quoted Prices
	in Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Instruments		Inputs		Inputs
	Level 1		Level 2		Level 3		Total
Derivative Liability	$	–	$	–	$	18,186,760	$	18,186,760
		Rollforward
		of Balance
Balance, December 31, 2012	$	6,393,863
Derivative liability for Series B preferred stock		9,900,000
Derivative liability for convertible notes		741,264
Change in value of derivative liability during 2013		1,151,633
Balance, September 30, 2013	$	18,186,760

The Company's derivative liability was valued using pricing models, and the Company generally uses similar models to value similar instruments.  Where possible, the Company verifies the values produced by its pricing models to market prices.  Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility, and correlations of such inputs.  These financial liabilities do not trade in liquid markets, and, as such, model inputs cannot generally be verified and do involve significant management judgment.  Such instruments are typically classified within Level 3 of the fair value hierarchy.  The change in fair value of the derivative liability is included as a component of other income in the unaudited Consolidated Statement of Operations.

NOTE 17    NET LOSS PER SHARE

The Company accounts for net loss per share in accordance with ASC subtopic 260-10, Earnings Per Share (“EPS”). This requires presentation of basic and diluted EPS on the face of the statement of operations for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS.

Basic net loss per share is computed by dividing net loss by the weighted average number of shares of Series A Shares outstanding during each period.  It excludes the dilutive effects of potentially issuable common shares such as those related to the Company’s convertible notes.  Diluted net loss per share is calculated by including potentially dilutive share issuances in the denominator.  However, diluted net loss per share for the periods ended September 30, 2013 and 2012 do not reflect the effects of shares potentially issuable upon conversion of convertible notes and outstanding warrants.  These potentially issuable shares would have an anti-dilutive effect on the Company’s net loss per share.

NOTE 18    ACQUISITION

China Motion Telecom (HK) Limited

On November 27, 2012, the Company, through its wholly owned subsidiary Gulfstream Seychelles, entered into a Stock Purchase Agreement (“China Motion SPA”) with (i) China Motion Telecom International Limited; (ii) its wholly owned subsidiary China Motion Holdings Limited; and (iii) China Holdings’ 95% subsidiary ChinaMotion InfoServices Limited (collectively “Seller”) to acquire 100% of the capital stock of China Motion. In addition, the Company provided Seller a corporate guaranty of the obligations of Gulfstream Seychelles under the China Motion SPA. The China Motion SPA was amended on two occasions prior to closing. The Company closed its acquisition of China Motion on March 1, 2013. Funds paid or payable under the China Motion SPA (as amended) are in Hong Kong dollars. Currency conversions to US dollars are expressed in parentheses at a conversion rate of HK$7.75=US$1.00, with the US equivalent rounded to the nearest US$100, and are therefore approximate and may change as of the date any amount was paid or becomes or became payable. The material terms of the China Motion SPA (as amended) are as follows:

24

(i) The total purchase price for 100% of the capital stock of China Motion (“China Motion Stock”) is HK$49,500,000 (US$6,387,100). The Company paid HK$12,009,363 (US$1,549,600) in cash at or prior to closing and HK$37,490,637 (US$4,837,500) as the principal balance of a promissory note (“Note”) issued by the Company at closing. The purchase price is subject to the following adjustments, as determined by audit of China Motion’s balance sheet as of February 28, 2013 that is to be completed within four months of closing: (a) a credit to Seller equal to the balance of all cash, accounts receivable, other receivables, inventory and prepayments to others; and (b) a credit to the Company equal to the balance of all accounts payable, accruals and other payables and advanced income received. The aggregate cash balance in China Motion’s accounts as of closing was in the agreed amount of HK$7,800,000 (US$1,006,500).

(ii) The Note is in the total amount of HK$38,990,637.45 (US$5,031,000), of which the principal balance of HK$37,490,637 (US$4,837,500) is applicable to the purchase price and the remaining HK$1,500,000 (US$193,500) represents interest that will accrue on the Note through its maturity and is not part of the purchase price. The Note calls for a payment of HK$4,650,000 (US$600,000) principal only on or before May 31, 2013 (which the Company paid on or about June 27, 2013) and the remaining HK$32,840,637.45 (US$4,237,500) balance of principal and accrued interest due on or before August 31, 2013.

(iii) As security for repayment of the Note, the Company pledged the China Motion Stock to Seller pursuant to the terms of a Stock Pledge Agreement. Seller is acting as an interim escrow agent under the Stock Pledge Agreement, subject to appointment of a substitute escrow agent the parties are to locate and retain and who is willing to accept substantially all of the material terms of the Stock Pledge Agreement.

(iv) For so long as the Note remains unpaid, Seller is entitled to appoint one of three or more members of China Motion’s board of directors, and the following fundamental decisions require the unanimous consent of all directors and the written consent of Seller: (a) borrow any sum or enter into any contract for capital expenditures that is in excess of HK$1,500,000 (US$193,500) or is outside the course of China Motion’s general business model as a telecommunications service provider; (b) vary any rights attaching to any of China Motion’s shares; (c) consolidate or merge with or acquire any other business or dispose of any existing capital assets of China Motion; (d) issue any China Motion shares or create or issue any debentures or other securities convertible into shares or debentures; (e) pass any resolutions in general meeting or by way of written resolution relating to wind-up or dissolution of China Motion; and (f) distribute any profits of China Motion.

(v) The Company commits to begin upgrading China Motion’s telecommunications network. China Motion will bear the expenses of engineering services rendered in connection with such upgrade, upon reasonable commercial terms estimated to total approximately no more than HK$1,300,000 (US$167,700) per month.

(vi) The Company agrees to pay to Seller at closing HK$387,500 (US$50,000) towards reimbursement of total costs and disbursements to the professional fees incurred by Seller in connection with the first amendment and the second amendment, which payment is in addition to and is not part of the purchase price.

(vii) For a period of one year following the Closing, Seller will assist the Company with managing relationships between the Company and key suppliers and customers by assigning an executive representative of Seller who has significant past experience managing those relationships on behalf of the Company.

(viii) Each party to the China Motion SPA makes certain representations and warranties regarding their respective corporate status and authority, and Seller regarding the financial status of China Motion and its past operations, all upon terms the Company believes are standard in transactions of this nature. The maximum aggregate damages the Company may recover for one or more breach of Seller’s representations and warranties is 70% of the purchase price set forth in the China Motion SPA. Any such claim must be brought no later than 24 months after Closing. In addition, the Company agrees to hold Seller harmless from any claims or damages arising solely out of or in connection with the Company taking over China Motion during the time period between closing and the final termination of the Stock Pledge Agreement, including any diminution of the value of the net current assets of China Motion to a level below their net value as of closing.

(ix) The China Motion SPA is governed under Hong Kong law, and any disputes are to be resolved through arbitration conducted in Hong Kong.

25

Although the Company owns 100% of the shares of China Motion, as of the period ending September 30, 2013, the Company does not believe it can control China Motion, because the management of China Motion continued to follow instructions of the Seller that blocked significant decisions made by the Company in the ordinary course of business. Most significantly, the Company was unable to change signature authority on the bank accounts maintained by China Motion in a manner that would allow the Company’s representatives to approve or issue payments from those accounts without also obtaining the authority or counter-signature of a representative of the Seller. The dispute between the Company and the Seller that gave rise to the Company’s lack of control of China Motion is further described in Note 15 – Commitments and Contingencies. The Company’s inability to control management of China Motion was discovered in June 2013. In accordance with ASC 810, the Company believes this lack of control over management is significant enough to overcome the presumption of consolidation by the Company even though it is the majority shareholder. Instead, the Company is accounting for its acquisition of China Motion on the cost method. During the quarter ended June 30, 2013, the Company determined that its investment in China Motion must be completely impaired and wrote off the entire purchase price of $6,387,100. The Company’s impairment analysis remained unchanged as of September 30, 2013. As a result of transactions with Seller and others occurring after September 30, 2013 and further described in Note 20– Subsequent Events, the Company expects its impairment and consolidation analysis will change to allow the Company to account for its acquisition of China Motion as a wholly owned subsidiary in its future consolidated financial statements.

NOTE 19    DISPOSITIONS/DISCONTINUED OPERATIONS

Sale of Tower Assets of VelaTel Peru

On August 16, 2013, VelaTel Peru entered into an asset purchase agreement (“VelaTel Peru APA”) with IB for sale to IB of the 30 cellular towers, along with a mutual warranty agreement (“IB Mutual Warranties”) regarding the future permitting of the cellular towers. Under the VelaTel Peru APA, the purchase price for the towers is assumption by IB of all liabilities associated with the towers, which includes (i) $112,904 in past unpaid rent to site landlords, (ii) future rents totaling $7,975 per month aggregate for all 30 cellular towers, (iii) $7,918 in unpaid electricity charges advanced by site landlords, and (iv) $61,736 owed to the steel fabricator who contracted to erect the towers. Under the IB Mutual Warranties, VelaTel Peru agrees that IB may make application in the name of VelaTel Per for any such permit for which VTP's status as a holder of telecommunications licenses or concessions is required or advantageous, and to assign any permits so obtained in whole or in part in favor of other licensed telephone operators who may wish to lease space on the towers. In return, VelaTel Peru is allowed to maintain its existing equipment on each tower until 90 days after the later of the date a permit is issued for that tower or the date IB determines the applicable municipality will not grant a permit. Closing of the VelaTel Peru APA and IB Mutual Warranties occurred on September 4, 2013.

In recognition of the fact the Company received benefit pursuant to the AQT Loan Agreement (transaction described in Note 7 – Notes Payable) that did not flow to VelaTel Peru in exchange for the obligation of VelaTel Peru to transfer title to the 30 cellular towers to IB as an affiliate of AQT, VelaTel Peru received a credit in the amount of $600,000 against the balance of the intercompany debt that VelaTel Peru and GMR owe to the Company. FGPM consented to the VelaTel Peru APA, the IB Mutual Warranties, and the reduction of intercompany debt in connection with the VelaTel Peru SPA described immediately below.

Sale of Stock of VelaTel Peru

On August 16, 2013, the Company, through Gulfstream Seychelles, entered into a stock purchase agreement (“VelaTel Peru SPA”) with First Global Projects Management, Ltd. (“FGPM”) for the sale of 100% of the capital stock of VelaTel Peru. Under the VelaTel Peru SPA, in exchange for payment to the Company at closing of $1,300,000, the Company will: (i) transfer to FGPM all of the Company’s 95% interest in the capital stock of VelaTel Peru; (ii) transfer all of the Company’s 99.9% interest in the capital stock of VelaTel Peru’s sister company Go Movil Resources, S.A.C. (“GMR”); and (iii) assign to FGPM the balance of all intercompany debt that VelaTel Peru and GMR will owe to the Company as of closing of the VelaTel Peru SPA. Under the VelaTel Peru SPA, FGPM also acquires the 5% equity interest of the minority shareholders of VelaTel Peru in exchange for $68,422. The Company and the other sellers are not making representations or warranties as extensive as would be typical in such a transaction, nor are they agreeing to indemnify FGPM regarding the past operations or financial condition of VelaTel Peru that have already been identified as contingencies during FGPM’s due diligence. The purchase price reflects a discount for the limitations of such representations, warranties and indemnities. The purchase price also reflects a reduction for the separate transfer of assets and liabilities associated with cellular towers designed, constructed and owned by VelaTel Peru transferred to IB and described immediately above. Closing of the VelaTel Peru SPA occurred on September 4, 2013.

The sale of Vela Tel Peru resulted in a gain on the disposition of a subsidiary in the amount of $5,817,986. The gain was determined as follows: net proceeds of $1,259,716 and the disposition of Vela Tel Peru net liabilities of $9,608,693 less the intercompany debt of $5,050,423.

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Sale of Stock of Zapna

This transaction occurred after the period ending September 30, 2013 and is described in Note 20 – Subsequent Events.

Treatment of VelaTel Peru and Zapna on Financial Statements

During the period ending September 30, 2013, VelaTel Peru and Zapna were considered discontinued operations. The Company has not been able to obtain accurate financial information for VelaTel Peru or Zapna for the three months ended September 30, 2013, which has required the Company to make estimates regarding the third quarter activity.

The operating results for VelaTel Peru and Zapna have been presented in the accompanying unaudited Consolidated Statement of Operations for the nine-month periods ended September 30, 2013 and 2012 as discontinued operations and are summarized below:

	Nine-Months Ended September 30,
	2013			2012
Revenues	$	465,275		$	1,668,373
Cost of revenue		397,979			1,497,810
Gross profit		67,296			170,563
Operating expenses		892,307			496,663
Loss from operations		(825,011	)		(326,100	)
Non-operating income		754,100			(176,644	)
Net income (loss)	$	(70,911	)	$	(502,744	)

The assets and liabilities of the discontinued operations at September 30, 2013 and December 31, 2012 are summarized below:

	September 30,		December 31,
	2013		2012
Current assets	$	–	$	372,534
Long-term assets		–		4,596,368
	$	–	$	4,968,902
Current liabilities	$	612,529	$	9,346,975

NOTE 20    SUBSEQUENT EVENTS

The Company has evaluated events subsequent to September 30, 2013, to assess the need for potential recognition or disclosure in this Report. Such events were evaluated through the date the Company’s unaudited Consolidated Financial Statements were finalized.  Based upon this evaluation, it was determined that no subsequent events occurred that require recognition in the unaudited Consolidated Financial Statements and that the following items represent subsequent events that merit disclosure in this Report.

Refinance of Unpaid Balance of Purchase Price for China Motion Acquisition

On October 28, 2013, the Company entered into a series of related agreements pertaining to its acquisition of China Motion that is described in Note 18 – Acquisition. For all agreements, funds paid or payable are in Hong Kong dollars. Currency conversions to US dollars are expressed in parentheses at a conversion rate of HK$7.75=US$1.00, with the US equivalent rounded to the nearest US$100, and are therefore approximate and may change as of the date any amount was paid or becomes or became payable.

Deed of Settlement with Sellers

The same parties to the China Motion SPA (including the Company as Guarantor of Gulfstream Seychelles) entered into a Deed of Settlement, the material terms of which are:

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(i)Immediate payment to Sellers of (a) the unpaid balance of the Note in the amount of HK$34,340,637 (US$4,431,100), and (b) HK$850,000 (US$109,700) towards Seller’s attorney fees incurred in connection with the arbitration proceeding and negotiation and preparation of the Deed of Settlement.

(ii)Seller’s withdrawal of all default notices and release of all collateral security covered by the Stock Pledge Agreement.

(iii)Dismissal within seven days of the arbitration proceeding commenced by the Company and Gulfstream Seychelles against Sellers (described in Note 15 – Commitments and Contingencies).

(iv) Waiver and release by the Company and Gulfstream Seychelles of any claims against Sellers arising under the representations and warranties contained in the China Motion SPA or otherwise related to the Transaction Documents.

(v) Seller authorizes its representative on China Motion’s board of directors to join in execution of board resolutions to change banking mandates to restore the Company’s operational control over China Motion.

China Motion Loan Agreement with new Lender

Xin Hua (as Lender), Gulfstream Seychelles (as Borrower) and the Company (as Guarantor) entered into a Loan Agreement, the material terms of which are:

(i) Borrower will borrow from Lender, who will immediately pay to Sellers the loan amount of HK$26,540,637 (US$3,424,600), without interest.

(ii) Repayment of the loan amount shall be in two installments, HK$7,800,000 (US$1,006,500) on or before December 15, 2013, and HK$18,740,637 (US$2,814,100) on or before February 28, 2014.

(iii) Repayment of the loan amount is secured by a Share Charge (described immediately below) against Borrower’s 100% equity ownership in China Motion.

(iv) During the time any of the loan amount is outstanding, Borrower and the Company agree to preserve the value of Lender’s collateral in the equity of China Motion, including (a) maintaining the net asset value of China Motion in the positive, (b) maintaining a minimum of two months’ working capital in China Motion, and (c) being primarily responsible for contracts associated with the upgrade of China Motion’s core network, including prohibition against China Motion paying any down payment, debt service, finance charges or principal repayment associated with such upgrade. Lender’s written consent is required for (d) China Motion to lend money or extend credit except to its customers in the ordinary course of its business, (e) China Motion to borrow money, receive credit or guaranty any indebtedness except to its vendors in the ordinary course of its business, (f) China Motion to hire new employees at a monthly salary in excess of HK$15,000 (US$1,900), or (g) Borrower or the Company to withdraw any funds from China Motion.

(v)  Lender consents in the Loan Agreement to China Motion making a loan to Borrower and the Company (“Agreed Loan”) in the amount of up to HK$1,936,216 (US$249,800) for the sole purposes of: (a) settling agreed legal costs of HK$850,000 (US$109,700) towards Seller’s attorney fees described above plus HK400,000 (US$51,600), (b) settling the First Adjustment and other miscellaneous amounts due Seller pursuant to the China Motion SPA in the amount of HK$676,216 (US$87,300), and (c) up to HK$10,000 (US$1,300) for any potential shortfall in payments to be made by Borrower to Sellers in US funds based on bank fees and exchange rate fluctuations. Borrower is required to repay China Motion the Agreed Loan on or before December 15, 2013.

(vi)  During the time any of the loan amount is outstanding, Lender shall have the right to appoint one of not more than three of members of China Motion’s board of directors.

(vii)During the time any of the loan amount is outstanding, Lender shall have the right to approve the terms of contracts related to the upgrade (including financing) of China Motion’s core network to confirm that the terms are consistent with preliminary terms negotiated with vendors as of the effective date of and as summarized in the Loan Agreement.

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Share Charge as Collateral for Loan Agreement

As collateral for repayment of the Loan Agreement, Gulfstream Seychelles (as Chargor) and Xin Hua (as Chargee) entered into a Share Charge agreement, the material terms of which are:

(i)  Chargor shall deliver to Chargee all share certificates representing Chargor’s ownership interest in China Motion, together with undated instruments of transfer and other documents authorizing the certificates to be re-issued in the name of Chargee upon any default under the Loan Agreement.

(ii) Chargor retains all right to exercise the voting interests represented by the charged shares until such time as the security of the charge becomes enforceable upon a default in the Loan Agreement.

(iii) During the time the Share Charge remains effective, Chargor shall not transfer any of the charged shares and shall not grant any option to acquire any of the charged shares without the written consent of the Chargor, which shall be given if the terms of such option provide that such option: (a) is subordinate to the option granted to Chargor pursuant to the Option Deed (described immediately below), (b) shall not be exercisable prior to full repayment of the loan amount, and (c) shall be null and void upon an exercise of the option granted to Chargee pursuant to the Option Deed.

(iv) Promptly upon repayment of the loan amount, Chargee shall deliver back to Chargor the charged shares and all signed and undated instruments of transfer.

Option Deed to Enforce Share Charge

As the instrument to enforce the security of the Share Charge, Gulfstream Seychelles (as Grantor) and Xin Hua (as Grantee) entered into an Option Deed agreement, the material terms of which are:

(i) Grantor grants to Grantee the option to purchase 100% of the outstanding shares of China Motion (“Option Shares”) for an Option Price equal to the aggregate amount of all moneys owed by the Grantor to the Grantor pursuant to the Loan Agreement as of the date three business days after the exercise of the Option, which Option Price shall be set off against the loan amount outstanding. The option may be exercised only as to 100% of the Option Shares, and only in the event of a default under the Loan Agreement.

(ii) The option granted under the Option Deed shall expire upon repayment in full of all amounts due under the Loan Agreement.

(iii) The Option Deed contains the same restrictions against transfer or grant of other options against the Option Shares as are contained in the Share Charge.

Terms Common to all Agreements

Each of the Deed of Settlement, the Loan Agreement, the Share Charge, and the Option Deed include representations and warranties regarding the corporate status of Gulfstream Seychelles and the Company, and the corporate and financial status of China Motion, and other terms the Company considers to be standard in transactions of a similar nature. Each of the agreements provides that it is governed by Hong Kong law, with jurisdiction of disputes exclusively before the courts of Hong Kong, and with the parties agreeing to submit to such jurisdiction.

Performance of all Agreements

On or about October 29, 2013, Gulfstream paid Sellers US$1,007,000 (less wire transfer charges), Lender paid Sellers HK$26,540,637, and China Motion paid Sellers and attorneys for Sellers and Lenders the remaining amounts called for under the Deed of Settlement and Loan Agreement, as described above. Thereafter, Sellers’ representative to China Motion’s board of directors joined in signing resolutions to change bank mandates, which resolutions were submitted to the appropriate banks of China Motion; the parties confirmed dismissal of the arbitration proceeding; and Gulfstream Seychelles delivered the required share certificates, signed and undated instruments of transfer, and other documents authorizing the certificates to be re-issued in the name of Lender upon any default under the Loan Agreement.

Copies of the Deed of Settlement, the Loan Agreement, the Share Charge, and the Option Deed, respectively, are attached as Exhibits 10.53 through 10.56 to this Report.

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Turnkey and Vendor Contracts for Upgrade of China Motion Network

Through the date this Report is filed, the Company and its subsidiary China Motion have been negotiating contracts for the upgrade of China Motion’s telephony core network from 2G to 4G technology, and associated customer billing and accounting functions. The first contract to be completed was a Turnkey Upgrade Agreement that contemplates finalization of three contracts with separate vendors for discrete components of the overall upgrade. Each contract is described separately below.

Turnkey Upgrade Agreement with New Host

On November 11, 2013, the Company and China Motion entered into a Turnkey Upgrade Agreement with New Host International Co., Ltd. (“New Host”) for project management and financing of the upgrade of China Motion’s telephony core network and associated customer billing and accounting functions. The material terms of the Turnkey Upgrade Agreement are:

(i) New Host will subcontract with three vendors China Motion has previously negotiated pricing and scope of services, ZTE Corporation (“ZTE”), Niceuc Communication Co., Ltd. (“Niceuc”)and Tectura Hong Kong Limited (“Tectura” and together with ZTE and Niceuc collectively “Subcontractors”). New Host will provide project management services to coordinate the work of the Subcontractors and pay each according to the tenor of their respective contracts. The aggregate amount payable to Subcontractors is US$2,437,139 (“Subcontracted Amount”).

(ii) New Host is entitled to a Management Fee equal to 15% of the Subcontracted Amount (initially US$365,571, subject to any future additions to the Subcontracted Amount). Following a 12 month Deferral Period, Finance Charges equal to 7.5% interest per annum accrue on the Subcontracted Amount but not the Management Fee (the Subcontracted Amount, the Management Fee and the Finance Charges collectively, “Purchase Price”).

(iii) Repayment of the Purchase Price shall be in 60 equal monthly installment, commencing on the same calendar day of the month following expiration of the Deferral Period, broken into separate installments for Subcontracted Amount plus amortized Finance Charges (“P&I Installments,” initially US$48,835) and Management Fee Installments (initially US$6,093). In the event of future increase in the Subcontracted Amount, Installment amounts shall be re-calculated so that any unpaid Installments remain equal. Customer may prepay the P&I Installments in whole or in part without penalty and subject to reduction in future Finance Charges, provided that partial prepayment of either the Management Fee or the Subcontracted Amount shall not decrease subsequent P&I Installments or Management Fee Installments until one or both have been paid in full.

(iv) Title to all equipment, software, and other property included in the Project, whether tangible or intangible, shall pass to China Motion upon delivery to its business premises, provided that until the Purchase Price is paid in full, New Host shall have a purchase money security interest in all such equipment, software and other tangible and intangible property. New Host shall assign to China Motion all warranties provided by each Subcontractor.

(v)The Turnkey Upgrade Agreement is subject to Hong Kong law, with disputes to be resolved through arbitration before Hong Kong International Arbitration Centre.

Sales Agreement with ZTE

On November 18, 2013, China Motion and New Host entered into a sales contract with ZTE (“ZTE Sales Agreement”) for the primary components of hardware and software (including installation and optimization) required to upgrade China Motion’s core telephony network from 2G to 4G technology, and to increase the capacity of the network to meet the future projected growth of China Motion’s subscribers. The total contract amount is US$2,050,609, payable (by New Host pursuant to the Turnkey Upgrade Agreement) upon certain milestones associated with delivery, acceptance and testing of the integrated network components. Title or ownership to the products covered by the ZTE Sales Contract passes to China Motion upon delivery of the products to China Motion’s premises, subject to a security interest in favor of ZTE against the full payment of the contract amount. The contract price includes training of China Motion’s personnel on proper operations of the products, and a one year warranty against defect. The parties have negotiated the terms and price of an operations and maintenance agreement for further protection of the products beyond warranty expiration. The ZTE Sales Agreement is subject to Hong Kong law, with disputes to be resolved through arbitration before Hong Kong International Arbitration Centre.

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Sales Agreement with Niceuc

On November 18, 2013, China Motion and New Host entered into a sales contract with Niceuc Communication Co., Limited (“Niceuc Sales Contract”) for value added services and components (including installation and optimization) associated with specialty functions of the planned upgrade of China Motion’s core telephony network, including functions beneficial to China Motion’s performance of the StarHub Cooperation Agreement described below. The total contract amount is US$256,314, payable (by New Host pursuant to the Turnkey Upgrade Agreement) upon certain milestones associated with delivery, acceptance and testing of the integrated network components. The contract price includes a one year warranty against defect. The parties have negotiated the terms and price of an operations and maintenance agreement for further protection of the products beyond warranty expiration. The Niceuc Sales Agreement is subject to Hong Kong law, with disputes to be resolved through arbitration before Hong Kong International Arbitration Centre

ERP Purchase and Implementation Agreement with Tectura

On November 18, 2013, New Host and Tectura Hong Kong Limited (“Tectura”) entered into an agreement for purchase and implementation of an enterprise resource planning solution utilizing Microsoft Dynamics NAV accounting software (“Tectura Agreement”). The contract amount is HK$375,690 (~US$48,500), which is Tectura’s estimate of the quantity of end user licenses to meet China Motion’s requirements, plus estimated implementation and training services to be provided by Tectura on a time and materials basis. The contract amount is payable upon certain milestones contained in the Tectura Agreement.

Copies of the Turnkey Upgrade Agreement, the ZTE Sales Agreement, and the Niceuc Sales Agreement and the Tectura Agreement, respectively, are attached as Exhibits 10.57 through 10.59 to this Report. The Company considers the Tectura Agreement to not be sufficiently material to require attaching a copy as an Exhibit to this Report. A brief summary of the contract terms is provided because the scope of the contract is contained in the Turnkey Upgrade Agreement.

Cooperation Agreement between China Motion and a Tier One Mobile Network Operator in Asia

As of the date of this Report, the Company is in final negotiations for China Motion to enter into a Cooperation Agreement with a tier one mobile network operator in Asia. Because the Company’s management referred to the potential contract in a recent investor conference call, specific forward looking reference to the contract is included here. The Company will disclose the material terms of the contract on a Current Report on SEC Form 8-K as soon as the contract is finalized and signed.

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Sale of Stock of Zapna

On September 30, 2013, Gulfstream Seychelles and Aerial Investments, LLC (“Aerial”) entered into a stock purchase agreement (“Aerial SPA”) for Aerial to acquire the 75 shares of capital stock of Zapna (“Zapna Stock”) owned by Gulfstream Seychelles, representing 75% of the total equity ownership of Zapna. The material terms of the Zapna SPA are:

(i) The transaction is subject to a right of first refusal and tag along rights in favor Ahmad Holdings and/or Omair Khan (collectively “Minority Owner”), the owner of the remaining 25 shares of capital stock of Zapna, such rights granted pursuant to the 2012 stock purchase agreement (“2012 SPA”) by which Minority Owner sold 75 shares of Zapna Stock to Gulfstream Seychelles. Aerial agrees to honor Minority Owner’s tag along rights by also acquiring Minority Owner’s 25 shares of Zapna Stock for US$25 if Minority Owner delivers a timely notice of election.

(ii) The purchase price is US$75. As additional consideration, Gulfstream Seychelles agrees to assign to Aerial at closing without warranty, all rights, if any, Gulfstream Seychelles may have (1) against Minority Owner related to the Company, whether arising from breach of any representation or warranty Minority Owner made in connection with the 2012 SPA, from Minority Owner’s Management of the Company since closing of the 2012 SPA, and/or from conduct or circumstances described in Section 2.5 of the Aerial SPA, and/or (2) for financial benefits (or detriments) applicable to Gulfstream Seychelles’ ownership of the Zapna Stock for the period commencing July 1, 2013 and through Closing of this Agreement (“Assignment”). Aerial agrees to waive the Assignment if Minority Owner exercises either its right of first refusal or its tag along rights.

(iii) Gulfstream Seychelles warrants only its corporate qualifications, the capital structure of Zapna, and its ownership of the Zapna Shares. Gulfstream Seychelles expressly disclaims any representations or warranties regarding the past or future financial, legal or other status of Zapna. Aerial acknowledges that the transaction is made “as is, where is,” and that the purchase price reflects the disclaimers. Aerial acknowledges that Minority Owner has refused to cooperate with Gulfstream Seychelles to provide financial information regarding the Company for the period of time commencing July 1, 2013, and that the inability of the parent company of Gulfstream Seychelles to accurately report the financial results of Zapna on its consolidated financial statements for the period of time commencing July 1, 2013 is the basis of granting the Assignment.

On October 9, 2013, the Company delivered a copy of the signed Aerial SPA to Minority Owner, together with notice of its rights for a period of 30 days to exercise either its right of first refusal or its tag along rights. Minority Owner did not formally respond to the notice.

On November 19, 2013, after expiration of Minority Owner’s rights, closing of the Aerial SPA occurred when Aerial paid the Company, on behalf of Gulfstream Seychelles, the purchase price of US$75, and caused the delivery of instruments of ownership of the 75 shares of Zapna Stock to be delivered to Aerial and in Aerial’s name.

A complete copy of the Aerial SPA is attached as Exhibit 10.60 to this Report.

Item 2.  Management’s Discussion and Analysis of Financial Conditions and Results of Operations.

Forward-Looking Statements

This following information specifies certain forward-looking statements of our management.  Forward-looking statements are statements that estimate the happening of future events and are not based on historical fact.  Forward-looking statements may be identified by the use of forward-looking terminology, such as “may”, “shall”, “could”, “expect”, “estimate”, “anticipate”, “predict”, “probable”, “possible”, “should”, “continue”, or similar terms, variations of those terms or the negative of those terms.  The forward-looking statements specified in the following information have been compiled by our management on the basis of assumptions made by management and considered by management to be reasonable.  Our future operating results, however, are impossible to predict, and no representation, guaranty, or warranty is to be inferred from those forward-looking statements.

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Forward-looking statements include, but are not limited to, the following:

· Statements relating to our future business and financial performance;

· Our competitive position;

· Growth of the telecommunications industry in China; and

· Other material future developments that you may take into consideration

We believe it is important to communicate our expectations to our shareholders.  However, there may be events in the future that we are not able to predict accurately over which we have no control.  The risk factors and cautionary language discussed in this report provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations we described in our forward-looking statements, including among other things:

· Competition in the industry in which we do business;

· Legislation or regulatory environments;

· Requirements or changes adversely affecting the businesses in which we are engaged; and

· General economic conditions.

You are cautioned not to place undue reliance on these forward-looking statements.  The assumptions used for purposes of the forward-looking statements represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry, and other circumstances.  As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment.  To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements.  We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statement.

Corporate History

VelaTel Global Communications, Inc. (sometimes referred to in this Report as “Company”, “us”, “our” and “we”) was incorporated under the laws of the State of Nevada on September 19, 2005 under its former name, Mortlock Ventures, Inc., for the purpose of acquiring and developing mineral properties.  During the quarter ended March 31, 2008, the Company changed its business purpose and commenced concentrating on the telecommunications industry.  The Company changed its name to China Tel Group, Inc. on April 8, 2008 and acquired Trussnet Nevada (defined below) on May 21, 2008.

On May 21, 2008, we entered into a Reorganization and Merger Agreement pursuant to which our wholly owned subsidiary, Chinacomm Acquisition, Inc. (“Acquisition Subsidiary”), merged with and into Trussnet USA, Inc., a Nevada corporation (“Trussnet Nevada”).  Pursuant to the terms of the Reorganization and Merger Agreement, the Acquisition Subsidiary and Trussnet Nevada conducted a short-form merger under Nevada law, as a result of which Trussnet Nevada, as the surviving corporation, became our wholly owned subsidiary.  In exchange for all of the issued and outstanding shares of common stock of Trussnet Nevada, we issued 66,909,089 shares of the Company’s Series B Common Stock.  In addition, pursuant to the Reorganization and Merger Agreement, certificates representing 57,500,000 Shares held by our shareholders prior to the merger were returned to us and cancelled.

On July 25, 2011, we changed our name to VelaTel Global Communications, Inc.  We did so to better define our positioning as a key leader in deploying and operating wireless broadband access networks worldwide.

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During the first quarter of 2012, we commenced our planned operations as we deployed our wireless broadband telecommunications network in Peru (VelaTel Peru”). Prior to that, from our inception we were a “Development Stage Company” as defined by the ASC subtopic 915 Development Stage Entities. We accumulated a deficit during our development stage of $253,660,984.

You are cautioned not to place undue reliance on these forward-looking statements. The assumptions used for purposes of the forward-looking statements represent estimates of future events and are subject to uncertainty as to possible changes in economic, legislative, industry and other circumstances.  As a result, the identification and interpretation of data and other information and their use in developing and selecting assumptions from and among reasonable alternatives require the exercise of judgment. To the extent that the assumed events do not occur, the outcome may vary substantially from anticipated or projected results, and, accordingly, no opinion is expressed on the achievability of those forward-looking statements. We cannot guaranty that any of the assumptions relating to the forward-looking statements specified in the following information are accurate, and we assume no obligation to update any such forward-looking statement

The following information should be read in conjunction with the information contained in the unaudited Consolidated Financial Statements included within this Report.

Our Businesses

The Company currently holds investments or contracts in six active projects that we refer to as:

(i) VN Tech Fuel Cell Business;

(ii) Business Agreement with NGSN;

(iii) Aerostrong Exclusive Agreements;

(iv) Novi-Net Network;

(v) Montenegro Connect Network; and

(vi) China Motion MVNO Network.

During the nine-month period covered by the accompanying unaudited consolidated financial statements, the Company also held investments or contracts in two additional projects that were disposed of prior to the date this Report is filed:

(vii) VelaTel Peru Network (disposition completed September 4, 2013);

(viii) Zapna Wireless Broadband Solutions Business (disposition completed November 12, 2013).

The Company’s primary business model is to combine its engineering and deployment expertise, its equity funding relationships, its vendor partnership, radio frequency spectrum, fiber optic cable and concession rights assets acquired through a subsidiary or a joint venture relationship to create and operate wireless broadband networks worldwide.  We offer, or will offer, internet access, voice, video, and data services to the subscribers of the various wireless broadband networks we operate.  The Company’s secondary business model is to distribute products and services used in connection with wireless broadband networks. Thus far, we are in the business of offering: (i) hydrogen fuel cells used as a back-up power source for certain transmission of power to wireless broadband equipment and devices; and (ii) services that enable lower cost voice long distance and voice and data roaming fees to subscribers of cellular, voice over internet protocol or wireless broadband networks.   We have included in this Report references to projects or milestone events that may no longer be active to the extent such events are material to overall financial condition and/or our ongoing operations of the Company.

The Company’s present operational focus is on the deployment of wireless broadband networks in emerging international markets, using primarily either 2.5 GHz or 3.5 GHz radio frequency spectrum, and in the case of China Motion, the expansion of its legacy MVNO telephony operations.

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Results of Operations

Three-month period ended September 30, 2013 as compared to the three-month period ended September 30, 2012.

Our revenue, cost of revenue, expenses and other income for the three-month periods ended September 30, 2013 and 2012 are as follows:

Revenue:

2013		2012
$	462,880	$	214,486

Our revenue for the three-month period ended September 30, 2013 increased by $248,394 from the same period ended September 30, 2012.  The increase in revenue for 2013 is due to higher revenue from our subsidiary, Herlong.

Cost of Revenue:

2013		2012
$	61,245	$	36,543

Our cost of revenue for the three-month period ended September 30, 2013 was $61,245, or 13.2% of sales as compared to $36,543 or 17.0% of sales for the same period ended September 30, 2012.  The increase in cost of revenue in actual dollars is attributed to the increase in sales and the decease as a percentage of revenue in 2013 is a result of higher margins on the sales generated by our subsidiary, Herlong.

Selling, General and Administrative Expenses:

2013		2012
$	2,842,284	$	2,551,572

Our selling, general and administrative expenses for the three-month period ended September 30, 2013 was $2,842,284, as compared with $2,551,572 for the same period in 2012, a decrease of $290,712.  The decrease in the selling, general and administrative expenses during the three-month period in 2013 is a result of a reduction in general corporate overhead.

Impairment Loss:

2013		2012
$	–	$	1,010,000

During the three-month period ended September 30, 2012 we wrote off our investment in GBNC Network. GBNC indicated it would not honor the terms of the GBNC Agreement. Specifically, GBNC maintained that GBNC should have control over bank accounts and decisions regarding capital expenditures. Based on the duration of the impasse between us and GBNC regarding these matters, we determined it was appropriate to fully impair our $1,010,000 investment in GBNC.

Gain (Loss) on Change in Fair Value of Debt Derivative:

2013			2012
$	(24,200	)		53,098

For the three-month period ended September 30, 2013, we incurred a non-cash loss of $24,200 from the change in the fair value of our debt derivatives relating to our Amended and Restated Convertible Note Purchase Agreements dated November 17, 2008 (“Amended Convertible Note”), conversion feature of our Series B Preferred Stock, and convertible notes issued in 2013 as compared to a non-cash gain of $53,098 for same period in 2012.  The increase in the loss for 2013 is attributable to the change in fair value of the derivative liability as of the respective balance sheet dates.

