EFT Holdings, Inc. - FORM 10-K

Attached files

file	filename
EX-32.1 - EXHIBIT 32.1 - EFT Holdings, Inc.	v415072_ex32-1.htm
EX-31.1 - EXHIBIT 31.1 - EFT Holdings, Inc.	v415072_ex31-1.htm
EX-31.2 - EXHIBIT 31.2 - EFT Holdings, Inc.	v415072_ex31-2.htm
EX-32.2 - EXHIBIT 32.2 - EFT Holdings, Inc.	v415072_ex32-2.htm

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: March 31, 2015

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ________ to ________

Commission File No. 0-53730

EFT HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada	20-1211204
(State or other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

17800 Castleton St., Suite 300 City of Industry, CA	91748
(Address of Principal Executive Offices)	(Zip Code)

Registrant's Telephone Number: (626) 581-3335

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class		Name of each exchange on which registered

Securities registered pursuant to Section 12 (g) of the Act:

Common Stock

(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ¨ Yes x No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ¨ Yes x No

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. x Yes ¨ No

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 the registrant was required to submit and post such files). x Yes ¨ No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). ¨ Yes x No

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant, based upon the price of $0.01 per share, which was the closing price of the common stock as reported on the OTC Bulletin Board under the symbol “EFTB” on September 30, 2014, was $ 238,842 as of such date.

As of June 30, 2015, the registrant had 75,983,201 outstanding shares of common stock.

DOCUMENTS INCORPORATED BY REFERENCE:

None

EFT HOLDINGS, INC.

FORM 10-K

INDEX

		Page
PART I
Item 1.	Business.	3
Item 1A.	Risk Factors.	6
Item 1B.	Unresolved Staff Comments.	11
Item 2.	Properties.	11
Item 3.	Legal Proceedings.	12
Item 4.	Mine Safety Disclosures.	12

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	13
Item 6.	Selected Financial Data.	13
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	13
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk.	21
Item 8.	Financial Statements and Supplementary Data.	21
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	22
Item 9A.	Controls and Procedures.	22
Item 9B.	Other Information.	22

PART III
Item 10.	Directors, Executive Officers and Corporate Governance.	23
Item 11	Executive Compensation.	24
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	26
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	26
Item 14.	Principal Accounting Fees and Services.	27

PART IV
Item 15.	Exhibits, Financial Statement Schedules.	28

Signatures		29

PART I

FORWARD-LOOKING STATEMENTS

Certain statements made in this annual report on Form 10-K are “forward-looking statements” (within the meaning of the Private Securities Litigation Reform Act of 1995) regarding the Company’s plans and objectives for future operations. Forward-looking statements are based on current expectations and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. The Company’s plans and objectives are based, in part, on assumptions involving the continued expansion of its business. Assumptions relating to the foregoing involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to predict accurately and many of which are beyond the Company’s control. Although the Company believes its assumptions underlying the forward-looking statements are reasonable, any of the assumptions could prove inaccurate and, therefore, there can be no assurance the forward-looking statements included in this report will prove to be accurate. In light of the significant uncertainties inherent in forward-looking statements, the inclusion of such information should not be regarded as a representation by the Company or any other person that its objectives and plans will be achieved.

ITEM 1. BUSINESS.

General

The Company was originally incorporated under another name in Nevada on March 19, 1992. In 1999 Jack Jie Qin, the Company’s president and chief executive officer, began selling nutritional and personal care products. In 2000, Mr. Qin formed eFast Team International, Inc. to sell these nutritional and personal care products, many of which are the same, or virtually the same, as the products the Company sells today. The business conducted by eFast Team, which also used an affiliate program similar to the Company’s to sell its products, was eventually transferred to the Company in 2007. The Company formally changed its name to EFT Holdings, Inc. through the merger with a company named QCSC, Inc., which became effective on May 27, 2011.

The Company operates through its subsidiaries and, unless otherwise noted, any reference to its operations includes the operations of its subsidiaries.

The Company is primarily an e-Business company designed around the “Business-to-Customer” concept, which means that the Company’s products are sold directly to customers through its web site. The Company’s “Business-to-Customer” model differs from the traditional “Business to Business” model where products are sold to distributors who then sell the products to ultimate customers. In addition, the Company has begun to diversify its offerings of products and services in the recent past, as described below.

Products

The Company sells 27 different nutritional products, some of which are oral sprays; 21 different personal care products; an environmentally protective automotive product; an environmentally friendly house cleaner; and a flip top portable drinking container that contains a filter to remove impurities from the water. The Company’s products are biodegradable and are not regulated by federal, state or local environmental laws or environmental laws of its key target markets.

The Company generally does not have a return policy but it does provide a warranty for its products. The specific warranty terms and conditions vary depending upon the product sold, but generally include replacement of defective products, but no refunds, during the six month period following a sale. Historically, the Company’s warranty expenses have not been material.

Manufacturing

The Company’s products are manufactured by third party vendors and are packaged under its brand. The packaging for its products clearly states the country of manufacture, which is currently the United States in most cases. The Company does not have any long-term supply contracts or agreements with any manufacturers. The Company orders its products directly from vendors, on an “as-needed” or “expected need” basis. Raw materials used in the manufacture of the Company’s products are readily available and are not in short supply. The Company is not a party to any agreement for the purchase or delivery of raw materials.

From 2009 through 2012, the Company constructed a factory and water plant to produce bottled natural soda water in Baiquan, Heilongjiang Province, China. The bottled water factory is fully constructed and all manufacturing equipment has been purchased. After obtaining all the required licenses and passing ISO22000 requirements, the factory started production in April 2013, but production was suspended because Tianquan was sued by a contractor who constructed the water plant. The production is expected to resume when the lawsuit is closed.

None of the Company’s vendors account for a significant portion of its business and all of them can be replaced on short notice. The Company does not have any binding commitments or manufacturing agreements with any of its vendors.

Sales

The Company only sells its products through its website and only to “Affiliates.” To become an Affiliate, a customer must be recommended by another Affiliate, make a minimum purchase of $600, and pay $60 for shipping and handling fees. After that point, the new Affiliate is not required to make any additional purchases, pay membership fees, buy products, resell products, recruit others, or attend meetings. Free educational classes are offered to the Company’s Affiliates so they can learn more about the Company’s products and how to use them.

As of June 16, 2015, the Company had 1,258,824 registered Affiliates, most of which were located in China and Hong Kong. As of June 16, 2015, the Company did not have any sales activities in the United States. None of the Company’s Affiliates account for a significant portion of its business.

The Company pays its Affiliates a commission on the products they order from the Company. The commission is approximately 58% of the total dollar amount of the order. Commissions are considered a reduction of the sales price of the Company’s products and are reflected in the Company’s financial statements as a reduction in revenue. The commissions earned by each Affiliate are held in book entry form. The Affiliate can use the commissions to pay for new orders or transfer the commissions to a bank account where they can be withdrawn, in local currency, at automated teller machines (ATMs) in the country where the Affiliate resides. With this process, the Company reduces operating expense and eliminates cumbersome accounting chores such as issuing checks and reconciling bank statements.

Full payment is required in U.S. Dollars prior to shipment of any products. In most cases, once payment is received, products ordered are shipped directly by the Company’s third party manufacturers to the Company’s distribution centers in Hong Kong and China. Once the products are received at the distribution centers, they are shipped to the Affiliate placing the order.

EFT-Phone and ToByTo reward program

In February 2010, the Company assigned the worldwide distribution and servicing rights to a product known as the “EFT-Phone” to Digital Development Partners, Inc., “Digital”, previously an unrelated company, in exchange for 79,265,000 shares of Digital’s common stock. The shares the Company acquired represent approximately 92% of Digital’s outstanding common stock. The EFT-Phone is a cell phone which uses the Android operating system. The worldwide distribution and servicing rights to the EFT-Phone include the right to sell the EFT-Phone to the Company’s Affiliates and others. Digital also acquired the rights to distribute all EFT-Phone accessories. Digital began distributing EFT-Phones in July 2010.

Starting from December 2010, the Company introduced reward programs to its Affiliates. For example, upon joining a $3,000 program, each Affiliate must pay $3,000 as a non-refundable deposit. When the Affiliate sponsors one new Affiliate, the Company will reward the first Affiliate with a $1,500 instant sponsor bonus. When the first Affiliate sponsors at least two new Affiliates, and those two new Affiliates each also sponsor two new Affiliates, the first Affiliate will have completed the first cycle of the program. The Company will then reward the first Affiliate with an additional $1,500 bonus and deliver an EFT-phone and an e-pad for the cost of $1. After the completion of the first cycle, each Affiliate will enter into the matrix of the second cycle. Upon completion of the second cycle, the Company will reward the first Affiliate with $3,000. For each subsequent cycle thereafter within the matrix, each Affiliate will need to sponsor a new Affiliate in each cycle in order to qualify for the reward.

On April 1, 2012, the Company assigned network access rights to ToByTo Limited, “ToByTo”, a third-party company. The network access rights to ToByTo Limited include the right to access EFT’s Affiliate database for ToByTo’s marketing campaign, and provides access to EFT’s e-money system to facilitate sales activities. ToByTo, in return, compensates EFT by paying access fees in an amount equal to 10% of the respective enrollment fee of every Affiliate who enters the ToByTo e-phone program or another agreed upon amount. During the years ended March 31, 2015 and 2014, the Company agreed to waive the access fees in lieu of ToByTo agreeing to purchase a portion of the Company’s overstocked inventory.

eZGT Travel Program

In May 2011, the Company introduced to its Affiliates a series of travel programs attracting Affiliates to enjoy the benefits of travelling internationally. To participate in the Traveler programs, one must initially make a non-refundable deposit according to the programs’ requirements. When the Affiliate completes a cycle of the program he joined, he will receive a bonus reward and the Affiliate only needs to pay $1 for his or her own trip. The reward system of the travel program is similar to the ToByTo reward program.

On April 1, 2012, the Company assigned network access rights to eZGT Limited, a third party. The network access rights to eZGT Limited include the right to access EFT’s Affiliate database for eZGT’s marketing campaign, and provides access to EFT’s e-money system to facilitate sales activities. eZGT Limited, in return, compensates EFT by paying access fees in an amount equal to 10% of the respective enrollment fee of every Affiliate who enters the $300 and $3,000 travel programs or another agreed upon amount. However, for Affiliates who enter the $800 and $8,000 travel programs, eZGT will only pay access fees in the amount of $30 and $300, respectively. During the years ended March 31, 2015 and 2014, the Company agreed to waive the access fees in lieu of eZGT Limited agreeing to purchase a portion of the Company’s overstocked inventory for an agreed upon period of time.

