Deferred Compensation

6 Months Ended

Jun. 30, 2014

7.	DEFERRED COMPENSATION

Deferred compensation represented the unpaid compensation due to the Company’s CEO, Mr. Fang. As of December 31, 2012, the Company had ending balances of deferred compensation in the amount of $823,313 and related interest of $183,804 accrued at annual interest of 4%. For the year of 2013, the Company had accrued additional yearly deferred compensation in amount of $78,300 along with interest of $34,626 and only made interest payment of $20,000. In December 2013, the CEO had decided to cancel partial of deferred compensation in the amount of $400,000 along with related accrued interest of $163,804. As a result of forgiveness of compensation and interest, an amount of $563,804 was credited to the Company’s additional paid in capital account. At December 31, 2013, the Company had remaining outstanding balance of $501,613 as deferred compensation along with related accrued interest of $34,626. The Company had accrued additional quarterly deferred compensation and interest in amount of $25,800 and $10,247 for the six months ended June 30, 2014; therefore, the balance of deferred compensation as of June 30, 2014 was $527,413 and related interest of $44,873.

The following are the schedule of the deferred compensation along with accrued interest.

Description	Deferred compensation			Accrued related interest (Annual interest rate %)			Total
As of December 31, 2012	$	823,313		$	183,804		$	1,007,117
2013 accrual		78,300			34,626			112,926
2013 payment		-			(20,000	)		(20,000	)
Forgiveness of compensation and interest		(400,000	)		(163,804	)		(563,804	)
As of December 31, 2013	$	501,613		$	34,626		$	536,239
2014 six months accrual		38,400			10,247			48,647
2014 six months payment		(12,600	)		-			(12,600	)
2014 six months total accrual		25,800			10,247			36,047
As of June 30, 2014	$	527,413		$	44,873		$	572,286

- Definition

The entire disclosure for compensation costs, including compensated absences accruals, compensated absences liability, deferred compensation arrangements and income statement compensation items. Deferred compensation arrangements may include a description of an arrangement with an individual employee, which is generally an employment contract between the entity and a selected officer or key employee containing a promise by the employer to pay certain amounts at designated future dates, usually including a period after retirement, upon compliance with stipulated requirements. This type of arrangement is distinguished from broader based employee benefit plans as it is usually tailored to the employee. Disclosure also typically includes the amount of related compensation expense recognized during the reporting period, the number of shares (units) issued during the period under such arrangements, and the carrying amount as of the balance sheet date of the related liability.

+ References+ Details

Teletronics International, Inc. 10-Q