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Loss on Settlement of Debt:

2013		2012
$	1,514,810		133,720

For the three-month period ended September 30, 2013, we issued shares of our Series A Common Stock and warrants in settlement of debt. The settlement price was less than the fair value of the shares and warrants issued resulting in a loss of $1,514,810 compared to 133,720 in the same period in 2012.

Interest Expense:

2013		2012
$	676,604	$	243,099

For the three-month period ended September 30, 2013, our interest expense was $676,604 as compared to $243,099 for the same period in 2012.  The change in interest expense is attributable to the change in outstanding in notes payable and amortization of debt discounts in 2013 compared to 2012.

Net Income (Loss):

2013		2012
$	357,367	$	(4,028,887	)

Net income for the three months ended September 30, 2013 was $357,367 as a result of a gain on the sale of Velatel Peru of $5,817,986.

Nine-month period ended September 30, 2013 as compared to the nine-month period ended September 30, 2012.

Our revenue, cost of revenue, expenses and other income for the nine-month periods ended September 30, 2013 and 2012 are as follows:

Revenue:

2013		2012
$	1,031,134	$	438,840

Our revenue for the nine-month period ended September 30, 2013 increased by $592,294 from the same period ended September 30, 2012.  The increase in revenue for 2013 is attributed to higher revenue from our subsidiary, Herlong, and a full nine months of reporting Herlong’s results as compared to five and one half months during 2012 based on completing our acquisition of Herlong on April 12, 2012.

Cost of Revenue:

2013		2012
$	128,472	$	77,076

Our cost of revenue for the nine-month period ended September 30, 2013 was $128,472, or 13.5% of sales as compared to $77,076 or 17.6% of sales for the same period ended September 30, 2012.  The increase in cost of revenue in actual dollars is attributed to the increase in sales and the decease as a percentage of revenue in 2013 is a result of higher margins on the sales generated by acquired subsidiary, Herlong.

Selling, General and Administrative Expenses:

2013		2012
$	6,173,062	$	8,248,744

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Our selling, general and administrative expenses for the nine-month period ended September 30, 2013 was $6,173,062 as compared with $8,248,744 for the same period in 2012, a decrease of $2,075,682.  The decrease in the selling, general and administrative expenses during the nine-month period in 2013 is a result of a reduction in general corporate overhead.

Impairment Loss:

2013		2012
$	6,387,100	$	1,010,000

During the nine months ended September 30, 2013 we wrote off our investment in China Motion for $6,387,100, which represents the entire purchase price for the acquisition when we determined we did not have effective control China Motion. The management of China Motion continued to follow instructions of the Seller that blocked significant decisions we made in the ordinary course of China Motion’s business, including efforts to change signature authority on the bank accounts in a manner that would allow us to approve or issue payments from those accounts without also obtaining the authority or counter-signature from a representative of the selling shareholders from whom we acquired China Motion.

During the nine months ended September 30, 2012 we wrote off our investment in the GBNC Network.

Gain (Loss) on Change in Fair Value of Debt Derivative:

2013			2012
$	(1,151,633	)		14,714

For the nine-month period ended September 30, 2013, we incurred a non-cash loss of $1,151,633 from the change in the fair value of our debt derivatives relating to our Amended and Restated Convertible Note Purchase Agreements dated November 17, 2008 (“Amended Convertible Note”), conversion feature of our Series B Preferred Stock, and convertible notes issued in 2013 as compared to a non-cash loss of $38,384 for same period in 2012.  The increase in the loss for 2013 is attributable to the change in fair value of the derivative liability as of the respective balance sheet dates.

Gain (Loss) on Settlement of Debt:

2013			2012
$	(6,763,365	)		1,723,817

For the nine-month period ended September 30, 2013, we issued shares of our Series A Common Stock and warrants in settlement of debt. The settlement price was less than the fair value of the shares and warrants issued resulting in a loss of $6,763,365. In 2012, the settlement price was greater than the fair value of the shares that resulted in a gain of $1,723,817.

Interest Expense:

2013		2012
$	1,517,408	$	1,151,705

For the nine-month period ended September 30, 2013, our interest expense was $1,517,408 as compared to $1,151,705 for the same period in 2012.  The change in interest expense is attributable to the change in outstanding in notes payable and amortization of debt discounts in 2013 compared to 2012.

Net Loss:

2013		2012
$	15,273,243	$	9,469,601

Net cash provided by financing activities consist of net cash proceeds from the issuance of convertible and other notes, Share subscriptions and advances from shareholders.  Our Convertible Note Purchase Agreements dated February 17, 2008 (“Convertible Note”) matured on December 31, 2008, unless they were extended by signing an Amended Convertible Note.  In that case, the due date is 90 days from the date we receive a notice of redemption from the convertible note holder. Both the Convertible Notes and the Amended Convertible Notes have an interest rate of 10% per annum.

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Our liquidity needs consist of our working capital requirements, indebtedness payments, research and development expenditure funding, and general and administrative expenses.  Our known liquidity demands include the following categories and amounts as of September 30, 2013:

(i) Litigation installment payments of $821,735;

(ii) Notes payable to related parties of $870,138;

(iii) Notes payable of $15,274,800;

(iv) Convertible Notes and Amended Convertible Notes of $573,868;

(v) Advances from officers of $64,076 and

(vi) Accounts payable and accrued expenses of $15,215,541and sales, general and administrative expenses of approximately $1.2 million per month for our San Diego, Taiwan, Cyprus, Croatia and Montenegro operations.

Historically, we have financed our operations through the sale of equity and convertible debt, as well as borrowings from related parties and from Isaac Organization, Inc.

From our date of inception through September 30, 2013, we have incurred accumulated losses of approximately $322.6 million.  As of September 30, 2013, we had cash of $1.1 million and liabilities of approximately $51.6 million, of which $48.2 million are deemed to be current liabilities.  We expect to continue to incur net losses for the foreseeable future. Our independent accountants have expressed substantial doubt about our ability to continue as a going concern in their audit report, dated May 17, 2013, for the period ended December 31, 2012.  In order to continue to operate our businesses, we will need to raise substantial amounts of additional capital.

Our equity capital consists of Series A Common Stock, Series B Common Stock, Series B Preferred Shares, Convertible Notes and Amended Convertible Notes, each of which is discussed in further detail below.

Effective September 19, 2013, we increased (post-reverse) the number of authorized Series A Shares from 1 billion to 10 billion by filing a Certificate of Amendment of our Articles of Incorporation with the Nevada Secretary of State.  As of September 30, 2013, we had issued and outstanding 657,160,092 Series A Shares. As of the date of this Report, the total number of Series A Shares issued and outstanding is 1,113,412,415.

As of September 30, 2013, we had authorized the issuance of up to 1,000,000,000 Series B Shares, of which 80,000,000 shares were issued and outstanding. As of the date of this Report, 130,000,000 Series B Shares are issued and outstanding.  Each Series B Share has the right to cast ten votes for each action on which each Series A Share has a right to vote.  The consent of 80% of the issued and outstanding Series B Shares is required in order to sell, assign or transfer any of the Series B Shares.  Series B Shares do not participate in any declared dividends. Series B Shares are redeemable on May 23, 2023 at the par value of $0.001 per share. Due to the limitations on transfer of Series B Shares, we do not consider the issuance of Series B Shares to be a viable source for funding our operations.

In addition, we have authorized the issuance of up to 25,000,000 shares of Preferred Stock, with rights and preferences to be determined by our Board of Directors. We have designated 2,500 shares of our Preferred Stock as Series B Preferred Stock, of which 270 such shares had been issued to Ironridge Technology as of September 30, 2012. As of the date of this Report, a total of 285 shares of Series B Preferred Stock are issued and outstanding.

As of September 30, 2013, we have raised approximately $28.5 million related to our Convertible Notes and our Amended Convertible Notes.  These notes bear interest at 10% per annum and are all either past due or have been converted.  As of September 30, 2013, the outstanding balance of principal and interest on unpaid Convertible Notes and Amended Convertible Notes was approximately $0.3 million.  The proceeds from our Convertible Notes and Amended Convertible Notes helped fund our operations during 2008 and 2009.  However, interest accruing and settlement of litigation associated with our Convertible Notes contributed to our liquidity needs for the period ended September 30, 2013 and is expected to continue to do so in the future.  

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Also as of September 30, 2013 we have raised approximately $0.9 million for the issuance of Series B Preferred Stock and approximately $0.7 million from the issuance of convertible notes payable.

As of September 30, 2013, we owed approximately $0.9 million as a result of borrowings from related parties.  We have sometimes relied on borrowings from related parties as a means of financing our operations, but only when other capital resources were not readily available.  We have no present plans to rely on further borrowings from related parties as a means of financing our operations.

During 2010 and 2012, we negotiated equipment vendor financing that, if continued in the future, we expect will reduce our short term need for capital from the sources described above as a percentage of our total capital needs.  However, no assurances can be given that we will continue to obtain equipment financing on the same terms as secured during 2010 and 2012.  Repayment of such equipment financing will increase our liquidity demands in the future.

The following table presents a summary of our sources and uses of cash for the nine-month period ended September 30, 2013 and 2012:

	Nine Months Ended September 30,
	2013			2012
Net cash provided by (used in) operating activities:	$	(791,982	)	$	4,673,480
Net cash used in investing activities	$	(386,527	)	$	(7,128,461	)
Net cash provided by financing activities	$	2,046,974		$	2,551,556
Effect of currency rate exchange		1,192
Increase in cash and cash equivalents	$	869,657		$	96,575

Operating Activities

The cash used in operating activities for the nine months ended September 30, 2013 is a result of our net loss offset by an increase in accounts payable and accrued expenses and non-cash expenses for the settlement of debt and the change in fair value of the derivative liability.

Investing Activities

The cash used in investment activities for the nine months ended September 30, 2013 consisted of the cash paid in connection with the purchase of China Motion offset by cash proceeds from the sale of Velatel Peru.

Financing Activities

Net cash provided by financing activities for the nine months ended September 30, 2013 consisted of proceeds from the issuance of Series B Preferred Stock, issuance of notes payable and the issuance of convertible notes.

Off-Balance Sheet Arrangements

At September 30, 2013, we have no off-balance sheet arrangements.

Critical Accounting Policies and Estimates

Our Management’s Discussion and Analysis of Financial Condition and Results of Operations section discusses our unaudited Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”).  The preparation of our unaudited Consolidated Financial Statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the unaudited Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. On an on-going basis, management evaluates its estimates and judgments, including those related to revenue recognition, accrued expenses, financing operations, contingencies and litigation. Management bases its estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.  Actual results may differ from these estimates under different assumptions or conditions. The most significant accounting estimates inherent in the preparation of our unaudited Consolidated Financial Statements include estimates as to the appropriate carrying value of certain assets and liabilities which are not readily apparent from other sources.

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These accounting policies are described at relevant sections in this discussion and analysis and in the Notes to the unaudited Consolidated Financial Statements included in this Report for the periods ended September 30, 2013 and 2012.

Revenue Recognition

We recognize revenue from product sales and services in accordance with ASC subtopic 605-10, Revenue Recognition requiring four basic criteria to be met before revenue can be recognized:

(i) Persuasive evidence of an arrangement exists;

(ii) Delivery has occurred or services have been rendered;

(iii) The selling price is fixed and determinable; and

(iv) Collectability is reasonably assured.  Determination of criteria (iii) and (iv) are based on management's judgments regarding the fixed nature of the selling prices of the products delivered and the collectability of those amounts.

Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. We defer any revenue for which the product has not been delivered or is subject to refund until such time that we and the customer jointly determine that the product has been delivered or no refund will be required. ASC 605-10 incorporates ASC subtopic 605-25, “Multiple-Element Arraignments.” ASC 605-25 addresses accounting for arrangements that may involve the delivery or performance of multiple products, services and/or rights to use assets. The effect of implementing ASC 605-25 on our financial position and results of operations was not significant.

Cash and Cash Equivalents

For purposes of our unaudited Consolidated Statement of Cash Flows, we consider all highly liquid debt instruments purchased with a maturity date of three months or less to be cash equivalents.

Fair Values

ASC subtopic 825-10, Financial Instruments requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, as well as short-term borrowings, approximate fair value because of the short-term maturity of these instruments. All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the unaudited Consolidated Financial Statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable, the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise, only available information pertinent to fair value has been disclosed.

Accounting For Bad Debt and Allowances

Bad debts and allowances are provided based on historical experience and management's evaluation of outstanding accounts receivable. Management evaluates past due or delinquency of accounts receivable based on the open invoices aged on a due date basis.

Inventories

The inventory consists of finished goods ready for resale purposes.  The Company purchases the merchandise on delivered duty paid basis.  Inventories are valued at the lower of cost or market, with cost determined using the first-in, first-out method.

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Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and impairment losses.  Depreciation is computed over the estimated useful lives of the respective assets.

The estimated useful lives of property, plant and equipment are as follows:

Machinery and equipment	10 years
Vehicles	4 years
Furniture and fixtures	10 years
Leasehold improvements	*
Constructed assets (towers)	10 years
Computers	5 years

* Leasehold improvements are amortized over the shorter of their useful lives or the term of the lease.

We evaluate the carrying value of items of property, plant and equipment to be held and used whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.  The carrying value of an item of property, plant and equipment is considered impaired when the projected undiscounted future cash flows related to the asset are less than its carrying value.  We measure impairment based on the amount by which the carrying value of the respective asset exceeds its fair value.  Fair value is determined primarily using the projected future cash flows discounted at a rate commensurate with the risk involved.

Long-Lived Assets

We have adopted ASC subtopic 360-10, Property, Plant and Equipment. ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Events relating to recoverability may include significant unfavorable changes in business conditions, recurring losses or a forecasted inability to achieve break-even operating results over an extended period. We evaluate the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets would be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell.

Intangible Assets and Goodwill

We account for acquisitions in accordance with the provisions of ASC 805-10. We assign to all identifiable assets acquired (including intangible assets), and to all identifiable liabilities assumed, a portion of the cost of the acquired company equal to the estimated fair value of such assets and liabilities at the date of acquisition. We record the excess of the cost of the acquired company over the sum of the amounts assigned to identifiable assets acquired less liabilities assumed, if any, as goodwill.

We amortize our identifiable intangible assets over their estimated period of benefit. The estimated useful life of developed software is ten years.  We periodically evaluate the recoverability of intangible assets and takes into account events or circumstances that warrant revised estimates of useful lives or indicate that impairment exists.

We account for and report acquired goodwill and other intangible assets under ASC subtopic 305-10, Intangibles, Goodwill and Other. In accordance with ASC 305-10, test our intangible assets for impairment on an annual basis and when there is reason to suspect that their values have been diminished or impaired.  Any write-downs are included in our results from operations.

Functional Currency

Transactions of VelaTel Peru are in US Dollars; accordingly, this subsidiary’s functional currency is the US Dollar. The accounts of Zapna are maintained in Danish Kroner, the accounts of Novi-Net are maintained in Croatian Kuna, the accounts of Herlong and Montenegro Connect are maintained in the Euro, and the accounts of China Motion are maintained in Hong Kong Dollars. The accounts of these foreign subsidiaries are translated into US Dollars in accordance with ASC Topic 830 “Foreign Currency Matters.” In accordance with ASC Topic 830: (i) all assets and liabilities are translated at the exchange rate on the balance sheet dates; (ii) stockholders’ equity is translated at historical rates; and (iii) statement of operation 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 ASC Topic 220, “Comprehensive Income.” Gains and losses resulting from the translations of foreign currency transactions and balances are reflected in the statements of income.

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Foreign Currency Transactions and Comprehensive Income

GAAP requires that recognized revenue, expenses, gains and losses be included in net income. Certain statements, however, require entities to report specific changes in assets and liabilities, such as gain or loss on foreign currency translation, as a separate component of the equity section of the balance sheet. Such items, along with net income, are components of comprehensive income. Translation gains are classified as an item of accumulated other comprehensive income in the stockholders’ equity section of the consolidated balance sheet.

Advertising Costs

Advertising costs, which are included in selling, administrative and general, are expensed as incurred.  Advertising costs for the nine months ended September 30, 2013 and 2012 were not significant.

Net Loss Per Share

We have adopted ASC subtopic 260-10, Earnings Per Share.  This requires the computation, presentation and disclosure requirements of earnings per Share information.  Basic earnings per Share have been calculated based upon the weighted average number of Shares outstanding.  Stock options and warrants have been excluded as common stock equivalents in the diluted earnings per Share, because they are anti-dilutive.

Concentrations of Credit Risk

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash, cash equivalents and trade receivables. The Company places its cash and temporary cash investments with high credit quality institutions. At times, such investments may be in excess of the FDIC insurance limit.

Stock Based Compensation

We have adopted ASC subtopic 718-10, Compensation.  ASC 718-10 requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options and employee stock purchases related to an employee stock purchase plan based on the estimated fair values.

Research and Development

We account for research and development costs in accordance with the ASC subtopic 730-10, Research and Development. Under ASC 730-10, all research and development costs must be charged to expense as incurred. Accordingly, internal research and development costs are expensed as incurred.  Third-party research and development costs are expensed when the contracted work has been performed or as milestone results have been achieved.  Company sponsored research and development costs related to both present and future products and services are expensed in the period incurred.

Reclassifications

Certain reclassifications have been made to prior periods’ data to conform to the presentation set forth in this registration statement.  These reclassifications had no effect on reported income or losses.

Going Concern Disclosure

The accompanying unaudited Consolidated Financial Statements included in this Report have been prepared in conformity with GAAP, and contemplates our continuance as a going concern. Our independent registered accounting firm, in its report dated May 17, 2013, has expressed substantial doubt about our ability to continue as a going concern. Our viability is dependent upon our ability to obtain future financing and the success of our future operations. We have incurred a net loss of $15.3 million for the period ended September 30, 2013, a cumulative net loss of $322.6 million since inception, a negative working capital of $46.8 million and a stockholders' deficiency of $49.1 million.

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In addition, we require substantial additional capital to finance our planned business operations and expect to incur operating losses in future periods due to the expense of deploying and/or the continued deployment of our projects.

We have not realized material revenue since inception, and we are not without doubt that we will be successful in generating revenues in the future.  If we are not able to raise substantial additional capital in a timely manner, we may lose our rights to participate in the operation of the networks and businesses identified above and may be forced to cease operations. Our continued existence is dependent upon management's ability to develop profitable operations and resolve our liquidity problems. The accompanying unaudited Consolidated Financial Statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should we be unable to continue as a going concern.

To attain profitable operations, management continues focus its efforts on the deployment and operation of our wireless broadband networks.  As stated in the beginning of this Item 2, we have nine projects, six of which are deploying wireless broadband networks and three of which offer services or products related to the wireless broadband networks we are deploying. The nine projects span Hong Kong, China, Croatia, Montenegro, Peru and Denmark. We will continue to be dependent on outside capital to fund our projects and selling, general and administrative expenses for the foreseeable future. Any financing obtained may further dilute or otherwise impair the ownership interest of the current stockholders. If we fail to generate positive cash flows or fail to obtain additional capital when required, we could modify, delay or abandon some or all of our projects.

Recent Accounting Pronouncements

In February 2013, the FASB issued ASU No. 2013-02, which amends the authoritative accounting guidance under ASC Topic 220 Comprehensive Income. The amendments do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under GAAP that provide additional detail about those amounts. The amendments in this update are effective prospectively for reporting periods beginning after December 15, 2013. Early adoption is permitted. Adoption of this update is not expected to have a material effect on the Company’s consolidated results of operations, or its financial condition.

The FASB has issued ASU No. 2013-04, Liabilities (Topic 405), “Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date.” ASU 2013-04 provides guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The amendments in this ASU are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The Company does not expect the adoption of this guidance to have a material impact on the Company’s financial statements.

In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, A Similar Tax Loss, or a Tax Credit Carryforward Exists (A Consensus the FASB Emerging Issues Task Force). ASU 2013-11 provides guidance on financial statement presentation of unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The FASB’s objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current U.S. GAAP. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforward in the same tax jurisdiction as of the reporting date. This amendment is effective for public entities for fiscal years beginning after December 15, 2013 and interim periods within those years. The company does not expect the adoption of this standard to have a material impact on the Company’s financial position and results of operations.

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Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

The Company is a smaller reporting company as defined by Rule 12b-2 under the Securities Exchange Act of 1934, as amended (“Exchange Act”), and is not required to provide the information called for by this Item.

Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

We have adopted and maintain disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e)) under the Exchange Act) that are designed to insure that information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized and reported within the time periods required under the Rules and Forms of the United States Securities and Exchange Commission (“SEC”) and that the information is gathered and communicated to our senior management team, including the Company’s Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

Our Chief Executive Officer and our Chief Financial Officer evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this Report.  They concluded that our disclosure controls and procedures were not effective with respect to financial reporting of complex transactions as of September 30, 2012.

Our Chief Financial Officer, and others in the Company, as appropriate, will be undertaking efforts to insure that the Company’s controls and procedures meet all legal requirements. It is anticipated that such efforts will be concluded by the time our Form 10-K for the period ended December 31, 2013 is filed with the SEC.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended September 30, 2013, there were no changes in our internal control over financial reporting that have affected materially, or are reasonably likely to affect materially, our internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.  Legal Proceedings.

There have been no material developments in any of the pending litigation against the Company since we filed our Annual Report on Form 10-K for the year ended December 31, 2012.

Item 1A.  Risk Factors.

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in Part I, Item 1A., “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2012, which could materially affect the Company’s business, financial position and results of operations. There are no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the period ended December 31, 2012.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds.

With the exception of the following sales of unregistered equity securities, all information required by Item 701 of Regulation S-K has been previously included in a Current Report on Form 8-K:

On July 1, 2013, the Company issued 5,787,037 Shares to Redwood Management, LLC (“Redwood”) in partial payment of a promissory note in the amount of $500,000 in favor of Isaac Organization, Inc. (“Isaac”) and assigned by Isaac to America Orient, LLC (“AO”) and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and payment of accrued interest of $0. The Company also issued 5,787,263 warrants to AO in connection with this Share issuance. Each warrant has an exercise price of $0.00432 and an exercise term of three years.

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On July 2, 2013, the Company issued 5,000,000 Shares to Asher Enterprises, Inc. (“Asher”) in partial payment of a promissory note in the amount of $103,500 in favor of Asher. This sale of Shares resulted in a principal reduction of $30,000 in notes payable of the Company and payment of accrued interest of $0.

On July 2, 2013, the Company issued 20,000,000 Shares to Ironridge Global as partial fulfillment of the court approved settlement of the lawsuit brought by Ironridge Global as assignee of certain trade creditors.

On July 8, 2013, the Company issued 5,787,037 Shares to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 5,787,037 warrants to AO in connection with this Share issuance. Each warrant has an exercise price of $0.00432 and an exercise term of three years.

On July 8, 2013, the Company issued 11,500,000 Shares to AO in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO. The Company also issued 11,500,000 warrants to James Shaw (“Shaw”) at the direction of AO. Each warrant has an exercise price of $0.006 and an exercise term of three years.

On July 9, 2013, the Company issued 4,918,033 Shares to Asher in partial payment of a promissory note in the amount of $103,500 in favor of Asher. This sale of Shares resulted in a principal reduction of $13,500 in notes payable of the Company and penalties and accrued interest of $16,500.

On July 10, 2013, the Company issued 3,071,253 Shares to Continental Equities, LLC (“Continental”) in partial payment of a promissory note in the amount of $50,000 in favor of Continental. This sale of Shares resulted in a principal reduction of $15,000 in notes payable of the Company and accrued interest of $0.

On July 12, 2013, the Company issued 6,565,000 Shares to Asher in partial payment of a promissory note in the amount of $103,500 in favor of Asher. This sale of Shares resulted in a principal reduction of $0 in notes payable of the Company and penalties and accrued interest of $39,390.

On July 12, 2013, the Company issued 5,787,037 Shares to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 5,787,037 warrants to AO in connection with this Share issuance. Each warrant has an exercise price of $0.00432 and an exercise term of three years.

On July 15, 2013, the Company issued 4,000,000 Shares to AO in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO. This sale of Shares resulted in a principal reduction of $23,200 in notes payable of the Company and accrued interest of $0. The Company also issued 4,000,000 warrants to AO in connection with this Share issuance. Each warrant has an exercise price of $0.0058 and an exercise term of three years.

On July 19, 2013, the Company issued 2,777,777 Shares to Continental in partial payment of a promissory note in the amount of $50,000 in favor of Continental. This sale of Shares resulted in a principal reduction of $10,000 in notes payable of the Company and accrued interest of $0.

On July 19, 2013, the Company issued 13,500,000 Shares to Isaac in partial payment of two promissory notes in the amount of $500,000 each in favor of Isaac. This sale of Shares resulted in a principal reduction of $74,250 in notes payable of the Company and accrued interest of $0. The Company also issued 13,500,000 warrants to Isaac in connection with this Share issuance. Each warrant has an exercise price of $0.0055 and an exercise term of three years.

On July 23, 2013, the Company issued 6,944,444 Shares to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 6,944,444 warrants to AO in connection with this Share issuance. Each warrant has an exercise price of $0.0036 and an exercise term of three years.

On July 29, 2013, the Company issued 5,319,149 Shares to WHC Capital, LLC in partial payment of a promissory note in the amount of $75,000 in favor of WHC. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0.

45

On July 30, 2013, the Company issued 6,944,444 Shares to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 6,944,444 warrants to AO in connection with this Share issuance. Each warrant has an exercise price of $0.0036 and an exercise term of three years.

On August 6, 2013, the Company issued 2,000,000 Shares to Continental in partial payment of a promissory note in the amount of $50,000 in favor of Continental. This sale of Shares resulted in a principal reduction of $6,880 in notes payable of the Company and accrued interest of $0.

On August 7, 2013, the Company issued 6,944,444 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 6,944,444 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.0036 and an exercise term of three years.

On August 20, 2013, the Company issued 6,799,996 Shares to Continental in partial payment of a promissory note in the amount of $50,000 in favor of Continental. This sale of Shares resulted in a principal reduction of $18,120 in notes payable of the Company and accrued interest of $2,280.

On August 20, 2013, the Company issued 6,756,757 Shares to WHC Capital, LLC in partial payment of a promissory note in the amount of $75,000 in favor of WHC. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0.

On August 20, 2013, the Company issued 33,000,000 Shares to Ironridge Global as partial fulfillment of the court approved settlement of the lawsuit brought by Ironridge Global as assignee of certain trade creditors.

On August 21, 2013, the Company issued 13,157,894 Shares to Asher in partial payment of a promissory note in the amount of $78,500 in favor of Asher. This sale of Shares resulted in a principal reduction of $50,000 in notes payable of the Company and accrued interest of $0.

On August 21, 2013, the Company issued 10,416,666 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 10,416,666 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.0024 and an exercise term of three years.

On August 26, 2013, the Company issued 11,538,462 Shares to Asher in partial payment of a promissory note in the amount of $78,500 in favor of Asher. This sale of Shares resulted in a principal reduction of $28,500 in notes payable of the Company and penalties and accrued interest of $21,500.

On August 26, 2013, the Company issued 23,900,000 Shares to Isaac in partial payment of a promissory note in the amount of $500,000 in favor of Isaac. This sale of Shares resulted in a principal reduction of $95,600 in notes payable of the Company and accrued interest of $0. The Company also issued 23,900,000 warrants to Isaac in connection with this Share issuance. Each warrant has an exercise price of $0.004 and an exercise term of three years.

On August 27, 2013, the Company issued 8,928,571 Shares to Continental in partial payment of a promissory note in the amount of $50,000 in favor of Continental. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0.

On August 29, 2013, the Company issued 10,416,666 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 10,416,666 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.0024 and an exercise term of three years.

46

On August 30, 2013, the Company issued 7,397,143 Shares to Asher in partial payment of a promissory note in the amount of $78,500 in favor of Asher. This sale of Shares resulted in a principal reduction of $0 in notes payable of the Company and penalties and accrued interest of $25,890.

On September 4, 2013, the Company issued 6,326,815 Shares to Continental in partial payment of a promissory note in the amount of $50,000 in favor of Continental. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $2,506.

On September 9, 2013, the Company issued 10,162,201 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 10,162,201 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.00246 and an exercise term of three years.

On September 13, 2013, the Company issued 13,020,833 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 13,020,833 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.00192 and an exercise term of three years.

On September 23, 2013, the Company issued 14,880,952 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 14,880,952 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.00168 and an exercise term of three years.

On September 24, 2013, the Company issued 55,000,000 Shares to Ironridge Global as partial fulfillment of the court approved settlement of the lawsuit brought by Ironridge Global as assignee of certain trade creditors.

On September 25, 2013, the Company issued 10,000,000 Shares to WHC Capital, LLC in partial payment of a promissory note in the amount of $75,000 in favor of WHC. This sale of Shares resulted in a principal reduction of $17,000 in notes payable of the Company and accrued interest of $0.

On September 26, 2013, the Company issued 16,025,641 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 16,025,641 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.00156 and an exercise term of three years.

On October 2, 2013, the Company issued 7,157,532 Shares to WHC Capital, LLC in partial payment of a promissory note in the amount of $75,000 in favor of WHC. This sale of Shares resulted in a principal reduction of $8,000 in notes payable of the Company and accrued interest of $3,452.

On October 2, 2013, the Company issued 25,000,000 Shares to Isaac in partial payment of a promissory note in the amount of $500,000 in favor of Isaac. This sale of Shares resulted in a principal reduction of $40,000 in notes payable of the Company and accrued interest of $0. The Company also issued 25,000,000 warrants to Isaac in connection with this Share issuance. Each warrant has an exercise price of $0.016 and an exercise term of three years.

On October 3, 2013, the Company issued 20,077,144 Shares to Bursztyn Family Trust in payment of compensation owed to Leon Eric Bursztyn pursuant to an independent contractor agreement. This sale of Shares resulted in reduction of $46,379 of accounts payable of the Company.

On October 7, 2013, the Company issued 759,017 shares to WHC in partial payment of a promissory note in the amount of $150,000 in favor of WHC. This sale of Shares resulted in a principal reduction of $0 in notes payable of the Company and accrued interest of $1,366. The Company also issued 759,017 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.0018 and an exercise term of three years.

47

On October 14, 2013, the Company issued 16,666,666 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 16,666,666 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.0015 and an exercise term of three years.

On October 15, 2013, the Company issued 17,857,143 Shares to WHC Capital, LLC in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and partially assigned by Isaac to WHC. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0.

On October 18, 2013, the Company issued 17,857,143 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 17,857,143 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.0014 and an exercise term of three years.

On October 21, 2013, the Company issued 55,000,000 Shares to Ironridge Global as partial fulfillment of the court approved settlement of the lawsuit brought by Ironridge Global as assignee of certain trade creditors.

On October 21, 2013, the Company issued 38,000,000 Shares to Isaac in partial payment of a promissory note in the amount of $500,000 in favor of Isaac. This sale of Shares resulted in a principal reduction of $53,200 in notes payable of the Company and accrued interest of $0. The Company also issued 38,000,000 warrants to Isaac in connection with this Share issuance. Each warrant has an exercise price of $0.014 and an exercise term of three years.

On October 22, 2013, the Company issued 17,857,143 Shares to WHC Capital, LLC in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and partially assigned by Isaac to WHC. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0.

On October 28, 2013, the Company issued 16,025,641 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 16,025,641 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.0016 and an exercise term of three years.

On October 31, 2013, the Company issued 45,000,000 Shares to Isaac in partial payment of a promissory note in the amount of $500,000 in favor of Isaac. This sale of Shares resulted in a principal reduction of $63,000 in notes payable of the Company and accrued interest of $0. The Company also issued 45,000,000 warrants to Isaac in connection with this Share issuance. Each warrant has an exercise price of $0.014 and an exercise term of three years.

On October 31, 2013, the Company issued 19,230,770 Shares to WHC Capital, LLC in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and partially assigned by Isaac to WHC. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0.

On November 4, 2013, the Company issued 80,000,000 Shares to Ironridge Global as partial fulfillment of the court approved settlement of the lawsuit brought by Ironridge Global as assignee of certain trade creditors.

On November 5, 2013, the Company issued 19,841,269 to Redwood in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and assigned by Isaac to AO and partially assigned by AO to Redwood. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0. The Company also issued 19,841,269 to AO in connection with this Share issuance. Each warrant has an exercise price of $0.00176 and an exercise term of three years.

On November 13, 2013, the Company issued 25,000,000 Shares to WHC Capital, LLC in partial payment of a promissory note in the amount of $500,000 in favor of Isaac and partially assigned by Isaac to WHC. This sale of Shares resulted in a principal reduction of $25,000 in notes payable of the Company and accrued interest of $0.

48

On November 14, 2013, the Company issued 55,000,000 Shares to Isaac in partial payment of a promissory note in the amount of $500,000 in favor of Isaac. This sale of Shares resulted in a principal reduction of $55,000 in notes payable of the Company and accrued interest of $0. The Company also issued 55,000,000 warrants to Isaac in connection with this Share issuance. Each warrant has an exercise price of $0.01 and an exercise term of three years.

The restricted Shares issued to the aforementioned entities and individuals relied upon exemptions provided for in Sections 4(2) and 4(5) of the Securities Act of 1933, as amended (“Securities Act”), including Regulation D promulgated thereunder, based on the knowledge possessed by those entities or individuals regarding the Company’s operations and financial condition and their experience in financial and business matters that allowed them to evaluate the merits and risk of receipt of these Shares. The Shares issued to Ironridge Global are exempt from registration under Section 3(a)(10) of the Securities Act.

Item 3.  Defaults on Senior Securities.

As of September 30, 2013, the Company is in default on payment of the principal and interest on approximately $468,641 of our Convertible Notes and Amended Convertible Notes.  We intend to cure the defaults and satisfy the convertible notes as soon as funds are available to the Company to do so.

Item 4.  Removed and Reserved.

Item 5.  Other Information.

(a) All information required to be disclosed on Form 8-K during the period ended September 30, 2013 has been so reported.

(b) The Company does not have procedures in place by which security holders may recommend nominees to the Company’s Board of Directors.

(c) Effective May 16, 2013, the Company reduced the size of its Board of Directors from four Directors to two Directors. The Company also eliminated the positions of Chief Operating Officer (the duties of which were transferred to our Chief Executive Officer) and Chief Administrative Officer (the duties of which continue to be performed by a Manager of Administration). The Company’s intent is to consolidate decision making authority in the Board of Directors and in those executive officers who are also directors (the Chief Executive Officer and the President). Other officers who have previously been considered executive officers have had their management responsibilities and decision making authority curtailed. These include: (i) Carlos Trujillo, who holds the title Chief Financial Officer; (ii) Kenneth L. Waggoner, who until his resignation effective November 13, 2013 held the titles of Secretary, Executive Vice-President, Legal and General Counsel; (iii) Kenneth Hobbs, who holds the titles of Secretary, Vice-President, Mergers & Acquisitions and General Counsel; and (iv) Isidoro Gutierrez, who formerly held the title of Chief Administrative Officer and now holds the title of Manager of Administration.

(d) Effective November 13, 2013, Kenneth L. Waggoner resigned as Secretary, General Counsel, and Executive Vice-President, Legal. Mr. Waggoner’s resignation was not the result of any disagreements with the Company on any matter relating to the Company’s operations or policies and practices. Kenneth Hobbs will assume the duties and responsibilities of the Company’s General Counsel and Secretary, in addition to his prior duties as Vice-President, Mergers & Acquisitions. The Company considers it unnecessary for its General Counsel to also hold the office of Vice-President, Legal, and has eliminated that position.

Item 6.  Exhibits.

The following is a list of documents either referred to in this current Report on Form 10-Q or in prior Reports for which the transaction reported remains material to the Company’s operations or as a contingency or commitment. The exhibit list includes a reference to the specific prior Report where the same document was attached as an Exhibit to that Report. Reference in this Exhibit List to “the Company” refers to either VelaTel Global Communications, Inc. or its prior name, China Tel Group, Inc.