Intellectual Property

The Company’s product formulations, delivery systems (spray), packages, packaging design and labels are proprietary.

The Company uses the “EFT” name, a trademark owned and licensed to it by EFT Assets Limited. The Company is required to pay an annual royalty to EFT Assets equal to a percentage of its gross sales for the previous fiscal year. The percentage is 5% for the first $30 million in gross sales; 4% for the $10 million in gross sales in excess of $30 million; 3% for the $10 million in gross sales in excess of $40 million; 2% for the $10 million in gross sales in excess of $50 million; and 1% for the $10 million in gross sales in excess of $60 million, and is subject to a minimum $0.5 million annual royalty. Except for the foregoing, the Company does not currently hold any patents, trademarks, or copyrights nor is the Company a party to any licenses, franchises, concessions, royalty agreements or similar agreements pertaining to intellectual property.

Government Regulation

Currently, government approval is not necessary for the sale of any of the Company’s products and the Company’s Affiliate marketing activities are not subject to governmental regulation in the countries in which the Company operates. However, if existing laws change, the Company may be required to conduct clinical trials to demonstrate the safety and efficacy of these products in order to continue to market and sell them.

General

The Company has not and does not engage in any research and development activities, nor does the Company contemplate spending any material amount on such activities in the foreseeable future.

The Company’s business is not seasonal in nature.

As of March 31, 2015, the Company had three full-time employees at its executive offices in the City of Industry, California, eight full-time employees at its Kowloon, Hong Kong office, one full-time employee at its Taipei, Taiwan office, and three full-time employees at its factory in China. The Company adjusts the number of employees from time to time as necessary to meet the demand for its products.

None of the Company’s employees are represented by a collective bargaining agreement. The Company believes its employee relations are good.

The Company files electronically with (or furnishes to) the SEC its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports pursuant to Section 13(a) of the Securities Exchange Act of 1934. The Company makes available free of charge on its web site (www.eftb.us) all such reports as soon as reasonably practicable after they are filed.

The SEC maintains an Internet site that contains reports, proxy information and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website is http://www.sec.gov. The materials are also available at the SEC’s Public Reference Room, located at 100 F Street, N.E., Washington, D.C. 20549. The public may obtain information through the public reference room by calling the SEC at 1-800-SEC-0330.

ITEM 1A. RISK FACTORS.

An investment in the Company’s common stock involves a high degree of risk. In addition to the following risk factors, you should carefully consider the risks, uncertainties and assumptions discussed herein, and in other documents that the Company subsequently files with the SEC that update, supplement or supersede such information for which documents are incorporated by reference into this Report. Additional risks not presently known to the Company, or which the Company considers immaterial based on information currently available, may also materially adversely affect the Company’s business. If any of the events anticipated by the risks described herein occur, the Company’s business, cash flow, results of operations and financial condition could be adversely affected, which could result in a decline in the market price of the Company’s common stock, causing you to lose all or part of your investment.

Risks Related to the Company’s Business

We have a history of losses, we expect to continue to incur losses and we may never achieve profitability.

The Company reported a net loss of $5,363,469 and a loss from operations of $5,224,759 for the year ended March 31, 2015. The Company reported a net loss of $20,341,700 and a loss from operations of $6,744,684 for the year ended March 31, 2014. At March 31, 2015, the Company’s accumulated deficit amounted to $60,304,126. During the year ended March 31, 2015, net cash used by operating activities amounted to $1,527,356. At March 31, 2015, the Company’s working capital deficit amounted to $8,771,507. The Company expects to continue incurring losses for the foreseeable future and may never achieve or sustain profitability. The Company may need to raise additional capital to penetrate markets for the sales of the Company’s products. The Company believes that it has access to capital resources through possible public or private equity offerings, debt financings, corporate collaborations or other means. If the economic climate in the United States does not improve or further deteriorates, the Company’s ability to raise additional capital could be negatively impacted. If the Company is unable to secure additional capital, the Company may be required to take additional measures to reduce costs in order to conserve its cash in amounts sufficient to sustain operations and meet its obligations. These measures could cause significant delays in the Company’s efforts to commercialize its products, which are critical to the realization of its business plan and to future operations.

Current economic conditions may adversely affect the Company’s industry, business and results of operations and could cause the market value of its common stock to decline.

The Company’s results of operations may be materially affected by conditions in the global capital markets and the economy generally, both in China and elsewhere around the world. Factors that could affect consumers’ willingness to make such discretionary purchases include general business conditions, levels of employment, energy costs, interest rates and tax rates, and the availability of consumer credit and consumer confidence. Recently, concerns over inflation, energy costs, geopolitical issues, and the availability and cost of credit, have contributed to increased volatility and diminished expectations for the Chinese economy.

A continued or protracted downturn in the global economy could adversely impact consumer purchases of discretionary items including demand for the Company’s products. This has led, and could further lead, to reduced consumer spending, which the Company believes may include consumer spending on nutritional and beauty products and other discretionary items. In addition, reduced consumer spending may drive the Company and its competitors to lower prices. A reduction in consumer spending could significantly reduce the Company's sales and leave it with unsold inventory, which would have a material adverse effect on the Company’s business, financial condition and results of operations.

The Company regularly maintains cash balances at a commercial bank in excess of the Federal Deposit Insurance Corporation insurance limit of $250,000.

The Company regularly maintains cash balances at a commercial bank in excess of the Federal Deposit Insurance Corporation (FDIC) insurance limit of $250,000. If the financial position and/or liquidity of the bank were to become impaired, the Company’s financial position and the results of its operations could be negatively affected to the extent of account balances held at the financial institution in excess of the federally insured limit.

The extent of the Company’s sourcing and manufacturing may adversely affect its business, financial condition and results of operations.

All of the Company’s products are currently manufactured in the United States and a majority of them are sold to customers in Hong Kong and China. As a result of the magnitude of this sourcing and shipping, the Company’s respective businesses are subject to the following risks:

	•	political and economic instability in foreign countries, including heightened terrorism and other security concerns, which could subject imported or exported goods to additional or more frequent inspections, leading to delays in deliveries or impoundment of goods or to an increase in transportation costs of raw materials or finished product;
	•	the imposition of regulations and quotas relating to exports and imports, including quotas imposed by bilateral agreements between the United States, from which the Company sources its products, and foreign countries, including China;
	•	the imposition of duties, taxes and other charges on exports and imports;
	•	significant fluctuation of the value of the U.S. dollar against the Hong Kong Dollar, Chinese Yuan and other foreign currencies;
	•	difficulty in staffing and managing international operations and difficulty in maintaining quality control;
	•	the strength of international economies;
	•	restrictions on the transfer of funds to or from foreign countries; and
	•	violations by foreign contractors of labor and wage standards and resulting adverse publicity.

The Company operates on very tight delivery schedules and, if there are delays and expected delivery dates cannot be met, it could negatively affect the Company’s profitability.

If there is a delay in the delivery of goods and delivery schedules cannot be met, then the Company’s Affiliates may cancel orders with it, which would impact the Company’s gross profits and, therefore, its profitability. The Company may also incur extra costs to meet delivery dates, which would also reduce the Company’s profitability.

The Company faces intense competition and any failure to timely implement its business plan could diminish or suspend its development and possibly cease its operations.

The industry in which the Company operates is highly competitive. In the Business to Consumer, “B2C,” e-commerce business, competitors, typically catalog and other online retailers, attempt to secure contracts with various merchandise brands to offer merchandise to their consumers. The Company also faces competition for consumers from retailers, duty-free retailers, specialty stores, department stores and specialty and general merchandise catalogs, many of which have greater financial and marketing resources than the Company has. The internet online commerce market is rapidly evolving and intensely competitive. Barriers to entry are minimal and current and new competitors can launch new websites at a relatively low cost. Many competitors in this area have greater financial, technical and marketing resources than the Company. There is no assurance that the Company will be able to compete successfully with them in the future.

The Company has experienced, and anticipates that it will continue to experience for at least the foreseeable future, significant pricing pressure and significantly increased promotional activity from its competitors; and it may face challenges in seeking to provide merchandise at competitive prices that allow the Company to be profitable. Continued advancement in technology and increasing access to that technology is paving the way for growth in the internet consumer industry. In addition, the nutritional supplement and cosmetic e-business markets have and continue to become increasingly competitive and are rapidly evolving. There can be no assurance that the Company will maintain its competitive edge or that it will continue to provide only American-made merchandise. If the Company is unable to successfully compete in this promotional environment, it could experience reductions in its sales and excessive build-up of merchandise inventories resulting in increased markdowns and reductions in its gross profit margins, adversely impacting its profitability and cash flows from operating activities.

The Company faces significant inventory risks.

The Company is exposed to significant inventory risks that may adversely affect its operating results as a result of new product launches, rapid changes in product cycles, changes in consumer tastes with respect to its products and other factors. Future success depends on consistently anticipating, gauging and responding to Affiliates’ demands and tastes in the design, pricing, style and production of the Company’s products. The Company’s failure to anticipate, identify or react appropriately and in a timely manner to changes in customer preferences and economic conditions could lead to lower sales, missed opportunities, excessive inventories and markdowns, each of which could have a material adverse impact on the Company’s business and its sales levels.

The Company must accurately predict these trends and avoid overstocking or understocking products. All of the Company’s products are supplied by third parties, which it orders generally on an “as needed” basis. However, based on ordering trends, the Company does stock certain items that the Company believes will be in demand so that they are available for immediate shipping. In the last few years, the Company has mitigated decreases in sales by lowering its levels of inventory to preserve cash on hand. Demand for products, however, can change significantly between the time inventory is ordered and the date of sale. In addition, when the Company begins selling a new product, it may be difficult to establish vendor relationships, determine appropriate product selection, and accurately forecast product demand. The acquisition of certain types of inventory, or inventory from certain sources, may require significant lead time and prepayment, and such inventory may not be returnable. Any one of the inventory risk factors set forth above may adversely affect the Company’s operating results.

The Company may continue to experience fluctuations in its operating results.

The Company’s annual and quarterly operating results have fluctuated and may continue to fluctuate in the future. As a result, period-to-period comparisons of historical and future results may not necessarily be meaningful and should not be relied on as an indication of future performance. There can be no assurance that the Company’s current or future internal expectations and outlook for sales, comparable sales, gross profit margins and profitability will prove to be accurate. Failure to meet internal or market financial expectations going forward, particularly with respect to sales, gross profit margins and earnings, could result in a decline in and/or increased volatility in the market price of the Company’s stock.

The Company depends on third parties to manufacture all of the products it sells and it does not have any written contracts with any of the manufacturers of its products. If the Company is unable to maintain these manufacturing relationships or enter into new arrangements, the Company may fail to meet customer demand and its net sales and profitability may suffer as a result.

All of the Company’s products are manufactured by third parties. The Company does not have any written contracts with any of the manufacturers of its products. The fact that the Company does not have written contracts with its third-party manufacturers means that they could cease manufacturing these products for the Company at any time and for any reason. In addition, the Company’s third-party manufacturers are not restricted from manufacturing its competitors' products. The Company’s inability to secure adequate and timely supplies of merchandise would harm inventory levels, net sales and gross profit, and ultimately its results of operations.

The Company’s manufacturers may increase the cost of the products it purchases from them.

If the Company’s manufacturers increase their prices, the Company’s margins would suffer unless it is able to pass along these increased costs to its customers. The Company may not be able to develop relationships with new vendors and manufacturers at the same prices or at all, and even if the Company does establish such relationships, such new vendors and manufacturers might not allocate sufficient capacity to the Company to meet its requirements. Furthermore, if the Company increases its product orders significantly from the amounts the Company has historically ordered from its manufacturers, its manufacturers might be unable to meet this increased demand.

The Company’s third-party manufacturers may not continue to produce products that are consistent with its standards or applicable regulatory requirements, which could harm its brand, cause customer dissatisfaction and require the Company to find alternative suppliers of its products.

The Company’s third-party manufacturers may not maintain adequate controls with respect to product specifications and quality and may not continue to produce products that are consistent with its quality standards. If the Company is forced to rely on products of inferior quality, then its customer satisfaction and brand reputation would likely suffer, which would lead to reduced net sales. In addition, the Company may be required to find new third-party manufacturers to supply its products. There can be no assurance that the Company would be successful in finding third-party manufacturers that make products meeting its standards of quality.

The Company may incur material product liability claims, which could increase its costs and harm its financial condition and operating results.

The Company may be subjected to various product liability claims, including claims that products that are ingested by consumers or applied to their bodies contain contaminants, and that the products include inadequate instructions as to their uses, or include inadequate warnings concerning side effects and interactions with other substances. It is possible that widespread product liability claims could increase the Company’s costs, and adversely affect its revenues and operating income. Moreover, liability claims arising from a serious adverse event may increase the Company’s costs through higher insurance premiums and deductibles, and may make it more difficult to secure adequate insurance coverage in the future.

Adverse publicity associated with the Company’s products, ingredients or its Affiliates program, or those of similar companies, could harm the Company’s financial condition and operating results.

The Company’s results of operations may be significantly affected by the public’s perception of the Company and similar companies. This perception is dependent upon opinions concerning:

	•	the safety, efficiency and quality of the Company’s products and ingredients;
	•	the safety, efficiency and quality of similar products and ingredients distributed by other companies;
	•	the Company’s promotional and compensation programs; and
	•	B2C e-commerce business in general.

Adverse publicity concerning any actual or purported failure by the Company to comply with applicable laws and regulations regarding product claims and advertising, good manufacturing practices, the regulation of its programs, the licensing of its products for sale in the Company’s target markets or other aspects of its business (whether or not resulting in enforcement actions or the imposition of penalties), could have an adverse effect on the Company’s business and could negatively affect its ability to attract Affiliates, which would negatively impact the Company’s ability to generate revenue.

In addition, the Company’s Affiliates’ perception of the safety, quality and efficiency of the Company’s products and ingredients, as well as similar products and ingredients distributed by other companies, could be significantly influenced by media attention, publicized scientific research or findings, widespread product liability claims or other publicity concerning the Company’s products or ingredients or similar products and ingredients distributed by other companies. Adverse publicity, whether or not accurate or resulting from consumers’ use or misuse of the Company’s products, that associates consumption of its products or ingredients or any similar products or ingredients with illness or other adverse effects, questions the benefits of the Company’s or similar products or claims that any such products are ineffective, inappropriately labeled or have inaccurate instructions as to their use, could lead to lawsuits or other legal challenges and could negatively impact the Company’s reputation, the market demand for its products or its general business.

The Company is subject to the risks of doing business abroad.

Most of the Company’s Affiliates are located in China and Hong Kong. As such, the Company is subject to customary risks of doing business abroad, including currency fluctuations, political or labor instability and potential import restrictions, duties and tariffs. The Company does not maintain insurance for the potential lost profits due to such disruptions. Political or economic instability in China or Hong Kong or elsewhere could cause substantial disruption in the Company’s business. This could materially adversely affect the Company’s financial condition and results of operations. Heightened terrorism security concerns could subject exported goods to additional, more frequent or more thorough inspections. This could delay deliveries or increase costs, which could adversely impact the Company’s results of operations. In addition, since the Company negotiates its purchase orders with customers in United States dollars, the value of the United States dollar against local currencies could impact its cost in dollars of production from these manufacturers. The Company is not currently engaged in any hedging activities to protect against these currency risks. If there is downward pressure on the value of the dollar, the Company’s customers’ purchase prices for its products could increase. The Company may not be able to offset an increase in production costs with a price increase to its customers.

Fluctuations in the price, availability and quality of materials used in the Company’s products could have a material adverse effect on its cost of goods sold and its ability to meet its customers’ demands.

Fluctuations in the price, availability and quality of the materials used in the manufacture of the Company’s products by third parties could have a material adverse effect on the cost of such products to it or its ability to meet its customers’ demands. The Company may not be able to pass on all or any portion of higher material prices to its customers.

The failure to upgrade information technology systems as necessary could have an adverse effect on the Company’s operations.

Some of the Company’s information technology systems, which are primarily utilized to manage information necessary to price and ship products and to generate reports that report each customer’s order are dated and are comprised of multiple applications, rather than one overarching state-of-the-art system. Modifications involve replacing legacy systems with successor systems, making changes to legacy systems or acquiring new systems with new functionality. If the Company is unable to effectively implement these systems and update them where necessary, this could have a material adverse effect on its business, financial condition and results of operations.

Entry into new businesses or operations may divert the Company’s management's attention and consume resources that are necessary to sustain its business.

The Company may enter into new businesses or operations in the future, which may result in unforeseen difficulties and expenditures. In addition, the new businesses, operations, products, or services may disrupt the Company’s business, divert its resources and require significant management attention that would otherwise be available for development of its business. The anticipated benefits of any new businesses, operations, products, or services may also not be realized or the Company may be exposed to unknown liabilities.

The Company is highly dependent on its current management.

The Company’s success is significantly dependent upon its management team. The Company’s success is particularly dependent upon Mr. Jack Jie Qin, its Chairman and CEO. The loss of him could have an adverse effect on the Company. If the Company were to lose the services of its officers and directors, the Company may experience difficulties in effectively implementing its business plan.

The Company’s principal shareholder owns 69% of its outstanding common stock and its interests may not be aligned with the interests of the Company’s other shareholders.

Dragon Win Management, Ltd. (“Dragon Win”) owns a majority of the Company’s issued and outstanding common stock. As a result, Dragon Win has substantial influence in determining the outcome of any corporate transactions or other matters submitted to the Company’s shareholders for approval, including mergers, consolidations and the sale of all or substantially all of the Company’s assets, election of directors and other significant corporate actions. Dragon Win may not act in the best interests of the Company’s minority shareholders. In addition, without its consent, the Company could be prevented from entering into transactions that could be beneficial to the Company. This concentration of ownership may also discourage, delay or prevent a change in control of the Company, which could deprive its shareholders of an opportunity to receive a premium for their shares as part of a sale of the Company and might reduce the price of the Company’s common stock. These actions may be taken even if they are opposed by the Company’s other shareholders.

The outcome of litigation and other claims is unpredictable and any rulings not in the Company’s favor could have a material adverse effect on its business and results of operations.

The Company is and may become subject to litigation, claims and administrative proceedings for which it cannot or may not be able to predict or determine the ultimate outcome or quantify the potential financial impact. Because of the inherent difficulty of predicting the outcome of any legal claims and administrative proceedings, the Company cannot provide assurance as to the outcome of any pending or future matters, or, ultimately determined adversely to the Company, the loss, expense or other amounts attributable to any such matter. The resolution of such matter or matters, if unfavorable, could have a material adverse effect on the Company’s business, liquidity and results of operations. Refer to Item 3. “Legal Proceedings,” for a more detailed discussion of certain current litigation and other proceedings.

If the Company becomes directly subject to the recent scrutiny, criticism and negative publicity involving U.S. reporting companies with substantial PRC operations or sales, the Company may have to expend significant resources to investigate and resolve any negative allegations resulting from such scrutiny, which could harm its business operations and reputation and could result in a loss of your investment in the Company’s stock, especially if such allegations cannot be addressed and resolved favorably.

Recently, U.S. reporting companies that have substantially all of their operations or sales in China have been the subject of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered around a lack of effective internal controls over financial accounting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result of the scrutiny, criticism and negative publicity, many of these companies are now conducting internal and external investigations into the allegations, and in the interim are subject to shareholder lawsuits and SEC enforcement actions.

It is not clear what effect such sector-wide scrutiny, criticism and negative publicity will have on the Company and its business. If the Company becomes the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, the Company will have to expend significant resources to investigate such allegations and/or defend itself. This situation will be costly and time consuming and distract management from growing the Company. If such allegations are not proven to be groundless, the Company and business operations will be severely impacted and your investment in the Company’s stock could be rendered worthless.

The Company’s stock is thinly traded and the price of its stock may become highly volatile.

There is currently only a limited market for the Company’s common stock. A limited market is characterized by a relatively limited number of shares in the public float, relatively low trading volume and a small number of brokerage firms acting as market makers. The market for low-priced securities is generally less liquid and more volatile than securities traded on national stock markets. Wide fluctuations in market prices are not uncommon. No assurance can be given that the market for the Company’s common stock will continue. The price of the Company’s common stock may be subject to wide fluctuations in response to factors such as the following, some of which are beyond the Company’s control:

	·	quarterly variations in the Company’s operating results;
	·	operating results that vary from the expectations of investors;
	·	changes in expectations as to the Company’s future financial performance, including financial estimates by investors;
	·	reaction to the Company’s periodic filings, or presentations by executives at investor and industry conferences;
	·	changes in the Company’s capital structure;
	·	changes in market valuations of other internet or online service companies;
	·	announcements of innovations or new services by the Company or its competitors;
	·	announcements by the Company or its competitors of significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;

	·	lack of success in the expansion of the Company’s business operations;
	·	announcements by third parties of significant claims or proceedings against the Company or adverse developments in pending proceedings;
	·	additions or departures of key personnel;
	·	asset impairment;
	·	temporary or permanent inability to offer products or services;
	·	rumors or public speculation about any of the above factors; and
	·	market and volume fluctuations in the stock markets in general.