49

Exhibit No.	Description of each Exhibit
	Plan of Acquisition, Reorganization, Arrangement, Liquidation or Succession
2.1	Reorganization and Merger Agreement, dated May 21, 2008, among the Company, Chinacomm Acquisition, Inc., Trussnet USA, Inc., a Nevada corporation (“Trussnet Nevada”), and the stockholders of Trussnet Nevada [Incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 15, 2009]
	Articles of Incorporation and Bylaws
3.1	Articles of Incorporation [Incorporated by reference to the Company’s Registration Statement on Form SB-2 (No. 333-134883) filed on June 9, 2006]
3.2	Certificate of Amendment of Articles of Incorporation [Incorporated by reference to the Company’s Information Statement on Schedule 14-C filed on February 10, 2011]
3.3	Bylaws [Incorporated by reference to the Company’s Registration Statement on Form SB-2 (No. 333-134883) filed on June 9, 2006]
3.4	Amended Bylaws [Incorporated by reference to the Company’s Information Statement on Schedule 14-C filed on February 10, 2011]
3.5	Certificate of Amendment of Articles of Incorporation [Incorporated by reference to the Company’s Information Statement filed on Schedule 14-C filed on February 17, 2012
3.6	Certificate of Change amending Articles of Incorporation [Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 23, 2012]
3.7	Certificate of Amendment and Restatement of Articles of Incorporation [Incorporated by reference to the Company’s Information Statement on Schedule 14-C filed on August 20, 2013]
	Contracts for Professional Services, Employment and/or Strategic Relationships
10.1	Memorandum of Understanding of Global Strategic Cooperation, dated August 9, 2010, between the Company and ZTE Corporation (ZTE”) [Incorporated by reference to the Company’s Current Report on Form 8-K filed on August 12, 2010]
10.2	Executive Employment Agreement, dated April 4, 2011 but retroactive to November 1, 2010, between the Company and Tay Yong Lee “Colin Tay” [Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 6, 2011]
10.3	Agreement for Professional Services, dated May 6, 2011, between the Company and ChangeWave, Inc. [Incorporated by reference to the Company’s Report on Form 10-Q filed on May 16, 2011].
	Contracts Related to ChinaComm Joint Venture
10.4	Framework Agreement, dated April 7, 2008, between the Company and CECT-Chinacomm Communications Co., Ltd. (“Chinacomm”) et al. [Incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 15, 2009]
10.5	Subscription and Shareholder’s Agreement relating to ChinaComm Limited (“Chinacomm Cayman”), dated May 23, 2008, between Gulfstream Capital Partners Ltd.(“Gulfstream Seychelles”) (as Investor), Thrive Century Limited, Newtop Holdings Limited (as Founders), Chinacomm Cayman (as Company), Qui Ping and Yuan Yi (as Guarantors) and Chinacomm and CECT Chinacomm Shanghai Co. Ltd. (as Warrantors)
10.6	Exclusive Technical Services Agreement, dated May 23, 2008, between Trussnet Gulfstream (Dalian) Co., Ltd. and Yunji Communications Technology (China) Co (“Yunji China”). [Incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 15, 2009]
10.7	Exclusive Technical and Management Consulting Services Agreement, dated May 23, 2008, between Yunji China and Chinacomm [Incorporated by reference to the Company’s Annual Report Form on 10-K filed on May 15, 2009]
10.8	Equipment Lease Agreement, dated May 23, 2008, between Trussnet Gulfstream (Dalian) Co., Ltd.(“TCP”) and Yunji China. [Incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 15, 2009]
10.9	Equipment Sublease Agreement, dated May 23, 2008, between Yunji China and Chinacomm [Incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 15, 2009]
10.10	Subscription and Shareholder’s Agreement relating to ChinaComm Limited (“Chinacomm Cayman”), dated February 16, 2009, between Trussnet Capital Partners, Ltd. (“TCP”) (as Investor), Thrive Century Limited, Newtop Holdings Limited (as Founders), Chinacomm Cayman (as Company), Qui Ping and Yuan Yi (as Guarantors), Chinacomm and CECT Chinacomm Shanghai Co. Ltd.(“Chinacomm Shanghai”) (as Warrantors) [Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 3, 2011]
10.11	Addendum to Subscription and Shareholders Agreement, dated February 16, 2009, between TCP and Chinacomm [Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 3, 2011]

50

Exhibit No. Description of each Exhibit

10.12	Asset Purchase Agreement, Promissory Note and Security Agreement, all dated March 9, 2009, between the Company and TCP [Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 10, 2009]
10.13	First Amendment to Promissory Note, dated March 5, 2010, between the Company and TCP [Incorporated by reference to the Company’s Current Report on Form 8-K/A filed on March 5, 2010]
	Second Amendment to Promissory Note, dated March 18, 2010.[Incorporated by reference to the Company’s Current Report on Form 8-K/A filed on March 18, 2010]
10.14	Third Amendment to Promissory Note, dated April 9, 2009, between the Company and TCP [Incorporated by reference to the Company’s Current Report on Form 8-K/A filed on April 13, 2010]
10.15	Fourth Amendment to Promissory Note, dated May 9, 2009, between the Company and TCP [Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 12, 2010]
10.16	Assignment and Subscription Agreement and Cancellation of Promissory Note, dated April 4, 2011, between the Company and TCP [Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 6, 2011]
	Contracts Related to Acquisition of Peru Subsidiary VelaTel Peru, S.A. (formerly Perusat, S.A.)
10.17	Stock Purchase Agreement, dated February 22, 2009, between Mario Octavio Navarro Alvarez and Rafael Isaias Samanez Zacarias, as sellers, and Gulfstream Seychelles, as buyer, regarding capital stock of Perusat, S.A. [Incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 15, 2009]
	Contracts Related to Golden Bridge Joint Venture
10.18	Subscription and Shareholder Agreement for “New Co,” dated December 13, 2010, between the Company and Golden Bridge Network Communications Co., Ltd. (“GBNC”) [Incorporated by reference to the Company’s Current Report on Form 8-K filed on December 15, 2010]
10.19	Equipment Contract for Haixi Wireless Broadband Project (GBNC), dated March 14, 2011, among the Company, Gulfstream Seychelles and ZTE [Incorporated by reference to the Company’s Current Report on Form 8-K filed on March 16, 2011]
	Contracts Related to Sino Crossing Joint Venture
10.20	Subscription and Shareholder Agreement for “JV,” dated November 11, 2010, between the Company, Shanghai Ying Yue Network Technology Ltd.(“YYNT”), and Azur Capital SDN BHD (“Azur”) [Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 16, 2010]
10.21	Subscription and Shareholder Agreement for “New Co,” dated November 11, 2010, between the Company and Azur [Incorporated by reference to the Company’s Current Report on Form 8-K filed on November 16, 2010]
10.22	Addendum to Subscription and Shareholder Agreement between Azur and the Company, dated December 2, 2011. [Incorporated by reference to the Company’s Current Report on Form 8-K on December 9, 2011].
	Contracts Related to VN Tech Joint Venture
10.23	Subscription and Shareholder Agreement for “New Co,” dated April 1, 2011, between Shenzhen VN Technologies Co., Ltd (“VN Tech”) and the Company [Incorporated by reference to the Company’s Current Report on Form 8-K filed on April 6, 2011]
10.24	Amended and Restated Subscription and Shareholder Agreement for VN Tech between Gulfstream Seychelles, Luo Hongye and VN Tech. [Incorporated by reference to the Company’s Current Report on Form 8-K on April 24, 2012].
	Contracts Related to Equity and Convertible Debt Instruments
10.25	Convertible Note Purchase Agreement, dated February 12, 2008 [Incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 15, 2009]
10.26	Amended and Restated Convertible Note Purchase Agreement, dated November 17, 2008 [Incorporated by reference to the Company’s Annual Report on Form 10-K filed on May 15, 2009]
10.27	Stock Purchase Agreement, dated February 9, 2010, between the Company and Isaac Organization, Inc.(“Isaac”) [Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 9, 2010]
10.28	First Amendment to Stock Purchase Agreement, dated March 5, 2010, between the Company and Isaac [Incorporated by reference to the Company’s Current Report on Form 8-K/A filed on March 5, 2010]
10.29	Amended and Restated Stock Purchase Agreement, dated May 9, 2010, between the Company and Isaac [Incorporated by reference to the Company’s Current Report on Form 8-K filed on May 12, 2010]

51

Exhibit No. Description of each Exhibit

10.30	Line of Credit Loan Agreement and Promissory Note dated July 1, 2011 between the Company and Isaac [Incorporated by reference to the Company’s Report on Form 10-Q filed on August 15, 2011].
10.31	Agreement to Extend and Increase First Line of Credit Loan Agreement and Promissory Note, To Cancel Stock Purchase Agreement, and To Grant Option in VN Tech Agreement, between the Company and Isaac, dated February 23, 2012 [Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 29, 2012].
10.32	Second Line of Credit Loan Agreement and Promissory Note between the Company and Isaac, dated February 23. 2012 [Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 29, 2012].
10.33	Line of Credit Promissory Note between the Company and Weal Group, Inc., dated March 5, 2012. [Incorporated by reference to the Company’s Current Report on Form 8-K dated March 9, 2012].
	Contracts related to NGSN
10.34	Exclusive Consulting and Technical Service Agreement between New Generation Special Network Co. Ltd (“NGSN”)  and Gulfstream Seychelles, dated February 1, 2012.[Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 6, 2012].
10.35	Business Agreement with NGSN and the Company dated August 26, 2011. [Incorporated by reference on the Company’s Current Report on Form 8-K on October 25, 2011].
	Contracts related to Aerostrong
10.36	Business Agreement with Aerostrong Company Limited (“Aerostrong”) and the Company, dated November 11, 2011. [Incorporated by reference on the Company’s Current Report on Form 8-K on November 14, 2011].
10.37	Strategic Cooperation Agreement between Aerostrong and Beijing Yunji Communications Technical Service Co., Ltd., dated April 19, 2012. [Incorporated by reference on the Company’s Current Report on Form 8-K on April 20, 2012].
	Contracts related to Acquisition of Zapna, APS
10.38	Stock Purchase Agreement, dated April 3, 2012, between the Company., Gulfstream Seychelles and Zapna, ApS [Incorporated by reference to the Company’s Current Report on Form 8-K on April 5, 2012]
	Contracts related to Acquisition of Herlong Investments, Ltd. and its Subsidiaries, and Balkans Wireless Broadband Deployment
10.39	Business Cooperation Agreement between 7L Capital Partners Emerging Europe LP (7LCPEELP), Karlo Vlah, Durda Vlah, Josip Vlah, the Company, Novi-Net d.o.o and Montenegro Connect, d.o.o, dated December 6, 2011. [Incorporated by reference to the Company’s Current Report on Form 8-K December 9, 2011].
10.40	Equipment Contract and Purchase Order between Novi-Net and ZTE, dated May 10, 2012. [Incorporated by reference to the Company’s Current Report on Form 8-K December 14, 2012]
10.41	Equipment Contract and Purchase Order between Montenegro Connect and ZTE, dated May 10, 2012. [Incorporated by reference to the Company’s Current Report on Form 8-K December 14, 2012]
10.42	Software Contract and Purchase Order between Herlong Investments, Ltd. and ZTE, dated May 10, 2012. [Incorporated by reference to the Company’s Current Report on Form 8-K December 14, 2012]
	Contracts Related to Sale of Stock and Assets of VelaTel Peru, S.A.
10.43	Share Purchase Agreement between Gulfstream Seychelles, Mario Navarro, and Rafael Samanez, as Sellers, First Global Projects Management, Inc., as Purchaser, and the Company, as Guarantor, for the Shares of VelaTel Peru S.A. and Go Movil Resources, S.A.C., dated August 16, 2013. [Incorporated by reference to the Company’s Current Report on Form 10-Q on August 19, 2013]
10.44	Loan Agreement between the Company and AQT, LLC, dated August 16, 2013. [Incorporated by reference to the Company’s Current Report on Form 10-Q on August 19, 2013]
10.44	Asset Purchase Agreement between VelaTel Peru, as Seller, and Inversiones Balesia, S.A.C., as Purchaser, for 30 Cellular Towers, dated August 16, 2013. [Incorporated by reference to the Company’s Current Report on Form 10-Q on August 19, 2013]
10.45	Mutual Warranty Agreement between VelaTel Peru and Inversiones Balesia, dated August 16, 2013. [Incorporated by reference to the Company’s Current Report on Form 10-Q on August 19, 2013]
	Contracts related to Acquisition of China Motion Telecom (HK) Limited, the Upgrade of its Core Telephony Network, and Roaming Agreement with Option to Purchase 25% of Shares
10.46	Stock Purchase Agreement for China Motion (“China Motion SPA”) between China Motion Telecom International, China Motion Holdings, China Motion InfoServices (collectively “Seller”) and Gulfstream Seychelles, dated November 27, 2012. [Incorporated by reference to the Company’s Report on Form 8-K on November 27, 2012]

52

Exhibit No. Description of each Exhibit

10.47	Corporate Guaranty by the Company of the obligations of Gulfstream Seychelles under China Motion SPA, dated November 27, 2012. [Incorporated by reference to the Company’s Report on Form 8-K on November 27, 2012]
10.48	First Amendment to China Motion SPA, dated February 4, 2013. [Incorporated by reference to the Company’s Report on Form 8-K on February 4, 2013]
10.49	Second Amendment to China Motion SPA, dated March 3, 2013. [Incorporated by reference to the Company’s Report on Form 8-K on March 8, 2013]
10.50	Promissory Note of Gulfstream Seychelles to Sellers under China Motion SPA, dated March 3, 2013. [Incorporated by reference to the Company’s Report on Form 8-K on March 8, 2013]
10.51	Stock Pledge Deed and Stock Escrow Agreement for China Motion Stock, dated March 3, 2013. [Incorporated by reference to the Company’s Report on Form 8-K on March 8, 2013]
10.52	Notice of Arbitration of the Company and Gulfstream Seychelles against China Motion Sellers, dated July 20, 2013. [Incorporated by reference to the Company’s Current Report on Form 10-Q on August 19, 2013]
10.53	Deed of Settlement between the Company, Gulfstream Seychelles, and China Motion Sellers, dated October 28, 2013. [Exhibit attached to this Current Report on Form 10-Q]
10.54	Loan Agreement between the Gulfstream Seychelles, as Borrower, the Company, as Guarantor, and Xin Hua, as Lender for payment of amounts due China Motion Sellers, dated October 28, 2013. [Exhibit attached to this Current Report on Form 10-Q]
10.55	Share Charge between Gulfstream Seychelles and Xin Hua for pledge of China Motion shares as collateral for Xin Hua Loan Agreement, dated October 28, 2013. [Exhibit attached to this Current Report on Form 10-Q]
10.56	Option Deed between Gulfstream Seychelles and Xin Hua for enforcement of security in the event of default under Xin Hua Loan Agreement, dated October 28, 2013. [Exhibit attached to this Current Report on Form 10-Q]
10.57	Turnkey Upgrade Equipment between the Company, China Motion Telecom (HK), Ltd., and New Host International Co., Ltd. (“New Host”), dated November 11, 2013. [Exhibit attached to this Current Report on Form 10-Q]
10.58	Sales Contract between China Motion, New Host, and ZTE, dated November 18, 2013. [Exhibit attached to this Current Report on Form 10-Q]
10.59	Sales Contract between China Motion, New Host, and Niceuc Communication Co., Ltd., dated November 18, 2013. [Exhibit attached to this Current Report on Form 10-Q]
	Contracts related to Sale of Stock of Zapna
10.60	Stock Purchase Agreement between Gulfstream Seychelles and Aerial Investments, LLC, dated September 30, 2013. [Exhibit attached to this Current Report on Form 10-Q]
	Certifications filed with this Report on Form 10-Q for the Period Ended September 30, 2012
31.1	Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial and Accounting Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer and Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
99.1	Temporary Hardship Exemption
101.INS	XBRL Instance Document*
101.SCH	XBRL Taxonomy Extension Schema*
101.CAL	XBRL Taxonomy Extension Calculation Linkbase*
101.DEF	XBRL Taxonomy Extension Definition Linkbase*
101.LAB	XBRL Taxonomy Extension Label Linkbase*
101.PRE	XBRL Taxonomy Extension Presentation Linkbase*

__________

* To be furnished by amendment per Temporary Hardship Exemption under Regulation S-T.

53

SIGNATURES

In accordance with the requirements of the Exchange Act, Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

Dated: November 19, 2013	VELATEL GLOBAL COMMUINICATIONS, INC.
	By:	/s/ George Alvarez
		George Alvarez Chief Executive Officer
	By:	/s/ Carlos Trujillo
		Carlos Trujillo Chief Financial Officer

54

EX-10.53

EXHIBIT 10.53

Deed of Settlement

THIS DEED is made the 28^th day of October 2013

BETWEEN:

(1) China motion telecom international LIMITED, a company incorporated in Bermuda with limited liability, the head office and principal place of business of which in Hong Kong is at Rooms 3505-3506, 35^th Floor, Edinburgh Tower, The Landmark, 15 Queen’s Road Central, Central, Hong Kong (“Listco”);

(2) china motion holdings limited, a company incorporated in the British Virgin Islands with limited liability, the registered office of which is at P.O. Box 71, Craigmuir Chambers, Road Town, Tortola, British Virgin Islands (“Holdings”);

(3) chinamotion infoservices limited, a company incorporated in the British Virgin Islands with limited liability, the registered office of which is at P.O. Box 957, Offshore Incorporations Centre, Road Town, Tortola, British Virgin Islands (“CMInfo”);

(4) velatel global communications, inc., a company incorporated in the United States, the registered office of which is at 5950 La Place Court, Suite 160, Carlsbad, CA, 92008, USA (“VelaTel”); and

(5) gulfstream capital partners ltd., a company incorporated in Seychelles with limited liability, the registered office of which is at 1^st Floor, #5 DEKK House, De Zippora Street, P.O. Box 456, Povidence Industrial Estate, Mahe, Republic of Seychelles (“Buyer”).

WHEREAS:

(A) China Motion Telecom (HK) Limited (“CMTHK”) is a company incorporated in Hong Kong with limited liability. As at the date hereof, CMTHK has an authorised share capital of HK$390,000,000.00 divided into 390,000,000 ordinary shares of HK$1.00 each (each a “CMTHK Share”), of which 378,467,031 CMTHK Shares have been issued and are fully paid up or credited as fully paid. CMTHK became a wholly-owned subsidiary of Buyer as from 1 March 2013.

(B) CMInfo is a 95% subsidiary of Holdings.

(C) Holdings is a wholly-owned subsidiary of Listco, the issued shares of which are listed on the Main Board of the Stock Exchange.

(D) Buyer is a wholly-owned subsidiary of VelaTel.

(E) On 27 November 2012, Listco, Holdings and CMInfo on the one part, and Buyer on the other part, entered into the SPA for the purchase of 100% of the stock of CMTHK (the “Sale Shares”). On the same day, the Corporate Guaranty was executed by VelaTel in favour of Holdings and CMInfo (collectively, the “Sellers”) guaranteeing each and every obligation of the Buyer under the SPA. The SPA and the Corporate Guaranty were subsequently varied and amended by the First Amendment and the Second Amendment.

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(F) The First Amendment dated 4 February 2013 was entered into among, inter alios, (a) Listco; (b) the Sellers; (c) the Buyer; and (d) VelaTel to the effect that the Outside Closing Date (as defined in the SPA) was extended to 28 February 2013 at the request of Buyer and VelaTel for additional time for them to raise sufficient fund to close the transaction of the sale and purchase of the Sale Shares. In consideration of the aforesaid extension, it was agreed by the parties to the First Amendment that the purchase price for the Sale Shares was increased from HK$45,000,000 to HK$45,405,000 and a further deposit of the sum of HK$1,170,000 in escrow was payable by the Buyer to the Sellers.

(G) The Buyer and VelaTel failed to timely make payment to close the transaction under the First Amendment. Upon the request of the Buyer and VelaTel, the parties entered into a Second Amendment.

(H) The Second Amendment dated 3 March 2013 which took effect on 1 March 2013 was entered into among, inter alios, (a) Listco; (b) the Sellers; (c) the Buyer; and (d) VelaTel. It was agreed by the parties to the Second Amendment that the total purchase price for the Sale Shares was further increased to HK$49,500,000 which comprised of (a) HK$4,646,862.55 held in escrow by the agreed escrow agent; (b) HK$7,362,500 paid as further down payment at closing of the SPA (as amended by the First Amendment and the Second Amendment); and (c) HK$37,490,637.45 being a part of a promissory note in the amount of HK$38,990,637.45 issued by VelaTel.

(I) Pursuant to the Second Amendment, a promissory note dated 1 March 2013 (the “Promissory Note”) for a total sum of HK$38,990,637.45 was issued by VelaTel in favour of the Sellers by which VelaTel promised to pay to the order of the Sellers the principal sum of HK$37,490,637.45 being partial consideration of the Sale Shares, plus interest accrued thereon in an aggregate sum of HK$1,500,000, of which HK$4,650,000 to be paid on or before 31 May 2013 and the balance of HK$34,340,637.45 on or before 31 August 2013 on the terms contained in the Promissory Note.

(J) In further pursuance of the Second Amendment, a Stock Pledge Deed and Stock Escrow Agreement dated 3 March 2013 (which took effect as from 1 March 2013) (the “Stock Pledge Agreement”) was executed between the Sellers and the Buyer whereby, among other things, the Buyer has pledged an aggregate of 378,467,031 ordinary shares of HK$1.00 each in the issued capital of CMTHK to the Sellers as security for the due and punctual payment of the Promissory Note and all obligations of the Buyer under the Stock Pledge Agreement. The Stock Pledge Agreement was agreed by the parties to take effect as from 1 March 2013.

(K) Upon the non-payment of the HK$4,650,000 on or before 31 May 2013, the Sellers issued a default notice to the Buyer and VelaTel on 1 June 2013, and the Sellers eventually received the said sum of HK$4,650,000 before 28 June 2013.

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(L) Both the Buyer and VelaTel have failed to pay to the Sellers the balance of HK$34,340,637.45 (the “Outstanding Amount”) or any part thereof on or before 31 August 2013 or at all, which the Sellers assert is in breach of the SPA (as varied and amended by the First Amendment and the Second Amendment), the Corporate Guaranty and the Stock Pledge Agreement or in accordance with the terms of the Promissory Note (the “Default”).

(M) On 5 September 2013, Statutory Demands in respect of the Outstanding Amount due by VelaTel to the Sellers (the “Statutory Demands”) were duly served on VelaTel and its President, Mr. Colin Tay.

(N) On the same day, the Sellers delivered to the Buyer and VelaTel the Default Notice (as defined in the Stock Pledge Agreement) in respect of the Default.

(O) Up to the date of this Deed, both the Buyer and VelaTel still fail to pay to the Sellers the Outstanding Amount or any part thereof or at all.

(P) On 20 July 2013, VelaTel and the Buyer as claimants instituted arbitration proceedings in the Hong Kong International Arbitration Centre (“HKIAC”) intituled HKIAC/PA 13105 (the “Arbitration Proceedings”) against Listco and the Sellers in relation to alleged breaches by Listco and the Sellers of the SPA (as varied and amended by the First Amendment and the Second Amendment) and claimed in its Notice of Arbitration for, inter alia, specific performance of the SPA (as varied and amended by the First Amendment and the Second Amendment) and loss and damages allegedly suffered by VelaTel and the Buyer.

(Q) On 26 August 2013, Listco and the Sellers have submitted their Response to the Notice of Arbitration denying any alleged breaches on their part of the SPA (as varied and amended by the First Amendment and the Second Amendment) and any relief claimed by VelaTel and/or the Buyer.

(R) In consideration of the mutual undertakings, covenants and agreements hereinafter set out and without prejudice to the rights and remedies available to the Sellers under the SPA (as varied and amended by the First Amendment and Second Amendment to the SPA), the Corporate Guaranty, the Stock Pledge Agreement and the Promissory Note, Listco, the Sellers, the Buyer and VelaTel have entered into this Deed to resolve the aforesaid matters and disputes subject to and upon the terms and conditions herein contained.

IT IS HEREBY AGREED:

1. INTERPRETATION

1.1 In this Deed (including the Recitals and Schedules), unless the context otherwise requires or permits, the following words and expressions shall have the meanings ascribed to each of them respectively below:

“associates”	has the meaning ascribed to this term under the Listing Rules
“Business Day”	a day (other than a Saturday, Sunday or public holiday) on which licensed banks are open for business in Hong Kong throughout their normal business hours

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“Buyer Parties”	together the Buyer and VelaTel
“Corporate Guaranty”	the corporate guaranty dated 27 November 2012 and executed by VelaTel in favour of Holdings and CMInfo, a copy of which is exhibited hereto as Exhibit “B” and for the purpose of this Deed, if the context requires, shall mean the Corporate Guaranty as varied and amended by the First Amendment and the Second Amendment
“First Amendment”	the first amendment to the stock purchase agreement, escrow agreement and corporate guaranty dated 4 February 2013 among (a) Listco; (b) the Sellers; (c) the Buyer; and (d) VelaTel in relation to, among others, the variation and amendments to certain terms of the SPA and the Corporate Guaranty and a copy of which is exhibited hereto as Exhibit “C”
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock Exchange
“Listco Group”	together Listco, Holdings, CMInfo and their respective subsidiaries and “member of the Listco Group” shall be interpreted accordingly
“Parties”	the parties to this Deed; and a “Party” means any one of the Parties
“Second Amendment”	the second amendment to the stock purchase agreement and corporate guaranty dated 3 March 2013 (which took effect on 1 March 2013) among (a) Listco; (b) the Sellers; (c) the Buyer; and (d) VelaTel in relation to, among others, the variation and amendments to certain terms of the SPA and the Corporate Guaranty and a copy of which is exhibited hereto as Exhibit “D”
“SPA”	the agreement dated 27 November 2012 among (a) Listco, (b) Holdings; (c) CMInfo; and (d) the Buyer in relation to the purchase of 100% of the stock of CMTHK, a copy of which is exhibited hereto as Exhibit “A” and for the purpose of this Deed, if the context requires, shall mean the SPA as varied and amended by the First Amendment and the Second Amendment
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“this Deed”	this settlement deed, as amended from time to time
“Transaction Documents”	the SPA, the Corporate Guaranty, the First Amendment, the Second Amendment, the Stock Pledge Agreement, the Promissory Note and any ancillary documents in relation to the aforesaid documents

4

“Warranties”	the representations, warranties and undertakings set out herein and all other representations, undertakings and warranties provided by the Buyer or VelaTel under this Deed
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong
“US$”	United States dollars, the lawful currency of the United States of America

1.2 The headings of this Deed are inserted for convenience only and shall be ignored in construing this Deed. Unless the context otherwise requires, references in this Deed to the singular shall be deemed to include references to the plural and vice versa; references to one gender shall include all genders and references to any person shall include an individual, firm, body corporate or unincorporate.

1.3 References to any statute or statutory provision shall include any statute or statutory provision which amends or replaces or has amended or replaced it and shall include any subordinate legislation made under the relevant statute.

1.4 References in this Deed to clauses and schedules are references to clauses of and schedules to, this Deed and references to sub-clauses and paragraphs are unless otherwise stated, references to sub-clauses and paragraphs of the clause, sub-clause or, as appropriate, the schedule in which the reference appears.

1.5 In this Agreement, any reference to a document in the “approved form” is to a form of the relevant document which is in form and substance satisfactory to Listco.

2. ACKNOWLEDGMENT

2.1 Each of Parties to this Deed hereby acknowledges and confirms that the matters set out in the Recitals above are true and correct.

3. Terms of Settlement

3.1 The Buyer Parties hereby confirm and acknowledge that as at date of this Deed, both the Buyer and VelaTel have failed to pay to the Sellers the Outstanding Amount or any part thereof or at all.

3.2 In consideration of the Sellers’ forbearance to sue and to initiate legal proceedings against the Buyer and/or VelaTel for the Default and to recover the Outstanding Amount with interest accrued thereon and/or claims for damages for breach of the terms of the Transaction Documents, the Buyer agrees to pay to the Sellers a sum of HK$34,340,637.25 by way of one or more banker’s drafts and/or wire transfers issued by a licensed bank(s) in Hong Kong in favour of the Sellers (the “Settlement Sum”) forthwith upon the signing of this Deed to the following account:

5

Bank	Account holder	Account number	Currency
The Hong Kong and Shanghai Banking Corporation Limited	China Motion Holdings Limited	026-272005-001	HKD

3.3 All payments made or to be made by the Buyer Parties under this Deed shall be made in cleared funds, without any deduction and free and clear of and without deduction for or on account of any taxes, levies, imports, duties, charges, fees and withholdings of any nature now or hereafter imposed by any governmental or other authority.

3.4 Upon the execution of this Deed, the Listco Group (including their shareholders, employees, directors (including the director(s) of CMTHK nominated by the Listco Group) and advisors) shall be released and discharged absolutely without any recourse by VelaTel and the Buyer from, and VelaTel and the Buyer shall waive and forgo, any or all past, present or future, actual or contingent, liabilities, obligations, claims, demands, actions, suits, proceedings, costs, expenses, or fees of whatsoever nature or howsoever arising out of or related to any or all claims that the Buyer and VelaTel and/or their respective associates have or may have against the Listco Group (including their shareholders, employees, directors and advisors) under or otherwise in relation to or in connection with any of the Transaction Documents and/or any transactions contemplated thereunder, including but not limited the Arbitration Proceedings.

3.5 The Buyer and VelaTel shall within 7 days from the date of the execution of this Deed discontinue the Arbitration Proceedings with no order as to costs, and shall pay any administrative or other fees imposed by HKIAC in connection with the Arbitration Proceedings on any of the parties to the Arbitration Proceedings and provide such written evidence to Listco and the Sellers in relation to the discontinuance to the satisfaction of Listco and the Sellers. 

3.6 The Sellers shall within 7 days from the date of the execution of this Deed authorise its director representative of CMTHK to sign on the written resolutions of the Board of Directors of CMTHK in substantially the form as Annexure 1 hereto to change the bank mandates.

3.7 The Buyer Parties shall deliver to Listco and the Sellers:

(a)	written evidence to the satisfaction of Listco and the Sellers that the Settlement Sum has been duly paid upon execution of this Deed; and
(b)	written evidence to the satisfaction of Listco and the Sellers that the Arbitration Proceedings has been discontinued within 7 days from the date of execution of this Deed.

3.8 Mutual execution of this Deed shall constitute confirmation by each of the Buyer Parties that there is no breach of the terms of any of the Transaction Documents (including but not limited to any warranties and representations) on the part of the Listco Group and the Buyer Parties will not make any claim or otherwise allow any third party to make any claim against any member of the Listco Group (including their shareholders, employees, directors and advisors) in respect of any matters or issues arising out of or in connection with or incidental to any of the Transaction Documents and/or any disputes, claims, actions, proceedings or suits of any nature whatsoever or howsoever arising (whether under common law, equity or statute or otherwise and whether in Hong Kong or elsewhere), whether past, present or future, actual or contingent.

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3.9 Mutual execution of this Deed, subject to the delivery of the documents by the Buyer Parties in accordance with Clause 3.7 above, shall constitute confirmation from the Sellers that:

(a)	the Statutory Demands and the Default Notice are withdrawn; and
(b)	the collateral security under the Stock Pledge Agreement is released.

3.10 Notwithstanding any provisions contained in any of the Transaction Documents, each of the Buyer Parties hereby confirms and declares that any and all representations, warranties and/or undertakings of any of the Listco and/or the Sellers under any of the Transaction Documents are deemed to have duly expired on 31 August 2013. Each of the Buyer Parties hereby further confirms and declares that there has been no breach of any of the terms and conditions of any of the Transaction Documents (including but not limited to any warranties and representations) on the part of the Listco Group and each of the Buyer Parties shall not make any claim or otherwise allow any third party to make any claim against any member of the Listco Group (including their shareholders, employees, directors and advisors) in respect of any matters or issues arising out of or in connection with or incidental to any of the Transaction Documents and/or any disputes, claims, actions, proceedings or suits of any nature whatsoever or howsoever arising (whether under common law, equity or statute or otherwise and whether in Hong Kong or elsewhere), whether past, present or future, actual or contingent. For the avoidance of doubt, neither the Listco nor the Sellers shall be deemed to have given any representations and/or warranties regarding CMTHK under this Deed and none of the clauses of this Deed shall be deemed as any representations and/or warranties made by any of the Listco Group in respect of any matters in relation to or otherwise in connection with CMTHK.

4. Full and final settlement

The terms set out herein are full and final settlement of all the Parties’ actual or contingent claims, whether past, present and /or future, against each other in connection with or incidental to any of the Transaction Documents and/or any disputes, claims, actions, proceedings or suits of any nature whatsoever or howsoever arising (whether under common law, equity or statute or otherwise and whether in Hong Kong or elsewhere) in relation thereto and none of the parties shall be entitled to make any claim or bring any legal proceedings against each other in relation thereto in the future.

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5. EVENTS OF DEFAULT

5.1 Without prejudice to the terms set out in this Deed, there shall be an event of default (an “Event of Default”) if any one of the following events shall have occurred or is continuing:

(a)	the Buyer Parties fail to duly perform or observe any of its obligations under this Deed;
(b)	any of the representations or Warranties by any of the Buyer Parties contained in this Deed or made pursuant hereto or thereto proves to have been untrue or incorrect when made or deemed to have been made;
(c)	the Buyer Parties fail to pay in accordance with the terms of this Deed any sums hereunder when they fall due;
(d)	any decree or order is made by any competent court adjudging any of the Buyer Parties insolvent or bankrupt under the insolvency or bankruptcy laws of any jurisdiction to which it may be subject or any order or application is made for the appointment of any liquidator, receiver, trustee, curator or sequestrator or other similar official of any of the Buyer Parties in respect of all or a substantial part of its assets;
(e)	prior to or within 90 days following payment of the Settlement Sum to the Sellers, any of the Buyer Parties becomes insolvent, is unable to, or shall admit inability to pay its debts as they fall due; stops payment to creditors generally; disposes or threatens to dispose of all or a substantial part of its assets; proposes or takes any action for readjustment, rescheduling, deferral or a moratorium of all or part of his/her/its debts; proposes or enters into any composition, arrangements with or any assignment for the benefit of its creditors generally;
(f)	prior to or within 90 days following payment of the Settlement Sum to the Sellers, a distress, attachment, execution or other legal process is levied, enforced or sued out on or against all or any part of the assets of any of the Buyer Parties;
(g)	all necessary consent, approval and authorisation of any governmental and/or regulatory authorities thereof required for or in connection with the execution, delivery, performance, legality, validity, enforceabililty or admissibility in evidence of this Deed is revoked or withheld or materially modified or otherwise ceases to be in full force and effect;
(h)	this Deed ceases to be in full force and effect or the validity or enforceability thereof or any indebtedness or any other obligation of any of the Buyer Parties or other obligor hereunder or thereunder is disaffirmed by or on behalf of any of the Buyer Parties or such obligor;
(i)	any step is taken by any person for the winding-up, liquidation, dissolution or bankruptcy of any of the Buyer Parties;
(j)	any action or proceeding of or before any court or authority shall be commenced (and not withdrawn or dismissed within a period of twenty-one (21) days after its commencement) to enjoin or restrain the performance of and compliance with any obligations expressed to be assumed by any of the Buyer Parties in this Deed or in any event to question the right and power of any of the Buyer Parties to enter into, exercise its rights under and perform and comply with any obligations expressed to be assumed by any of them in this Deed or the legality, validity and enforceability of this Deed ; or
(k)	it is or will become unlawful for any of the Buyer Parties to perform or comply with any one or more of its obligations under this Deed.

8

5.2 The Buyer Parties shall immediately notify Listco and the Sellers forthwith in writing of any occurrence of an Event of Default.

5.3 In each and every case that an Event of Default occurs, Listco and the Sellers shall be remitted to and be entitled to forthwith exercise and enforce against the Buyer Party(ies) and their respective assets in respect of the Outstanding Amount and any interest accrued thereon and/or any outstanding balance thereof together all such rights and remedies as Listco and/or the Sellers would have been entitled to exercise as if this Deed had never been entered into.

6. GENERAL warranties and undertaking

6.1 Each of the Parties hereby irrevocably warrants to each other that:-

(A) it has full power, authority and legal capacity to enter into and execute this Deed, and to perform the obligations herein provided;

(B) the execution and performance of this Deed does not contravene any agreement to which it is a party; and

(C) this Deed shall be binding in all respects on its successors and assigns.

6.2 Each of the Parties undertakes to the other parties that it shall not describe or in any way hold itself out as being the agent of the other parties, and shall not allow its affiliates to do so. Each of the Parties further declares and warrants that it shall in no circumstances have any power to enter into any transaction on behalf of or in any other way to bind the other Parties.

6.3 Each of the Buyer Parties hereby irrevocably covenants with, warrants and undertakes to the Listco and the Sellers that any obligation to be performed hereunder by the Buyer Parties shall be deemed to be an obligation imposed on and an agreement made by each of Buyer Parties jointly and severally.

7. NOTICES

Any notice required to be given under this Deed shall be in English and in writing, and shall be taken as duly served if left at or sent by registered or recorded delivery post to the addressee thereof, at its address first before stated or at such other address as may have been last notified in writing by or on behalf of any such party to the other party or parties to this Deed. Any such notice shall be deemed to be served at the time when such notice is left at the address of the party to be served and, if served by post, on the fifth (5) day (not including a Sunday or public holiday) next following the day of posting.

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8. INDEMNITY FOR BREACH

Each of the Buyer Parties hereby indemnifies, and shall keep indemnified, each of members of the Listco Group against all costs and damages (including their entire legal expenses) howsoever incurred, due to its failure to perform any of its obligations pursuant to this Deed.

9. COSTS AND EXPENSES

All costs and expenses, including, but not limited to, fees and disbursements of legal advisors, counsel, financial advisors and/or accountants engaged by Listco and the Sellers, incurred in connection with the preparation and negotiation of this Deed and incurred by the Listco Group in connection with the Arbitration Proceedings and issuing the Statutory Demands and the Default Notice, agreed at HK$850,000 shall be borne solely by the Buyer Parties to be paid to Listco and the Sellers within 7 days upon signing hereof.

10. general provisions

10.1 Each party agrees to perform (or procure the performance of) all further acts and things, and to execute and deliver (or procure the execution and delivery of) such further documents, as may be required by law or as may be necessary or reasonably desirable to implement and/or give effect to this Deed.

10.2 This Deed constitutes the entire agreement between the parties with respect to the subject matter of this Deed and supersedes and extinguishes any representations, warranties, agreements, understandings and negotiations previously given or made other than those contained in this Deed. It is agreed that no party has entered into this Deed in reliance upon any representation, warranty or undertaking of any other party which is not expressly set out or referred to in this Deed.

10.3 If any particular provision or part of this Deed shall be held to be invalid or unenforceable, then such provision shall (so far as invalid or unenforceable) be given no effect and shall be deemed not to form part of this Deed but without invalidating any of the remaining provisions of this Deed. The parties agree that they shall use all reasonable endeavours to replace any invalid or unenforceable provisions by a valid and enforceable substitute provision the effect of which is as close as possible to the intended effect of the invalid or unenforceable provision.

10.4 This Deed may be executed in any number of counterparts, all of which taken together are deemed to constitute one and the same document. Satisfactory evidence of execution of this Deed will include evidence by facsimile of execution by the relevant party and in such case the executing party undertakes to produce the original as soon as reasonably practicable thereafter.

10.5 Nothing in this Deed shall preclude a Party’s right to bring proceedings for the enforcement of the terms of this Deed.

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10.6 Without prejudice to a party’s right to claim damages for any breach or non-compliance of this Deed, it is agreed that the terms of this Deed shall be specifically enforceable.

10.7 The execution and performance of this Deed is not, and shall not be construed as, any admission of any liability, validity or quantum on the part of any party.