There is not now, and there may not ever be, an active market for the Company’s common stock, and the Company cannot assure you that the common stock will become liquid or that it will be listed on a securities exchange.

There is currently only a limited market for the Company’s common stock. In this venue, an investor may find it difficult to obtain accurate quotations as to the market value of the common stock and trading of the Company’s common stock may be extremely sporadic. For example, several days may pass before any significant number of shares may be traded. A more active market for the common stock may never develop. In addition, if the Company fails to meet the criteria set forth in SEC regulations, various requirements would be imposed by law on broker-dealers who sell the Company’s securities to persons other than established customers and accredited investors. Consequently, such regulations may deter broker-dealers from recommending or selling the common stock, which may further affect the liquidity of the Company’s common stock.

The Company may be subject to penny stock regulations and restrictions and you may have difficulty selling shares of the Company’s common stock.

The SEC has regulations which generally define so-called “penny stocks” to be equity securities that have a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. When listed or quoted on an over-the-counter electronic exchange, the Company’s common stock may be deemed to be a “penny stock” subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors” (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses).

For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and receive the purchaser's written consent to the transaction prior to sale. In addition, unless exempt, the rules require delivery, prior to any transaction in penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock. As a result, this rule may affect the ability of broker-dealers to sell the Company’s securities and may affect the ability of purchasers to sell any of the Company’s securities in the secondary market.

There can be no assurance that the Company’s common stock will qualify for exemption from the Penny Stock Rule. In any event, even if the Company’s common stock were exempt from the Penny Stock Rule, it would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock if the SEC finds that such a restriction would be in the public interest.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not Applicable.

ITEM 2. PROPERTIES.

The Company leases a 3,367 square foot office in the City of Industry in California that serves as its principal executive offices. The lease will expire on February 14, 2018. Pursuant to the lease, the monthly rent was $9,091 per month until February 2014 and $9,455 per month thereafter.

Until March 31, 2015, the Company rented office space for its satellite training center in Hong Kong. Until March 31, 2014, the lease was for 6,500 square feet with a monthly rental of $30,900. Beginning on April 1, 2014, the Company reduced the rented space to 1,510 square feet and the monthly rental was reduced to $10,735. This office was located at Langham Office Tower, 8 Argyle Street, Suite 3706, Kowloon, Hong Kong SAR. The lease expired on March 31, 2015 and was then extended to June 24, 2015 with monthly rent increased to $15,319. In June 2015, the Company moved to a 1,100 square foot office located at Suite 1506, Concordia Plaza, 1 Science Museum Road, Tsimshatsui East, Kowloon. The new lease has a monthly rental of $9,480 and will expire on June 22, 2017.

The Company also rents storage space, generally 3,000 square feet or less, for its satellite training center in Hong Kong. The space is leased for terms of two years. See Note 16 of the Notes to the Consolidated Financial Statements contained in Item 8 for information concerning the amounts the Company is required to pay pursuant to these leases.

The Company also leases 40,000 square meters of land in Yongqin county of Baiquan, Heilongjiang Province, in the People’s Republic of China (the “PRC”) where it has constructed a bottled water factory. The land lease commenced on December 31, 2009 for a term of fifty years, with a yearly land-use right’s fee of $3,865.

The Company rents a 240 square foot office space for its operation in Taiwan. This office is located at No. 376, Ren Ai Road, Da An district, Taipei. The lease expires on December 16, 2015, and the monthly rental is $1,260.

The Company believes its properties are sufficient for its current operations.

ITEM 3. LEGAL PROCEEDINGS.

All material pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party, or of which any of their property is the subject, are disclosed in Note 18 to the Consolidated Financial Statements in this Annual Report on Form 10-K.

Except as otherwise disclosed in this Annual Report on Form 10-K, the Company does not know of any claims, pending or threatened against it which, in the opinion of the Company’s management, are likely to have a material and adverse effect on its business, financial condition or results of operations.

ITEM 4. MINE SAFETY DISCLOSURES.

Not Applicable.

PART II

ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

The Company’s common stock (“EFTB”) trades on the over-the-counter Pink Sheets. The following chart shows the high and low bid prices as published by Pink OTC Markets for the periods shown below. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission, and may not necessarily represent actual transactions.

Three Months Ended	Low Bid		High Bid

June 30, 2014	$	0.01	$	0.01
September 30, 2014	$	0.01	$	0.01
December 31, 2014	$	0.01	$	0.01
March 31, 2015	$	0.01	$	0.01

June 30, 2013	$	0.01	$	0.01
September 30, 2013	$	0.01	$	0.01
December 31, 2013	$	0.01	$	0.01
March 31, 2014	$	0.01	$	0.01

The holders of the Company’s common stock are entitled to one vote per share. The Company’s stockholders do not have preemptive rights to purchase, subscribe for, or otherwise acquire any shares of its common stock.

The Company did not pay any dividends during the two years ended March 31, 2015. The Company’s board of directors is not restricted from paying any dividends but is not obligated to declare a dividend. The Company currently intends to retain all future earnings for use in the operation and expansion of its business and does not anticipate paying any cash dividends on common stock in the foreseeable future.

The Company’s Articles of Incorporation authorize its board of directors to issue up to 25,000,000 shares of preferred stock. The provisions in the Articles of Incorporation relating to the preferred stock allow the Company’s directors to issue preferred stock with multiple votes per share and dividend rights which would have priority over any dividends paid with respect to the holders of the Company’s common stock. The issuance of preferred stock with these rights may make the removal of management difficult even if the removal would be considered beneficial to shareholders generally, and will have the effect of limiting shareholder participation in certain transactions such as mergers or tender offers if these transactions are not favored by the Company’s management.

During the year ended March 31, 2015, the Company did not purchase any shares of its common stock from third parties in a private transaction or in the open market. During the year ended March 31, 2015, none of the Company’s officers or directors, or any of its principal shareholders, purchased any shares of its common stock on its behalf from third parties in a private transaction or as a result of purchases in the open market.

As of March 31, 2015, there were 4,916 record holders of the Company’s common stock.

ITEM 6. SELECTED FINANCIAL DATA

Not Applicable.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following management’s discussion and analysis should be read in conjunction with the Company’s financial statements and the notes thereto and the other financial information appearing elsewhere in this Report. In addition to historical information, the following discussion contains certain forward-looking information. See “Forward-Looking Statements” above for certain information concerning those forward-looking statements. The Company’s financial statements are prepared in U.S. dollars and in accordance with U.S. GAAP.

Overview

The Company operates through its subsidiaries and, unless otherwise noted, any reference to its operations includes the operations of its subsidiaries.

Industry Wide Trends that are Relevant to the Company’s Business

The nutritional supplement and cosmetic e-business markets have and continue to become increasingly competitive and are rapidly evolving. Barriers to entry are minimal. Current and new competitors can launch new websites at a relatively low cost. Many competitors in this area have greater financial, technical and marketing resources than the Company does. Continued advancement in technology and increasing access to that technology is paving the way for growth in direct marketing. The Company also faces competition for consumers from retailers, duty-free retailers, specialty stores, department stores and specialty and general merchandise catalogs, many of which have greater financial and marketing resources than the Company has. Notwithstanding the foregoing, the Company believes that it is well-positioned within the Asian consumer market with its current plan of supplying U.S. merchandise brands to consumers and that its exposure to both the Asian and American cultures gives it a competitive advantage. There can be no assurance that the Company will maintain its competitive edge or that the Company will continue to provide solely U.S.-made merchandise.

The Company’s products are sensitive to business and personal discretionary spending levels and tend to decline or grow more slowly during economic downturns, including downturns in any of the Company’s major markets. The current worldwide downturn is expected to adversely affect the Company’s sales and liquidity for the foreseeable future. Although the Company has mitigated decreases in sales by lowering its levels of inventory to preserve cash on hand, the Company does not know when the downturn will subside and when consumer spending will increase from its current depressed levels. Even if consumer spending increases, the Company is not sure when consumer spending will increase for its products, which will affect its liquidity.

The global economy is currently undergoing a period of unprecedented volatility, and the future economic environment may continue to be less favorable than that of recent years. This has led, and could further lead, to reduced consumer spending, and which may affect adversely spending on nutritional and beauty products and other discretionary items, such as the Company’s products. In addition, reduced consumer spending may force the Company and its competitors to lower prices. These conditions may adversely affect the Company’s revenues and profits. In addition, the Company expects future operations to be affected by ToByTo’s marketing and distribution of EFT Phones, eZGT’s marketing of the travel program and the Company’s water bottling operations.

Results of Operations

Comparison for the Years Ended March 31, 2015 and 2014

Sales revenue, net

Sales revenues, net of commission expense, decreased to approximately $750,000 for the year ended March 31, 2015 from approximately $1,488,000 for the year ended March 31, 2014 primarily due to a decline in sales demand from the Company’s Affiliates. The Company’s policy is to pay commissions to its Affiliates upon receipt of the sales orders even though revenue is not recognized by the Company until later when the products are delivered. In addition, sales orders dropped from $2.6 million to $1.3 million which caused the associated commission expense to decrease to approximately $799,000 for the year ended March 31, 2015 from approximately $1,506,000 for the year ended March 31, 2014.

Commissions paid to the Company’s Affiliates are considered to be a reduction of the selling prices of its products, and are recorded as a reduction of revenue.

Shipping charges

Shipping charges decreased to $218,000 for the year ended March 31, 2015 from $379,000 for the year ended March 31, 2014 mainly due to the reduction in gross sales.

Cost of goods sold

Cost of goods sold consists of merchandise purchased from vendors. Cost of goods sold decreased to approximately $315,000 for the year ended March 31, 2015 from $557,000 for the year ended March 31, 2014 mainly due to a reduction in gross sales. Gross sales of products declined from approximately $2,995,000 to $1,548,000, or 48%. However, cost of sales of products declined by only 42% from approximately $548,000 to $315,000, mainly due to the sale of $139,000 and $173,000 of promotional items that were sold at cost during the years ended March 31, 2015 and 2014, respectively. Despite the items that were sold at discounted prices, cost of goods sold as a percentage of gross sales for the year ended March 31, 2015 was 20%, higher than last year by 2%, which is mainly due to vendor price increases during the year.

Shipping costs

Shipping costs consist of freight charges from the U.S. warehouse and/or vendors to the Company’s logistic facility in China. Shipping costs decreased to approximately $42,000 for the year ended March 31, 2015 from approximately $45,000 for the year ended March 31, 2014, mainly attributable to reduction in gross sales during the year.

Gross profit

Gross profit decreased to approximately $611,000 for the year ended March 31, 2015 compared to $1,264,000 for the year ended March 31, 2014. Gross profit, as a percentage of total revenue, was 63% during the year ended March 31, 2015 compared with 68% during the year ended March 31, 2014. The decrease in gross profit was partly due to a reduction in gross sales and the sale of promotional products at cost during the current year.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased to approximately $5,205,000 for the year ended March 31, 2015 compared to approximately $6,621,000 for the year ended March 31, 2014, mainly due to lower legal fees, computer service fees, rental charges, wages and depreciation expense in the current year compared with last year.

Inventory obsolescence

Inventory obsolescence decreased to approximately $131,000 for the year ended March 31, 2015 as compared to $888,000 for the year ended March 31, 2014, mainly due to significantly lower amounts of inventory either at or nearing obsolescence in the current year as compared to last year.

Royalty expenses

Royalty expenses for both years ended March 31, 2015 and 2014, were $500,000. Royalties payable to EFT Assets are equal to a percentage of the Company’s gross sales based on certain threshold criteria, with a minimum annual royalty of $500,000. See Note 7 to the consolidated financial statements in this Annual Report for further information.

Interest income

Interest income decreased to approximately $152,000 for the year ended March 31, 2015 as compared to approximately $289,000 for the year ended March 31, 2014. Interest income decreased mainly due to a decline in the amount of investments in corporate bonds as compared to the previous year.

Interest expense

Interest expenses decreased to approximately $158,000 for the year ended March 31, 2015 as compared to approximately $808,000 for the year ended March 31, 2014. The significant decrease in interest expense is mainly due to the Company’s recording of interest expense of $800,000 in the year ended March 31, 2014 on underpayment of tax liabilities for the years 2008 to 2010.

Gain/(loss) on disposal of securities available for sale

Gain/(loss) on disposal of securities available for sale decreased to a loss of approximately $53,000 for the year ended March 31, 2015 from a gain of $51,000 for the year ended March 31, 2014 mainly due to the loss associated with the liquidation of funds held in one of the Company’s investment accounts..

Write-off and impairment of prepayment on development in progress

As required by U.S. GAAP, the Company performed an impairment analysis related to the prepayment on development in progress asset and recorded an impairment of approximately $8,966,000 , related to this asset based on this analysis for the year ended March 31, 2014. Notwithstanding such impairments, the Company and its subsidiary EFT Investment have continued to vigorously pursue the recovery of the full value of the prepayment on the development in progress asset.

Gain/(loss) on sales of long-term investment

The gain on sales of long-term investment of approximately $2.4 million for the year ended March 31, 2015 is mainly from the sale by the Company of CTX shares that the Company had previously written off.

Other income

Other income increased to $167,000 for the year ended March 31, 2015 as compared to approximately $109,000 for the year ended March 31, 2014 due to an increase in the sale of expiring products during the year.

Income tax expenses

In December 2013, the IRS concluded its audit of the Company’s returns for the years 2007 through 2010 and issued an examination report that proposed adjustments of $12.3 million of additional tax liabilities for the years 2008 through 2010. As a result of this report, the Company increased its income tax liability to $8.6 million during the quarter ended December 31, 2013. Even though the Company increased its income tax provision as a result of this report, the Company continued to challenge the IRS findings.

After receiving further information from the Company subsequent to the issuance of its original report, the IRS reversed its position on a major issue and has issued a revised report which significantly reduced the amount of tax the Company owes. Accordingly, the Company has revised its provision for income taxes and has reversed $4.1 million of the original provision recorded previously.

Income tax expense decreased to approximately $9,000 for the year ended March 31, 2015 from approximately $3.6 million for the year ended March 31, 2014. As discussed above, the IRS has revised its audit report of the Company’s returns for the years 2008 through 2010 and has reduced its proposed adjustments from $12.3 million to $4.5 million of additional tax liabilities for the years 2008 through 2010. The Company plans to continue to challenge most of the remaining proposed adjustments as set forth in the revised report and is in the process of appealing the proposed adjustments with the IRS. The Company had federal and California state tax liabilities in the aggregate amount of $5.4 million and $5.3 million including interest and penalty as of March 31, 2015 and 2014, respectively.

Loss from disposal of Excalibur

The Company recorded a loss of approximately $2,623,000 in the year ended March 31, 2015 due to the approximately $9.7 million loss arising from the write-off of the Company’s total receivable from Excalibur International Marine Corporation, “Excalibur”, a company in which the Company previously had a 48.81% equity interest. The loss was offset by an approximately $7 million gain resulting from the deconsolidation of Excalibur arising from the Company’s loss of its shareholding rights in Excalibur. Excalibur was deconsolidated from the Company’s consolidated accounts effective October 1, 2014.

Capital Resources and Liquidity

The following table reflects the Company’s sources / uses of cash for the two years ended March 31, 2015 and 2014.

	Year Ended March 31,
	2015			2014
Net cash used in operating activities	$	(1,527,356	)	$	(4,213,411	)
Net cash provided by investing activities		2,560,447			5,015,698
Net cash used in financing activities		(541,205	)		(575,700	)
Effect of exchange rate changes on cash		70,503			(103,056	)
Net increase in cash	$	562,389		$	123,531

Operating activities:

During the year ended March 31, 2015, net cash used in operating activities was $1,527,356. This was primarily due to a net loss of $2,713,545 adjusted to exclude losses from the discontinued operations of Excalibur. The net loss was further adjusted by non-cash related expenses that included depreciation expense of $186,948, a provision for inventory obsolescence of $130,787, cash used to purchase inventory of $184,351 and $581,000 for prepaid insurance.

During the year ended March 31, 2014, net cash used in operating activities was $4,213,411. This was primarily due to a net loss of $19,741,003 adjusted to exclude losses from the discontinued operations of Excalibur. The net loss was further adjusted by non-cash related expenses that included depreciation of $271,489, provision of inventory obsolescence of $888,320, recorded impairment losses of approximately $8,966,000, and a decrease in working capital related to recording of additional provision for income taxes for 2008 to 2010 of $4,375,949, which was partially offset by gains realized from the sales of securities available for sale of $51,069.

Investing activities:

Net cash provided by investing activities for the year ended March 31, 2015 was $2,560,447 primarily due to proceeds from the sale of corporate bonds of $5,862,107 and proceeds from the disposal of fixed assets of $19,952, which were partially offset by the purchase of $3,321,612 of corporate bonds.

Net cash provided by investing activities for the year ended March 31, 2014 was $5,015,698, primarily due to proceeds from the sales of corporate bonds of $6,705,450 and proceeds from the disposal of fixed assets of $1,471,028, which were partially offset by the purchase of $3,154,172 of corporate bonds and the acquisition of fixed assets of $6,608.

Financing activities:

Net cash used in financing activities for the years ended March 31, 2015 and 2014, was $541,205 and $575,700, respectively, due to the repayment of a short-term loan for financing the Company’s directors’ and officers’ liability insurance policy. For more information please see Note 13 to the consolidated financial statements in this report.

Working Capital:

	March 31, 2015			March 31, 2014
Current assets	$	5,655,514		$	8,228,362
Current liabilities		(14,427,021	)		(18,128,984	)
Working capital / (deficiency)	$	(8,771,507	)	$	(9,900,622	)

Historically, cash and cash equivalents and securities available for sale have been the Company’s primary sources of liquidity. The Company believes its existing cash and cash equivalents will not be sufficient to meet its working capital requirements for the next 12-month period should the Company fail to successfully appeal the proposed adjustments with the IRS amounting to $3.6 million plus accrued interest and penalties.

There is no assurance that the Company will be able to obtain further funds required for its continued working capital requirements. The ability of the Company to meet its financial obligations and commitments will depend primarily upon the continued financial support of its directors and shareholders, the continued issuance of equity to new shareholders, and its ability to achieve and maintain profitable operations.

There is substantial doubt about the Company’s ability to continue as a going concern as the continuation of the Company’s business is dependent upon obtaining further long-term financing, successfully appealing the proposed adjustment of $3.6 million with the IRS, collection of the Company’s prepayment on development in progress of $20.7 million and achieving a profitable level of operations. The issuance of additional equity securities by the Company could result in a significant dilution of the equity interests of its current shareholders. Obtaining commercial loans, assuming those loans would be available, will increase the Company’s liabilities and future cash commitments.

Balance Sheet Items

Material changes in the Company’s balance sheet items between March 31, 2015 and March 31, 2014 are discussed below:

Securities Available for Sale

Securities available for sale decreased to $2,132,397 for the year ended March 31, 2015 compared to $4,662,020 for the year ended March 31, 2014, as the Company sold certain securities to fund operations.

Inventories

Inventory decreased to $303,848 at March 31, 2015 compared to $618,919 at March 31, 2014 due to the sale of overstocked or products nearing expiration during the year to third parties, since the Company only orders products on an “as needed” basis to avoid overstocking and lower inventory levels are adequate to meet the current demand. In addition, the Company recorded a $130,787 mark-down allowance on inventory during the year ended March 31, 2015.

Property and Equipment

Property and equipment decreased to $894,129 for the year ended March 31, 2015 compared to $1,098,308 for the year ended March 31, 2014, as a result of scheduled depreciation expense being recorded.

Prepayment on development in progress

The Company’s wholly-owned subsidiary, EFT Investment Co. Ltd, entered into two sets of agreements with the seller of the office building on May 31, 2011 to secure what its former General Manager represented to be an option to purchase an office building, located in Taipei, Taiwan. As of March 31, 2014, option payments of NTD600 million, equivalent to approximately $20.8 million, have been made to the sellers. As required by U.S. GAAP, the Company performed an impairment analysis related to the prepayment on the development in progress asset and recorded impairment of approximately $8,966,000 and $11,227,000 related to this asset based on the analysis for the years ended March 31, 2014 and 2013, respectively. See Notes 8 and 18 to the consolidated financial statements included as part of this Report for more information.

Accounts Payable

Accounts payable slightly decreased to $1,073,795 at March 31, 2015 compared to $1,189,494 at March 31, 2014, as a result of marketing expenses paid during the year.

Commission Payable

Commission payable slightly decreased to $3,785,004 at March 31, 2015 compared to $3,884,774 at March 31, 2014 due to lower commissions earned by Affiliates this year compared to last year.

Contingent Liabilities

Contingent liabilities increased to $214,019 at March 31, 2015 compared to $213,674 at March 31, 2014 mainly due to the effect of exchange rate changes.

Other Liabilities

Other liabilities increased to $5,874,187 at March 31, 2015 compared to $5,729,073 at March 31, 2014. The increase of $145,114 is due to the accrual of interest associated with the $4,527,000 tax liability accrued in the previous year.

Unearned Revenue

Unearned revenue slightly decreased to $3,198,776 at March 31, 2015 compared to $3,268,916 at March 31, 2014. The recording of unearned revenue results from temporary delays associated with the recognition of revenue related to the sale of products or services to Affiliates.