10.8 Time shall in every respect be of the essence of this Deed but no failure on the part of the Listco Group to exercise, and no delay on its part in exercising any right hereunder shall operate as a waiver thereof, nor will any single or partial exercise of any right under this Deed by the Listco Group preclude any other or further exercise of it or the exercise of any other right or prejudice or affect any right against any the Buyer Parties under the same liability, whether joint, several or otherwise. The rights and remedies provided in this Deed are cumulative and not exclusive of any rights or remedies provided by law.

11. Governing Law and jurisdiction

This Deed shall be governed by and construed and take effect in accordance with the laws of Hong Kong. Each of the parties irrevocably submits to the non-exclusive jurisdiction of the courts of Hong Kong for the determination of any question, dispute, suit, action or proceedings arising out of or in connection with this Deed.

12. PROCESS AGENT

Each of the Buyer Parties hereby confirms that it has appointed Mr. Lawrence Lo of Room 1307, Tower 1, Lippo Centre, No. 89 Queensway, Admiralty, Hong Kong as its agent to receive and acknowledge on its behalf service of any writ, summons, order, judgment or other legal process in Hong Kong. If for any reason the agent named above or (its successor) no longer serves as agent of the Buyers Parties for this purpose, the Buyer Parties shall promptly appoint a successor agent and notify the Listco Group, failing which the Listco Group shall be entitled to treat the last known agent as valid. Each of the Buyer Parties hereby agrees that any such legal process shall be sufficiently served on it if delivered to such agent for service at its address for the time being in Hong Kong whether or not such agent gives notice thereof to the Buyer Parties.

IN WITNESS whereof, the parties hereof have duly executed this Deed the day and year first above written.

EXECUTED and DELIVERED as a DEED under the COMMON SEAL of China motion telecom international LIMITED and SIGNED by JI ZU GUANG its Director in the presence of :-   ) ) ) ) ) ) )       /s/ Ji Zu Guang

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EXECUTED and DELIVERED as a DEED under the COMMON SEAL of china motion holdings limited and SIGNED by JI ZU GUANG its Director in the presence of :-   ) ) ) ) ) ) )       /s/ Ji Zu Guang

EXECUTED and DELIVERED as a DEED under the COMMON SEAL of chinamotion infoservices limited and SIGNED by JI ZU GUANG its Director in the presence of :-   ) ) ) ) ) ) ) /s/ Ji Zu Guang

EXECUTED as a DEED and signed by COLIN TAY its President for and on behalf of velatel global communications, inc. in the presence of :-   ) ) ) ) ) )         /s/ Colin Tay

EXECUTED as a DEED and SIGNED by COLIN TAY its director for and on behalf of gulfstream capital partners ltd. in the presence of :-   ) ) ) ) ) )         /s/ Colin Tay

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EX-10.54

EXHIBIT 10.54

THIS LOAN AGREEMENT is dated the 28^th day of October 2013

BETWEEN:

(1) Gulfstream Capital Partners Ltd., a company incorporated in Seychelles with limited liability, the registered office of which is at 1st Floor, #5 DEKK House, De Zippora Street, P.O. Box 456, Povidence Industrial Estate, Mahe, Republic of Seychelles (the “Borrower”);

(2) XIN HUA, holder of PRC Identity Card Number 522501197702277338, of 37/F, 500 Chengdu North Road, Huangpu District, Shanghai, PRC (the “Lender”); and

(3) VELATEL GLOBAL COMMUNICATIONS, INC., a company incorporated in the United States, the registered office of which is at 5950 La Place Court, Suite 160, Carlsbad, CA, 92008, USA (the “Guarantor”).

WHEREAS:

(A) The Borrower has requested the Lender to make available to the Borrower a loan in the principal sum of HK$26,540,637.45 which shall be paid on behalf of the Borrower to China Motion Holdings Limited (“Holdings”) and ChinaMotion InfoServices Limited (“CMInfo”, Holdings and CMInfo collectively the “Sellers”), both companies incorporated in the British Virgin Islands with limited liability, for the sole and exclusive purpose of financing the partial payment of the Settlement Sum by the Borrower to the Sellers pursuant to the Settlement Deed.

(B) In consideration of the Lender agreeing to enter into this Agreement, the Guarantor has agreed to guarantee in favour of the Lender the due and punctual performance of the obligations of the Borrower under this Agreement subject to and upon the terms and conditions of this Agreement.

(C) This Agreement sets out the terms and conditions subject to which the Lender will make available the Loan to the Borrower.

1. INTERPRETATION

1.1          In this Agreement (including the Schedules), the following expressions shall, except where the context otherwise requires, have the meanings attributed to them respectively below:

“Arbitration Proceedings”	means the arbitration proceedings commenced by the Borrower and the Guarantor in the Hong Kong International Arbitration Centre against Listco, Holdings and CMInfo and intituled HKIAC/PA 13105
“Business Day”	a day (other than a Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are generally open for business throughout their normal business hours

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“China Mortion” or “Company”	means China Motion Telecom (HK) Limited, a company incorporated in Hong Kong with limited liability having its registered office at Suits 1105-1106, 11/F, Chinachem Golden Plaza, 77 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong with company no. of 450483
“Drawdown Date”	the date of drawdown of the Loan as specified in the Notice of Drawing
“Encumbrance”	means any mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment, security interest, or other encumbrance of any kind securing, or any right conferring a priority of payment in respect of, any obligation of any person, and any other preferential arrangement resulting in a secured transaction or having the same economic or legal effect as any of the foregoing or the interest of a vendor or lessor under any conditional sale agreement, lease, hire purchase agreement or other title retention arrangement or any agreement to give any of the foregoing;
“Event(s) of Default”	any one or more of the events specified in Clause 12 or any act or event which with the giving of notice and/or the lapse of time and/or the fulfilment of any other condition would become one or more of such events
“First Instalment”	has the meaning ascribed thereto in Clause 6.1(a)
“Hong Kong”	the Hong Kong Special Administrative Region of the PRC
“Indebtedness”	means any obligation for the payment or repayment of money, whether as principal or as surety and whether present or future, actual or contingent, secured or unsecured;
“Listco”	means China Motion Telecom International Limited, a company incorporated in Bermuda with limited liability, the issued shares of which are listed on the Main Board of The Stock Exchange of Hong Kong Limited
“Loan”	the principal amount of HK$26,540,637.45 to be advanced by the Lender to the Borrower subject to and upon the terms and conditions of this Agreement, or as the case may be, the aggregate amount outstanding, at any relevant time, of all moneys owing to the Lender in respect thereof plus the bank charges or wiring fees incurred by the Lender in the course of transmitting the principal amount to the payee of the Loan
“Notice of Drawing	the notice of drawing in the form set out in Schedule 3

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“Option Deed”	means the option deed to be made between the Borrower and the Lender pursuant to which the Borrower has granted a call option to the Lender for the acquisition by the Lender from the Borrower the entire issued share capital of China Motion and including any supplement or amendment made from time to time, such option deed shall be in form and substance to the satisfaction of the Lender;
“PRC”	the People’s Republic of China, for the purpose of this Agreement, excluding the Hong Kong Special Administrative Region, Macau Special Administrative Region and Taiwan
“Repayment Date”	28 February 2014 being the date of repayment of the Second Instalment, or where relevant, the date referred to in Clause 6.2 or 12.2 when the Loan and all monies payable under this Agreement shall be due and payable
“Second Instalment”	has the meaning ascribed thereto in Clause 6.1(b)
“Secured Indebtedness”	means, collectively, the Loan and interest thereon, fees, expenses and all other moneys due or to become due from the Borrower to the Lender from time to time and at any time under this Agreement and/or any Security Documents;
“Security Documents”	means the Share Charge, the Option Deed and any and all other security documents as may be required by the Lender from time to time executed by the parties thereto (other than the Lender) pursuant to Clause 18, and a “Security Document” means each or any one of them, as the context requires;
“Settlement Deed”	means the settlement deed dated 28 October 2013 and made between Listco, Holdings, CMInfo, the Borrower and the Guarantor wherein the Borrower has agreed, inter alia, to pay to the Sellers the Settlement Sum and discontinue the Arbitration Proceedings subject to the terms and conditions therein contained;
“Settlement Sum”	shall have the meaning ascribed to it under the Settlement Deed
“Share Charge”	means the share charge to be executed by the Borrower in favour of the Lender pursuant to which the Borrower shall create a first fixed charge over the entire issued share capital of China Motion and including any supplement or amendment made from time to time, such Share Charge shall be in form and substance to the satisfaction of the Lender;
“this Agreement”	this loan agreement for the Loan, as amended from time to time
“HK$” or “HKD”	Hong Kong dollars, the lawful currency of Hong Kong

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1.2          Except to the extent that the context requires otherwise, any reference in this Agreement to:

(1) an “agency” of a state or government means any ministry, agency, board, bureau, commission, department, authority, statutory corporation (whether autonomous or not) or other instrumentality of or any corporation or other entity owned or controlled by such state or government;

(2) “assets” include present and future properties, revenues and rights of every description;

(3) any document shall include that document as in force for the time being and as amended in accordance with the terms thereof or with the agreement of the parties thereto and with the consent of the Lender, if required hereunder;

(4) any enactment shall include any such enactment as re-enacted, amended, extended, consolidated or replaced from time to time;

(5) “laws and regulations” shall include all constitutional provisions, treaties, conventions, statutes, acts, laws, decrees, ordinances, subsidiary and subordinate legislation, orders, rules and regulations having the force of law, rules of civil and common law and equity, directives, instructions, notifications, circulars, policy statements and guidelines (whether or not having the force of laws) and other similar authorities;

(6) a “person” includes any individual, company, corporation, firm, partnership, joint venture, association, organisation, unit or trust (in each case, whether or not having separate legal identity); and

(7) “tax” includes any present or future tax, levy, impost, duty, charge, fees, deduction or withholding of any nature and whatever called, by whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or assessed.

1.3          The headings in this Agreement are inserted for convenience only and shall be ignored in construing this Agreement. Unless the context otherwise requires, references in this Agreement to the singular shall be deemed to include references to the plural and vice versa and references to one gender shall include all genders.

1.4          References in this Agreement to Clauses and Schedules are references to clauses of and schedules to, this Agreement.

2.            THE LOAN

2.1          Subject to and upon the terms and conditions of this Agreement, the Lender hereby agrees to make available to the Borrower the Loan in the principal amount of HK$26,540,637.45 for the sole and exclusive purpose of financing the partial payment of the Settlement Sum pursuant to the Settlement Deed. The Loan shall be drawn down once in its entire sum on the Drawdown Date.

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2.2          In consideration of the agreement by the Lender to make the Loan available to the Borrower under this Agreement, the Borrower hereby covenants with the Lender that it will pay the Secured Indebtedness in the manner and at the times herein provided for payment thereof.

3.            CONDITIONS PRECEDENT

3.1          The obligations of the Lender to advance the Loan to the Borrower shall be expressly subject to the fulfilment of the following conditions precedent:

(1) all necessary approvals, consents, authorisations and licences in relation to the transactions contemplated under this Agreement having been obtained;

(2) all representations and warranties made by the Borrower in this Agreement or in connection herewith shall be true and correct with the same effect as if made on and as of Drawdown Date with reference to the facts and circumstances then subsisting;

(3) no Event of Default shall have occurred or potential Event of Default shall have occurred (or would be likely to occur as a result of the Loan being made);

(4) the Share Charge having been duly executed by the Borrower;

(5) the Option Deed having been duly executed by the Borrower and the Lender;

(6) such other documents, evidence and financial and other information relating to any of the matters contemplated under this Agreement and the Security Documents as the Lender may require;

(7) all representations and warranties set out in Clause 9 shall be true and correct as on the Drawdown Date with reference to the facts and circumstances then existing; and

(8) the Lender shall have received evidence to its satisfaction that the Loan shall be applied for the sole purpose set out in Clause 2.1.

3.2          This Agreement is to be signed simultaneously upon the Borrower, the Guarantor and Sellers entering into the Settlement Deed.

4.            DRAWING

4.1          The Loan must be drawn in one lump sum within five (5) Business Days from the date of this Agreement by the Borrower serving the Notice of Drawing duly signed by the Borrower on the Lender prior to the Drawdown Date.

4.2          The Notice of Drawing once given under Clause 4.1 shall be irrevocable and shall oblige the Borrower to make a drawing stated in the Notice of Drawing. For the avoidance of doubt, the Loan can only be drawn down once in its entire sum.

4.3          Subject to the receipt by the Lender the duly issued Notice of Drawing and the fulfilment of the conditions precedent as set out in Clause 3.1, the Lender will transfer the Loan on behalf of the Borrower to the designated bank account of the Sellers as set out in Schedule 2 of this Agreement within the first Business Day immediately after date of the Notice of Drawing.

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4.4          For the avoidance of doubt, the Lender shall not be obliged to advance the Loan or any part thereof or at all to the Buyer if Lender is requested to transfer the Loan or any part thereof to any party or account other than the designated bank account of the Sellers as set out in Schedule 2 of this Agreement

5.            INTEREST

5.1          Subject to Clause 5.2, the Borrower shall bear no interest until the Repayment Date.

5.2          If the Borrower defaults in repayment on the due date of any part of the Loan, the Borrower shall pay interest on such overdue sums from the due date until payment in full (before and after judgment) at the rate of 3% per month. Such interest shall be calculated on the basis of a 30 day month and the actual number of days elapsed and accrued on a daily basis.

6.            REPAYMENT

6.1          Without prejudice to Clauses 6.2 and 12.2, the Borrower shall repay the Loan in two instalments to the bank account in Hong Kong designated by the Lender in the following manner:

(a) HK$7,800,000 being the first instalment (“First Instalment”), shall be repaid by the Borrower to the Lender in cash on or before 15 December 2013; and

(b) the remaining HK$18,740,637.45 (“Second Instalment”) shall be repaid by the Borrower to the Lender on or before 28 February 2014.

6.2           The Borrower may prepay to the Lender the whole or any part of the Loan by giving to the Lender not less than fourteen (14) Business Days’ notice in writing of its intention to make such prepayment, specifying the amount to be prepaid and the date on which prepayment is to be made.

6.3          A notice of intention to prepay shall not be effective until actually received by the Lender but once having been given by the Borrower shall be irrevocable and shall oblige the Borrower to make the specified prepayment and failure to make prepayment in accordance with such a notice shall be an Event of Default.

6.4          No amounts prepaid may be re-borrowed.

7.            PAYMENTS

7.1          All payments to be made by the Borrower to the Lender pursuant to this Agreement shall be made in HK$ in immediately available funds and, unless expressly provided in this Agreement to the contrary, shall be made to the Lender by wire transfer with proof of delivery receipt from the initiating bank not later than 11:00 a.m. (Hong Kong time) on the due date to such account as the Lender may from time to time stipulate in writing.

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8.            TAXES

8.1          All amounts payable by the Borrower hereunder shall be made without set-off, counterclaim or other deductions and free and clear of and without deduction for or on account of any taxes (other than tax on the overall net income of the Lender) now or hereafter imposed, levied, collected, withheld or assessed by any country, state or any political sub-division or taxing authority thereof or therein or any federation or organisation of which any such country, state or any political sub-division thereof may at the time of payment be a member.

8.2          If the Borrower is prohibited by the law of any jurisdiction other than the laws of Hong Kong from making payments without deduction or withholding as provided in Clause 8.1 then:

(1) the Borrower shall ensure that such deduction and/or withholding does not exceed the minimum requirement under the applicable law;

(2) the Borrower shall pay to the Lender such additional amounts as necessary in order that the net amounts received by the Lender, after such deduction or withholding shall equal the amount which it would have received had no such deduction or withholding been required to be made;

(3) the Borrower shall immediately and in any event no later than the date after which penalties would attach cause to be paid over to the relevant authority the full amount of the deduction or withholding which it is required to deduct or withhold including the whole amount of any deduction or withholding from any additional amount paid pursuant to paragraph (2) above; and

(4) the Borrower shall deliver to the Lender within seven (7) days of payment or the due date or on demand satisfactory evidence of payment of such deduction or withholding to the relevant authority.

8.3          Without prejudice and in addition to Clauses 8.1 and 8.2, the Borrower shall fully indemnify and keep the Lender fully indemnified against all tax (other than tax on the overall net income of the Lender) now or hereafter imposed, levied, collected or assessed by the taxing authority of any jurisdiction other than the Inland Revenue Department of Hong Kong in respect of interest, front-end fees, and other sums of a similar nature paid or payable by the Borrower to the Lender under this Agreement. For the purpose aforesaid, the Borrower shall, on each occasion on which payment is made by the Borrower to the Lender in respect of interest, front-end fees and other sums of a similar nature under this Agreement, pay to the Lender such additional amount as the Lender may require to discharge the tax imposed by the taxing authority of any jurisdiction other than the Inland Revenue Department of Hong Kong on such payment.

9.            REPRESENTATIONS AND WARRANTIES

9.1          Each of the Borrower and the Guarantor hereby represents and warrants to the Lender as follows:

(1) each of the Borrower and the Guarantor, as the case may be, has full power and authority to make borrowings hereunder upon the terms and conditions of this Agreement and enter into and perform its obligations under this Agreement and the Security Documents to which it is a party;

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(2) the execution, delivery and performance by the Borrower and the Guarantor, as the case may be, of this Agreement or the Security Documents to which it is a party will not violate in any material respect any provision of (a) any law or regulation or any order or decree of any governmental agency or court to which it is subject; or (b) any mortgage, charge, deed, contract or other undertaking or instrument to which it is a party or which is binding upon it;

(3) this Agreement and each Security Documents to which the Borrower and/or the Guarantor, as the case may be, is a party constitute or will, when executed, constitute the legal, valid and binding obligations of the Borrower and the Guarantor, as the case may be, enforceable in accordance with their respective terms;

(4) all governmental or other authorisations, approvals and consents required for or in connection with the execution, delivery, performance, legality, validity, enforceability and admissibility in evidence of this Agreement and the Security Documents have been obtained and all such authorisations, approvals and consents are in full force and effect;

(5) no action, suit or proceeding is pending or threatened against the Borrower and/or the Guarantor before any court, board of arbitration or administrative agency or tribunal which the Lender may at its reasonable discretion consider to be material to the business, assets or condition (financial or otherwise) of the Borrower and/or the Guarantor, on the ability of the Borrower and/or the Guarantor, as the case may be, to perform its obligations under this Agreement and the Security Documents or other documents to which the Borrower and/or the Guarantor is a party;

(6) each of the Borrower and the Guarantor has not taken any action for bankruptcy and no steps have been taken or proceedings started or is threatened for the bankruptcy of the Borrower or the Guarantor;

(7) save for the matters as contemplated under the Settlement Deed and those disclosed in the SEC filings submitted by the Guarantors to the U.S. Securities and Exchange Commission prior to the execution of this Agreement, each of the Borrower and the Guarantor is not in default or has committed any breach of or under any agreement to which it is a party or by which it may be bound and as at the date of this Agreement, no condition, event or act exists or has occurred, which, with the lapse of time or the giving of notice or both or the fulfilment of any other condition would constitute such a default or breach;

(8) each of the Borrower and the Guarantor is not required to make any deduction or withholding from amounts payable under this Agreement or any of the Security Documents to which it is a party for or on account of any taxes now or hereafter imposed by federal, state or local any taxing authority of the United States of America or the Republic of Seychelles;

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(9) no Event of Default has occurred or will occur as a result of the entry into this Agreement or any of the Security Documents by the Borrower or the Guarantor;

(10) it is not necessary to ensure the legality, validity, enforceability, admissibility in evidence or priority of the Security Documents or the security created thereunder that any of them be filed, recorded or enrolled with any court or authority in Hong Kong or elsewhere or that any stamp duty, documentary, registration or similar tax be paid on or in relation to any of them in Hong Kong or elsewhere and each of this Agreement and the Security Document is in proper form for its enforcement in the courts of Hong Kong or elsewhere;

(11) the Loan will be used solely and exclusively for the purpose set out in Clause 2.1; and

(12) the repayment of any part of the Loan or interest thereon by the Borrower or the Guarantor is not subject to any withholding tax or duties or tax or duties of similar nature under any federal, state or local laws of the United States of America or the Republic of Seychelles.

9.2          The Borrower hereby further represents, warrants and agrees that each of the representations and warranties contained in this Clause 9.1 shall be correct and complied with in all respects for so long as any part of the Loan or interest thereon or any other amounts payable hereunder remain outstanding and shall without prejudice to the foregoing be deemed to be repeated on the date on which the Loan is made.

9.3          The Borrower hereby acknowledges that the Lender has agreed to make the Loan available to the Borrower in reliance upon the undertakings, representations and warranties contained in this Clause 9.

10.         COVENANTS

10.1       Each of the Borrower and the Guarantor hereby covenants and agrees with the Lender that so long as any part of the Loan or interest thereon or any other amounts payable hereunder remain outstanding, each of the Borrower and the Guarantor shall:

(1) promptly advise the Lender in writing of details of any litigation, arbitration or administrative proceeding which would have rendered the undertakings, representations and warranties contained in Clause 9 incorrect had the same been current or threatened as at the date hereof immediately upon occurrence of the same;

(2) deliver to the Lender within the period specified in any notice from the Lender, all such other information relating to the condition (financial or otherwise) of the Borrower or the Guarantor as the Lender may request;

(3) in all respects observe and comply with the covenants and obligations under this Agreement, the Security Documents and other documents to which it is a party;

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(4) obtain and promptly renew from time to time and comply with the terms of all consents, licences, approvals or authorisations of all governmental agencies of any country or state or political subdivision thereof required for in connection with the execution, delivery, performance, validity, enforceability and admissibility in evidence of this Agreement and deliver or cause to be delivered to the Lender evidence of renewal of and compliance with the terms of all such consents, licences, approvals or authorisations;

(5) promptly advise the Lender upon becoming aware of (a) any Event of Default; (b) any potential Event of Default; or (c) any material adverse factor which may inhibit the Borrower or the Guarantor in the performance of its obligations under this Agreement or any of the Security Documents to which it is a party;

(6) maintain the net current asset value of China Motion in the positive;

(7) maintain a minimum two (2) month’s working capital for the present requirements of China Motion, equivalent to the level of working capital as at 28 February 2013 commencing from the date of this Agreement; and

(8) guarantee and shall be primarily responsible for the contracts for goods, services and financing for the upgrade of the core network of China Motion for which contracts China Motion will be one of the parties, but without any down payments, debt services, finance charges or principal payments to be borne by China Motion prior to the full repayment of the Loan, the major terms of which are set out in the Annexure. For the purpose of this sub-clause (8), the Borrower shall submit to the Lender the final draft of the contracts for goods, services and financing for the upgrade of the core network of China Motion at least 7 days prior to the proposed date of execution of such contracts for the prior approval by the Lender, which approval shall be given if the terms are in line with the said major terms.

10.2       Each of the Borrower and the Guarantor hereby covenants and agrees with the Lender that, except as provided in Clause 10.1(8), so long as any part of the Loan or interest thereon or any other amounts payable hereunder remain outstanding, each of the Borrower and the Guarantor will procure China Motion not to, without the prior written consent of the Lender which is at the Lender’s absolute discretion without assigning any reason thereof:

(1) lend any money or extend any credit, save and except for (i) the extension of credit by China Motion to its postpaid customers with respect to the provision of goods and services in the ordinary course of its business; and (ii) the advancement of a loan in the sum of up to HK$1,936,215.84 (the “Agreed Loan”) to the Borrower solely for the following three purposes:

(a) settling the agreed legal costs and expenses incurred by (1) the Lender in relation to the negotiation, preparation and execution of this Agreement and the Security Documents and (2) Listco and the Sellers arising out of and in connection with the Arbitration Proceedings and the negotiation, preparation and execution of the Settlement Deed, in the aggregate amount of HK$1,250,000;

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(b) settling with the Sellers (1) the adjustments to the purchase price of the entire issued share capital of China Motion based on the audited net asset value of China Motion as at 28 February 2013, and (2) the additional stamp duty in connection with the transfer of shares of China Motion from the Sellers to the Borrower, each pursuant to the Second Amendment (as defined in the Settlement Deed), in the aggregate amount of HK$676,215.84; and (3) any shortfall based on exchange rate differences and wire transfer fees in connection with a payment being made by Borrower to Holdings in U.S. Dollars upon execution of the Settlement Deed, in an amount not to exceed HK$10,000.

The Agreed Loan shall be repaid by the Borrower to China Motion in full on or before 15 December 2013;

(2) give any guarantee or enter into any indemnity and undertaking or other deed imposing obligations or liabilities on its part in respect of any indebtedness or obligation of any other person;

(3) enter into any loan, credit or other borrowing arrangement other than with the existing vendors and suppliers of China Motion as at the date of this Agreement and in the ordinary course of business and on such terms consistent with the loan, credit or other borrowing arrangement already entered into with such existing vendors or suppliers;

(4) take any action or any other steps or proceedings for its liquidation;

(5) create any security in respect of any debt or in respect of any guarantee or indemnity in respect of any debt save for the Security Documents;

(6) require or procure China Motion to pay any portion of the down payment, debt service, finance charges or principal payments for the network upgrade as set out in Clause 10.1(8);

(7) pay the entire or any part of the expenses of engineering services rendered in connection with upgrading China Motion’s telecommunication network;

(8) charge China Motion for any costs and expenses in relation to or otherwise in connection with the upgrade of the core network of China Motion;

(9) repay any outstanding loans due to their respective shareholders or directors; and

(10) employ any new employees of China Motion with monthly salary exceeding HK$15,000 per month per individual or increase the salary or remuneration of any existing employees.

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10.3       Each of the Borrower and the Guarantor hereby covenants and agrees with the Lender that so long as any part of the Loan or interest thereon or any other amounts payable hereunder remain outstanding, each of the Borrower or the Guarantor will not, without the prior written consent of the Lender which is at the Lender’s absolute discretion without assigning any reason thereof:

(1) take any action or any other steps or proceedings for its liquidation;

(2) withdraw any funds directly or indirectly from China Motion except for the advancement of the Agreed Loan to the Borrower;

(3) require or procure China Motion to pay any portion of the down payment, debt service, finance charges or principal payments for the network upgrade as set out in Clause 10.1(8);.

(4) receive the entire or any part of the expenses of engineering services rendered in connection with upgrading China Motion’s telecommunication network; and

(5) charge China Motion for any costs and expenses in relation to or otherwise in connection with the upgrade of the core network of China Motion.

11.         Lender governance rights

11.1       On and from the Drawdown Date and for such time as there are any monies owed by the Borrower to the Lender (or its affiliates):

(a) the Lender shall have the right from time to time to nominate one person to be appointed and to continue in office as directors of China Motion (each such person being a Lender Director), provided that such persons fulfil the requirements under the applicable law to be appointed as a director; and

(b) China Motion shall to the extent permitted under applicable law (as from time to time amended) procure that the Board shall comprise at all times not more than three Directors (including the Lender Directors).

11.2       The Lender may appoint or remove a Lender Director nominated by it by notice to China Motion signed by it or on its behalf. The appointment or removal shall take effect when the notice is delivered to China Motion, unless the notice indicates a later date.

11.3       A Lender Director shall have the same rights as any other director of China Motion or member of the relevant board committee of China Motion and its subsidiaries (“China Motion Group”), as applicable, to receive notice of meetings and to receive information in relation to the China Motion Group, and shall be entitled to vote at any such meetings in accordance with the terms of the articles of association of China Motion and/or the terms of reference of the relevant board committee of China Motion Group, as the case may be.

11.4       If the Borrower ceases to owe any monies to the Lender, its rights under clause 11.1, 11.2 and 11.3 shall cease and the Lender shall (unless the Lender otherwise agree) procure that any Lender Director promptly resigns as a director of China Motion Group.

11.5       The Lender shall notify China Motion in writing promptly on becoming aware that the Borrower has ceased to owe any monies to the Lender (and its affiliates).

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11.6       Subject to clause 11.7, the quorum for the transaction of business at any meeting of the board of China Motion shall be at least one Lender Director (or his alternate) and at least one non-Lender Director (or his alternate) when the relevant business is transacted.

11.7       If no Lender Director attends a duly convened board meeting of China Motion (the “Initial Board Meeting”), at such Initial Board Meeting the chairman of the Board shall give each director of China Motion written notice of a second meeting of the Board (the “Second Board Meeting”) to be held at the same place and same time seven Business Days after the Initial Board Meeting. If no Lender Director attends the Second Board Meeting, at such Second Board Meeting the chairman of the Board shall give each director of China Motion written notice of a third meeting of the Board (the “Third Board Meeting”) to be held at the same place and same time seven Business Days after the Second Board Meeting. If no Lender Director attends the Third Board Meeting, the Lender Directors shall be deemed to have waived the right to attend the meeting and a quorum will have been formed and any two directors of China Motion may hold the Third Board Meeting without any Lender Directors.

11.8       At any meeting of the board directors of China Motion, each director of China Motion shall be entitled to one vote. Any director of China Motion who is absent from any meeting may nominate any other director of China Motion to act as his alternate and to vote in his place at the meeting.

11.9       On and from the Drawdown Date and for such time as the Borrower owes, directly or indirectly, any monies to the Lender (or its affiliates), the Lender shall be entitled to appoint and maintain in office at least one director of each member of China Motion Group (and to remove any director so appointed from office and to appoint another in the place of any director so removed) and the provisions of clauses 11.2 to 11.8 shall apply to such directors mutatis mutandis and the parties shall ensure that any amendments required to reflect these provisions are made to the memorandum and articles of association or other constitutional documents of each member of China Motion Group as soon as reasonably practicable following that company becoming a member of China Motion Group.

11.10     From the date of this Agreement until the Repayment Date or the date of repayment of the entire principal amount and interest of the Loan and all moneys owing by the Borrower to the Lender under this Agreement (whichever is later), each party shall use their respective powers to ensure, so far as they are legally able, that no action or decision is taken (whether by the Board, the Company or any of their respective officers or managers) in respect of any matter listed in Schedule 4, without prior written consent of the Lender.

11.11     The Borrower agrees that as long as there are any monies owed by the Borrower to the Lender:

(a) it will answer in reasonable detail any reasonable written or oral inquiry by the Lender, and facilitate the interview of directors, officers and employees of China Motion at any reasonable time specified by the Lender;

(b) the Lender shall have the right to review and audit all the books, records and accounts of China Motion and its subsidiaries and the Borrower shall make all reasonable efforts, and shall procure that China Motion makes all reasonable efforts, to cooperate with any such review, audit, analysis and related reports;

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(c) the Lender shall be entitled to receive all information, including monthly management accounts and operating statistics and other trading and financial information, in such form as they reasonably require to keep them properly informed about the business and affairs of China Motion and generally to protect their interests as Lender; and

(d) the Lender shall at any time, upon providing reasonable written notice to the Borrower, be entitled to visit and inspect any facilities, offices or other premises of China Motion.

12.          EVENTS OF DEFAULT

12.1        There shall be an Event of Default if any one of the following events shall have occurred and such events have not been rectified or cured or is continuing:

(1) Non-payment of the First Instalment: the Borrower fails to pay any amount due from it with respect to the First Instalment on the due date for such payment under this Agreement; or

(2) Non-payment of the Second Instalment: the Borrower fails to pay any amount due from it with respect to the Second Instalment under this Agreement on the due date for payment; or

(3) Non-payment of other sums: the Borrower fails to pay any amount due from it under this Agreement in the manner specified herein on the due date for payment, including but not limited to the failure to repay any amount due to the Company; or

(4) Other obligations: the Borrower or the Guarantor commits any breach of or omits to observe any of its undertakings or obligations under this Agreement or any of the Security Documents to which it is a party; or

(5) Breach of representation: any representation or warranty made or deemed to be repeated by the Borrower pursuant to this Agreement is or proves to have been incorrect in any material respect when made or repeated; or

(6) Authorisation: any consent, licence, approval or authorisation referred to in Clause 9.1(4) is modified in a manner unacceptable to the Lender or is not granted or is suspended or revoked or terminated or expires and is not renewed or otherwise ceases to be in full force and effect; or

(7) Decree or order: any decree or order is made by any competent court adjudging the Borrower or the Guarantor insolvent or bankrupt under the insolvency or bankruptcy laws of any jurisdiction to which it may be subject or any order or application is made for the appointment of any liquidator, receiver, trustee, curator or sequestrator or other similar official of the Borrower or the Guarantor in respect of all or a substantial part of its assets (save for the purposes of an amalgamation, merger or reconstruction not involving insolvency the terms of which shall have received the prior written approval of the Lender);

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(8) Insolvency: the Borrower or the Guarantor is unable to pay its debts as they fall due, or stops payment under its respective obligations generally, or commences negotiations with its creditors generally with a view to the general readjustment or rescheduling of its financial indebtedness; or

(9) Winding up: any petition is presented or other step is taken for the purpose of winding up, liquidating or dissolving the Borrower or the Guarantor for which in the opinion of the Lender there would be no realistic prospects of successfully resisting or such action, steps or proceedings is not discharged or discontinued within seven (7) days, or an order is made for or resolution passed for the winding up, liquidation or dissolution of the Borrower or the Guarantor, or a notice is issued convening a meeting for the purpose of passing any such resolution; or

(10) Appointment of receivers: any receiver or manager or other administrator is appointed of the Borrower or the Guarantor or any part of its assets, or the directors of the Borrower or the Guarantor request any person to appoint such a receiver or manager or administrator, or any other steps are taken to enforce any Encumbrance over all or any part of the assets of the Borrower or the Guarantor; or

(11) Other jurisdictions: any event occurs or proceeding is taken with respect to the Borrower or the Guarantor in any jurisdiction to which it is subject which has an effect which is equivalent or similar to any of the events mentioned in sub-clauses (5) to (8); or

(12) Cross default: the Borrower or the Guarantor defaults or receives notice of default under any of the Security Documents or obligation whether relating to borrowing or other matters or any indebtedness of the Borrower or the Guarantor under any of the Security Documents becomes payable, or capable of being, or is declared payable before its stated maturity or is not paid when due or any security interest, guarantee or other security created by the Borrower or the Guarantor under any of the Security Documents becomes enforceable; or

(13) Security: this Agreement or any of the Security Documents shall be or is likely to be invalid, void or unenforceable; or

(14) Repudiation: the Borrower or the Guarantor repudiates this Agreement or any of the Security Documents or does or causes to be done any act or thing evidencing an intention to repudiate this Agreement or any of the Security Documents or any action or proceedings are commenced (and not withdrawn or dismissed within a period of 14 days after its commencement) to enjoin or restrain the performance of or compliance with any respective obligation of the Borrower or the Guarantor under this Agreement or any of the Security Documents or otherwise dispute the ability of the Borrower or the Guarantor to enter into, exercise its respective rights or perform or comply with any of its respective obligations under this Agreement or any of the Security Documents; or

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(15) Securities regulations: the Borrower or the Guarantor fails to comply in all material respects with, or does not diligently perform in all material respects any of its duties and obligations under, all applicable laws, rules, codes, regulations, consents, licences, approvals and authorisations in any manner that is likely to adversely to affect the ability of the Borrower or the Guarantor to perform all or any of its obligations under or otherwise to comply with the terms of this Agreement or any of the Security Documents; or

(16) Failure to pay: the Borrower (i) fails to make any payment pursuant to the Security Documents; or (ii) to perform an obligation on a due date for such payment or obligation under the Security Documents; or (iii) becomes bound to repay prematurely any other loan or other obligation for borrowed money by reason of a default by it in the Security Documents; or (iv) if it fails to make any payment in respect thereof on a due date for such payment pursuant to the Security Documents; or (v) becomes bound to make payment under any guarantee given by it under the Security Documents by reason of a default by the principal debtor; or (vi) fails to make any payment in respect of any present or future security on or over any asset of the Borrower which becomes enforceable against the assets covered by the Security Documents; or

(17) Use of loan: the Loan is used for the purpose(s) other than those set out in Clause 2.1.

12.2        Upon the occurrence of an Event of Default and at any time thereafter, the Lender may by notice in writing to the Borrower and/or the Guarantor:

(1) declare the Loan, all interest accrued thereon and all other monies payable under this Agreement to be forthwith due and payable whereupon the same shall be forthwith due and payable; and/or

(2) declare all or any part of the security constituted under the Security Documents to be immediately enforceable whereupon the same shall become immediately enforceable.

13.          ENFORCEMENT OF SECURITY

If on the date on which the Secured Indebtedness or any part thereof has become immediately due and payable pursuant to Clause 12.2, the Secured Indebtedness or the part thereof which has become immediately due and payable have not been paid in full, the security constituted under the Security Documents shall then become immediately enforceable. For the avoidance of doubt, the enforcement of security constituted under the Security Documents will not prejudice the right of the Lender to recover any shortfall from the Borrower.

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14.         INDEMNITIES

14.1       Without prejudice to any other right or remedy of the Lender, upon:

(1) the occurrence of an Event of Default; and/or

(2) the declaration of the Loan to be immediately due and payable pursuant to Clause 12.2 or otherwise in accordance with the terms of this Agreement; and/or

(3) the Borrower failing to borrow the Loan or satisfy any of the conditions precedent after having delivered a Notice of Drawing; and/or

(4) any sums payable by the Borrower under this Agreement not being paid when due, and at any time thereafter,

the Borrower shall pay to the Lender on demand such amount or amounts as shall fully indemnify the Lender against all losses, expenses and liabilities which the Lender may sustain or incur by reason of the occurrence of any of the foregoing including but not limited to any loss, expense, premium or penalties suffered or incurred by the Lender in liquidating or re-employing deposits from third parties acquired to effect or maintain the Loan or any part thereof. A certificate of the Lender setting forth the amount of such losses, expenses and liabilities and specifying the basis therefor shall, in the absence of manifest error, be conclusive and binding on the Borrower.

14.2       The indemnities set out in Clause 14.1 shall be an obligation of the Borrower separate and independent of and in addition to its other obligations under this Agreement and the Security Documents to which it is a party, shall give rise to separate and independent cause of action, and shall take effect notwithstanding any time or other concession granted to the Borrower or any judgment or order being obtained or the filing of any claim in the liquidation, dissolution or bankruptcy (or analogous process) of the Borrower.

15.         Guarantee

15.1       The Guarantor hereby irrevocably and unconditionally guarantees to the Lender the due and punctual performance of the Borrower under this Agreement and the Security Documents.

15.2       The obligations of the Guarantor shall be continuing obligations and shall not be satisfied, discharged or affected by any intermediate payment or settlement of account or any change in the constitution or control of, or the insolvency of or any bankruptcy, winding up or analogous proceedings relating to any of the parties to this Agreement and the Security Documents.

15.3       The liability of the Guarantor hereunder shall be unaffected by any arrangement which the Lender may make with the Borrower or with any other person which (but for this provision) might operate to diminish or discharge the liability of or otherwise provide a defence to a surety. Without prejudice to the generality of the foregoing, the Lender is to be at liberty at any time and without reference to the Guarantor to give time for payment or grant any other indulgence and to give up, deal with, vary, exchange or abstain from perfecting or enforcing any other securities or guarantees held by the Lender at any time and to discharge any party thereto and to realise such security or guarantees or any of them, as the Lender thinks fit and to compound with, accept compositions from and make any other arrangements with the Borrower or any person or persons liable on other securities or guarantees held by or by the Lender without affecting the liability of the Guarantor hereunder.

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15.4       As a separate and independent stipulation it is hereby agreed by the Guarantor that any obligation and undertaking under this Clause which may not be enforceable against the Guarantor on the footing of a guarantee, whether by reason of any legal limitation (other than any limitation imposed by this Agreement), disability or incapacity on or of the Borrower or any other fact or circumstance and whether or not known to the Lender shall nevertheless be enforceable against the Guarantor as sole or principal obligor in respect thereof.

15.5       The Guarantor hereby waives any right to require a proceeding first against the Borrower or any other person.

15.6       The obligations and liabilities of the Guarantor and the Borrower under this Agreement are joint and several and are of continuing nature and shall not be discharged or affected by the dissolution, amalgamation, reconstruction or reorganisation of or the change in constitution or control of any of the parties to this Agreement.

16.         FEES AND EXPENSES

16.1       The Borrower shall be responsible for:

(1) all reasonable costs and expenses (including taxes thereon and legal fees on a full indemnity basis) incurred by the Lender as legal costs in connection with the negotiation, preparation and execution of this Agreement and the Security Documents and any other documents ancillary to or derived from any of them, agreed at HK$400,000 to be paid to the Lender within 7 days of the date of signing hereof;

(2) all reasonable costs and expenses (including taxes thereon and legal fees on a full indemnity basis) incurred by the Lender in connection with the Loan or the admissibility in evidence of this Agreement and the Security Documents; and

(3) promptly, and in any event before any penalty becomes payable, any stamp, documentary, registration or similar taxes payable in connection with the entry into, performance, enforcement or admissibility in evidence of this Agreement and/or any amendment or waiver thereof, and shall indemnify the Lender against any liability with respect to or resulting from any delay in paying or omission to pay any such taxes.

17.         NOTICES

17.1       All notices or communications required to be served or given pursuant to this Agreement:

(1) shall be in writing and may be sent by prepaid post, mail (by airmail if to another country) or facsimile (but, if by facsimile from the Borrower, shall promptly be confirmed by mail) or personal delivery;

(2) shall be sent to the parties at the facsimile number or address from time to time designated in writing by that party to the other; the initial facsimile number and address so designated by each party being set out in Schedule 1;

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(3) if sent by the Borrower shall be irrevocable and shall not be effective until actually received by the Lender;

(4) if sent to the Borrower shall be deemed to have been given and received by the Borrower (a) within five days after the date of posting, if sent by mail; (b) when delivered, if delivered by hand; and (c) on despatch, if sent by facsimile; and

(5) shall be in the English language.

18.         FURTHER ASSURANCE

18.1       Each of the Borrower and the Guarantor agrees, immediately upon demand by the Lender, at its own cost and expense, make, execute, do, perform and provide or cause or procure to be made, executed, done, performed and provided, all such further acts, agreements, assurances, bills, bonds, contracts, deeds, documents, evidences of indebtedness, guarantees, indemnities, instruments, letters, loan notes, notes, notices, powers of attorney, promissory notes, receipts, undertakings, matters and things as the Lender shall reasonably require to perfect or improve the security afforded or created under the Security Documents, or intended to be afforded or created by this Agreement, or for facilitating the realisation of all or any part of securities created under the Security Documents and the exercise of all powers, rights, remedies, authorities and discretions vested in the Lender.

18.2       Each of the Borrower and the Guarantor hereby jointly and severally undertakes with the Lender that, from the date of this Agreement and so long as any moneys are owing under this Agreement, it will, on demand, duly execute in favour of the Lender such documents and agreements referred to in Clause 18.1, in addition to the Security Documents as the Lender shall from time to time require on or over or in respect of all or any part of its present and/or future undertaking, properties, assets, rights and/or revenues as a continuing security for its obligations under this Agreement, and which shall:-

(a) be in such form and duly executed, delivered, created, secured and/or perfected in such manner as the Lender shall stipulate;

(b) if necessary or desirable under applicable law for its creation, legality, validity, priority, enforceability, admissibility in evidence or effectiveness or for the performance by the Borrower or any of its obligations thereunder, be duly notarised, filed, recorded, registered and/or enrolled according to such law; and

(c) not, without the prior written consent of the Lender, secure or prefer or be extended so as to secure or prefer any present or future indebtedness or obligation except the Borrower's obligations under this Agreement.

19.         MISCELLANEOUS

19.1       A certificate issued by the Lender as to any sum payable by the Borrower under this Agreement and any other certificate, determination, notification or opinion of the Lender provided for in this Agreement shall, in the absence of manifest error, be conclusive evidence against the Borrower.

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19.2        If at any time any provision hereof is or becomes illegal, invalid or unenforceable in any respect under the laws of any jurisdiction, neither the legality, validity or enforceability of the remaining provisions hereof nor the legality, validity or enforceability of such provision under the laws of any other jurisdiction shall in any way be affected or impaired thereby.

19.3        Save as may be expressly otherwise provided herein, time is of the essence of this Agreement but no failure or delay on the part of the Lender to exercise any power, right or remedy hereunder shall operate as a waiver thereof nor shall a waiver by the Lender of any particular default by the Borrower affect or prejudice the right, power or remedy of the Lender in respect of any other default or any subsequent default of the same or a different kind nor shall any single or partial exercise by the Lender of any power, right or remedy hereunder preclude any other or further exercise thereof or the exercise of any power, right or remedy.

19.4        No power, right or remedy conferred under this Agreement upon the Lender is intended to be exclusive of any other power, right or remedy but shall be cumulative and shall be in addition to every other power and remedy now or hereafter existing at law, in equity, by statute or contract or otherwise.

19.5        No waiver of any Event of Default shall be effective unless in writing signed by the Lender.

19.6        This Agreement may not be amended save in writing duly signed by all parties hereto.

19.7        The Lender may grant waivers, consents or indulgence in respect of any one or more obligations of or conditions or requirements imposed on or applied to the Borrower under or in connection with this Agreement including without limitation any condition or requirement applicable to the making of a drawing under this Agreement and any such waiver, consents or indulgence may be given subject to such terms and conditions as may be imposed by the Lender.

19.8        This Agreement and the documents referred to herein constitute the entire obligations of the Lender and supersede any previous expressions of intent or understandings in respect of the transaction contemplated under this Agreement.

19.9        This Agreement may be executed in any number of counterparts and by different parties on separate counterparts as the Lender may require which when taken together shall be deemed to constitute one agreement.

19.10      In the event of any inconsistency between any of the terms of this Agreement and any of the terms of the Security Documents, the terms of this Agreement shall prevail.

20.          ASSIGNMENT

20.1        This Agreement shall enure to the benefit of the parties hereto and their respective successors, assignees and transferees.

20.2        The Borrower may not assign any of its rights or obligations under this Agreement.

20.3        The Lender may at any time without the consent of or notice of the Borrower assign its rights and benefits hereunder or any part thereof to any one or more persons on such terms and conditions as it may deem fit.

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21.          LAW AND JURISDICTION

21.1        This Agreement shall be governed by and construed in accordance with the laws of Hong Kong.

21.2        Each of the Borrower and the Guarantor hereby irrevocably submits to the jurisdiction of the courts of Hong Kong and of any country in which it has assets and hereby irrevocably waives any objection to any proceedings in any such courts on the basis of forum non conveniens. Each of the Borrower and the Guarantor agrees that a judgment in any proceedings brought in any such courts may be enforced in any other jurisdiction by suit on the judgment or in any other manner permitted by law.

21.3        The submission in Clause 21 is non-exclusive and the Lender reserves the right to proceed in any other jurisdiction having or claiming or accepting jurisdiction in respect thereto.

21.4        The Borrower hereby irrevocably appoints Lawrence Lo of Room 1307, Tower 1, Lippo Centre, No. 89 Queensway, Admiralty, Hong Kong as its agent to accept service of legal process out of the courts of Hong Kong in connection with this Agreement. The Borrower further agrees to maintain a duly appointed agent in Hong Kong to accept service of process out of the courts of Hong Kong and to keep the Lender informed of the name and address of such agent. Service on Lawrence Lo (or such other agent as shall have been notified by the Borrower in writing) shall be deemed to be service on the Borrower.

21.5        The Guarantor hereby irrevocably appoints Lawrence Lo of Room 1307, Tower 1, Lippo Centre, No. 89 Queensway, Admiralty, Hong Kong as its agent to accept service of legal process out of the courts of Hong Kong in connection with this Agreement. The Guarantor further agrees to maintain a duly appointed agent in Hong Kong to accept service of process out of the courts of Hong Kong and to keep the Lender informed of the name and address of such agent. Service on Lawrence Lo (or such other agent as shall have been notified by the Guarantor in writing) shall be deemed to be service on the Guarantor.

IN WITNESS hereof the parties hereto have duly executed this Agreement as a deed the day and year first above written.

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Schedule 1

Address and Facsimile Number for Notification

Party	Address	Fax number
The Borrower	2nd Floor, No. 86 Fu Xin South Road Sec 2 Taipei 106 Taiwan	(886) 2 2701-4140
The Lender	37/F, 500 Chengdu North Road, Huangpu District, Shanghai, the People’s Republic of China	(86) 021 6358-6040
The Guarantor	2nd Floor, No. 86 Fu Xin South Road Sec 2 Taipei 106 Taiwan	(886) 2 2701-4140

Schedule 2

Designated bank account of the Sellers

Bank	Account Holder	Account number	Currency
The Hong Kong and Shanghai Banking Corporation Limited	China Motion Holdings Limited	026-272005-001	HKD

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Schedule 3

Notice of Drawing

Date:

To:         Xin Hua

We refer to the loan agreement dated 28 October 2013 (the “Loan Agreement”) pursuant to which you have agreed to advance a loan in the principal amount of HK$26,540,637.45 to us.

We hereby:

(1) give you notice that we intend to make the drawing of HK$26,540,637.45 (the “Drawdown Amount”) on 28 October 2013;

(2) certify that no Event of Default or condition, act or event which, with the giving of notice or lapse of time or both or the fulfillment of any other condition would constitute an Event of Default has occurred, is continuing or would result from the drawing requested hereunder;

(3)	represent and warrant that the representations and warranties set out in Clause 9 of the Loan Agreement are true and correct on the date hereof with reference to the facts and circumstances now existing;
(4)	confirm that the undertakings set out in Clause 10.1 of the Loan Agreement have at all times been duly complied with, observed and performed; and

(5) direct you to pay the Drawdown Amount on behalf of us to the following bank account of China Motion Holdings Limited:

Bank	Account Holder	Account number	Currency
The Hong Kong and Shanghai Banking Corporation Limited	China Motion Holdings Limited	026-272005-001	HKD

Expressions capitalised and not defined in this Notice of Drawing shall have the meanings attributed thereto in the Loan Agreement.

For and on behalf of

Gulfstream Capital Partners Ltd.

_______________________

Name: Colin Tay

Title:   President

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Schedule 4

Reserved Matters

1.Any alteration to the articles of association and/or other constitutional documents of the Company.

2.Changing the number of securities the Company (“Securities”) is authorised to issue or the number of shares issued in the Company or the Company increasing (or reducing) its shareholding in any other company.

3.The issue of any Securities by the Company.

4.The Company redeeming or repurchasing any Securities (other than from an employee following his termination or when contractually bound to do so pursuant to the terms on which the Securities were issued or a repurchase from all shareholders of the Company on a pro rata basis).

5.Fundamentally changing the nature or scope of the business of the Company or any decision to change the name under which the Company carries on its business.

6.The Company changing its dividend policy or the Company declaring or paying any dividend or distribution other than when contractually bound to do so pursuant to the terms on which the relevant Securities were issued.

7.The Company borrowing, lending, issuing any guarantee, raising money, issuing any trust receipts.

8.The Company disposing of or leasing (whether in a single transaction or series of transactions) any business (or any material part of any business) or any assets (other than a disposal or lease of assets in the ordinary course of business) where the value of the disposal or lease exceeds HK$250,000.

9.The Company establishing any subsidiary.

10.The Company entering into (or terminating) any material partnership, joint ventures, profit-sharing agreement, technology licence or collaboration or merging with any other entity (not being a subsidiary of the Company), save for transactions carried out with the Borrower in the ordinary course of business.

11.Major decisions relating to the conduct (including the settlement) of legal proceedings where there is a potential liability or claim of more than HK$100,000 to which the Company is a party.

12.Any transaction by Company with, or procured by, any subsidiary, parent company or controlling shareholders of the Borrower.

13.Appointing or removing the auditors of the Company.

14.Approving the Company’s accounts and/or any change in the principal accounting policies of the Company.

15.Any proposal to wind up the Company or other voluntary proceeding seeking liquidation, administration (whether out of court or otherwise), reorganisation, readjustment or other relief under any bankruptcy, insolvency or similar law or the appointment of a trustee, receiver, administrator (whether out of court or otherwise) or liquidator or similar officer (save as contemplated in this Agreement).

16.Creating any mortgage, charge, Encumbrance or other security interest of any nature in respect of all or any material part of any undertaking, property or assets of the Company.

17.Any action which in the reasonable opinion of the Lender, will cause or will likely cause any diminishment in value of the collaterals given by the Borrower under this Agreement.

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Annexure

Major terms of the contracts for goods, services

and financing for the upgrade of the core network of China Motion

25

THE BORROWER

EXECUTED AS A DEED	)
	)
and SIGNED by Colin Tay, its director	)
	)
for and on behalf of	)	/s/ Colin Tay
	)
Gulfstream Capital Partners Ltd.	)
	)
in the presence of:	)
THE LENDER
SIGNED, SEALED and DELIVERED	)
	)
by XIN HUA	)	/s/ Xin Hua
	)
in the presence of:	)
THE Guarantor
EXECUTED AS A DEED	)
	)
and SIGNED by Colin Tay, its President	)
	)
for and on behalf of	)	/s/ Colin Tay
	)
Velatel Global Communications, Inc.	)
	)
in the presence of:	)

26

EX-10.55

EXHIBIT 10.55

THIS CHARGE is dated 28^th day of October 2013

MADE BY:

GULFSTREAM CAPITAL PARTNERS, LTD, a company incorporated in Seychelles with limited liability and having its registered office at 1^st Floor, #5 DEKK House, De Zippora Street, P.O. Box 456, Providence Industrial Estate, Mahe, Republic of Seychelles, facsimile number +(886) 2 2701-4140 (the “Chargor”).

IN FAVOUR OF:

XIN HUA, holder of PRC Identity Card Number 522501197702277338, of 37/F, 500 Chengdu North Road, Huangpu District, Shanghai, the People’s Republic of China (the “Chargee”).

WHEREAS:

(A) China Motion Telecom (HK) Limited (the “Company”) is a company incorporated in Hong Kong with limited liability. As at the date of this Charge, the Company has an authorised share capital of HK$390,000,000 divided into 390,000,000 shares (each a “Share”) of HK$1.00 each in the capital of the Company, 378,467,031 Shares of which have been issued and are fully paid or credited as fully paid. As at the date of this Charge, the Chargor is the legal and beneficial owner of 378,467,031 Shares, representing the entire issued share capital of the Company.

(B) By a loan agreement (the “Loan Agreement”) dated 28 October 2013 entered into between VELATEL GLOBAL COMMUNICATIONS, INC. (“VelaTel”), the holding company of the Chargor, and the Chargee, the Chargee has agreed to make available to VelaTel loan facilities in the principal amount of up to HK$26,540,637.45 (the “Loan”) subject to and upon the terms and conditions therein.

(C) In consideration of the Chargee agreeing to make the Loan available to VelaTel, the Chargor has at the request of the Chargee agreed to enter into this Charge and charge the Charged Securities (as defined below) in favour of the Chargee subject to and upon the terms and conditions of this Charge.

NOW THIS CHARGE WITNESSES as follows:

1. INTERPRETATION

1.1 Words and expressions defined in the Loan Agreements shall, unless otherwise specified, have the same meanings when used herein.

1.2 In this Charge (including the Recitals hereto), except where the context otherwise requires:

“Charged Securities” means the 378,467,031 Shares legally and beneficially owned by the Chargor, including all dividends paid or payable thereon and stocks and shares, rights, monies and property accruing or offered at any time by way of substitution, redemption, bonus, preference, option, exchange, dividend, distribution, scheme of arrangement or organisation or otherwise to the same or in respect thereof

1

“Disposition” means any sale, assignment, exchange, transfer, concession, loan, lease, surrender of lease, tenancy, licence, direct or indirect reservation, waiver, compromise, release, dealing with or in or granting of any option, right of first refusal or other right or interest whatsoever and include any agreement for any of the same and "Dispose" and "Disposal" shall be construed accordingly

“Encumbrance” means any mortgage, charge, pledge, lien (otherwise than arising by statute or operation of law), hypothecation or other encumbrance, priority of security interest, deferred purchase, title retention, leasing, sale-and-repurchase or sale-and-leaseback arrangement whatsoever over or in any property, assets or rights of whatsoever nature and includes any agreement for any of the same and “Encumber” shall be construed accordingly

“Event of Default” means any event or circumstance described as such in Clause 12 of the Loan Agreement

“Secured Obligations” means the Loan and the total from time to time of all principal, interest, costs, fees, expenses, charges and other amounts payable by VelaTel or the Chargor pursuant to, under or in connection with the Loan Agreement and this Charge and including (without limitation):

(1) the principal, interest, fees and all other amounts from time to time payable by VelaTel pursuant to, under or in connection with the Loan Agreement;

(2) all costs, charges and expenses which may be incurred under or in connection with any other matter arising under or in consequence of this Charge (including legal expenses on a full indemnity basis); and

(3) interest on all sums advanced and all other moneys payable hereunder at such rate as is applicable (both before and after judgment).

“this Charge” means this instrument, as originally executed or amended from time to time

“HK$” mean the lawful currency for the time being of Hong Kong

1.3 Except to the extent that the context requires otherwise, any reference in this Charge to:

(1) any document shall include that document as in force for the time being and as amended in accordance with the terms thereof or with the agreement of the parties thereto;

(2) any enactment shall include the same as from time to time re-enacted, amended, extended, consolidated or replaced; and

(3) a “person” includes any individual, company, corporation, firm, partnership, joint venture, association, organisation, unit or trust (in each case, whether or not having separate legal personality).

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1.4 The headings and table of contents in this Charge are inserted for convenience only and shall be ignored in construing this Charge. Unless the context otherwise requires, references in this Charge to the singular shall include the plural and vice versa and references to one gender shall include all genders. Unless otherwise stated, references in this Charge to Clauses are to the clauses of this Charge.

2. CHARGING PROVISIONS

2.1 In consideration of the Chargee from time to time granting other forbearance, indulgence, time or concession for so long as the Chargee thinks fit to VelaTel pursuant to the Loan Agreement, the Chargor as legal and beneficial owner hereby charges by way of first fixed charge the Charged Securities to the Chargee as continuing security for the payment and discharge of the Secured Obligations.

2.2 The Chargor hereby undertakes that it shall forthwith upon signing this Charge deliver to the Chargee the following documents:

(1) share certificate(s) in respect of the Charged Securities issued in the name of the Chargor;

(2) undated instrument(s) of transfer in respect of the Charged Securities duly executed in blank by the Chargor;

(3) undated bought and sold notes in respect of the Charged Securities duly executed in blank by the Chargor;

(4) undated declaration of the Chargor that there is no loss of the share certificate(s) of the Charged Securities as referred to in sub-paragraph (1) above;

(5) a duly executed letter of authorisation from each of the directors of the Company, substantially in the form set out in Schedule 1; and

(6) undated letter of resignation of each of Tay Yong Lee, George Alvarez, Hung Chau Wai Peter resigning from their respective office as director of the Company.

2.3 The Chargor hereby undertakes that upon receipt of any further shares or securities of the Company or any dividends, rights, monies or property accruing or offered in respect of the Charged Securities or other securities of the Company, it shall forthwith deposit the same with the Chargee or its nominee, together with the relevant instruments of transfer in favour of the Chargee or any one or more of its nominees, or other applicable instrument of transfer acceptable to the Chargee, all duly executed or if required by the Chargee, in such form that the Chargee may complete the due execution thereof (which completion on behalf of the Chargor, the Chargor hereby expressly authorises and ratifies).

2.4 The Chargor hereby agrees that at any time after this security becomes enforceable, the Chargee may, at the cost of the Chargor, register the Charged Securities in the name of the Chargee or its nominee.

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3. REPRESENTATIONS AND WARRANTIES

3.1 The Chargor hereby represents and warrants to the Chargee as follows:

(1)	it is the legal and beneficial owner of the Charged Securities free and clear of all Encumbrances and Dispositions and has good and marketable title thereto;
(2)	the Charged Securities are validly issued and, in relation to the Shares constituting the Charged Securities, are fully paid or credited as fully paid;
(3)	the Charged Securities are not liable to any call, assessment or demand of any kind save and except for the any option granted pursuant to Clause 3.3, and the Company has not granted any right or option whatsoever to call for the issue of any further shares in the Company.
(4)	it has full power, authority and right to charge the Charged Securities in the manner provided in this Charge free from all Dispositions and Encumbrances;
(5)	all necessary actions and authorisations under its constituent documents or, as the case may be, the laws and regulations governing its organisation and existence for it to enter into this Charge and to perform its obligations hereunder have been taken and obtained;
(6)	the execution, delivery and performance of this Charge by it will not exceed any power granted to it or violate in any respects any provisions of (a) any law or regulation or any order or decree of any governmental agency or court to which it is subject; (b) its constituent documents or any law or regulation governing its organisation and existence or any law or regulation governing its management and operation; or (c) any mortgage, charge, deed, contract or other undertaking or instrument to which it is a party or which is binding upon it or its assets, and the execution, delivery and performance of this Charge will not result in the creation or imposition of, or any obligation to create or impose, any Encumbrance on any of its assets save and except the Encumbrance created hereunder;
(7)	all governmental or other authorisations, approvals and consents required for or in connection with the execution, validity, enforceability or admissibility in evidence of this Charge have been obtained and all such authorisations, approvals and consents are in full force and effect;
(8)	this Charge constitutes its legal, valid and binding obligations and enforceable in accordance with its terms;
(9)	in any proceedings in relation to this Charge taken in the country of its incorporation and the relevant jurisdiction where it carries on its business or has assets, the choice of Hong Kong law should be recognised and enforced;
(10)	The Company has not issued or resolved or agreed to issue or granted any option or other right to acquire any shares or securities of the Company to any other person;

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(11)	it is generally subject to civil and commercial law and to legal proceedings and neither it nor any of its assets or revenues is entitled to any immunity or privilege (sovereign or otherwise) from any set-off, judgment, execution, attachment or other legal process;
(12)	no litigation, arbitration or administrative proceeding is currently taking place or pending or threatened against the Chargor or its assets which if adversely determined would have a material adverse effect on the ability of the Chargor to perform its obligations under this Charge;
(13)	the Chargor will procure the Company and the board of the Company to approve the appointment of any nominee of the Chargee to be the director of the Company should the Chargee exercise its rights under this Charge;
(14)	the facts stated in the Recitals are true and correct in all respects; and
(15)	it is not necessary or advisable under any law to file, register or otherwise record this Charge in any public office or elsewhere or to pay any stamp, registration or similar tax on or in relation to this Charge in order to ensure the legality, validity, priority, enforceability, effectiveness or admissibility in evidence of this Charge.

3.2 The Chargor further represents and warrants to the Chargee that so long as part of the Secured Obligations remains outstanding, each of the representations and warranties set out in Clause 3.1 will be correct and complied with in all respects.

3.3 The Chargor hereby covenants with the Chargee that no option in respect of the whole or any part of the Charged Securities shall be granted to any person other than the Chargee without the prior written consent of the Chargee, which shall be given if there are unequivocal terms in the instrument granting such option to the effect that such option:

(a) shall be subordinate to the option granted to the Chargee pursuant to the Option Deed (as defined in the Loan Agreement); and

(b) shall not be exercisable prior to the full repayment of the Loan to the Chargee; and

(c) shall be null and void upon the occurrence of any Event of Default as set out in Clause 12.1 of the Loan Agreement; and

(d) contains no other terms which in effect would in anyway contradict, prevail or undermine the effect of the terms set out in sub-paragraphs (a), (b) and (c) above,

and the Chargor shall submit to the Chargee for approval the final draft of the deed of option for the grant of such option at least 7 days prior to the proposed date of execution of such deed of option, together with a written notice confirming (i) the identity of the grantee of such option; and (ii) the proposed date of execution of the relevant deed of option.

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4. GENERAL COVENANTS

4.1 The Chargor hereby covenants with the Chargee that so long as part of the Secured Obligations remains outstanding, it will:

(1)	warrant and defend its title to and the security interest in the Charged Securities hereby created in favour of the Chargee against any and all claims of all persons whomsoever;
(2)	procure that at all times the Charged Securities are free from any restrictions on transfer;
(3)	punctually pay all calls or other payments due in respect of any of the Charged Securities and in case of default, the Chargee may (but shall not be obliged to), if it thinks fit, make any such payment on behalf of the Chargor and in which event the Chargor shall reimburse the Chargee on demand any reasonable sums so paid together with interest thereon at such rate of interest customarily charged by the Chargee for overdue sums which is for the time being notified to the Chargor (both before and after judgment) from the date on which payment was made up to the date of full repayment;
(4)	at its own expense, subscribe and pay for all rights, shares, options, warrants or securities of the Company from time to time offered to the Chargor or the Chargee by virtue of the holding of the Charged Securities;
(5)	pay to the Chargee upon demand, on a full indemnity basis, all costs and expenses and charges (including legal fees) incurred by the Chargee in connection with the perfection or preservation of the security created by this Charge or with the preservation, enforcement, exercise or attempted or intended exercise of any right, power or remedy hereunder and to pay interest thereon at such rate of interest as the Chargee may in its discretion from time to time charge and have notified to the Chargor (as well after as before judgment) from the date on which such expense or liability was incurred by the Chargee to the date of full payment, which until payment shall form part of the Secured Obligations;
(6)	duly perform, observe and comply with its obligations hereunder in all respects and in accordance with all laws and regulations applicable to the transactions contemplated hereby;
(7)	pay to the Chargee on demand all direct costs, charges and expenses (including legal fees) incurred by the Chargee, in connection with the perfection or preservation of the security created by this Charge together with interest thereon at such rate of interest customarily charged by the Chargee for overdue sums which is for the time being notified to the Chargor (both before and after judgment) calculated from the date on which the same are incurred by the Chargee up to the date of payment by the Chargor;

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(8)	promptly advise the Chargee in writing upon becoming aware of the occurrence of any event or any material adverse factor which may inhibit the Chargor in the performance of its obligations hereunder;
(9)	promptly upon becoming aware inform the Chargee of the occurrence of any Event of Default or potential Event of Default;
(10)	obtain and maintain all authorisations, approvals and consents to ensure that this Charge is and will remain in full force and effect and take immediate steps to obtain and thereafter maintain in full force and effect any other authorisations which may become necessary for the purposes stated herein;
(11)	ensure that at all times the claims of the Chargee against the Chargor hereunder will rank first in priority of payment and security against the claims of all its creditors;
(12)	promptly notify the Chargee of any notice or communication relating to this Charge, which may adversely affect the rights of the Chargee under the Loan Agreements as and when the Chargor receives the same;
(13)	do or permit to be done everything which the Chargee may from time to time require to be done for the purpose of enforcing the Chargee’s rights hereunder and will allow the name of the Chargor to be used as and when required by the Chargee for that purposes;
(14)	at all time remain the legal and beneficial owner of the Charged Securities unless the Chargee otherwise agrees in writing;
(15)	procure that the Company shall not issue or grant or resolve or agree to issue or grant any option or other right to acquire shares of the Company to any person other than the Chargee;
(16)	procure that the Company shall not propose or implement any financial and/or corporate restructuring, reorganisation, amalgamation or merger; and
(17)	procure that the Company will not declare or pay any dividend or make any other income distribution to its shareholders.

4.2 The Chargor further covenants with the Chargee that so long as any part of the Secured Obligations remains outstanding, without the prior written consent of the Chargee, it will not:

(1)	dispose of, create or permit to arise or subsist any Encumbrance over the Charged Securities or any part thereof or the equity of redemption thereof under this Charge; nor
(2)	declare or cause to be declared or paid to themselves any dividends, or demand or accept any payment from the Company by way of distribution, return of capital or otherwise howsoever in respect of any shares in the capital of the Company; nor
(3)	permit or agree to any variation of the rights attaching to any of the Charged Securities.

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4.3 If the Chargor defaults in performing its obligations under Clause 4.1(3) or 4.1(5), without prejudice to any rights of the Chargee, the Chargee may effect any such payment as may be required to be made by the Chargor or, as the case may be, subscribe to and pay for the rights or other issues and any money so paid by the Chargee shall be repaid on demand together with interest thereon at such rate of interest customarily charged by the Chargee for overdue sums which is for the time being notified to the Chargor (as well after as before judgment) from the date on which payment is made to the date of full repayment, which shall until payment form part of the Secured Obligations.

5. DIVIDENDS, INTEREST AND VOTING RIGHTS

5.1 Any dividends, payments, interest or other amounts on or with respect to the Charged Securities shall be paid to the Chargee whether before or upon the security hereby constituted becoming enforceable and, shall be applied by the Chargee in discharge of the Secured Obligations and if received by the Chargor shall be paid over to the Chargee forthwith upon receipt and until such payment shall be held by the Chargor in trust for the Chargee. The Chargor shall, if requested by the Chargee, from time to time execute and deliver to the Chargee dividend and interest mandates in respect of the Charged Securities.

5.2 Until the security hereby constituted becomes enforceable, the Chargor or its nominee shall at any time at the discretion of the Chargor exercise any voting rights in respect of the respective Charged Securities to the exclusion of the Chargee provided that the Chargee is satisfied that any such exercise will not contravene any provision of this Charge or prejudice its interest in the Charged Securities.

5.3 Upon the security becoming enforceable and at any time thereafter, the Chargee or its nominee may (to the entire exclusion of the Chargor) at any time at the discretion of the Chargee exercise any voting rights in respect of the Charged Securities and all powers or rights given to the Chargee or its nominee as trustees by sub-sections (4) and (5) of section 11 of the Trustee Ordinance of Hong Kong in respect of securities subject to a trust and all powers or rights which may be exercised by the person in whose name the Charged Securities are registered.

6. ENFORCEMENT OF SECURITY

6.1 The Chargee shall be entitled to declare all or any part of the security hereby created immediately enforceable on or at any time or times after a declaration is made by the Chargee pursuant to Clause 12.2 of the Loan Agreements.

6.2 Upon the security hereby constituted becoming enforceable and at any time thereafter, the Chargee may without prejudice to any of its rights under this Charge, to the exclusion of the Chargor, and without any notice to or further consent or concurrence by the Chargor exercise all rights including (i) procure the registration of all or any of the Charged Securities in the name of the Chargee or its nominee and the Chargee or its nominee shall enjoy all benefits attaching to the Charged Securities as if it were a sole beneficial owner thereof including without limitation the right to vote and to receive dividends (ii) sell or dispose of all or any part of the Charged Securities in such manner and for such consideration as the Chargee may, in its absolute discretion, think fit, and (iii) procure the documents executed in escrow given pursuant to this Charge to be completed.

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6.3 Upon the security hereby constituted becoming enforceable after the Chargee has given to the Chargor a notice of its intention to dispose of the Charged Securities, the Chargee shall be entitled to dispose of or appropriate to its own use and benefit (the last mentioned being treated as a sale at fair market value less costs incurred in such sale) the Charged Securities or any part thereof (provided that if it is by way of a judicial sale, the Chargee or its nominee may obtain leave to bid) by such method, upon such terms and for such consideration (whether payable or deliverable immediately or by installments) as the Chargee may in its absolute discretion determine with power to postpone any such Disposition and in any such case the Chargee may exercise any and all rights attaching to the Charged Securities as it in its discretion may determine and without being answerable for any loss occasioned by such Disposition or resulting from postponement thereof or the exercise of such rights. The Chargor shall not have any claim against the Chargee or its nominee in respect of any loss arising out of any such sale or any postponement thereof howsoever caused and whether or not a better price could or might have been obtained upon the sale of the Shares or any of them by deferring or advancing the date of such sale.

6.4 All monies received by the Chargee in respect of the Disposition by it of the Charged Securities or any part thereof or otherwise howsoever arising out of the exercise by the Chargee of its power hereunder shall be applied in or towards payment of the Secured Obligations in such order as the Chargee deems fit. If such proceeds are insufficient to discharge the Secured Obligations in full, then nothing contained in this Charge shall prejudice the rights of the Chargee against the Chargor or any other person under this Charge in respect of such deficiency. In connection with any proposed Disposition, the Chargor hereby waives all rights to confidentiality in respect of the Shares or business of the Company and its subsidiaries.

6.5 For the purpose of assisting the Chargee in the exercise of any rights conferred by this Clause 6, the Chargor hereby covenants that it will promptly execute such bought and sold notes, instruments of transfer, proxies and other documents as the Chargee may require and will procure the registration of transfers of the Charged Securities and the entry of the Chargee or such persons it may appoint in the register of members as the holder of the Charged Securities and give all necessary assistance to the Chargee in arranging the registration of the transfer of the Charged Securities to the Chargee or such persons it may appoint in the books of the Company and the entry of the Chargee or such persons it may appoint in the register of members of the Company as the holder of the Charged Securities.

7. THIRD PARTIES DEALING WITH THE CHARGEE

7.1 The Chargor agrees that, upon any disposal of the whole or any part of the Charged Securities or rights which the Chargee shall make or purport to make under this Charge, a statement in writing signed by any director, officer or manager for the time being of the Chargee that the security constituted hereby is enforceable and that the power of sale has become exercisable shall be conclusive evidence of the fact in favour of any purchaser or other persons to whom any of the Charged Securities or rights may be transferred. The purchaser or other person will take the Charged Securities or rights free of any right of the Chargor or any person claiming under it and the Chargor hereby undertakes to fully indemnify the Chargee and keep the Chargee fully indemnified against any claim which may be made against the Chargee by such purchaser or such other person by reason of any defect in its title to the Charged Securities or other rights.

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7.2 Upon any Disposition of the Charged Securities or any part thereof under Clause 6.3, the purchaser shall not be bound to see or enquire whether the power of Disposition of the Chargee has arisen in the manner herein provided and the Disposition shall be deemed to be within the power of the Chargee and the receipt of the Chargee for the purchase money shall effectively discharge the purchaser who shall not be concerned or be in any way answerable therefor.

8. FURTHER ASSURANCE

8.1 The Chargor agrees, at its own costs and expenses, to execute and do all assurances, acts, deeds and things as the Chargee may reasonably require, and procure other interested parties so to do, for protecting or perfecting the security over all or any part of the Charged Securities or for facilitating the realisation of all or any part of the Charged Securities and the exercise of all powers, rights, remedies, authorities and discretions vested in the Chargee. The Chargor shall, in particular, execute all transfers and assurances of all or any part of the Charged Securities whether to the Chargee or to its nominees or purchasers and give all notices, orders and directions which the Chargee may think expedient.

9. POWER OF ATTORNEY

9.1 As continuing security for the discharge of the Secured Obligations and the performance of its obligations hereunder, the Chargor hereby irrevocably appoints the Chargee and any officer from time to time nominated by the Chargee, each with full power of substitution and each with full power to act alone, to be its attorneys and in its name and on its behalf to sign, seal and deliver or otherwise execute and do all such assurances, deeds, acts, documents and things (whether as their own act or deed or otherwise) which, in the opinion of the Chargee, it should execute or do pursuant to any of the terms of this Charge or for the purpose of giving the Chargee the full benefit of this Charge and the security hereby created and generally to use its name in the exercise of all or any of the powers conferred on the Chargee hereunder.

9.2 The Chargor hereby ratifies and confirms and covenants to ratify and confirm whatever such attorneys shall lawfully do or cause to be done by virtue of Clause 9.1.

10. RELEASE

10.1 As soon as reasonably practicable after the discharge of the Secured Obligations (including provision for contingent liabilities in such manner and of such amount as may be determined by the Chargee in its absolute discretion) and all obligations and liabilities under this Charge but subject to the rights of any other person which have arisen as a result of the exercise by the Chargee of any of its powers, rights and remedies hereunder and the rights of any third party, the Chargee shall take all steps that may be necessary to release and discharge the Charged Securities from the security hereby created and where appropriate, transfer the Charged Securities to the Chargor or as the Chargor may direct and release the Chargor from the terms of this Charge.