Non-controlling interest

Non-controlling interest changed from $6,742,016 at March 31, 2014 to $49,522 at March 31, 2015 due to the loss recorded by Digital during the year ended March 31, 2015 and the deconsolidation of Excalibur.

Investment

The Company lent $5,000,000 to CTX Virtual Technologies Inc., “CTX,” in July 2010. The loan to CTX was unsecured, bore interest at 8% per year and had a term of one year to July 26, 2011. At any time during the one-year term, the Company could, at its option, convert the loan into 8,474,576 units, with each unit consisting of one share of CTX’s common stock and one warrant, to be increased by 25% to 10,593,220 units if CTX common stock was not listed on any of the American Stock Exchange, the OTC Bulletin Board or NASDAQ by February 28, 2011. On March 12, 2011, CTX elected to convert the full amount of $5,000,000 into 10,593,220 units and paid the Company in full for all accrued and unpaid interest that it owed to the Company.

From May 2011, the Company’s Taiwan subsidiary EFT Investment entered into agreements to secure an option to invest in a real estate project in Taiwan. As of March 31, 2014, option payments of NTD600 million, or approximately US$20.8 million, have been made to the property developers. As required by U.S. GAAP, the Company performed an impairment analysis related to the prepayment on development in progress asset and recorded an impairment of approximately $8,966,000 related to this asset based on this analysis for the year ended March 31, 2014. The Company performed a similar analysis for the year ended March 31, 2013 and recorded an impairment of approximately $11,227,000.

The Company also bought securities available for sale to earn interest, and has invested $2.1 million in such securities at March 31, 2015.

The unused cash and cash equivalents of $2.3 million at March 31, 2015 will be used in the Company’s daily operations. The Company has no unused lines of credit or other borrowing facilities.

Commitments for Capital Expenditures

Except as otherwise disclosed herein, the Company does not have any commitments for any material capital expenditures. The Company does not have any commitments or arrangements from any person to provide it with any additional capital.

Except as disclosed in Item 1A or this Item 7, the Company does not know of any trends or demands that affected, or are reasonably likely to affect, its capital resources or liquidity.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on its financial condition.

Significant Accounting Policies/Recent Accounting Pronouncements

See Note 2 to the Consolidated Financial Statements contained in Item 8 for a description of the Company’s significant accounting policies and recent accounting pronouncements which have, or potentially may have, a material impact on its financial statements.

Critical Accounting Policies and Estimates

The Company’s financial statements are based on the selection and application of significant accounting policies, which require management to make significant estimates and assumptions. The Company believes that the following are some of the more critical judgment areas in the application of its accounting policies that currently affect its financial condition and results of operations.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has negative working capital of $8,771,507 as of March 31, 2015, reported a net loss of $5,363,469 for the year ended March 31, 2015 and did not generate cash from operations for the year ended March 31, 2015. At March 31, 2015, the Company’s accumulated deficit amounted to $60,304,126. The Company expects to continue incurring losses for the foreseeable future and may need to raise additional capital from external sources in order to continue the long-term efforts contemplated under its business plan. These circumstances, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

Securities Available for Sale

The Company’s investments in corporate bonds are classified as available for sale and are reported at fair value, based on quoted prices and market prices, using the specific identification method. Unrealized gains and losses, net of taxes, are reported as a component of stockholders’ equity. Realized gains and losses on investments are included in investment and other income, net when realized. Any impairment loss to reduce an investment’s carrying amount to its fair market value is recognized as an expense when a decline in the fair market value of an individual security below its cost or carrying value is determined to be other than temporary.

Long-Lived Assets

The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with ASC Topic 360. ASC Topic 360 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the asset’s carrying amount. In that event, a loss is recognized based on the amount by which the carrying amount exceeds the fair market value of the long-lived assets. Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.

Inventories

Inventories are valued at the lower of cost, determined on a first-in, first-out basis, or market. Inventory consists of nutritional, personal care, automotive additive, environmentally safe products, portable drinking containers, EFT-Phone, E-pad and bottled water. On a quarterly basis, the Company’s management reviews inventory levels in each country for estimated obsolescence or unmarketable items, as compared with future demand requirements and the shelf life of the various products. Based on this review, the Company records inventory write-downs when costs exceed expected net realizable value.

Revenue/Unearned Revenue

The Company’s revenue recognition policy is in accordance with the requirements of Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition, (“SAB104”), ASC Topic 605, Accounting for Consideration Given by a Vendor to a Customer (Including a Reseller of the Vendor’s Products) and other applicable revenue recognition guidance and interpretations. Sales revenue is recognized at the date of shipment to customers when a formal arrangement exists, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all of the relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Commissions paid to the Company’s Affiliates are considered to be a reduction of the selling prices of its products, and are recorded as a reduction of revenue.

Unearned Revenues consist of cash received in advance for goods to be delivered at a future date. The Company records the payments received from customers as a liability until the products are delivered. Sales are recorded when the products are delivered.

Starting in December 2010, the Company introduced some EFT-Phone reward programs to its Affiliates. For example, upon joining a $3,000 program, each Affiliate must pay $3,000 as a non-refundable deposit. When an Affiliate sponsors one new Affiliate, the Company will reward the first Affiliate with a $1,500 instant sponsor bonus. When the first Affiliate sponsors at least two new Affiliates, and those two new Affiliates each also sponsor two new Affiliates, the first Affiliate will have completed the first cycle of the program. The Company will then reward the first Affiliate with an additional $1,500 bonus, and deliver an EFT-phone and an e-pad for the cost of $1. The refundable deposit is recorded as unearned revenue, and the Company only recognizes revenue once the EFT phone has been delivered to the Affiliate.

Foreign Currency Translation

The Company’s reporting currency is the U.S. dollar. The Company’s operations in China, Hong Kong and Taiwan use their local currencies as their functional currency. The financial statements of the Company’s subsidiaries are translated into U.S. Dollars, “USD,” in accordance with ASC Topic 830, Foreign Currency Translation. According to ASC Topic 830, all assets and liabilities are translated at the year-end current exchange rate, stockholders’ equity items are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, Reporting Comprehensive Income as a Component of Stockholders’ Equity. Foreign exchange transaction gains and losses are reflected in the income statement.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Under this method, income tax expense is recognized for the amount of taxes payable or refundable for the current year. In addition, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities and for operating losses and tax credit carry-forwards. Management must make assumptions, judgments and estimates to determine the current provision for income taxes and the deferred tax assets and liabilities and any valuation allowance to be recorded against a deferred tax asset. Management’s judgments, assumptions and estimates relative to the current provision for income tax take into account current tax laws, management’s interpretation of current tax laws and possible outcomes of current and future audits conducted by foreign and domestic tax authorities. Changes in tax law or management’s interpretation of tax laws and the resolution of current and future tax audits could significantly impact the amounts recorded for income taxes in the Company’s financial statements. Management’s assumptions, judgments and estimates relative to the value of a deferred tax asset take into account predictions of the amount and category of future taxable income, such as income from operations. Actual operating results and the underlying amount and category of income in future years could render management’s current assumptions, judgments and estimates of recoverable net deferred taxes inaccurate. Any of the assumptions, judgments and estimates mentioned above could cause the Company’s actual income tax obligations to differ from the estimates, thus materially impacting its financial position and results of operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements required by this item begin on page F-1 of this Annual Report on Form 10-K.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page(s)

Report of Independent Registered Public Accounting Firm	F-1

Consolidated Financial Statements

Consolidated Balance Sheets	F-2

Consolidated Statements of Operations	F-3

Consolidated Statements of Comprehensive Income / (Loss)	F-4

Consolidated Statement of Changes in Equity	F-5

Consolidated Statements of Cash Flows	F-6

Notes to Consolidated Financial Statements	F-7

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors of

EFT Holdings, Inc.

We have audited the accompanying consolidated balance sheets of EFT Holdings, Inc. and subsidiaries (the “Company”) as of March 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity (deficiency), and cash flows for the years then ended. The Company’s management is responsible for these consolidated financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit of the consolidated financial statements include examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of EFT Holdings, Inc. and subsidiaries as of March 31, 2015 and 2014 and the results of their operations and cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in Note 2 to the accompanying financial statements, the Company has negative working capital of $8,771,507 and an accumulated deficit of $60,304,126 as of March 31, 2015, reported net losses and did not generate cash from operations for past two years. These circumstances, among others, raise substantial doubt about the Company’s ability to continue as a going concern. Management's plans in regard to these matters are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/Paritz & Company, P.A.

Hackensack, New Jersey

July 14, 2015

F-1

EFT HOLDINGS, INC.

Consolidated Balance Sheets

	March 31, 2015			March 31, 2014
ASSETS
Current assets
Cash and cash equivalents	$	2,332,595		$	1,770,206
Securities available for sale		2,132,397			4,662,020
Inventories		303,848			618,919
Prepaid expenses		593,586			620,337
Other receivables		293,088			492,001
Current assets of discontinued operations		-			64,879
Total current assets		5,655,514			8,228,362

Property and equipment, net		894,129			1,098,308
Security deposit		360,203			422,029
Non-current assets of discontinued operations		-			210,948
Total assets	$	6,909,846		$	9,959,647
LIABILITIES AND EQUITY (DEFICIENCY)
Current liabilities
Accounts payable	$	1,073,795		$	1,189,494
Commission payable		3,785,004			3,884,774
Other liabilities		5,874,187			5,729,073
Unearned revenues		3,198,776			3,268,916
Short-term loan		281,240			319,245
Contingent liabilities		214,019			213,674
Current liabilities of discontinued operations		-			3,523,808
Total liabilities		14,427,021			18,128,984

Equity (deficiency)
EFT Holdings, Inc. stockholders' equity (deficiency):
Preferred stock, $0.001 par value, 25,000,000 shares authorized, none issued and outstanding		-			-
Common stock, $0.00001 par value, 4,975,000,000 shares authorized, 75,983,201 shares issued and outstanding at March 31, 2015 and 2014		760			760
Additional paid in capital		52,854,891			52,854,891
Retained deficit		(60,304,126	)		(54,963,024	)
Accumulated other comprehensive income (loss)		(19,178	)		680,052
Total EFT Holdings, Inc. stockholders’ equity (deficiency)		(7,467,653	)		(1,427,321	)
Non-controlling interest		(49,522	)		(6,742,016	)
Total equity (deficiency)		(7,517,175	)		(8,169,337	)
Total liabilities and equity (deficiency)	$	6,909,846		$	9,959,647

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

F-2

EFT HOLDINGS, INC.