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10.2 Any release, discharge or transfer as mentioned in Clause 10.1 shall be in such form as the Chargee shall approve and shall be made at the cost and expense of the Chargor. On any release of any of the Charged Securities, the Chargee shall return the identical securities which were deposited, lodged, held or transferred.

10.3 Any release, discharge or settlement between the Chargor and the Chargee shall be conditional upon no security, disposition or payment to the Chargee by the Chargor or any other persons being avoided or reduced pursuant to any reason or ground whatsoever including without limitation any provisions or enactments relating to bankruptcy, liquidation or insolvency and in the event of any such avoidance or reduction, the Chargee shall be entitled to enforce the provisions of this Charge against the Chargor subsequently as if such release, discharge or settlement had not occurred.

10.4 Clause 10.1 shall apply only in respect of such number of the Charged Securities as remains after the exercise of the rights, powers and remedies of the Chargee in the event of the security conferred by this Charge becoming enforceable and shall not in any way restrict or be construed so as to restrict such rights, powers and remedies.

11. NATURE OF SECURITY

11.1 The security created by this Charge is in addition to and not in substitution for and shall not in any way affect or be affected by any other security or guarantee which the Chargee may now or at any time hold or take from VelaTel, the Chargor or any other person in respect of the Secured Obligations and the obligations and liabilities under this Charge.

11.2 The security created by this Charge shall not be considered satisfied or discharged by any intermediate payment or satisfaction of the whole or part of the Secured Obligations but shall be a continuing security and shall extend to cover any sum which shall for the time being constitute the balance due or expressed to be due from VelaTel to the Chargee in respect of the Secured Obligations.

11.3 For the purpose of enabling the Chargee to sue or claim from VelaTel the full amount of the Secured Obligations and the obligations and liabilities of VelaTel or to preserve intact the liability of VelaTel or any other person, the Chargee may at any time place and keep for such time as it may think prudent any amounts received, recovered or realised under this Charge or as a result of the exercise of any right conferred herein to and in a separate or suspense account to the credit of the Chargor or of such other person or transaction as it shall in its unfettered discretion think fit.

12. MISCELLANEOUS

12.1 This security and the rights of the Chargee hereunder shall not be affected by any act, omission, fact, circumstance, matter or thing which, but for this provision, might operate to release or otherwise exonerate the Chargor from its obligations hereunder, including, without limitation, and whether or not known to the Chargee:

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(1)	any time or indulgence granted to VelaTel, the Chargor or any other person;
(2)	the taking, variation, compromise, renewal or release of, or refusal or failure to perfect or enforce or realise any rights, remedies or securities against VelaTel, the Chargor or any other person;
(3)	any want of authority by any person purporting to act on behalf of VelaTel, the Chargor or any other person;
(4)	any amendment to, or variation of the terms of this Charge;
(5)	the Chargor or VelaTel or any other person not being or ceasing to be legally liable for discharging any obligation or liability undertaken or purported to be undertaken on its behalf;
(6)	the illegality, invalidity or unenforceability of or any defect in any provision of this Charge;
(7)	the lapse or expiry of applicable limitation period;
(8)	the absorption, amalgamation, reconstruction or reorganisation or other change in the constitution of the Company or any other person;
(9)	the winding-up, liquidation or dissolution of VelaTel, the Company, the Chargee, the Chargor or any other person; and
(10)	any other act, omission, event of thing whatsoever which but for this provision would or might afford an equitable defence to a surety or otherwise operate to discharge, impair or affect the obligations or liabilities of the Chargor hereunder.

12.2 This Charge shall continue to be effective or, as the case may be, shall be reinstated if at any time payment of any sums paid to the Chargee or hereunder must be rescinded or otherwise repaid or restored by the Chargee upon the bankruptcy, liquidation, reorganisation or otherwise of VelaTel or the Chargor (whether as a fraudulent preference or otherwise).

12.3 For the purpose of discharging any Secured Obligations or of paying any moneys into a suspense account, the Chargee may convert any moneys received, recovered or realised by the Chargee under or pursuant to this Charge from their existing currency of denomination into the currency of the Secured Obligations and any such conversion shall be made at the open market selling rate of exchange for the currency of the Secured Obligations against the existing currency.

12.4 No payment to the Chargee under this Charge pursuant to any judgment or order of any court or otherwise shall operate to discharge any obligation or liability of VelaTel or the Chargor in respect of which it was made unless and until payment in full shall have been received in the currency in which such obligation or liability was incurred. To the extent that the amount of any such payment shall, on actual conversion into such currency, fall short of the amount of such obligation or liability expressed in that currency, the Chargee shall have a further separate cause of action against VelaTel and the Chargor for the recovery of the amount of the shortfall.

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12.5 The Chargor undertakes on demand fully and effectually to indemnify and at all times keep indemnified the Chargee against any claim, demand, action, proceeding, liability, loss, damage, penalty, interest, cost, charge or expense, legal or otherwise, taken, made, threatened, sustained or incurred by or against the Chargee for anything done, permitted or omitted in the exercise or purported exercise of any of the powers of the Chargee or the Receiver under or pursuant to this Charge.

12.6 Save as may be expressly provided herein to the contrary, time is of the essence of this Charge. No failure or delay on the part of the Chargee to exercise any power, right or remedy under this Charge shall operate as a waiver thereof nor shall a waiver by the Chargee of any particular default by the Chargor affect or prejudice the power, right or remedy of the Chargee in respect of any other default or any subsequent default of the same or a different kind nor shall any single or partial exercise by the Chargee of any power, right or remedy hereunder preclude any other or further exercise thereof or the exercise of any other power, right or remedy. The powers, right and remedies provided in this Charge are not exclusive of any power, right and remedies but are cumulative and in addition to every other power, right and remedy now or hereafter existing at law, in equity, by statute or contract or otherwise.

12.7 If at any time any provision of this Charge is or becomes illegal, invalid or unenforceable in any respect, neither the legality, validity or enforceability of the remaining provisions of this Charge nor the legality, validity or enforceability of such provision shall in any way be affected or impaired thereby.

12.8 The Chargor hereby undertakes that it shall, entirely at its own expense, immediately upon demand by the Chargee make, execute, do and perform, or cause or procure to be made, executed, done and performed, by it and/or use its best endeavours to procure to be made, executed, done and performed by other necessary parties (if any), all such further acts, agreements, assignments, assurances, bills, contracts, deeds, documents, evidences of indebtedness, indemnities instruments, letters, loan notes, notices, powers of attorney, promissory notes, receipts, securities, undertakings, matters and things as the Chargee shall reasonably require to perfect or improve the security afforded or created, or intended to be afforded or created by this Charge.

12.9 A certificate of the Chargee of the amount of the Secured Obligations outstanding and due at any time hereunder shall, in the absence of manifest error, be binding and conclusive on the Chargor.

13. ASSIGNMENT

13.1 This Charge shall be binding on and shall enure to the benefit of the parties and their respective executors, administrators, successors and assigns provided that the Chargor may not Dispose of its rights or obligations hereunder without the prior written consent of the Chargee.

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13.2 The Chargee may at any time without the consent of or notice to the Chargor assign its rights and benefits hereunder or any part thereof to anyone. Such assignee shall have the same rights and benefits and/or obligations against the Chargor under this Charge as if it were an original party thereto in respect of its rights and benefits and/or obligations assigned to it. The Chargee may disclose to a potential assignee or any other person proposing to enter into contractual arrangements with it in relation to this Charge such information about the Chargor as it may think fit.

14. INDEMNITY

14.1 Independently of any other terms, conditions and stipulations herein, the Chargor agrees that if, for any reasons whatsoever, its obligations under any of the provisions hereof is or becomes or proves to be unenforceable or shall be declared or adjudged to be illegal, invalid or unenforceable under any applicable law, it shall grant to the Chargee a complete indemnity and will pay to the Chargee all sums necessary to make good and to compensate the Chargee for all losses, damages, costs, legal fees, disbursements and liabilities suffered or incurred by the Chargee as a direct or indirect result of such illegality, invalidity or unenforceability.

15. COSTS AND EXPENSES

15.1 All costs and expenses, including, but not limited to, fees and disbursements of legal advisors, counsel, financial advisors and/or accountants engaged by the Chargee, incurred in connection with the preparation and negotiation of this Charge and any other related documents and any transaction contemplated by such documents, shall be borne solely by the Chargor.

16. NOTICES

16.1 Save as otherwise provided herein, all notices or other communications required or permitted hereunder:

(1)	shall be in writing and may be sent by postage prepaid mail (by airmail if to another jurisdiction), facsimile or personal delivery;
(2)	shall be sent to the relevant party at the facsimile number or address from time to time designated by that party to the other party, the initial facsimile number and address so designated by each party is set out under its name on the first page of this Charge;
(3)	if sent by the Chargor shall be irrevocable but shall not be effective until actually received by the Chargee;
(4)	if sent to the Chargor shall be deemed to have been given or made to and received by the Chargor (a) within three days after the date of posting, if sent by mail; (b) when delivered, if delivered by hand; and (c) on despatch, if sent by facsimile; and
(5)	shall be in the English language.

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16.2 The Chargor hereby irrevocably appoints Lawrence Lo of Room 1307, Tower 1, Lippo Centre, No. 89 Queensway, Admiralty, Hong Kong as its agent to accept service of legal process out of the courts of Hong Kong in connection with this Charge. The Chargor further agrees to maintain a duly appointed agent in Hong Kong to accept service of process out of the courts of Hong Kong and to keep the Chargee informed of the name and address of such agent. Service on Lawrence Lo (or such other agent as shall have been notified by the Chargor in writing) shall be deemed to be service on the Chargor.

17. LAW AND JURISDICTION

17.1 This Charge shall be governed by and construed in accordance with the laws of Hong Kong.

17.2 The Chargor hereby irrevocably submits to the jurisdiction of the courts of Hong Kong and of any country in which it has assets and hereby irrevocably waives any objection to any proceedings in any such courts on the basis of forum non-conveniens. The Chargor agrees that a judgment in any proceedings brought in any such courts may be enforced in any other jurisdiction by suit on the judgment or in any other manner permitted by law.

17.3 The Chargor hereby consents to the service of process out of the courts of Hong Kong by the mailing of a copy or notice thereof by postage prepaid mail to the address of the Chargor from time to time designated by the Chargor to the Chargee pursuant to Clause 16.1(2) and confirms that failure by the Chargor to receive such copy or notice shall not prejudice due service.

17.4 The submission in Clause 17.2 is non-exclusive and the Chargee reserves the right to proceed in any other jurisdiction having or claiming or accepting jurisdiction in respect thereto.

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Schedule 1

Form of Authorisation Letter

Date:

To:         Xin Hua

I, [ ], refer to the share charge (the “Share Charge”) dated 28 October 2013 and made by Gulfstream Capital Partners, Ltd. as chargor in favour of Xin Hua as chargee in relation to the shares of China Motion Telecom (HK) Limited (the “Company”). Unless otherwise stated herein, terms used in this letter shall have the same meanings as stated in the Share Charge.

I hereby authorise you to date the resignation letter on my behalf at any time on or after the occurrence of an Event of Default and to submit the same on my behalf to the secretary, board of directors and/or any other authorised representative of the Company and, if applicable, its subsidiaries. I acknowledge, agree and confirm that upon such dating and submission, I shall cease to be an officer and/or director of the Company and each subsidiary thereof, and I shall not accept any re-appointment in respect thereto without your prior written consent. This authorisation is irrevocable.

Yours faithfully

_______________________

Name:

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IN WITNESS whereof the Chargor has executed this Charge the day and year first above written

Executed as a Deed and SIGNED by Colin Tay, its director   for and on behalf of   Gulfstream Capital Partners, Ltd.   in the presence of:   ) ) ) ) ) ) ) ) )       /s/ Colin Tay

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EX-10.56

EXHIBIT 10.56

THIS OPTION DEED is dated 28^th day of October 2013

BETWEEN:

(1) GULFSTREAM CAPITAL PARTNERS, LTD, a company incorporated in Seychelles with limited liability and having its registered office at 1^st Floor, #5 DEKK House, De Zippora Street, P.O. Box 456, Providence Industrial Estate, Mahe, Republic of Seychelles (the “Grantor”); and

(2) XIN HUA, holder of PRC Identity Card Number 522501197702277338, of 37/F, 500 Chengdu North Road, Huangpu District, Shanghai, the People’s Republic of China (the “Grantee”).

WHEREAS:

(A) China Motion Telecom (HK) Limited (the “Company”) was incorporated in Hong Kong with limited liability and as at the date hereof, has an authorised share capital of HK$390,000,000 divided into 390,000,000 shares of HK$1.00, 378,467,031 shares of which have been issued and are fully paid or credited as fully paid. Further information concerning the Company is set out in Part A of Schedule 1.

(B) By a loan agreement (the “Loan Agreement”) dated 28 October 2013 made between VELATEL GLOBAL COMMUNICATIONS, INC. (“VelaTel”) and the Grantee, the Grantee has agreed to make available to VelaTel loan facilities in the principal amount of up to HK$26,540,637.45 (the “Loan”) subject to and upon the terms and conditions therein.

(C) In consideration of the Grantee agreeing to make the Loan available to VelaTel, the Grantor has agreed to grant the Option (as defined below) to the Grantee subject to and upon the terms and conditions of this Deed.

NOW THIS DEED WITNESSES AS FOLLOWS:

1. INTERPRETATION

1.1 Words and expressions defined the Loan Agreement shall, make otherwise specified, has the same meanings when used herein.

1.1 In this Deed (including the Recitals), unless the context requires otherwise, the following words shall have the meanings ascribed to them below:

“Attorney”	has the meaning ascribed to this term in Clause 8
“Audited Accounts”	the audited balance sheet of the Company as at the Audited Accounts Date and the audited profit and loss accounts of the Company for the period ended on the Audited Accounts Date, a copy of which has been attached to this Deed as Exhibit “A”

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“Audited Accounts Date”	28 February 2013
“Business Day”	a day (other than Saturday, Sunday or public holiday) on which licensed banks in Hong Kong are generally opened for business throughout their normal business hours
“Completion”	completion of the sale and purchase of the Option Shares in accordance with the terms and conditions of this Deed
“Completion Date”	the third Business Day after the date of exercise of the Option
“Disclosed”	disclosed in a full, fair, specific and accurate manner this Deed, the Audited Accounts, the Management Accounts and the disclosure letter provided by the Grantor on the date of this Deed, and any agreements or other documents attached to this Deed and/or the disclosure letter
“Encumbrance”	any mortgage, charge, pledge, lien, (otherwise than arising by statute or operation of law), hypothecation or other encumbrance, priority or security interest, deferred purchase, title retention, leasing, sale-and-repurchase or sale-and-leaseback arrangement whatsoever over or in any property, assets or rights of whatsoever nature and includes any agreement for any of the same and “Encumber” shall be construed accordingly
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s Republic of China
“Management Accounts”	the unaudited balance sheet of the Company as at the Management Accounts Date and the unaudited profit and loss accounts of the Company for the six months ended on the Management Accounts Date, a copy of which has been attached to this Deed as Exhibit “B”
“Management Accounts Date”	30 September 2013
“Option”	the option to require the sale by the Grantor of the Option Shares to the Grantee (or his nominee(s)) at the Option Price subject to and upon the terms and conditions of this Deed
“Option Notice”	has the meaning ascribed to this term in Clause 3.1
“Option Period”	the period commencing from the Drawdown Date and ending on (and including) the date on which the Secured Indebtedness under the Loan Agreement is repaid to the Grantee in full
“Option Price”	the option price set out in Clause 2.4
“Option Shares”	such number of Shares representing the entire issued share capital of the Company from time to time within the Option Period
“Secured Indebtedness”	has the meaning ascribed to it under the Loan Agreement

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“Tax Indemnity”	the deed of indemnity in the agreed form to be made between the Grantor, the Grantee and the Company, a draft of which is set out in Schedule 3
“Taxation”	all forms of taxation including overseas taxation and all forms of profits tax, interest tax, estate duty and stamp duty and all levies, imposts, duties, charges, fees, deductions and withholdings whatsoever charged or imposed by any statutory, governmental state, provincial, local government or municipal authority whatsoever and the expression “Tax” shall be construed accordingly
“Warranties”	the representations, undertakings and warranties set out in Schedule 2 and all other representations, undertakings and warranties provided by the Grantor under this Deed
“this Deed”	this option deed for the grant of the Option, as amended from time to time
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong

1.3 References herein to Clauses, Schedules and Exhibits are, unless the context otherwise requires, to clauses in, schedules and exhibits of this Deed.

1.4 The headings are inserted for convenience only and shall not affect the construction of this Deed. Unless the context otherwise requires, references in this Deed to the singular shall include the plural and vice versa and references to one gender shall include all genders.

1.5 In this Deed, any reference to a document in the “agreed form” is to a form of the relevant document which is in form and substance satisfactory to the Grantor and the Grantee.

2. THE OPTION

2.1 The Grantor hereby irrevocably and unconditionally grants to the Grantee or its nominees the Option to require the Grantor to sell to the Grantee the Option Shares at the Option Price subject to and upon the terms and conditions of this Deed.

2.2 The Grantor hereby undertakes that it shall forthwith upon signing this Deed deliver to the Grantee the following documents:

(1) share certificate(s) in respect of the Option Shares issued in the name of the Grantor;

(2) undated instrument(s) of transfer in respect of the Option Shares duly executed in blank by the Grantor;

(3) undated bought and sold notes in respect of the Option Shares duly executed in blank by the Grantor;

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(4) undated declaration of the Grantor that there is no loss of the share certificate(s) of the Option Shares as referred to in sub-paragraph (1) above;

(5) undated letter of resignation of each of Tay Yong Lee, George Alvarez, Hung Chau Wai Peter resigning from their respective office as director of the Company;

(6) undated Tax Indemnity executed under seal by the Grantor and the Company;

(7) undated resolutions of the board of directors of the Grantor approving this Deed, the Tax Indemnity and other documents necessary for the purpose of effecting this transaction and authorising a person or persons to execute the same (with seal, where appropriate) for and on their behalf; and

(8) undated written resolution of the board of directors of the Company approving the resolutions referred to in Clause 5.4.

2.3 Upon exercise of the Option, the Grantor shall as beneficial owner sell and the Grantee shall purchase and/or shall procure its nominees to purchase the Option Shares free from all liens, charges, Encumbrances, equities and other adverse third party rights and together with all rights attaching thereto as at the date of exercise of the Option.

2.4 The Option Price shall be equivalent to an amount equal to the aggregate of the entire outstanding principal amount and interest of the Loan and all moneys owing by the Grantor to the Grantee under the Loan Agreement as at the date of Completion (the “Outstanding Amount”).

2.5 The Option Price shall be satisfied by the Grantor by setting off against the Outstanding Amount.

3. EXERCISE OF THE OPTION

3.1 Subject to the condition precedent as set out in Clause 4.1, the Option may be exercised by the Grantee at any time during the Option Period by serving an option notice (an “Option Notice”) on the Grantor and the date of exercise of the Option shall be the date on which the Option Notice is despatch by the Grantee.

3.2 The Option may only be exercised once by the Grantee and the Option shall lapse after the service of the exercise notice to the Grantor by the Grantee in accordance with Clause 3.1.

3.3 The Grantor hereby warrants and undertakes to the Grantee that it shall procure that for the duration of the Option Period, no resolution of the board of directors of the Company or of its general meeting shall be passed for the creation or issue or agree to issue of any Shares or the grant or agree to grant of any options over or right to acquire any Shares or the uncalled capital of the Company or the issue of any warrants, debentures, securities or other obligations convertible into Shares or enter into any agreement to do any of the same, unless the prior written consent of the Grantee is obtained.

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3.4 The Grantor hereby covenants with the Grantee that no option in respect of the whole or any part of the Option Shares shall be granted to any person other than the Grantee without the prior written consent of the Grantee, which shall be given if there are unequivocal terms in the instrument granting such option to the effect that such option:

(a) shall be subordinate to the option granted to the Grantee pursuant to the this Deed; and

(b) shall not be exercisable prior to the full repayment of the Loan to the Grantee; and

(c) shall be null and void upon the occurrence of any Event of Default as set out in Clause 12.1 of the Loan Agreement; and

(d) contains no other terms which in effect would in anyway contradict, prevail or undermine the effect of the terms set out in sub-paragraphs (a), (b) and (c) above,

and the Grantor shall submit to the Grantee for approval the final draft of the deed of option for the grant of such option at least 7 days prior to the proposed date of execution of such deed of option, together with a written notice confirming (i) the identity of the grantee of such option; and (ii) the proposed date of execution of the relevant deed of option.

3.5 For the avoidance of doubt, the Option can be exercised on one occasion in relation to the entire number of Option Shares during the Option Period subject to and upon the terms and conditions of this Deed.

4. CONDITIONS

4.1 Exercise of the Option shall be conditional upon the occurrence of an Event of Default as set out in Clause 12.1 of the Loan Agreement.

5. COMPLETION

5.1 The Grantor shall be bound to complete the sale of the Option Shares subject to an Option Notice on the third Business Day after the date of exercise of the Option.

5.2 Completion shall take place at 4:00 p.m. on the Completion Date at the offices of the legal advisers of the Grantee, Michael Li & Co. at 19th Floor, Prosperity Tower, 39 Queen’s Road Central, Central, Hong Kong.

5.3 At Completion, the Grantor shall deliver or procure the delivery to the Grantee of, if not already delivered, all the following:

(1) instrument(s) of transfer in respect of the transfer of the Option Shares duly executed by the Grantor in favour of the Grantee or its nominee(s);

(2) original share certificate(s) in respect of the Option Shares;

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(3) copy, certified by a director of the Company as true and complete, of the resolutions of the board of directors of the Company referred to in Clause 5.4;

(4) such evidence to the reasonable satisfaction of the Grantee evidencing the set off between the Outstanding Amount and the Option Price;

(5) the Tax Indemnity duly executed under seal by the Grantor and the Company; and

(6) copy, certified by a director of the Grantor as true and complete, of resolutions of the board of directors of the Grantor approving this Deed, the Tax Indemnity and other documents necessary for the purpose of effecting this transaction and authorising a person or persons to execute the same (with seal, where appropriate) for and on their behalf.

5.4 The Grantor shall procure a meeting of the board of directors of the Company to be held at which such matters shall be dealt with and resolved upon as the Grantee shall require for the purpose of giving effect to the provisions of this Deed including without limitation:

(1) in relation to the Company, the approval for the transfer of the Option Shares to the Grantee or his nominee(s) and the registration of such transfer, subject to the relevant instruments of transfer being duly stamped (if applicable);

(2) in relation to the Company, the approval of, the Tax Indemnity and authorisation of execution of the same under seal for and on behalf of the Company;

(3) at the request of the Grantee, the appointment of such persons nominated by the Grantee as directors and officers of the Company with effect from Completion; and

(4) the amendment of all existing mandates for operation of all the bank accounts maintained by the Company in such manner as the Grantee may require.

5.5 Against compliance and fulfillment of all acts and the requirements set out in Clauses 5.3 and 5.4, the Grantee shall:

(1) produce to the Grantor duly executed instrument(s) of transfer in respect of the Option Shares duly executed by the Grantee and procure the stamping of the same in a timely manner without incurring any penalties for late stamping; and

(2) deliver to the Grantor the Tax Indemnity duly executed under seal by the Grantee.

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6. WARRANTIES

6.1 The Grantor hereby represents and warrants to the Grantee and his successors and assigns that the Warranties are true and accurate in all respects as at the date of this Deed and will continue to be so throughout the Option Period up to and including the time of Completion.

6.2 Each of the Warranties is without prejudice to any other Warranty and, except here expressly or otherwise stated, no provision in any Warranty shall govern or limit the extent or application of any other provision in any Warranty. The Grantor hereby agrees that the Grantee shall treat each of the Warranties as a condition of this Deed.

6.3 The Grantor hereby agrees to fully indemnify and keeps the Grantee and his assigns fully indemnified on demand from and against any depletion of any tangible assets, all losses, costs and expenses (including legal expenses) which the Grantee may incur or sustain from or in consequence of any of the Warranties not being correct or fully complied with. This indemnity shall be without prejudice to any of the rights and remedies of the Grantee and their assigns in relation to any such breach of Warranties and all such rights and remedies are hereby expressly reserved.

6.4 If it shall be found at any time after Completion that any of the Warranties is not true, correct and accurate or is not as represented, warranted or undertaken and:

(1) the effect thereof is that the value of some assets of any member of the Group including, without limitation, the value of any asset stated in the Management Accounts is less than its value would have been had there been no such breach or the matter warranted were as warranted; or

(2) any member of the Group has incurred or is under any liability or contingent liability which would not have been incurred if such matter were as represented or warranted or the relevant undertaking were performed; or

(3) the effect thereof is that the amount of a liability of any member of the Group is higher than its amount would have been had there been no such breach or the matter warranted were as warranted,

then, without prejudice to any other provisions of this Deed, the Grantor shall indemnify the Grantee on demand on a full indemnity basis, and holds them harmless from and against all liabilities, damages, costs, claims, reduction in net consolidated assets or increase in net consolidated liabilities and all reasonable expenses which the Grantee may sustain, suffer, or incur as a result of any of the foregoing and the Grantor shall pay to the Grantee on demand the full amount of any such loss as aforesaid in immediately available funds.

6.5 The Warranties shall survive Completion and the rights and remedies of the Grantee in respect of any breach of the Warranties shall not be affected by Completion or by the Grantee rescinding, or failing to rescind this Deed, or failing to exercise or delaying the exercise of any right or remedy, or by any other event or matter whatsoever, except a specific and duly authorised written waiver or release and no single or partial exercise of any right or remedy shall preclude any further or other exercise.

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6.6 The Grantee shall be entitled to take action both before and after Completion in respect of any breach or non-fulfillment of any of the Warranties and Completion shall not in any way constitute a waiver of any right of the Grantee.

6.7 The Grantor undertakes in relation to any Warranty which refers to the knowledge, information or belief of the Grantor that they have made full enquiry into the subject matter of that Warranty which are reasonable in all circumstances and that they do not have the knowledge, information or belief that the subject matter of that Warranty may not be correct, complete or accurate.

6.8 The Grantor shall immediately inform the Grantee in writing of any fact, matter, event or circumstance which renders any of the Warranties untrue, inaccurate or misleading or will give rise to a breach of any of the Warranties.

7. CONDUCT OF BUSINESS PENDING COMPLETION

7.1 The Grantor hereby undertakes with the Grantee and that, except as required by this Deed or in the ordinary and usual course of business of the Company, no resolution of the directors or members of the Company shall be passed prior to: (i) if the Option has not been exercised, the last day of the Option Period; or (ii) if the Option has been exercised, the Completion Date, without the prior written consent of the Grantee.

7.2 The Grantor hereby undertakes with the Grantee that until: (i) if the Option has not been exercised, the last day of the Option Period; or (ii) if the Option has been exercised, the Completion Date, the Company shall carry on its business in a manner consistent with its existing practice and the Grantor shall:

(1) procure that the Company shall not without first obtaining the prior written consent of the Grantee enter into any contract or commitment of an unusual or onerous nature or other than in the normal and ordinary course of business;

(2) keep the Grantee reasonably informed of all significant matters relating to the Company, its business, assets and prospects;

(3) promptly advise the Grantee in writing of details of any litigation, arbitration or administrative proceeding which would have rendered the undertakings, representations and warranties contained in Schedule 2 incorrect had the same been current or threatened as at the date hereof immediately upon occurrence of the same;

(4) deliver to the Grantee within the period specified in any notice from the Grantee, all such other information relating to the condition (financial or otherwise) of the Company as the Grantee may request;

(5) in all respects observe and comply with the covenants and obligations under this Deed;

(6) obtain and promptly renew from time to time and comply with the terms of all consents, licences, approvals or authorisations of all governmental agencies of any country or state or political subdivision thereof required for in connection with the execution, delivery, performance, validity, enforceability and admissibility in evidence of this Deed and deliver or cause to be delivered to the Grantee evidence of renewal of and compliance with the terms of all such consents, licences, approvals or authorisations;

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(7) promptly advise the Grantee upon becoming aware of any material adverse factor which may inhibit the Grantor in the performance of its obligations under this Deed;

(8) maintain the net current asset value of the Company in the positive;

(9) maintain a minimum two (2) month’s working capital for the present requirements of the Company, equivalent to the level of working capital as at 28 February 2013 commencing from the date of this Deed; and

(10) guarantee and shall be primarily responsible for the contracts for goods, services and financing for the upgrade of the core network of the Company for which contracts the Company will be one of the parties thereto, but without any down payments, debt services, finance charges or principal payments be borne by the Company prior to the full repayment of the Loan, the major terms of which are set out in the Annexure to the Loan Agreement. For the purpose of this sub-clause (10), the Grantor shall submit to the Grantee the final draft of the contracts for goods, services and financing for the upgrade of the core network of the Company at least 7 days prior to the proposed date of execution of such contracts for the prior approval by the Grantee, which approval shall be given if the terms are in line with the said major terms.

7.3 Without prejudice and notwithstanding Clauses 7.1 and 7.2, the Grantor undertakes that it shall prior to: (i) if the Option has not been exercised, the last day of the Option Period; or (ii) if the Option has been exercised, the Completion Date, take all steps necessary to ensure that except as required by this Deed or by the Loan Agreement or by any applicable law or in the ordinary and usual course of business of the Company, the Company shall not carry out any of the following actions and no resolution of the board of directors of the Company or of its general meeting shall be passed to carry out the same unless the written consent of the Grantee is obtained:

(1) the creation or issue of any shares in the Company or the grant of any options over any shares or the uncalled capital of the Company or the issue of any warrant, debentures, securities or other obligations convertible into shares in the Company or enter into any agreement to do any of the same;

(2) the capitalisation, repayment or other form of distribution of any amount standing to the credit of any reserve of the Company on the redemption or purchase of any shares in the Company or any other reorganisation of share capital;

(3) take any action or any other steps or proceedings for the winding-up or liquidation of the Company;

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(4) the alteration of the rights attaching to any of the Option Shares or the shares of the Company;

(5) the alteration of the memorandum and articles of association of the Company and the passing of any resolutions inconsistent with the provision of this Deed;

(6) the acquisition or disposal of any lease or any other interests in real property owned or occupied by the Company or the creation of any mortgage or other encumbrance over such property;

(7) the acquisition or disposal of any property or other asset by the Company if the aggregate sum involved exceeds (or, in the case of a disposal, if the book value exceeds) HK$250,000 other than acquisition or disposals in the ordinary course of business of the Company;

(8) the acquisition or formation by the Company of any subsidiary or the acquisition of any share in any other company or the participation by the Company in any partnership or joint venture;

(9) the sale or disposal of the whole or a substantial part of the undertaking of the Company;

(10) the entering into of any material contract by the Company other than in its ordinary course of business;

(11) the lending of any moneys (otherwise than by way of deposit with a bank or other institution the normal business of which includes the acceptance of deposit), the granting of any credit or the giving of any guarantee or indemnity;

(12) the amalgamation or merger of the Company with any other company or concern;

(13) the alteration of the composition of any board of directors of the Company;

(14) the making, declaration or payment of any dividend or distribution save as disclosed in the Management Accounts;

(15) doing, allowing or procuring any act or omission on or before Completion which will constitute a breach of any of the Warranties;

(16) doing anything which is likely to materially jeopardise or diminish the value of any tangible assets of the Company;

(17) the withdrawal of any fund directly or indirectly from the Company (including the repayment of any loans due to shareholders and/or directors of the Company);

(18) requiring or procuring the Company to fund the upgrade of the core network of the Company;

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(19) charging the Company or any of its subsidiaries for any costs and expenses in relation to or otherwise in connection with the upgrade of the core network of the Company;

(20) take any action which in the reasonable opinion of the Grantee, will cause or will likely cause any diminishment in value of the Option Shares.

8. POWER OF ATTORNEY

As continuing security for the due performance of the Grantor’s obligations in this Deed, the Grantor hereby irrevocably and by way of security appoints the Grantee (the “Attorney”), with full power of substitution and with full power to act alone to be its attorney and on its behalf to execute and do any such instrument, act or thing which, in the opinion of the Attorney, the Grantor ought to do under the covenants and provisions contained in this Deed. The Grantor agrees to ratify and confirm and covenants to ratify and confirm whatever the Attorney shall lawfully do by virtue of this Clause 8.

9. FURTHER ASSURANCE

Each party hereto shall, at the costs and expenses of the other party hereto execute, do and perform or procure to be executed, done and performed by other necessary parties all such further acts, agreements, assignments, assurances, deeds and documents as the requesting party may require to effectively vest the registered and beneficial ownership of the Option Shares in the Grantee or to give to the requesting party the full benefits of all the provisions of this Deed.

10. [Intentionally deleted]

11. TIME AND WAIVER

Time shall in every respect be of the essence of this Deed but no failure on the part of any party hereto to exercise, and no delay on his/its part in exercising any right hereunder shall operate as a waiver thereof, nor will any single or partial exercise of any right under this Deed preclude any other or further exercise of it or the exercise of any other right or prejudice or affect any right against any other parties hereto under the same liability, whether joint, several or otherwise. The rights and remedies provided in this Deed are cumulative and not exclusive of any rights or remedies provided by law.

12. PARTIAL INVALIDITY

If at any time one or more provisions of this Deed is or becomes invalid, illegal, unenforceable or incapable of performance in any respect under the laws of any relevant jurisdiction, the validity, legality, enforceability or performance of the remaining provisions hereof in that jurisdiction or the validity, legality, enforceability or performance under the laws of any other relevant jurisdiction of any provisions of this Deed shall not in any way be effected or impaired thereby.

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13. AMENDMENTS

This Deed shall not be amended, supplemented or modified except by instruments in writing signed by all parties hereto.

14. NOTICES

14.1 All notices or other communications required to be served or given pursuant to this Deed shall be in writing and delivered or sent to the parties hereto by prepaid postage, (by airmail if to another country), facsimile transmission or personal delivery to his/its address or facsimile number as set out below (or such other address or facsimile number as the addressee has by five days’ prior written notice designated to the other party):

To the Grantor:	Gulfstream Capital Partners, Ltd.
	Address:	2nd Floor No. 86 Fu Xin South Road Sec 2 Taipei 106 Taiwan
	Facsimile number:	(886) 2 2701-4140
	Attention:	Colin Tay
To the Grantee:	Xin Hua
	Address:	37/F, 500 Chengdu North Road, Huangpu District, Shanghai, the People’s Republic of China
	Facsimile number:	(86) 021 6358-6040

14.2 All notices or other communications served or given under this Deed shall be deemed to have been served and given by the relevant party (a) within two days after the date of posting, if sent by local mail; four days after the date of posting, if sent by airmail; (b) when delivered, if delivered by hand; and (c) on despatch, if sent by facsimile transmission.

14.3 The Grantor hereby irrevocably appoints Lawrence Lo of Room 1307, Tower 1, Lippo Centre, No. 89 Queensway, Admiralty, Hong Kong as its service agent to receive and acknowledge on its behalf service of any notice, writ, summons, order, judgment or communication in relation to this deed and further agrees that any such legal process or notice shall be sufficiently served on it if delivered during normal office hours to such agent for service at its address for the time being in Hong Kong. The Grantor further agrees to maintain a duly appointed agent in Hong Kong to accept service of process out of the courts of Hong Kong and to keep the Grantee informed of the name and address of such agent. Service on Lawrence Lo (or such agent as may be notified by the Grantor from time to time) shall be deemed to be service on its appointer.

14.4 Nothing in this Clause 14 shall preclude the service of communication or the proof of such service by any mode permitted by law.

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15. COSTS AND STAMP DUTY

15.1 The Grantor shall bear the costs and expenses (including legal fees) incurred by the Grantee in connection with the preparation, negotiation, execution and performance of this Deed and all documents incidental or relating to Completion.

15.2 All stamp duty (if any) payable in connection with the sale and purchase of the Option Shares shall be borne by the Grantor.

16. ASSIGNMENT

This Deed shall be binding upon each party's successors and assigns and personal representatives and none of the parties hereto may assign or transfer any of his/its rights and obligations under this Deed.

17. ENTIRE AGREEMENT

17.1 This Deed constitutes the entire agreement between the parties hereto with respect to the matters dealt with herein and supersedes all previous agreements, arrangements, statements, understandings or transactions between the parties hereto in relation to the matters hereof.

18. GOVERNING LAW AND JURISDICTION

18.1 This Deed shall be governed by and construed in accordance with the laws of Hong Kong.

18.2 The parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of the courts of Hong Kong.

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SCHEDULE 1

DETAILS OF THE COMPANY

Company name:	China Motion Telecom (HK) Limited (潤迅通訊(香港)有限公司)
Place of incorporation:	Hong Kong
Company no.:	450483.
Date of incorporation:	30 September 1993
Registered office:	Suites 1105-1106, 11/F Chinachem Golden Plaza, 77 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong
Authorised capital:	HK$390,000,000 divided into 390,000,000 shares of HK$1 each
Issued capital:	HK$378,467,031 comprising 378,467,031 shares of HK$1
Shareholder(s):	Gulfstream Capital Partners, Ltd.	100%
Director(s):	George Alvarez Tay Yong Lee Hung Chau Wai Peter
Nature of business:	Type 2 mobile telecommunications services in Hong Kong

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Schedule 2

Warranties

Save as Disclosed and/or any facts, circumstances, matters or information having been Disclosed on or prior to the Completion Date:

1. OPTION SHARES

1.1 The Option Shares when duly allotted and issued will rank pari passu in all respects inter se and with all other shares in the issued share capital of the Company.

1.2 Upon the allotment and issue of the Option Shares, the Grantor shall be the legal and beneficial owner of the Option Shares, and the Option Shares are free from all Encumbrances and will be sold and transferred to the Grantee free from all Encumbrances together with all rights and entitlements now and hereafter attaching thereto and the Option Shares are freely transferable to the Grantee without the consent, approval, permission, licence or concurrence of any third party.