Consolidated Statements of Operations

	Year Ended
	March 31, 2015			March 31, 2014

Sales revenues, net	$	749,852		$	1,487,791
Shipping charges		217,979			378,887
Total revenues, net		967,831			1,866,678
Cost of goods sold		315,008			556,875
Shipping costs		41,672			45,324
Total cost of revenues		356,680			602,199
Gross profit		611,151			1,264,479
Operating expenses:
Selling, general and administrative expenses		5,205,123			6,620,843
Provision for inventory obsolescence		130,787			888,320
Royalty expenses - related party		500,000			500,000
Total operating expenses		5,835,910			8,009,163
Operating loss		(5,224,759	)		(6,744,684	)
Other income/(expense)
Interest income		152,109			288,940
Interest expense		(158,181	)		(807,963	)
Gain/(loss) on disposal of securities available for sale
(includes $(47,263) and $135,876 accumulated other comprehensive
income/(loss) reclassifications for unrealized net gains on securities available
for sale for the years ended March 31, 2015 and 2014, respectively)		(53,398	)		51,069
Dividend income		8,787			-
Write-off and impairment of prepayment on development in progress		-			(8,966,004	)
Foreign exchange loss		(2,948	)		(110,039	)
Other income		166,576			108,988
Gain on sale of long-term investment		2,407,038			-
Total other income/(expense)		2,519,983			(9,435,009	)

Loss from continuing operations before income taxes		(2,704,776	)		(16,179,693	)
Income taxes expense		8,769			3,561,310
Loss from continuing operations		(2,713,545	)		(19,741,003	)
Discontinued operations
Loss from operation of Excalibur		(27,018	)		(600,697	)
Loss from disposal of Excalibur		(2,622,906	)		-
Total loss from discontinued operations		(2,649,924	)		(600,697	)
Net loss		(5,363,469	)		(20,341,700	)
Loss from non-controlling interest		22,367			315,530
Net loss attributable to EFT Holdings, Inc.	$	(5,341,102	)	$	(20,026,170	)

Net loss per share – continuing operations
Basic and diluted	$	(0.04	)	$	(0.25	)

Net loss per share – discontinued operations
Basic and diluted	$	(0.03	)	$	(0.01	)

Net loss per common share attributable to EFT
Holdings, Inc.
Basic and diluted	$	(0.07	)	$	(0.26	)
Weighted average common shares outstanding
Basic and diluted		75,983,201			75,983,201

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

F-3

EFT HOLDINGS, INC.

Consolidated Statements of Comprehensive Loss

	Year Ended
	March 31, 2015			March 31, 2014

Net loss	$	(5,363,469	)	$	(20,341,700	)
Other comprehensive income/(loss)
Foreign currency translation adjustment		(589,885	)		(265,235	)
Unrealized income/(loss) on securities available for sale		63,605			(158,469	)
Comprehensive loss		(5,889,749	)		(20,765,404	)
Less: Comprehensive income/(loss) attributable to non-controlling interests		150,583			(311,844	)
Comprehensive loss attributable to EFT Holdings, Inc.	$	(6,040,332	)	$	(20,453,560	)

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

F-4

EFT HOLDINGS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

										Accumulated						Total
					Additional		Retained			Other						Stockholders'
	Common Stock				Paid-In		Earnings			Comprehensive			Non-Controlling			Equity
	Shares		Amount		Capital		(Deficits)			Income (Loss)			Interests			(Deficiency)

BALANCE, MARCH 31, 2013		75,983,201	$	760	$	52,854,891	$	(34,936,854	)	$	1,107,442		$	(6,430,172	)	$	12,596,067
Comprehensive income:
Net loss		-		-		-		(20,026,170	)		-			(315,530	)		(20,341,700	)
Unrealized loss on securities available for sale		-		-		-		-			(158,469	)		-			(158,469	)
Foreign currency translation adjustment		-		-		-		-			(268,921	)		3,686			(265,235	)
Total comprehensive loss																	(20,765,404	)

BALANCE, MARCH 31, 2014		75,983,201	$	760	$	52,854,891	$	(54,963,024	)	$	680,052		$	(6,742,016	)	$	(8,169,337	)
Cancellation of shareholding right in subsidiary		-		-		-		-			-			6,541,911			6,541,911
Comprehensive income:
Net loss		-		-		-		(5,341,102	)		-			(22,367	)		(5,363,469	)
Unrealized gain on securities available for sale		-		-		-		-			63,605			-			63,605
Foreign currency translation adjustment		-		-		-		-			(762,835	)		172,950			(589,885	)
Total comprehensive income																	(5,889,749	)

BALANCE, MARCH 31, 2015		75,983,201	$	760	$	52,854,891	$	(60,304,126	)	$	(19,178	)	$	(49,522	)	$	(7,517,175	)

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

F-5

EFT HOLDINGS, INC.

Consolidated Statements of Cash Flows

	Year Ended
	March 31, 2015			March 31, 2014
Cash flows from operating activities:
Net loss	$	(5,363,469	)	$	(20,341,700	)
Net loss from discontinued operations		(2,649,924	)		(600,697	)
Net loss from continuing operations		(2,713,545	)		(19,741,003	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		186,948			271,489
(Gain)/loss from securities available for sale		53,398			(51,069	)
Provision for inventory obsolescence		130,787			888,320
(Gain)/loss on disposal of fixed assets		(1,686	)		6,894
Write-off and impairment of prepayment on development in progress		-			8,966,004
Changes in operating assets and liabilities:
Contingent liabilities		-			216,816
Inventories		184,351			521,835
Prepaid expenses		580,869			500,677
Other receivables		41,968			1,419,594
Accounts receivable		159,310			(56,251	)
Accounts payable		(115,730	)		281,529
Commission payable		(99,769	)		(270,382	)
Other liabilities		135,883			4,464,065
Unearned revenues		(70,140	)		(222,060	)
Net cash used in continuing operations		(1,527,356	)		(2,803,542	)
Net cash used in discontinued operations		-			(1,409,869	)
Net cash used in operating activities		(1,527,356	)		(4,213,411	)

Cash flows from investing activities:
Additions to fixed assets		-			(6,608	)
Proceeds from disposal of fixed assets		19,952			9,355
Purchase of securities available for sale		(3,321,612	)		(3,154,172	)
Proceeds from securities available for sale		5,862,107			6,705,450
Net cash provided by continuing operations		2,560,447			3,554,025
Net cash provided by discontinued operations		-			1,461,673
Net cash provided by investing activities		2,560,447			5,015,698

Cash flows from financing activities:
Repayment of installment plan		(541,205	)		(571,921	)
Net cash used in continuing operations		(541,205	)		(571,921	)
Net cash used in discontinued operations		-			(3,779	)
Net cash used in financing activities		(541,205	)		(575,700	)

Effect of exchange rate changes on cash		70,503			(103,056	)

Net increase in cash		562,389			123,531
Cash, beginning of year		1,770,206			1,646,675
Cash, end of year	$	2,332,595		$	1,770,206

Supplemental disclosures of cash flow information:
Income taxes paid in cash	$	13,270		$	14,549
Interest expenses paid in cash	$	7,920		$	7,963

Non-cash investing and financing activities:
Financing of directors' and officers' insurance through installment loan	$	503,200		$	571,200

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

F-6

EFT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - ORGANIZATION

EFT Holdings, Inc., “EFT Holdings” or the “Company,” formerly EFT Biotech Holdings, Inc., was incorporated in the State of Nevada on March 19, 1992.

The Company’s business is classified by management into two reportable segments: online and beverage. These reportable segments are two distinct businesses, each with a different customer base, marketing strategy and management structure. Substantially all of the Company’s revenue is generated from Mainland China.

The online business reportable segment is an aggregation of the Company’s online operating segments, which are organized to sell the Company’s products to “Affiliates” through its website. To become an Affiliate, a customer must be recommended by another Affiliate, make a minimum purchase of $600, and pay $60 for shipping and handling fees. The Company, through its subsidiaries, uses the internet as its “storefront” and business platform to sell and distribute American brand products consisting of 27 different nutritional products, some of which are oral sprays, 21 different personal care products, an environmentally protective automotive product, an environmentally friendly house cleaner and a flip top portable drinking container. The Company also assigned network access rights to third-party companies, which, in return, compensate EFT by paying access fees in an amount equal to 10% of the respective enrollment fee of every Affiliate who enters the e-phone and traveler program. For Affiliates that enter the $800 and $8,000 travel programs, an access fee in the amount of $30 and $300, respectively, will be paid. During the year ended March 31, 2014, the Company agreed to waive the access fees in lieu of third-party companies agreeing to purchase a portion of the Company’s overstocked inventory for an agreed upon period of time.

In February 2010, the Company assigned the worldwide distribution and servicing rights to a product known as the “EFT-Phone” to Digital Development Partners, “Digital,” a previously unrelated company, in exchange for 79,265,000 shares of Digital’s common stock. The shares acquired represent approximately 92% of Digital’s outstanding common stock.

The beverage reportable segment derives revenue and expenses from the bottled water factory in Baiquan, Heilongjiang Province, China. This bottled water factory started production in April 2013, but production was suspended because Tianquan was sued by a contractor who constructed the water plant (see Note 12). The production is expected to resume when the lawsuit is closed and final.

Note 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

Reclassification

Certain amounts in prior year consolidated financial statements have been reclassified to conform with the current year presentation.

Going concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has negative working capital of $8,771,507 and an accumulated deficit of $60,304,126 as of March 31, 2015, and it reported net losses and did not generate cash from operations for the past two years. The Company expects to continue incurring losses for the foreseeable future and may need to raise additional capital from external sources in order to continue the long-term efforts contemplated under its business plan. These circumstances, among others, raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

F-7

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries, all of which are wholly owned except for Digital, which is 91.74% owned by the Company. All inter-company accounts and transactions have been eliminated in consolidation. The Company consolidates Excalibur based on a three-month lag with the Company’s reporting periods as discussed in Note 9.

Foreign Currency

The Company’s reporting currency is the U.S. dollar. The Company’s operations in Hong Kong, Taiwan and China use their local currencies as their functional currency. The financial statements of the subsidiaries are translated into U.S. Dollars, “USD,” in accordance with ASC Topic 830, Foreign Currency Translation. According to ASC 830, all assets and liabilities are translated at the year-end currency exchange rate, stockholders’ equity items are translated at the historical rates and income statement items are translated at the average exchange rate for the period. The resulting translation adjustments are reported under other comprehensive income in accordance with ASC Topic 220, Reporting Comprehensive Income as a Component of Stockholders’ Equity. Foreign exchange transaction gains and losses are reflected in the statement of operations.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates and assumptions include determining the fair market value of our inventory, the collectability of accounts receivable, the value of deferred taxes and related valuation allowances. Certain of our estimates, including evaluating the collectability of accounts receivable and the fair market value of inventory, could be affected by external conditions, including those unique to our industry, and general economic conditions. It is possible that these external factors could have an effect on our estimates that could cause actual results to differ from our estimates. We re-evaluate all of our accounting estimates at least quarterly based on these conditions and record adjustments when necessary.