1.3 As at the Completion Date, the Option Shares represent the entire issued share capital in the Company.

2. SHARES

2.1 Subject to Clause 3.4 of the operative provision of this Deed, there is no option, right to acquire, mortgage, charge, pledge, lien or other form of security, encumbrance or third party rights on, over or affecting any part of the unissued share capital or loan capital of the Company or over any part of the issued or unissued share capital or loan capital of the Company and there is no agreement or commitment to give or create any of the foregoing and no claim has been made by any person to be entitled to any of the foregoing which has not been waived in its entirety or satisfied in full.

2.2 Subject to Clause 3.4 of the operative provision of this Deed, there is no agreement or commitment outstanding which calls for the allotment of or issue or accords to any person the right to call for the allotment or issue of any shares in or securities or debentures of the Company.

3. GENERAL

All statements in the Recitals are true and correct in all material respects.

4. THE GRANTOR

4.1 The Grantor has full power to enter into and perform this Deed and this Deed will, when executed, constitute binding obligations on the Grantor in accordance with its terms.

4.2 This Deed and the transfer of the Option Shares have been duly authorised by the Grantor. This Deed and the transfer of the Option Shares have been duly authorised by the Grantor. This Deed when duly executed, authenticated, and delivered, will constitute valid and legally binding obligations of the Grantor against the Grantee enforceable in accordance with their own terms.

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4.3 All consents, approvals, authorisations, orders, registrations and qualifications of or with any court or governmental agency or body and any other action or thing required to be obtained, taken, fulfilled or done in Hong Kong by the Company for or in connection with the transfer of the Option Shares and the consummation of the other transactions contemplated by this Deed have been obtained, taken, fulfilled or done and are in full force and effect.

4.4 The Grantor has not taken any action for bankruptcy and no steps have been taken or proceedings started or are threatened for the bankruptcy of the Grantor.

4.5 The Grantor is not in default or has committed any breach of or under any agreement to which it is a party or by which it may be bound and as at the date of this Deed, no condition, event or act exists or has occurred, which, with the lapse of time or the giving of notice or both or the fulfillment of any other condition would constitute such a default or breach.

5. THE Company

5.1 All the issued Shares are fully paid or credited as fully paid. All information regarding the Company in Schedule 1 are true and accurate.

5.2 Subject to Clause 3.4 of the operative provision of this Deed, the Company has not granted any right to call for the issue of or agreed to issue at any time before or after the date of this Deed any share or loan capital.

5.3 Subject to Clause 3.4 of the operative provision of this Deed, the Company is not under any contract, options, warrants or any other obligations regarding any part of its capital, issued or unissued, or for the issue of any shares, debentures, warrants, options, or other similar securities.

5.4 The Company is validly constituted and incorporated and has the requisite corporate power and is carrying on its business in the manner and in Hong Kong or the respective territories within the scope of its business licence and all relevant approval certificates and there is no suspension or cancellation of any such approvals, permits, authorities, licences or consents, the result of which may have a material adverse effect on the Company.

6. COMPLIANCE WITH CONSTITUTIONS

The copies of the memorandum of association and articles of the Company which have been produced to the Grantee are true and complete in all respects and have attached to them copies of all resolutions which are required by the applicable laws to be so attached. The Company has complied with its memorandum and articles of association in all respects and none of the activities, agreements, commitments or rights of the Company is ultra vires or unauthorised.

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7. FINANCIAL AND TAXATION

7.l The Audited Accounts and the Management Accounts have been prepared in accordance with the requirements of all relevant statutes and generally accepted accounting practice and policies applicable in Hong Kong and on a consistent basis and give a true and fair view of the state of affairs of the Company as at the Audited Accounts Date and the Management Accounts Date respectively and its results for the period ended on the Audited Accounts Date and six months ended on the Management Accounts Date, and make adequate provision for all actual liabilities, bad or doubtful debts, Taxation and adequate provision for or a note of (in accordance with good accounting practice) all contingent unqualified or disputed liabilities and all capital commitmentsand except where specified are not affected by any extraordinary, exceptional or non-recurring item.

7.2 The provision for Taxation in the Audited Accounts is sufficient to cover all Taxation assessed or liable to be assessed on the Company or for which the Company is then or may then be or become accountable in respect of profits, income, earnings, receipts, transfers, events and transactions up to the Audited Accounts Date.

7.3 The Company has duly complied with its obligations to account to the Tax and other regulatory authorities of Hong Kong or otherwise for all amounts for which it is or may become accountable in respect of Taxation.

8. NO MATERIAL ADVERSE CHANGE

The Company has carried on its business in the ordinary and usual course since the Audited Accounts Date and there has been no material adverse change, or any development reasonably likely to involve a prospective material adverse change, in the business, contractual, financial or trading position or prospects of the Company.

9. ASSETS

The assets of the Company are included in the Audited Accounts and all assets acquired since the Audited Accounts Date are solely the property of the Company and except as described in the Management Accounts are not subject to any Encumbrance or any agreement to give or create any Encumbrance otherwise than in the ordinary course of the business of the Company.

10. LIABILITIES

Except as described in the Audited Accounts and/or the Management Accounts, the Company has no recorded liabilities (including accounts payable) exceeding HK$100,000 or unrecorded or liabilities due or owing to any person, has not given any guarantee/indemnity or other form of security in favour of any person, and does not have any actual, contingent or deferred liability or commitment towards any person other than in the ordinary course of business. The Company had, as at the date of this Deed and up to Completion, no unrecorded liabilities, contingent liabilities and undisclosed commitments.

11. LITIGATION

11.1 Except as described in the Audited Accounts and/or the Management Accounts, the Company is not engaged in (nor is any director of the Company in relation to the affairs of the Company is engaged in) any legal proceedings (including litigation, arbitration and prosecution) which is of material importance and no such proceedings are pending or threatened, nor are there any facts likely to give rise to such proceedings known or which would on reasonable enquiry be known to the Company or its directors.

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11.2 No order has been made, or petition presented, or resolution passed or analogous proceedings instituted for the winding up of the Company; nor has any distress, execution or other process been levied in respect of the Company which remains undischarged; nor is there any unfulfilled or unsatisfied judgment or court order outstanding against the Company, nor has any receiver or receiver manager been appointed over all or any part of the undertaking and assets of the Company.

12. INDEBTEDNESS

Since the Audited Accounts Date, no circumstances or events have arisen or occurred such that any person is (or could, with the giving of notice and/or lapse of time and/or fulfilment of any condition and/or the making of any determination, become) entitled to payment of any indebtedness before its due date for payment by the Company, or to take any step to enforce any security for any indebtedness of the Company and no person to whom any indebtedness for borrowed money of the Company which is payable on demand has demanded or threatened in writing to demand repayment of the same, the cash and the bank balance of the Company shall be sufficient to repay all the liabilities of the Company as at the date of Completion.

13. COMPANY RECORDS

Since the Audited Accounts Date, the Company has kept and duly made up all requisite books of account (reflecting in accordance with all applicable legal requirement, minute books, registers, records and these and all other deeds and documents (properly stamped where necessary) belonging to or which ought to be in the possession of the Company and its seal are in the possession of the Company or the lender(s) to the Company (where such documents form part of the loan or security documents for loans made to the Company or documents required to be delivered under such loan or security documents).

14. NO OTHER SUBSIDIARIES

Save as Disclosed, the Company has no other subsidiaries or shares in any company.

15. INTELLECTUAL PROPERTY RIGHTS

15.1 To the Grantor’s knowledge and since the Audited Accounts Date, all intellectual property rights that are used or required by the Company in connection with its business is in full force and effect and is either vested in, and beneficially owned by, the Company, or is granted to the Company exclusive rights to use or apply such intellectual or industrial property rights by its proprietary owner or its authorised agents under legally valid and enforceable agreements.

15.2 To the Grantor’s knowledge and since the Audited Accounts Date, none of the intellectual or industrial property rights used by the Company is being claimed or opposed by any other person and all such intellectual and industrial property rights are valid and subsisting.

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16. THE COMPANY AND THE LAW

Since the Audited Accounts Date, the Company has conducted its business in all material respects in accordance with all applicable laws and regulations of Hong Kong, Macau, the PRC and any relevant jurisdiction and there is no order, decree or judgement of any court or any governmental agency of Hong Kong, Macau, the PRC or of any foreign country or jurisdiction outstanding against the Company which may have a material adverse effect upon the assets or business of the Company taken as a whole.

17. BUSINESS

Since the Audited Accounts Date, the Company has carried on its business in the ordinary and usual course.

18. THE COMPANY'S CONTRACTS

There are in force no powers of attorney given by the Company under seal. Except for usual authorities granted to, and ostensible authority held by, directors of the Company, no person, as agent or otherwise, is entitled or authorised to bind or commit the Company to any obligation not in the ordinary course of the Company's business.

19. ONEROUS CONTRACTS

The Company has not entered into any contract or commitment of an unusual or onerous nature which in the context of this Deed, might be material for disclosure since the Audited Accounts Date.

20. INVESTMENTS, ASSOCIATIONS AND BRANCHES

20.1 The Company is not the holder or beneficial owner of any class of shares or other capital of any other company or corporation (whether incorporated in Hong Kong or elsewhere), or interest in any partnership, joint venture, consortium, sole proprietorship or other unincorporated association.

20.2 the Company is not or has not agreed to become a member of any company, corporation (wherever incorporated) partnership, joint venture, consortium or other unincorporated association.

21. INSURANCE

21.1 Since the Audited Accounts Date, the Company has maintained insurance covers in respect of all risks and up to an extent that may reasonably be expected of a prudent businessman operating a business similar to that of the Company.

21.2 All insurance policies taken out or renewed by the Company since the Audited Accounts Date are valid and binding.

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22. EMPLOYMENT MATTERS

Except as described in the Audited Accounts and/or since the Audited Accounts Date, the Company is not bound or accustomed to pay any moneys other than in respect of normal remuneration, emoluments of employment, commission, performance bonus, other employment perquisites or pension benefits, to, or for the benefit of, any officer or employee of the Company.

23. NO MATERIAL NON-DISCLOSURE

There are no adverse material or substantial factors or circumstances known to the Grantor relating to the business or affairs of the Company which have not been disclosed to the Grantor.

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SCHEDULE 3

THIS DEED OF INDEMNITY AND GUARANTEE is dated

(1) GULFSTREAM CAPITAL PARTNERS, LTD, a company incorporated in Seychelles with limited liability and having its registered office at 1^st Floor, #5 DEKK House, De Zippora Street, P.O. Box 456, Providence Industrial Estate, Mahe, Republic of Seychelles(the “Grantor”);

(2) XIN HUA, holder of PRC Identity Card Number 522501197702277338, of 37/F, 500 Chengdu North Road, Huangpu District, Shanghai, the People’s Republic of China (the “Grantee”); and

(3) CHINA MOTION TELECOM (HK) LIMITED, a company incorporated in Hong Kong with limited liability and having its registered office at Suites 1105-1106, 11/F Chinachem Golden Plaza, 77 Mody Road, Tsim Sha Tsui East, Kowloon, Hong Kong (the “Company”).

WHEREAS:

(A) This Deed is supplemental to an option deed (the “Option Deed”) dated 25 October 2013 and entered into between, the Grantor as grantor and the Grantee as grantee in relation to, inter alia, the grant of an option to acquire the entire issued share capital of the Company.

(B) It is a condition of the Option Deed that the Grantor shall enter into this Deed to provide the Grantee and the Companies with a guarantee and indemnity subject to the terms and conditions herein contained.

NOW THIS DEED WITNESSES AND IT IS HEREBY AGREED as follows:

1.	(A)	In this Deed, expressions defined or to which a meaning is assigned in the Agreement shall, unless otherwise defined herein, bear the same meanings when used herein.
	(B)	In this Deed:
		(i)	“Relief” includes any relief, allowance, set off or deduction in computing profits or credit granted by or pursuant to any legislation or otherwise relating to all forms of Taxation;
		(ii)	“Taxation” means:
			(a)	any liability to any form of taxation whenever created or imposed and whether of Hong Kong or of any other part of the world and without prejudice to the generality of the foregoing includes profits tax, provisional profits tax, interest tax, salaries tax, property tax, estate duty, death duty, capital duty, stamp duty, payroll tax, withholding tax, rates, customs and exercise duties and generally any tax duty, impost, levy or rate or any amount payable to the revenue, customs or fiscal authorities whether of Hong Kong or of any other part of the world;

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			(b)	such an amount or amounts as is or are referred to in paragraph (iv) of this Clause; and
			(c)	all costs, interest, penalties, charges and expenses incidental or relating to the liability to taxation or the deprivation of Relief or of a right to repayment of taxation which is the subject of the indemnity and guarantee contained in Clause 2(A) to the extent that the same is/are payable or suffered by the Companies;
		(iii)	“Taxation Claim” includes any assessment, notice, demand or other documents issued or action taken by or on behalf of the Inland Revenue Department of Hong Kong or any other statutory or governmental authority whatsoever in Hong Kong or any other part of the world from which it appears that the Companies is liable or is sought to be made liable for any payment of any form of Taxation or to be deprived of any Relief or right to repayment of any form of Taxation which Relief or right to repayment would but for the Taxation Claim have been available to the Companies;
		(iv)	in the event of any deprivation of any Relief or of a right to repayment of any form of Taxation there shall be treated as an amount of Taxation for which a liability has arisen the amount of such Relief or repayment or (if smaller) the amount by which the liability to any such Taxation of the Companies would have been reduced by such Relief if there had been no such deprivation as aforesaid, applying the relevant rates of taxation in force in the period or periods in respect of which such Relief would have applied or (where the rate has at the relevant time not been fixed) the last known rate and assuming that the Companies had sufficient profits against which such Relief might be set or given; and
		(v)	“Companies” means the Company and the Subsidiaries.
	(C)	In this Deed, unless the context otherwise requires, the singular includes the plural and vice versa, words importing any gender include every gender and references to persons include firms, companies and corporations.
	(D)	In this Deed, references to clauses are to Clauses of this Deed.
2.	(A)	Without prejudice to any of the foregoing provisions of this Deed and subject as hereinafter provided, this Grantor hereby agrees with the Grantee and the Company that he will indemnify and guarantee and at all times keep them and each of them indemnified and guaranteed against Taxation falling on the Companies resulting from or by reference to any income, profits or gains earned, accrued or received on or before the Completion Date or any event or transaction on or before the Completion Date whether alone or in conjunction with any circumstances whenever occurring and whether or not such Taxation is chargeable against or attributable to any other person, firm or company.

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	(B)	The indemnity and guarantee contained in sub-clause (A) above shall not apply to Taxation falling on the Companies in respect of their current accounting periods or any accounting period commencing on or after the Completion Date unless liability for such Taxation would not have arisen but for some act or omission of, or transaction voluntarily effected by, the Companies(whether alone or in conjunction with some other act, omission or transaction, whenever occurring) without the prior written consent or agreement of this Grantor other than any such act, omission or transaction:
		(i)	carried out or effected in the ordinary course of business or in the ordinary course of acquiring and disposing of capital assets on or before the Completion Date; or
		(ii)	carried out, made or entered into pursuant to a legally binding commitment created on or before the Completion Date; or
		(iii)	consisting of the Companies ceasing, or being deemed to cease, to be a member of any group of companies or being associated with any other company for the purposes of any matter of Taxation.
3.	The indemnity and guarantee given by Clause 2 does not cover any Taxation Claim to the extent that such Taxation Claim arises or is incurred as a result of the imposition of Taxation as a consequence of any retrospective change in the law or practice coming into force after the Completion Date or to the extent that such Taxation Claim arises or is increased by an increase in rates of Taxation after such date with retrospective effect.
4.	No claim under this Deed shall be made by the Grantee and the Companies in respect of the same Taxation.
5.	In the event of any Taxation Claim arising, the Grantee and the Companies shall by way of covenant but not as a condition precedent to the liability of this Grantor hereunder give or procure that notice thereof is as soon as reasonably practicable given to this Grantor in the manner provided in Clause 10; and, as regards any such Taxation Claim, the Grantee and the Companies shall at the request of this Grantor take such action, or procure that such action be taken, as this Grantor may reasonably request to cause the Taxation Claim to be withdrawn, or to dispute, resist, appeal against, compromise or defend the Taxation Claim and any determination in respect thereof but subject to the Grantee and the Companies being indemnified and secured to his or their reasonable satisfaction by this Grantor against all losses (including additional Taxation), costs, damages and expenses which may be thereby incurred.
6.	(A)	If after this Grantor has made any payment pursuant to Clause 2 hereof, the Companies shall receive a refund of all or part of the relevant Taxation (whether pursuant to section 79 of the Inland Revenue Ordinance of Hong Kong or similar legislation elsewhere or otherwise) or a refund in respect of those amounts paid in previous accounting period prior to the Completion Date or any deferred tax liabilities provided in the financial statements of any of the Companies subsequently confirmed to be not required such company (if it shall receive such refund) shall repay or (if another of the Companies shall receive such refund) shall procure repayment by such Company, as the case may be to this Grantor) a sum corresponding to the amount of such refund less:

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		(i)	any expenses, costs and charges properly incurred by the Companies in recovering such refund; and
		(ii)	the amount of any additional Taxation which shall not have been taken into account in calculating any other payment made or to be made pursuant to this Clause but which is suffered by the Companies in consequence of such refund.
	(B)	Any payments due by this Grantor pursuant to the foregoing provisions of this Deed shall be increased to include such interest on unpaid tax as the Companies shall have been required to pay pursuant to section 71(5) or section 71(5A) of the Inland Revenue Ordinance (Chapter 112 of the Laws of Hong Kong) or similar legislation elsewhere or otherwise.
7.	The indemnities, guarantees, agreements and undertakings herein contained shall bind the personal representatives or successors of this Grantor and shall enure for the benefit of each party's successors or assigns.
8.	The whole or any part of the benefit of this Deed may be assigned by the Grantee and the Company.
9.	Any notice required to be given under this Deed shall be in writing and shall be delivered personally or sent by facsimile or by registered or recorded delivery post, postage prepaid to the respective party at the address set out herein or such other address as may have been last notified in writing by or on behalf of such party to the other parties hereto.  Any such notice shall be deemed to be served at the time when the same is handed to or left at the address of the party to be served and if served by post or facsimile transmission at the time he/it would have been received in the normal course of post or facsimile.
10.	This Deed is governed by and shall be construed in accordance with the laws of Hong Kong and the parties hereto hereby irrevocably submit to the non-exclusive jurisdiction of the courts of Hong Kong in relation to any proceedings arising out of or in connection with this Deed.

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IN WITNESS whereof this Deed of Indemnity and Guarantee has been duly executed by all parties hereto on the day and year first above written.

THE GRANTOR

EXECUTED AS A DEED   and SIGNED by COLIN TAY, its director   for and on behalf of   GULFSTREAM CAPITAL PARTNERS, LTD.   in the presence of:   ) ) ) ) ) ) ) ) )       /s/ Colin Tay

THE GRANTEE

SIGNED, SEALED and DELIVERED   by XIN HUA   in the presence of:   ) ) ) ) )         /s/ Xin Hua

SEALED with the COMMON SEAL   and SIGNED by COLIN TAY, its director   for and on behalf of   CHINA MOTION TELECOM (HK) LIMITED in the presence of:   ) ) ) ) ) ) ) ) )       /s/ Colin Tay

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IN WITNESS whereof this Deed has been executed on the day and year first above written.

THE GRANTOR

EXECUTED AS A DEED   and SIGNED by COLIN TAY, its director   for and on behalf of   GULFSTREAM CAPITAL PARTNERS, LTD.   in the presence of:   ) ) ) ) ) ) ) ) )       /s/ Colin Tay

THE GRANTEE

SIGNED, SEALED and DELIVERED   by XIN HUA   in the presence of:   ) ) ) ) )         /s/ Xin Hua

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EX-10.57

EXHBIIT 10.57

This Turnkey Upgrade Agreement (“Agreement”) is made on this 11^th day of November, 2013

BETWEEN

China Motion Telecom (HK) Limited, a company incorporated under the laws of Hong Kong, Special Administrative Region of the Peoples Republic of China, having its registered office at Suites 1105-1106, 11th floor, Chinachem Golden Plaza, 77 Mody Road, TsimShaTsui East, Hong Kong (“CMTHK”)

AND

VelaTel Global Communications, Inc., a company incorporated under the laws of the United States in the State of Nevada, having its registered office at 5950 La Place Court, Suite 160, California 92008 USA (“VelaTel”)

CMTHK and VelaTel are collectively referred to as “Customer.”

AND

New Host International Co., Ltd., a company incorporated under the laws of Brunei Darussalam having its registered office at Room 804, Sino Centre, 582-591 Nathan Road, Kowloon, Hong Kong (“Contractor”)

CMTHK, VelaTel and Contractor are each referred to as a “Party” and together as the “Parties”.

WHEREAS:

A. Customer wishes to acquire a turnkey solution for the expansion and upgrade of its telephony core network in Hong Kong, including hardware, software, billing and customer support solutions, and accounting reporting functions (“Project”), and has negotiated contracts for supply, installation and maintenance of the hardware and software comprising the Project from reputable vendors including ZTE Corporation (“ZTE”), Niceuc Communication Co., Ltd. (“Niceuc”)and Tectura Hong Kong Limited (“Tectura” and together with ZTE and Niceuc, collectively “Subcontractors”).

B. Contractor has expertise in coordinating and managing upgrade services similar to the Project and has agreed to contract directly with Subcontractors, to pay to each Subcontractor the amounts required for installation, maintenance and support of the Project equipment, to provide project management services in connection with the installation of the Project, and to assign warranty and other rights from Subcontractors to Customer as appropriate for Customer to have the full benefit of the Project.

NOW THEREFORE, in consideration of mutual representations, covenants and other valuable consideration, it is hereby agreed by and between the Parties as follows.

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ARTICLE 1          PURCHASE PRICE

The total purchase price payable by Customer to Contractor (“Purchase Price”) is itemized between the Subcontracted Amount, the Management Fee, and Finance Charges (each defined below).

1.1Subcontracted Amount. The aggregate amount payable to Subcontractors is US$2,437,139 (“Subcontracted Amount”), all as itemized on the quotation attached as Annex 1 to this Agreement (“Quotation”). The Subcontracted Amount shall be subject to adjustment for any VAT or other taxes due to any Subcontractor, and any change orders or other change in the scope of the Project mutually agreed in writing between Contractor and Customer (including approval of any lender of Customer whose consent is required). Customer may prepay the Subcontracted Amount, in whole or in part, without penalty, and with corresponding reduction in the Finance Charges.

1.2Management Fee. The management fee is US$365,571, which represents fifteen percent (15%) of the Subcontracted Amount (“Management Fee”). The Management Fee is subject to increase based on any increase in the Subcontracted Amount. The Management Fee covers any expense Contractor incurs associated with financing the Project, including payment of Subcontractor invoices in amounts and at times different from payments by Customer to Contractor, letter of credit expenses, and Contractor’s project management services associated with the Project. The Management Fee shall be fully earned upon execution of this Agreement, without regard to early repayment of the Subcontracted Amount or accrued Finance Charges.

1.3Finance Charges. After the Deferral Period (defined below), interest at the rate of seven and one-half percent (7.5%) per annum (“Finance Charges”) shall accrue on any outstanding balance of the Subcontracted Amount but not on the Management Fee.

ARTICLE 2          TERMS OF PAYMENT

2.1               The tenor for payment of the Purchase Price is a term of 72 months (“Term”). The Term shall commence upon the execution of the principal purchase orders between Contractor and ZTE and Niceuc (“Effective Date”). During the first twelve (12) months of the Term, no Finance Charges shall accrue, and no portion of the Purchase Price shall be payable (“Deferral Period”). Thereafter, the Purchase Price shall be paid in sixty (60) equal monthly installments commencing on the same calendar date that is thirteen (13) months after the Effective Date (“Commencement Date”), and on the same calendar day of each succeeding month during the remaining Term.

2.2               Each installment of the Subcontracted Amount plus Finance Charges (“P&I Installment”) shall be US$48,835. The amount of each P&I Installment allocated as Finance Charge is shown on the amortization schedule included in the Quotation. The amount of each P&I Installment and the amortization schedule shall be adjusted in the event of any adjustment to the Subcontracted Amount such that remaining P&I Installments after adjustment are equal.

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2.3               Each installment of the Management Fee (“Management Fee Installment”) shall be US$6,092.85. The Management Fee Installment amount shall be adjusted in the event of any adjustment of the Subcontracted Amount such that each of the remaining Management Fee Installments after adjustment are equal. Except in accordance with ARTICLE 4, no Finance Charges shall accrue on the Management Fee.

2.4               Should Customer elect to prepay any portion of the Subcontracted Amount, the amount of such prepayment in excess of the sum of the P&I Installment and the Management Fee Installment next due shall be applied first against the unpaid balance of the Subcontracted Amount of the following consecutive installments, until the same is paid in full, and then against the Management Fee. Any partial prepayment of either the Management Fee or the Subcontracted Amount shall not decrease subsequent P&I Installments or Management Fee Installments until one or both have been paid in full.

2.5               Should Customer fail to pay any P&I Installment, Management Fee Installment, or other amount required under this Agreement, within 10 days of its due date, Contractor shall thereafter have the right to issue and deliver to Customer a notice of delinquency, itemizing the amount in arrears and other circumstances surrounding such delinquency. Should Customer fail to cure such delinquency within five days of receipt of such notice, Contractor shall be entitled to declare Customer in default under this Agreement, and to exercise the remedies described in ARTICLE 4.

2.6               All payments shall be calculated in United States dollars. Customer shall be responsible for any fluctuation in exchange rates from other currencies that occur from time to time, and for any wire transfer or other bank charges associated with any payments. Unless otherwise directed by Contractor, all payments shall be made to Contractor’s bank account stated as follows:

Account name: [ • ]

Account number USD: [ • ]

Bank name: [ • ]

Swift code: [ • ]

Bank address: [ • ]

ARTICLE 3          TITLE TO EQUIPMENT AND COLLATERAL

3.1               Title to all equipment, software, and other property included in the Project, whether tangible or intangible, shall pass to Customer upon delivery to Customer’s business premises.

3.2               Until the Purchase Price is paid in full, Contractor shall have a purchase money security interest in all such equipment, software and other tangible and intangible property of Customer included in the Project. Customer shall cooperate with Contractor in signing or filing any papers necessary to perfect Contractor’s security interest under applicable law.

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ARTICLE 4          WARRANTY

Customer is familiar with the scope of warranty and service quality negotiated with each Subcontractor. Contractor’s warranty to Customer pursuant to this Agreement shall be co-extensive with the warranty to be contained in each contract between Contractor and each Subcontractor, each with identical duration and subject to the same limitations and exclusions as offered by each Subcontractor. Contractor agrees to assign all such Subcontractor warranties directly to Customer to the maximum extent allowed by law.

ARTICLE 5          REMEDIES

In the event of any delinquency noticed in accordance with Section 2.5 which is not timely cured, Contractor shall be entitled to exercise any of the following remedies, which shall be cumulative: (i) to declare the entire unpaid balance of the Subcontracted Amount, any accrued Finance Charges, and the Management Fee immediately due and payable, (ii) to foreclose Contractor’s security interest in any or all of the equipment and other tangible property as described in ARTICLE 3, and/or (iii) to seek specific performance of Customer’s unperformed obligations under this Agreement. In addition to all other remedies, after default, interest on the entire unpaid balance of the Purchase Price shall accrue at the default rate of eighteen percent (18%) per annum from the date of declaration of default pursuant to Clause 2.5.

ARTICLE 6          FORCE MAJEURE

Where the performance of either Party under this Agreement is hindered by or rendered impossible on account of Force Majeure, including earthquakes, typhoon, flood , fires, war and other unexpected or unavoidable forces in respect of their consequence or results, the Party in contingency shall provide notice to the other Party of such contingency immediately, and within 15 days shall present valid documents signed by the notarial agency of the locale, stating the details of the incident and proving the circumstance and the extended time of performance required. The Party in contingency shall be exempt from liability for damages caused to the other Party as a result of and during the pendency of any event constituting Force Majeure.

ARTICLE 7          APPLICABLE LAW AND RESOLUTION OF DISPUTES

7.1               This Agreement, including without limitation its conclusion, validity, construction, performance and settlement of the disputes, shall be governed by the law of Hong Kong, without giving effect to the principles of conflict of law. 

7.2               Any dispute arising from, or in connection with the Agreement shall be first settled through friendly negotiation by both Parties. In case no settlement to disputes can be reached through amicable negotiation by both Parties, the disputes shall then be submitted to Hong Kong International Arbitration Center (“HKIAC”) for arbitration before a single arbitrator to be conducted in English in accordance with its Arbitration Rules in force at the time of application for arbitration. The arbitration fees shall be borne by the losing party except otherwise awarded by the arbitrator.

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ARTICLE 8          GOVERNING LANGUAGE

The Agreement is entered in the English language. Should a translation of the Agreement into any other language be made for any reason, all matters involving interpretation shall be governed by the English text. The day-to-day language of communication and document transfer between the parties shall be English.

ARTICLE 9          NO JOINT VENTURE

Nothing in this Agreement shall be construed to constitute, create, give effect or recognize a joint venture partnership or formal business entity of any kind. Nothing shall be construed as providing for the sharing of profits or losses arising out of the efforts of either Party except as may be provided in any separate contract entered into between the parties (if any).

ARTICLE 10          NOTICES

Notices under this Agreement must be in writing, to be sent via overnight courier service, personal delivery, or by confirmed email or facsimile. If sent by confirmed personal delivery, notice will be effective at the time of delivery. If sent by overnight courier service, notice will be effective upon the actual time of delivery. If sent by confirmed email or facsimile, notice will be effective one business day after being sent. Notices should be sent to the address/email/facsimile for each Party shown immediately below the signature block for such Party. Any Party may change the details for delivery of notice to it by notice to the other Party delivered in accordance with this ARTICLE 9.

ARTICLE 11          NO WAIVER

The failure of either party to insist upon strict adherence to any term or condition of this Agreement on any occasion shall not be considered a waiver of any right to insist upon strict adherence to that term or condition or any other term or condition of this Agreement.

ARTICLE 12          MISCELLANEOUS

12.1            This Agreement and its Annexes constitutes the entire Agreement and understanding between the Parties with respect to the subject matter hereof, and there are no additional or other promises, representations, warranties or contracts or understandings, whether written or oral, except those as contained herein.

12.2            If any term or provision of this Agreement is held to be illegal or unenforceable, the validity or enforceability of the remainder of this Agreement will not be affected.

12.3            This Agreement may not be altered, modified, or waived in whole or in part, except in writing, signed by the Parties.

12.4            If there are any discrepancies exist between this Agreement and its Annexes, the provisions of this Agreement shall prevail.

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12.5            This Agreement may be executed in one or more counterparts, including facsimile copies of signatures, each of which shall be deemed to be an original and all of which, when taken together, shall be deemed to constitute one and the same agreement.

12.6            Contractor may assign and transfer its rights under this Agreement to any nominee who agrees to assume all duties and obligations of Contractor.

IN WITNESS WHEREOF, this Agreement has been duly signed by the Parties hereto, in duplicate, on the day written above.

For and on behalf of Customer: CHINA MOTION TELECOM (HK) LIMITED By: /s/ Yang Qun Name: Yang Qin Title: General Manager	For and on behalf of Contractor: NEW HOST INTERNATIONAL CO., LTD. By: /s/ Derrick Lin Name: Derrick Lin Title:
VELATEL GLOBAL COMMUNICATIONS, INC. By: /s/ Colin Tay Name: Colin Tay Title: President

Annex 1:   Quotation from Contractor, including Amortization Schedule and Summary of Quotations from Subcontractors

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EX-10.58

EXHIBIT 10.58

This Sales Contract (hereinafter referred to as the "Contract") is made on the 18^th day of November, 2013.

BETWEEN

China Motion Telecom (HK) Limited, a company incorporated in Hong Kong and having its registered office at Suites 1105-1106, 11th floor, Chinachem Golden Plaza, 77 Mody Road, TsimShaTsui East, Hong Kong (“CMTHK”) and New Host International Co., Ltd., a company incorporated in Brunei Darussalam having its registered office at Room 804, Sino Centre, 582-591 Nathan Road, Kowloon, Hong Kong (“New Host”) (hereinafter collectively and together referred to as “the Customer”),

AND

ZTE (H.K.) LIMITED, a company incorporated under the laws of Hong Kong SAR having its registered office at RM2907, 23/F, CHINA RESOURCES BUILDING, HARBOUR ROAD 26, HONGKONG. (hereinafter referred to as “ZTE”), which expression shall deem to mean and include its all successors-in-interest and assigns.

Customer and ZTE shall hereinafter be referred to individually as a “Party” and collectively as the “Parties”.

WHEREAS:

A) ZTE is a telecommunication network solutions provider and specializes in supplying telecom equipment, among which is CORE and VAS products and the corresponding software (hereinafter referred to as the "Products" or "Product"), as well as services associated with the engineering, installation, integration, optimization, post-installation maintenance of the Products, and training of Customer’s personnel in the operation of the Products (hereinafter referred to as the “Services”).

B) ZTE shall implement and install the project of CORE and VAS products in the Customer’s Network at the Site in accordance with this Sales Contract including all attached Annexes.

C) The Customer agrees to utilize the Products subject to the terms and conditions in the Sales Contract.

NOW THEREFORE, in consideration of mutual representations, covenants and other valuable consideration, it is hereby agreed by and between the Parties as follows.

ARTICLE 1          ZTE’S OBLIGATIONS

ZTE agrees to sell the Products to the Customer. The price of the Products is more particularly described in ANNEX 1: PRICED BOQ.

ZTE agrees that the Products shall be utilized to meet the requirements set out in ANNEX 2: TECHNICAL SPECIFICATIONS.

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ZTE and the Customer agree to the respective responsibilities set out in ANNEX 3: SCOPE OF WORK.

ZTE agrees to provide installation of the Products and other Services in accordance with the schedule and acceptance standards, tests, and KPIs set out in ANNEX 4: IMPLEMENTATION SCHEDULE AND ACCEPTANCE CRITERIA.

ZTE agrees that the Products come with a one year warranty commencing upon Preliminary Acceptance (as defined in ANNEX 4.1), the price of which is included in the purchase price (hereinafter referred to as “the Warranty Period”).

ZTE grants to the Customer a non-transferable and non-exclusive license to use the software for internal use only on the Products in accordance with the terms and conditions of this Contract.

Trade Terms is DDP Hong Kong, ZTE’s warehouse premises, with full protection of wooden packing boxes, with further payment by ZTE of (i) inland transportation, and (ii) insurance of Products until (iii) delivery to final installation location at Customer’s premises.

ZTE shall obtain the required approvals, permission and licenses for the import of the Products into the Customer’s Network.

ZTE shall obtain all necessary approvals, permission, permits and/or licenses from the relevant government agencies or entities of the Country for the import of the Products into the Customer’s Network.

ZTE shall pay costs and expenses incurred custom clearance including taxes and duties (if any) and as well as inland transportation and insurance of the Products to the final installation location at Customer’s premises.

ZTE shall utilize and certify the satisfactory performance of Products.

ARTICLE 2          CUSTOMER’S OBLIGATIONS

The Customer shall pay the total price of this contract which equals to Two Million Fifty Thousand Six Hundred Nine US Dollars (US Dollars 2,050,609) (“Contract Amount”) by telegraphic transfer (T/T) according to the following payment schedule:

For System Equipment and Engineering Service

-30% of Contract Amount will be paid within 30 days after signing the contract.

-30% of Contract Amount will be paid within 30 days after receipt of goods and inspection by Customer and ZTE to confirm all parts are received, and any “out of box” failure or due to transportation or handling damage shall be immediately replaced by ZTE.

-35% of Contract Amount will be paid within 30 days after Preliminary Acceptance Test as defined in ANNEX 4.1: PROJECT IMPLEMENTATION SCHEDULE.

-5% of Contract Amount will be paid within 30 days after Final Acceptance Test (as defined in ANNEX 4.1 PROJECT IMPLEMENTATION SCHEDULE). All Products and Services per the criteria, testing protocols, and KPIs set forth in ANNEX 4: IMPLEMENTATION SCHEDULE AND ACCEPTANCE CRITERIA.

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For Training

-100% of contract amount shown in ANNEX 5: TRAINING AGREEMENT will be paid within 30 days after accomplishing of the training.

For Maintenance and Support after warranty

-100% of contract amount shown in ANNEX 6: O&M SUPPORT SERVICE will be paid within 30days after issuing the O&M Support Service Contract. The O&M Support Service Contract will be issued upon expiration of the Warranty Period.

CMTHK and New Host hereby confirm and warrant that they as the co-Customer have the duty to pay ZTE under this Contract and CMTHK shall unconditionally pay ZTE in case New Host fails to pay ZTE in any circumstance.

ARTICLE 3          INSTALLATION AND COMMISSIONING

The Customer acknowledges and agrees that ZTE shall deliver, install and test, together with the Customer’s officials, the Products at the allocated Sites, and the same shall function satisfactorily in the Customer’s Network per the criteria, testing protocols, and KPIs set forth in ANNEX 4: IMPLEMENTATION SCHEDULE AND ACCEPTANCE CRITERIA..

If the Products are required to interface with equipment of any third parties, the Customer shall make available the access at their own cost and shall allow utilization of such equipment by ZTE.

ARTICLE 4          TESTING AND ACCEPTANCE

The Preliminary and Final Acceptance Tests (as defined in ANNEX 4.1 Project Implementation Proposal) of the Products shall be conducted, approved and signed jointly by ZTE and the Customer. The Preliminary and Final Acceptance Certificates (as defined in ANNEX 4.1 Project Implementation Proposal) shall also be issued and signed by the Customer.

ZTE shall assist Customer for the normal and stable running of the Products in accordance with the specifications described in ANNEX 2: TECHNICAL SPECIFICATIONS during the entire Warranty Period and provide maintenance support for the same.

ARTICLE 5          DOCUMENT AND TRAINING

ZTE agrees to provide the necessary documents and manuals for the installation, testing, operation and maintenance of the Products. ZTE agrees to prepare and provide the Customer course materials sufficient to support the training described ANNEX 5: TRAINING AGREEMENT.

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ARTICLE 6          WARRANTY AND LIMITATION OF LIABILITY

ZTE warrants that the Products provided by ZTE to the Customer hereunder will be free from defects in workmanship and materials and will conform to the technical specifications as set out in ANNEX 2: TECHNICAL SPECIFICATIONS under normal use and service during the entire Warranty Period.

ZTE shall not be liable under this warranty if its testing and examination discloses that the alleged defect in the Products does not exist or was caused by the Customer or its end user’s misuse, neglect, improper installation or testing, unauthorized attempts to repair, or by accident, fire, lightning or other hazard.

Notwithstanding any other provision of this Contract, neither the Customer nor ZTE shall be liable to the other Party for damages, loss of revenues or profits, loss of goodwill or any incidental, consequential, indirect or special damages in connection with the performance or non-performance of this Contract, whether or not ZTE was advised of the possibility of such damage.

The aggregate liability of ZTE under this Agreement shall in no event be more than the Contract Price.

Standard of Maintenance and Support are described in ANNEX 6: O&M SUPPORT SERVICE.

ARTICLE 7          TITLE OF THE PRODUCTS

The title or ownership to the Products shall be transferred to the Customer upon delivery of the Products to Customer’s Premises, subject to a security interest in ZTE’s favor against the full payment of this Contract, and if the Customer fails to pay the full Contract price or fails to perform other obligations under the terms and conditions of this Contract, the title or ownership to the Products shall revert to ZTE. Customer will cooperate in signing or filing any documents required for ZTE to perfect its security interest in the Products under applicable law.

ARTICLE 8          LIQUIDATED DAMAGES

8.1 From Supplier – If Supplier fails to deliver any Equipment and/or Services within the specified schedule time, except under those conditions defined as Force Majeure or due to Customer’s fault, Customer may claim from Supplier as liquidated damages a sum equivalent to zero point one percent (0.1%) of the contract value of the Equipment and/or Services delayed, which shall be applied on daily basis, from the due date until the full settlement of the delayed Equipment or Services. In any event, the aggregate sum of liquidated damages for any and all delays shall not exceed five per cent (5%) of the total value of the Equipment and/or Services delayed or any part thereof.

8.2 From Customer – If Customer fails to pay any sum due within the specified schedule, except under those conditions defined as Force Majeure or due to Supplier’s fault, Supplier may claim from Customer as liquidated damages a sum equivalent to zero point one percent (0.1%) of the overdue amount, which shall be applied on daily basis, from the due date until the full settlement of the delayed payment. In any event, the aggregate sum of liquidated damages for any such delay shall not exceed one percent (1%) per month of the outstanding unpaid balance due.

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8.3 Demands of liquidated damages – Upon demand for liquidated damages, the non-defaulting Party shall notify the defaulting Party the payable amount of liquidated damages in writing. The defaulting Party shall pay the liquidated damages within ten (10) Business Days after the receipt of the written notice. If the defaulting Party disagrees with the amount of liquidated damages, it shall notify the non-defaulting Party within five (5) Business Days after the receipt of the written notice. The liquidated damages shall be paid within ten (10) Business Days after consensus has been reached in respect of the amount of damages

ARTICLE 9          CONFIDENTIALITY

Either Party recognizes and acknowledges that it will access or have access to the proprietary, confidential and trade secrets, technical information or materials, software and data of the other Party, or of the other Party's suppliers (collectively, the "Confidential Information"). The receiving party agrees that it shall not disclose, sell, transfer, modify, translate, reproduce or otherwise cause the Confidential Information available to any third party and that it shall protect the same to the same extent it protects its own Confidential Information, but in no event will the receiving party exercise less than reasonable care in the protection thereof.

Confidential Information shall not be deemed to include information which:

(a) is rightfully possessed by the receiving party prior to the disclosure of such Confidential Information by the disclosing party;

(b) is subsequently acquired by the receiving party from an independent third party having a legal right to disclose the Confidential Information;

(c) becomes public knowledge, other than through an act or failure to act of the receiving party.

Unless otherwise agreed upon by ZTE in writing or is required by applicable law, the Customer or its agents, servants and/or employees shall not, without the prior written consent of ZTE, disclose the nature or results of the product trial testing being conducted or milestones and official release dates of any ZTE products or documentation.

ARTICLE 10          INTELLECTUAL PROPERTY

All patents, trade and service marks, design rights, copyrights, know-how, trade secrets and other intellectual and industrial property interests or rights in and to the Products shall remain the property of the ZTE and its third party suppliers, as appropriate. Nothing contained in this Contract shall be understood, construed, or interpreted to be a transfer of such rights.

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ARTICLE 11          FORCE MAJEURE

Where the performance hereof is hindered by or is absolutely impossible under the terms and conditions herein on account of Force Majeure, including earthquakes, typhoon, flood , fires, war and other unexpected, irresistible or unavoidable forces in respect of their consequence or results, the Party in contingency shall inform the other Party of such contingency by fax or telegram immediately, and within 15 days present valid documents signed by the notarial agency of the locale, stating the details of the incident and proving it is impossible to perform whole or part of this Contract or that extension of time of performance hereof is necessary. In case that this Contract is not able to be performed because of Force Majeure, the liabilities shall be exempted in part or wholly in light of the effects of Force Majeure. If the said Force Majeure lasts for 90 days, either of the Parties to the Contract shall have the right to terminate the Contract without incurring any liability under the said Contract.

ARTICLE 12          APPLICABLE LAW AND RESOLUTION OF DISPUTES

The Contract, including without limitation its conclusion, validity, construction, performance and settlement of the disputes, shall be governed by the law of Hong Kong Special Administrative Region of the People's Republic of China, without giving effect to the principles of conflict of law.

Any dispute arising from, or in connection with the Contract shall be first settled through friendly negotiation by both Parties. In case no settlement to disputes can be reached through amicable negotiation by both Parties, the disputes shall then be submitted Hong Kong International - Arbitration Center for arbitration in accordance with its arbitration rules in force at the time of application for arbitration. The arbitration shall proceed in Hong Kong and conducted in English before a single arbitrator. The arbitral award is final and binding upon both Parties. The arbitration fees shall be borne by the losing Party except otherwise awarded by the arbitration commission.

To the fullest extent permitted by law, this arbitration proceeding and the arbitrator’s award shall be maintained in confidence by the Parties so as to protect relevant valuable information or intellectual property rights.

Notwithstanding any reference to arbitration, both Parties shall continue to perform their respective obligations under the Contract except for those matters under arbitration.

ARTICLE 13          MISCELLANEOUS

Notices: Notices under this Contract must be in writing, to be sent via the regular post, postage prepaid, or by overnight courier service, personal delivery, or confirmed facsimile. If sent by confirmed facsimile, notice will be effective one business day after being sent. If sent by confirmed personal delivery, notice will be effective at the time of delivery. If sent by overnight courier service, notice will be effective upon the actual time of delivery. If sent by regular post, notice will be effective five (5) business days after deposit. Notices should be sent to the following addresses:

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CMTHK:

Suites 1105-1106, 11th floor, Chinachem Golden Plaza, 77 Mody Road, TsimShaTsui East, Hong Kong

Tel: 00852-22092270

Fax: 00852-22091270

Attn: Jamie Chang

New Host:

Room 804, Sino Centre, 582-591 Nathan Road, Kowloon, Hong Kong

Tel: 00852-23840332

Fax: 00852-27717211

Attn: Richard Liang

ZTE (H.K.) LIMITED

RM2307, 23/F, CHINA RESOURCES BUILDING, HARBOUR ROAD 26, HONGKONG.

Tel: 00852-25198983

Fax: 00852-25198986

Attn: Wang Antao

Language: This Contract is entered in the English language. Should a translation of the Contract into any other language be made for any reason, all matters involving interpretation shall be governed by the English text. The day-to-day language of communication and document transfer between the Parties shall be English.

Severability: It is mutually agreed that in case any one or more of the provisions of this Contract shall be invalid or unenforceable in any respect, such invalidity or unenforceability shall not affect the validity or enforceability of the other provisions of this Contract.

No Waiver: The failure of either Party to insist upon strict adherence to any term or condition of this Contract on any occasion shall not be considered a waiver of any right to insist upon strict adherence to that term or condition or any other term or condition of this Contract.

Entire Agreement: This Contract and its Annexes constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof, and there are no additional or other promises, representations, warranties or contracts or understandings, whether written or oral, except those as contained herein.

Written Changes: This Contract may not be altered, modified, amended, changed, rescinded or discharged in whole or in part, except by a written contract executed by both Parties.

Assignment. New Host shall have the right to assign its rights under this Contract to a nominee, subject to ZTE’s consent, such consent not to be unreasonably withheld, provided such nominee shall agree to assume all of New Host’s obligations under this Contract, and provided the credit facility of such nominee is equal to that of New Host.

This Contract may be signed in as many counterparts as may be necessary, each of which so signed shall be deemed to be an original (and each signed copy sent by electronic facsimile transmission shall be deemed to be an original), such counterparts together shall constitute one and the same instrument and, notwithstanding the date of the execution, shall be deemed to be effective as of the date set forth above.

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IN WITNESS WHEREOF, the Parties hereto have executed this Contract by their duly authorized representatives.

For and on behalf of: ZTE (H.K.) LIMITED By /s/ Wang Antao Wang Antao General Manager	For and on behalf of: CHINA MOTION TELECOM (HK) LIMITED By /s/ Yang Qin Yang Qin General Manager
	For and on behalf of: NEW HOST INTERNATIONAL CO., LTD. By /s/ Derrick Lin Derrick Lin

ANNEX 1: PRICED BOQ

ANNEX 2: TECHNICAL SPECIFICATION

ANNEX 3: SCOPE OF WORK

ANNEX 4: IMPLEMENTATION SCHEDULE AND ACCEPTANCE CRITERIA

ANNEX 5: TRAINING AGREEMENT

ANNEX 6: O&M SUPPORT SERVICE

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EX-10.59

EXHIBIT 10.59

Sales Contract

No: SZNCL2013070405A

Buyer: China Motion Telecom (HK) Limited

             Suites 1105-06, 11th floor, Chinachem Golden Plaza, 77 Mody Road, Tsimshatsui East, Kowloon, Hong Kong and

             New Host International Co., Limited

             Room 804, Sino Centre, 582-591 Nathan Road, Kowloon, Hong Kong

Seller: NICEUC COMMUNICATION CO., LIMITED

             Room 1401, Yuquan Road, Nanshan District, Shenzhen, Guangdong province, China

This Sales Contract is made by and between the Seller and the Buyer whereby the Seller agrees to sell and the Buyer agrees to buy the mentioned devices according to Appendix A and Appendix B.

1. List of devices: Appendix A and Appendix B of this contract.

2. Total Amount:

             USD 256,314.00 only (USD TWO HUNDRED FIFTY-SIX THOUSAND THREE HUNDRED FOURTEEN DOLLARS ONLY)

3. Time of Shipment: Three working days after Buyer delivers notice to proceed to Seller.

4. Term of Shipment: by Express.

5. Shipment Address: Suites 1105-06, 11th floor, Chinachem Golden Plaza, 77 Mody Road, Tsimshatsui East, Kowloon, Hong Kong

6. Payment Terms:

6-1) All the involved amount is in USD dollars.

6-2) The Freight is on the Seller's account.

6-3) The Buyer should pay for the 60% of the amount USD 180,226.8 (USD ONE HUNDRED EIGHTY THOUSAND TWO HUNDRED TWENTY-SIX AND EIGHTY CENTS ONLY) within one month after received and installed the devices. Installation shall be performed by Seller at Seller’s cost.

6-4) The rest 40% of the amount USD 120,151.2 (USD ONE HUNDRED TWENTY THOUSAND ONE HUNDRED FIFTY-ONE AND TWENTY CENTS ONLY) should be paid by the Buyer after the check and approval of the devices or within three months, whichever is greater.

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6-5) All the payment that paid by the Buyer should enter into the following Account:

Bank Name:	HSBC Hong Kong
Bank Address:	1 Queen's Road Central, Hong Kong
Bank Code:	004
SWIFT Address:	HSBCHKHHHKH
Account Number:	561 825076 838
Account Name	NICEUC COMMUNICATION CO.,LIMITED

7. Technical support: provided by the Seller via phone or the internet or on-site support.

8. Services after sales:

8-1) Warranty: one year; the Seller provides the devices and the software listed in Appendix A and B with a warranty of one year after the check and approval of the system. If there is any loss to the Buyer caused by the products provided by the Seller don't meet the above warranty, the Buyer shall have the right to return of the goods or request a replacement If damage to the devices is caused by human factors (such as improperly using, plugging when power on, etc.) or by the Force majeure, will not be within the scope of this warranty. By the mutual agreement, the Seller will carefully consider the situation and ask the Buyer to pay the reasonable cost.

8-2) After the warranty expires, the Seller will provide a payable and lifelong maintenance; the annual cost of maintenance is the 8% of the amount of this contract, which payment for the first year after warranty is included in the itemized contract price shown in Appendix A and B.

8-3) During the warranty period: the Seller shall provide the Buyer with spare parts to be stored in the equipment room of the Buyer. The quantity of spare parts at Buyer’s equipment room shall be sufficient for system maintenance during the warranty period and any extended maintenance period. When there is damage, the damaged part shall be replaced by the spare part, then Buyer shall ship the damaged part to the Seller to repair or replace.

8-4) The maintenance for the software during the warranty period: 7*24 remote technical support by phone or internet. Where in person maintenance is required, the Seller shall arrive at Buyer’s site within 24 hours after notice from the Buyer. If additional functional modules are required based on the original system, Buyer and Seller shall mutually determine the workload of development, then discuss further.

9. Liability for Breach:

9-1) If the Seller is unable to provide the devices/software covered by this contract in the agreed the schedule because of its own factors (excluding increased requirements from the Buyer, or delay of the project cause by impact from a third party not in Seller’s control), the Buyer have the right to seek liability for Breach. For delay of each day, the penalty is at 0.1% of the total amount of the contract, the total penalty should not exceed over 100% of the product. If the late delivery is over two week, the Buyer shall hold the right to terminate the contract. If the Buyer fails to pay the contract price on schedule due to its own actions, the penalty is at 0.1% of the total amount of the contract, the total penalty should not exceed over 100% of the product.

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10. Force Majeure:

Where performance of either party under this contract is hindered by or is absolutely impossible on account of Force Majeure, including earthquakes, typhoon, flood , fires, war and other unexpected, irresistible or unavoidable forces in respect of their consequence or results, the party in contingency shall inform the other party of such contingency immediately, in which case the liabilities shall be exempted in part or wholly in light of the effects of Force Majeure. If the said Force Majeure lasts for 90 days, either of the parties shall have the right to terminate the contract without incurring any liability.

11. Remark:

11-1) In the event of any dispute caused by this contract, the parties shall attempt in the first distance to resolve through friendly consultations. If they cannot reach an agreement, then both parties should submit the dispute arbitration to the Hong Kong Arbitration Center for arbitration in accordance with its arbitration rules in force at the time of application for arbitration. The arbitration shall proceed in Hong Kong and conducted in English before a single arbitrator. The arbitral award is final and binding upon both Parties. The arbitration fees shall be borne by the losing Party except otherwise awarded by the arbitration commission.

11-2) This contract is in duplicates respectively in Chinese and English with equal legal binding effect, in case of discrepancy, the English version shall prevail. This contract may be executed in one or more counterparts, including facsimile copies of signatures, each of which shall be deemed to be an original and all of which, when taken together, shall be deemed to constitute one and the same agreement.

11-3) The Contract, including without limitation its conclusion, validity, construction, performance and settlement of the disputes, shall be governed by the law of Hong Kong Special Administrative Region of the People's Republic of China, without giving effect to the principles of conflict of law.

SIGNATURES OF THE PARTIES APPEAR ON THE FOLLOWING PAGE

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For Buyer: China Motion Telecom (HK) Limited /s/ Jim Yang (authorized signature and company chop) Print Name: Jim Yang	For Seller: NICEUC COMMUNICATION CO.,LIMITED /s/ Young Peng (authorized signature and company chop) Print Name: Young Peng
New Host International Co., Limited /s/ Derrick Lin (authorized signature and company chop) Print Name: Derrick Lin

Date: ___________________

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Appendix A                     Contract Number: SZNCL2013070405A

I	AFP System
No	Item	Quantity	Unit price (USD)		Amount (USD)
1	AFPSystem	1.00	$82,302.00		$82,302.00
2	NC-AD300D MAP	1.00	$19,704.75		$19,704.75
Subtotal					$102,006.75
Ⅱ	RGP System
No	Item	Quantity		Unit price (USD)	Amount (USD)
1	RGP System	1.00		$56,502.00	$56,502.00
2	NC-AD300D MAP	1.00		$19,704.75	$19,704.75
Subtotal					$76,206.75
Ⅲ	Ring-back platform
No	Item	Quantity		Unit price (USD)	Amount (USD)
1	Software for Ring-back platform	1.00		$0.00	$0.00
2	Interface module of WEB database	1.00		$5,160.00	$5,160.00
3	NC-AD300D	2.00		$9,191.25	$18,382.50
Subtotal					23,542.50
Ⅳ	Upgrade of MAP signaling monitoring system
No	Item	Quantity		Unit price (USD)	Amount (USD)
1	Upgrade of MAP signaling monitoring system	1.00		$12,255.00	$12,255.00
Subtotal					$12,255.00
Ⅴ	SM-Res System
No	Item	Quantity		Unit price (USD)	Amount (USD)
1	Business processing software of Routing Info For SM-Res	1.00		$3,612.00	$3,612.00
2	NC-AD300D MAP	1.00		$19,704.00	$19,704.00
Subtotal					$23,316.00
Sum					$237,327.75
Ⅵ	Per year cost for maintenance (after expiration of one year warranty)
No	Item	Quantity		Unit price (USD)	Amount (USD)
1	One year's cost for maintenance	1		$18986.25	$18986.25
Total					$256,314.00

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Appendix B                     Contract Number: SZNCL2013070405A

I	MAP Message Convert for Singapore StarHub Project
No	Item	Quantity	Unit price (USD)	Amount (USD)
1	NC-AD300D	2.00	$15,032.00	$30,064.00
	MAP Message Covert Software	1	$14,000.00	$14,000.00
Subtotal				$44,064.00
Total				$44,064.00

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EX-10.61

EXHIBIT 10.60

STOCK PURCHASE AGREEMENT

THIS STOCK PURCHASE AGREEMENT (“Agreement”) is made as of the 30th day of September, 2013 (“Effective Date”) by and between (1) Gulfstream Capital Partners Limited (“Gulfstream”), a corporation organized under the laws of Seychelles and a wholly owned subsidiary of VelaTel Global Communications, Inc. (“VelaTel” or together with Gulfstream “Seller”) and (2) Aerial Investments, LLC, a limited liability company organized under the laws of the United States (Delaware) (“Purchaser”) for the purchase and sale of 75 out of 100 shares outstanding of the capital stock (“Zapna Stock”) of Zapna, ApS, a corporation organized under the laws of Denmark (“Company”). Seller and Purchaser are each sometimes referred to individually in this Agreement as a “Party” and together as “Parties.”

RECITALS

A.     VelaTel is the owner of 75 shares of Zapna Stock. Ahmad Holdings and/or Omair Khan (collectively and as their interests appear “Minority Owner”) is the owner of the remaining 25 shares of Zapna Stock.

B.     The Company offers solutions for telephony operators and subscribers (and adaptable to wireless broadband operators and subscribers) including mobile application IP rights, prepaid and postpaid billing platforms, front end portals, administration modules, roaming, SMS and voice termination services, and products to deliver such services.

C.     Seller desires to sell its interest in the Zapna Stock. Pursuant to the stock purchase agreement between Seller and Minority Owner (“2012 SPA”), Minority Owner has (1) a right of first refusal to acquire Seller’s Zapna Stock on the same terms as offered by Purchaser, and (2) a tag along option to sell its Zapna Stock to Purchaser on the same terms as Seller.

D.     Purchaser is willing to acquire either the 75 shares of Zapna Stock owned by Seller or all 100 shares of Zapna Stock owned by both Seller and Minority Owner. Purchaser enters into this Agreement subject to the rights of Minority Owner.

NOW, THEREFORE, for good and valuable consideration, the Parties to this Agreement agree as follows:

AGREEMENT

1.     Purchase and Sale of Zapna Stock.

The securities that are the subject of this Agreement are shares of Zapna Stock.

1.1     Sale of Zapna Stock. Subject to the terms and conditions of this Agreement, Seller shall sell and deliver to Purchaser at the Closing, and Purchaser shall purchase from Seller 75 shares of Zapna Stock, which shall represent 75% of the total shares of Zapna Stock issued and outstanding as of the Closing (“Purchased Shares”).

1.2     Purchase Price. The purchase price (“Purchase Price”) for the Purchased Shares is US$75, which Purchaser shall deliver to Seller at Closing, plus an assignment of Seller’s Rights against Minority Owner, as described in the following Section 1.3.

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1.3     Assignment of Additional Rights. As additional consideration and part of the Purchase Price, Seller assigns to Purchaser at Closing, without warranty, all rights, if any, Seller may have (1) against Minority Owner related to the Company, whether arising from breach of any representation or warranty Minority Owner made in connection with the 2012 SPA, from Minority Owner’s Management of the Company since closing of the 2012 SPA, and/or from conduct or circumstances described in Section 2.5, and/or (2) for financial benefits (or detriments) applicable to Seller’s ownership of the Zapna Stock for the period commencing July 1, 2013 and through Closing of this Agreement.

1.4     Closing; Delivery. The closing of this Agreement (“Closing”) shall take place on the earlier to occur of (1) expiration of Minority Owner’s right of first refusal and tag along rights, which shall occur 30 days following delivery by Seller to Minority Owner of a notice containing the terms of this Agreement, or (2) immediately following receipt by Seller from Minority Owner that Minority Owner (a) declines to exercise either its right of first refusal, or (b) exercises or declines to exercise its tag along rights. Immediately following the Closing, Seller shall cause the transfer and delivery of the Purchased Shares in the name of Purchaser.

1.5     Minority Owner’s Right of First Refusal. Purchaser acknowledges and agrees to honor Minority Owner’s right of first refusal. If Minority Owner delivers notice of its election to exercise its right of first refusal, (1) Seller shall pay the Purchase Price to Minority Owner, Seller shall cause the transfer and deliver the Purchased Shares in the name of Minority Owner or as Minority Owner directs, and (3) Seller shall waive any rights it otherwise assigns to Purchaser under Section 1.3 of this Agreement, and Seller shall instead release Minority Owner from any and all claims related to the Company.

1.6     Minority Owner’s Tag-Along Right. Purchaser acknowledges and agrees to honor Minority Owner’s tag along rights in lieu of Minority Owner’s right of first refusal. If Minority Owner delivers notice of its election to exercise its tag along rights, including Purchaser’s agreement to all of the terms of this Agreement, (1) Purchaser shall pay Minority Owner at Closing US$25, (2) Minority Owner shall cause the transfer and delivery of all 25 shares of its Zapna Stock in the name of Purchaser, and (3) Purchaser shall waive its assigned rights described under Section 1.3, and Purchaser shall instead release Minority Owner from any and all claims related to the Company.

2.     Representations and Warranties of Seller. Seller hereby represents and warrants to Purchaser that the following representations are true and complete as of the date of the Agreement.

2.1     Organization and Qualification of Seller. Seller is a corporation, and has all requisite power and authority to carry on his business as presently conducted and as proposed to be conducted. Seller has full power and authority to enter into this Agreement.

2.2     Authorization. Subject to the exercise or expiration of Minority Owner’s rights, all actions required to be taken by Seller in order to enter into the Agreement, and all actions necessary for the execution and delivery of the Agreement, and to sell, transfer and deliver to Purchaser the Purchased Shares, have been taken or will be taken prior to the Closing. The Agreement, when executed and delivered by Seller, shall constitute a valid and legally binding obligation of Seller, enforceable against Seller in accordance with its terms.

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2.3     Capitalization of the Company and any Subsidiary.

(a)     The authorized Capital Stock of the Company consists of 100 common shares, all of one class, of which 100 are outstanding.

(b)     To the best of Seller’s knowledge, the Company has no Subsidiaries.

2.4     Ownership of Purchased Shares. Seller is the lawful record beneficial owner of the Purchased Shares. Seller owns the Purchased Shares free and clear of all liens and encumbrances. Upon delivery of the Purchased Shares to Purchaser in accordance with this Agreement, Purchaser will acquire the beneficial and legal, valid and indefeasible title to such Purchased shares, free and clear of all liens and encumbrances except for restrictions on transfer under state and federal securities laws and liens or encumbrances created by or imposed by the Purchaser.

2.5     Disclaimer of Other Representations Concerning the Company. Seller has provided Purchaser, without warranty, with all financial information in Seller’s possession regarding the Company between closing of the 2012 SPA and June 30, 2013. Purchaser acknowledges that Minority Owner has refused to cooperate with Seller to provide any financial information regarding the Company for any period of time commencing July 1, 2013. Seller’s inability to accurately report the financial results of the Company on its consolidated financial statements for the period of time commencing July 1, 2013 is the basis of Seller’s assignment to Purchaser of the financial benefits (or detriments) described in Section 1.3. Seller has no direct evidence but has a reasonable suspicion that Minority Owner may have transferred contractual rights and/or revenue belonging to the Company to other companies affiliated with Minority Owner, including a purported subsidiary of the Company organized in Pakistan. Except as provided in Sections 2.3 and 2.4, Seller expressly disclaims any representations or warranties regarding the past or future financial, legal or other status of the Company. Purchaser acknowledges that this transaction is made “as is, where is,” and that the Purchase Price reflects the disclaimers contained in this Section.

3.     Representations and Warranties of the Purchaser. Purchaser hereby represents and warrants to Seller that:

3.1     Authorization. Purchaser has full power and authority to enter into the Agreement. The Agreement, when executed and delivered by Purchaser, will constitute valid and legally binding obligations of Purchaser, enforceable in accordance with their terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance, and any other laws of general application affecting enforcement of creditors’ rights generally, and as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies.

3.2     Disclosure of Information; Investment Experience. Purchaser has had an opportunity to discuss the Company’s business, management, financial affairs with Seller, but not with the Company’s management. Purchaser represents that Purchaser is experienced in evaluating and investing in transactions involving companies in a similar stage of development and acknowledges that Purchaser is able to fend for itself, can bear the economic risk of Purchaser’s investment, and has such knowledge and experience in financial and business matters.

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4.     Mutual Representations of the Parties. Each Party hereby represents to the other (Seller’s representations apply to each of Seller, the Company and the Company’s Subsidiaries, as applicable; Purchaser’s representations apply to Purchaser and any affiliate of Purchaser, as applicable):

4.1     Foreign Corrupt Practices Act. To the best of the representing Party’s knowledge, neither the Party, nor any of their respective directors, officers or employees have made, directly or indirectly, any payment or promise to pay, or gift or promise to give or authorized such a promise or gift, of any money or anything of value, directly or indirectly, to: (i) any foreign official (as such term is defined in the US Foreign Corrupt Practices Act (“FCPA”) for the purpose of influencing any official act or decision of such official or inducing him or her to use his or her influence to affect any act or decision of a governmental authority; or (ii) any foreign political party or official thereof or candidate for foreign political office for the purpose of influencing any official act or decision of such party, official or candidate or inducing such party, official or candidate to use his, her or its influence to affect any act or decision of a foreign governmental authority, in the case of both (i) and (ii) above, in order to assist the representing Party or their respective affiliates to obtain or retain business for, or direct business to, the representing Party or their respective affiliates, as applicable. Neither the representing Party, nor any of their respective directors, officers or employees has made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment of funds or received or retained any funds in violation of any law, rule or regulation.

4.2     Compliance with Office of Foreign Assets Control.

(a)To the representing Party’s knowledge, neither the Party, nor any of their respective directors, officers or employees is an OFAC Sanctioned Person (as defined below). The representing Party and their respective directors, officers or employees are in compliance with, and have not previously violated, the US Patriot Act of 2001, as amended through the date of this Agreement, to the extent applicable to the representing Party, and all other applicable anti-money laundering laws and regulations. None of: (i) the purchase and sale of the Zapna Stock or the VELA Shares; (ii) the execution, delivery and performance of this Agreement; or (iii) the consummation of any transaction contemplated hereby or thereby, or the fulfillment of the terms hereof or thereof, will result in a violation by anyone of any of the OFAC Sanctions (as defined below) or of any anti-money laundering laws of the United States or any other applicable jurisdiction.

(b)     For the purposes of Section 4.2(a) of this Agreement:

(i)     “OFAC Sanctions” means any sanctions program administered by the Office of Foreign Assets Control of the US Department of the Treasury (“OFAC”) under authority delegated to the Secretary of the Treasury (“Secretary”) by the President of the US or provided to the Secretary by statute, and any order or license issued by, or under authority delegated by, the President or provided to the Secretary by statute in connection with a sanctions program thus administered by OFAC. For ease of reference, and not by way of limitation, OFAC Sanctions programs are described on OFAC's website at www.treas.gov/ofac;

(ii)     “OFAC Sanctioned Person” means any government, country, corporation or other entity, group or individual with whom or which the OFAC Sanctions prohibit a US Person from engaging in transactions and includes, without limitation, any individual or corporation or other entity that appears on the current OFAC list of Specially Designated Nationals and Blocked Persons (“SDN List”). For ease of reference, and not by way of limitation, OFAC Sanctioned Persons other than governments and countries can be found on the SDN List on OFAC's website at www.treas.gov/offices/enforcement/ofac/sdn; and

(iii)     “US Person” means any US citizen, permanent resident alien, entity organized under the laws of the US (including foreign branches), or any person (individual or entity) in the US and, with respect to the Cuban Assets Control Regulations, also includes any corporation or other entity that is owned or controlled by one of the foregoing, without regard to where it is organized or doing business.

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6.     Indemnification.

Each Party agrees to defend, indemnify and hold harmless the other Party and its successors, permitted assigns, employees, officers, agents, managers, shareholders and affiliates, from and against any and all losses, deficiencies, liabilities, damages, assessments, judgments, costs and expenses, including reasonable attorneys’ fees (both those incurred in connection with the defense or prosecution of an indemnity claim and those incurred in connection with the enforcement of this provision) resulting from or arising out of (i) any failure of the indemnifying Party to perform or fulfill any undertaking, covenant or agreement applicable to such Party in this Agreement, and (ii) any material breach of a representation and warranty contained in Sections 2-4 of this Agreement and applicable to the indemnifying Party.

7.     Miscellaneous.

7.1     Survival of Warranties. Unless otherwise set forth in this Agreement, the representations and warranties of Seller and Purchaser contained in or made pursuant to this Agreement shall survive the execution and delivery of this Agreement and the Closing, and shall in no way be affected by any investigation or knowledge of the subject matter thereof made by or on behalf of Seller or Purchaser.

7.2     Successors and Assigns. The terms and conditions of this Agreement shall inure to the benefit of and be binding upon the respective successors and assigns of the Parties. Nothing in this Agreement, express or implied, is intended to confer upon any party other than the Parties hereto or their respective successors and assigns any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement.

7.3     Governing Law. This Agreement is made and any controversy arising out of or relating to this Agreement shall be governed by, and construed and enforced in accordance with, the laws of California, without regard to the conflict of laws principles thereof.

7.4     Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement.

7.5     Notices. All notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed effectively given upon the earlier of actual receipt or: (i) personal delivery to the Party to be notified; (ii) when sent, if sent by electronic mail or facsimile during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day; (iii) five (5) days after having been sent by registered or certified mail, return receipt requested, postage prepaid; or (iv) one (1) business day after deposit with a worldwide recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt. All communications shall be sent to the respective Parties at their address as set forth on the signature page, or to such e-mail address, facsimile number or address as subsequently modified by Notice given in accordance with this Section.

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7.6     Finder’s Fee and Commission. Purchaser represents that it neither is nor will be obligated for any finder’s or broker’s fee or commission in connection with this transaction. Purchaser agrees to indemnify and to hold harmless Seller from any liability for any commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction, including the costs and expenses of defending against such liability or asserted liability. Seller represents that it neither is nor will be obligated for any finder’s or broker’s fee or commission in connection with this transaction. Seller agrees to indemnify and hold harmless Purchaser from any liability for said commission or compensation in the nature of a finder’s or broker’s fee arising out of this transaction, including the costs and expenses of defending against such liability or asserted liability.

7.7     Dispute Resolution. Any dispute between the Parties to this Agreement which arises out of or relates to this Agreement shall be submitted to binding arbitration to be conducted by the Judicial Arbitration and Mediation Services, Inc. (“JAMS”), sitting in San Diego, California, for resolution by a single arbitrator acceptable to both Parties. If the Parties fail to agree to an arbitrator within ten (10) days of a written demand for arbitration being sent by one Party to the other Party, then JAMS shall select the arbitrator according to the JAMS Rules for Commercial Arbitration. The arbitration shall be conducted pursuant to the California Code of Civil Procedure and the California Code of Evidence. The award of the arbitrator shall be final and binding on the Parties and may be enforced by any court of competent jurisdiction. The Party prevailing in the arbitration shall be entitled to recover from the non-prevailing Party its reasonable attorney fees and other costs and expenses incurred in connection with the arbitration and/or any action to enforce the results of the arbitration.

7.8     Attorney Fees. If any action at law or in equity (including arbitration) is necessary to enforce or interpret the terms of any of this Agreement, the prevailing Party shall be entitled to reasonable attorneys’ fees, costs and necessary disbursements in addition to any other relief to which such Party may be entitled.

7.9     Severability. The invalidity or unenforceability of any provision hereof shall in no way affect the validity or enforceability of any other provision.

7.10     Delays or Omissions. No delay or omission to exercise any right, power or remedy accruing to any Party under this Agreement, upon any breach or default of any other Party under this Agreement, shall impair any such right, power or remedy of such non-breaching or non-defaulting Party nor shall it be construed to be a waiver of any such breach or default, or an acquiescence therein, or of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver of any other breach or default theretofore or thereafter occurring. Any waiver, permit, consent or approval of any kind or character on the part of either Party of any breach or default under this Agreement, or any waiver on the part of either Party of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement or by law or otherwise afforded to either Party, shall be cumulative and not alternative.

7.11     Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the Parties with respect to the subject matter hereof, and any other written or oral agreement relating to the subject matter hereof existing between the Parties is expressly canceled.

7.12     Counterparts. This Agreement may be executed in one or more counterparts, including facsimile copy of signatures, each of which shall be deemed to be an original copy of this Agreement, and all of which, when taken together, shall constitute one and the same Agreement.

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IN WITNESS WHEREOF, the parties have executed this Stock Purchase Agreement effective as of the date first above written.

GULFSTREAM CAPITAL PARTNERS, LTD.     By /s/ Colin Tay Colin Tay, its Executive Director   2^nd Floor, No. 86 Fu Xin South Road Sec 2 Taipei 106, TAIWAN E-Mail: ctay @velatel.com AERIAL INVESTMENTS, LLC     By /s/ Sandra Haxby Sandra Haxby, its Managing member   c/o The Company Corporation 2711 Centerville Road Wilmington, DE 19808 E-Mail: smoxie7@gmail.com

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EX-31.1

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A)

I, George Alvarez, certify that:

1.   I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2013 of VelaTel Global Communications, Inc. (“this Report”);

2.   Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this Report;

3.   Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) for the registrant and have:

a.   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b.   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions after the effectiveness of the disclosure controls and procedures, as of the end of the periods covered by this Report based on such evaluation; and

d.   Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.   Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 19, 2013	By: /s/ George Alvarez
	George Alvarez, Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULE 13A-14(A)/15D-14(A)

I, Carlos Trujillo, certify that:

1.   I have reviewed this quarterly report on Form 10-Q for the period ended September 30, 2013 of VelaTel Global Communications, Inc.(“this Report”);

2.   Based on my knowledge, this Report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances made, not misleading with respect to the period covered by this Report;

3.   Based on my knowledge, the financial statements, and other financial information included in this Report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this Report;

4.   The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a.   Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this Report is being prepared;

b.   Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.   Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this Report our conclusions after the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this Report based on such evaluation; and

d.   Disclosed in this Report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.   The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a.   All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b.   any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Dated: November 19, 2013	By: /s/ Carlos Trujillo
	Carlos Trujillo, Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of VelaTel Global Communications, Inc. ("Company") on Form 10-Q for the period ended September 30, 2013, as filed with the United States Securities and Exchange Commission (“SEC”) on the date hereof (“this Report”), I, George Alvarez, Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. §. 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(i) this Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in this Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: November 19, 2013	By: /s/ George Alvarez
	George Alvarez, Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT

TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of VelaTel Global Communications, Inc. ("Company") on Form 10-Q for the period ended September 30, 2013 as filed with the United States Securities and Exchange Commission (“SEC”) on the date hereof (“this Report"), I Carlos Trujillo, Chief, Financial Officer of the Company, certify, pursuant to 18 U.S.C. §. 1350, as adopted pursuant to §. 906 of the Sarbanes-Oxley Act of 2002, that:

(i) this Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(ii) the information contained in this Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated: November 19, 2013	By: /s/ Carlos Trujillo
	Carlos Trujillo, Chief Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

EX-99.1

Exhibit 99.1

Temporary Hardship Exemption

IN ACCORDANCE WITH THE TEMPORARY HARDSHIP EXEMPTION PROVIDED BY RULE 201 OF REGULATION S-T, THE DATE BY WHICH THE INTERACTIVE DATA FILE IS REQUIRED TO BE SUBMITTED HAS BEEN EXTENDED BY SIX BUSINESS DAYS.