Contingencies

Certain conditions may exist as of the date the financial statements are issued which may result in a loss to the Company but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and Taiwanese and Singapore legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s Taiwanese and Singapore legal counsel evaluate the perceived merits of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought.

If the assessment of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated, the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed in the footnotes to the financial statements.

Loss contingencies considered to be remote by management are generally not disclosed unless they involve guarantees, in which case the guarantee would be disclosed.

F-8

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand and cash in time deposits, certificates of deposit and all highly liquid investments with original maturities of three months or less. The Company maintains its accounts in banks and financial institutions in amounts that, at times, may exceed the federally insured limit. Management believes the Company is not exposed to any significant credit risk on those accounts.

Securities Available for Sale

Inventories

Inventories are valued at the lower of cost, determined on a first-in, first-out basis, or market. Inventory consists of nutritional, personal care, automotive additive, environmentally safe products, portable drinking containers, EFT-Phone, E-pad and bottled water. The Company has three warehouses, one in City of Industry, CA, one in Kowloon, Hong Kong, and one at its factory in the PRC. The Company also consigned some of its inventories to two logistic service providers in China. On a quarterly basis, the Company’s management reviews inventory levels in each country for estimated obsolescence or unmarketable items as compared with future demand requirements and the shelf life of the various products. Based on this review, the Company records inventory write-downs when costs exceed expected net realizable value.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Expenditures for maintenance and repairs are charged to earnings as incurred; additions, renewals and improvements are capitalized. When property and equipment are retired or otherwise disposed of, the related cost and accumulated depreciation are removed from the respective accounts, and any gain or loss is included in operations. Depreciation of property and equipment is provided using the straight-line method for substantially all assets with estimated lives of:

Machinery and equipment	3-8 years
Computers and office equipment	3-5 years
Automobiles	5 years
Leasehold improvements	5 years
Transportation equipment	12 years

Long-Lived Assets

Fair Value of Financial Instruments

ASC Topic 825 requires the Company to disclose the estimated fair values of financial instruments. The carrying amounts reported in the Company’s consolidated balance sheets for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value due to the short-term maturity of these instruments.

Fair Value Measurements

ASC Topic 820 defines fair value, establishes guidelines for measuring fair value and expands disclosures regarding fair value measurements. ASC Topic 820 does not require any new fair value measurements, but rather eliminates inconsistencies in guidance found in various other accounting pronouncements. Refer to Note 3, “Fair Value Measurements” for additional information on ASC Topic 820.

Stock-Based Compensation

The Company recognizes compensation expense for stock-based compensation in accordance with ASC Topic 718. For employee stock-based awards, we calculate the fair value of the award on the date of grant using the Black-Scholes method for stock options and the quoted price of our common stock for unrestricted shares; the expense is recognized over the service period for awards expected to vest. The estimation of stock-based awards that will ultimately vest requires judgment, and to the extent actual results or updated estimates differ from original estimates, such amounts are recorded as a cumulative adjustment in the period estimates are revised. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience.

F-9

Stock Issued for Services

The Company accounts for equity instruments issued in exchange for the receipt of goods or services from persons other than employees in accordance with ASC Topic 505. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of performance commitment or completion of performance by the provider of goods or services as defined by ASC Topic 505.

Revenue / Unearned Revenue

The Company’s revenue recognition policy is in accordance with the requirements of Staff Accounting Bulletin, “SAB,” No. 104, Revenue Recognition, “SAB 104,” ASC Topic 605, Accounting for Consideration Given by a Vendor to a Customer, Including a Reseller of the Vendor’s Products, and other applicable revenue recognition guidance and interpretations. Sales revenue is recognized when a formal arrangement exists with the customers, the price is fixed or determinable, the delivery is completed, no other significant obligations of the Company exist and collectability is reasonably assured. Payments received before all relevant criteria for revenue recognition are satisfied are recorded as unearned revenue. Commissions paid to the Company’s Affiliates are considered to be a reduction of the selling prices of its products, and are recorded as a reduction of revenue. The Company’s policy is to pay out commission to Affiliates upon receipt of sales orders even before revenue can be recognized.

Unearned Revenues consist of cash received in advance for goods to be delivered at a future date. The Company records the payments received from Affiliates as a liability until the products are delivered. Sales are recorded when the products are received by Affiliates and risk of ownership has passed.

Starting from December 2010, the Company introduced some EFT-Phone reward programs to its Affiliates. For example, upon joining a $3,000 program, each Affiliate must pay $3,000 as non-refundable deposit. When an Affiliate sponsors one new Affiliate, the Company will reward the first Affiliate with a $1,500 instant sponsor bonus. When the first Affiliate sponsors at least two new Affiliates, and those two new Affiliates each also sponsor two new Affiliates, the first Affiliate will have completed the first cycle of the program. The Company will then reward the first Affiliate with an additional $1,500 bonus and deliver an EFT-phone and an e-pad for the cost of $1. The non-refundable deposit is recorded as unearned revenue, and the Company only recognizes revenue upon the EFT phone being delivered to the Affiliate.

Warranty

The Company generally does not provide customers with right of return, but does provide a warranty, entitling the purchaser to a replacement of defective products within six months from the date of sale. Historically, warranty costs have not been material. Factors that affect the Company’s warranty liability include the number of products currently under warranty, historical and anticipated rates of warranty claims on those products, and cost per claim to satisfy the warranty obligation. Other factors are less significant due to the fact that the warranty period is only six months and replacement products are already in stock or available at a pre-determined price. The anticipated rate of warranty claims is the primary factor impacting the estimated warranty obligation. Warranty claims are relatively predictable based on historical experience. Warranty reserves are included in other liabilities and the provision for warranty accruals is included in cost of goods sold in the Consolidated Statements of Operations. Management reviews the adequacy of warranty reserves each reporting period based on historical experience. The Company records warranty liabilities at the time of sale for the estimated costs that may be incurred under its limited warranty. If actual results differ from the estimates, the Company revises its estimated warranty liability.

As of March 31, 2015, the Company’s estimated warranty expense was as follows:

Products sold for
0-2 months	2% of cost
3-4 months	1.5% of cost
5-6 months	1% of cost

Shipping Costs

The Company’s shipping costs are included in cost of sales for all periods presented.

F-10

Income Taxes

The Company follows ASC Topic 740, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns. Under this method, deferred income taxes are recognized for the tax consequences in future years of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts at each period end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

Under ASC Topic 740, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement.

Earnings per Share

Basic net income per share is computed on the basis of the weighted average number of common shares outstanding during the period.

Diluted net income per share is computed on the basis of the weighted average number of common shares and common share equivalents outstanding. Dilutive securities having an anti-dilutive effect on diluted net income per share are excluded from the calculation.

Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period, or at the time of issuance, if later, and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

The following table shows net income per share calculation for the two years ended March 31, 2015:

	Year Ended March 31,
	2015			2014
Historical Numerator:
Net loss attributable to EFT Holdings, Inc.	$	(5,341, 102	)	$	(20,026,170)
Denominator:
Weighted-average shares used for basic and diluted net income per share		75,983,201			75,983,201
Basic and diluted net loss per share	$	(0.07	)	$	(0.26	)

Comprehensive income

Comprehensive income is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments from owners and distributions to owners. For the Company, comprehensive income for the periods presented is comprised of net income, unrealized loss on marketable securities classified as available for sale, and foreign currency translation adjustments.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash, accounts receivable and other receivables arising from its normal business activities. The Company places its cash in what it believes to be credit-worthy financial institutions, but several of its bank accounts exceed the federally insured limit. The Company’s accounts receivable are constantly at a marginal level and its revenues are derived from orders placed by consumers located anywhere in the world over the Company’s designated internet portal. The Company maintains a zero dollar ($0) allowance for doubtful accounts and authorizes credits based upon its customers’ historical credit history. The Company routinely assesses the credits authorized to its customers and, based upon factors surrounding the credit risk, establishes an allowance, if required, for uncollectible accounts and, as a consequence, believes that its accounts receivable credit risk exposure beyond such allowance is limited.

F-11

Segment Reporting

ASC Topic 280, “Disclosure about Segments of an Enterprise and Related Information” 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. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company.

The Company’s business is classified by management into two reportable business segments: online and beverage. These reportable segments are two distinct businesses, each with a different customer base, marketing strategy and management structure. The online business reportable segment is an aggregation of the Company’s online operating segments, which are organized to sell the Company’s products to Affiliates through its websites. The online business reportable segment derives revenue from the sales of nutritional products, personal care products, EFT-phones and access fee to its network platform. The beverage business reportable segment derives revenue and expense from the bottled water factory in Mainland China. Substantially all of the Company’s revenue is generated from Mainland China. Unallocated items comprise mainly corporate expenses and corporate assets.

Recent accounting pronouncements

In April 2014, the FASB issued amendments to ASC Topic 205 “Presentation of Financial Statements” and ASC Topic 360 “Property, Plant and Equipment”. The amendments change the current requirements for reporting discontinued operations in Subtopic 205-20. It requires an entity to present, for each comparative period, the assets and liabilities of a disposal group that includes a discontinued operation separately in the asset and liability section, respectively, of the statement of financial position. This topic is effective for public entities for reporting periods beginning after December 15, 2014. An entity should not apply the amendments to a component classified as held for sale before the effective date even if the component of an entity is disposed of after the effective date. Early adoption is permitted, but only for disposals (or classifications as held for sale) that have not been reported in financial statements previously issued. The Company does not believe the adoption of the amendments to ASC 205 and ASC 360 will have a material effect on its consolidated financial statements.

There are no other new accounting pronouncements adopted or enacted during the year ended March 31, 2015 that had, or are expected to have, a material impact on the Company’s financial statements.

Except for rules and interpretive releases of the SEC and a limited number of grandfathered standards, the FASB Accounting Standards Codification ("ASC") is the sole source of authoritative GAAP literature recognized by the FASB and applicable to the Company.

Note 3 - FAIR VALUE MEASUREMENTS

ASC Topic 820 defines fair value, establishes a framework for measuring fair value and enhances disclosure requirements for fair value measurements. This topic does not require any new fair value measurements. ASC Topic 820 defines fair value as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. As a basis for considering such assumptions, ASC Topic 820 establishes a three-tier value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value:

Level 1 —

Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2—

Other inputs that are directly or indirectly observable in the marketplace.

Level 3—

Unobservable inputs which are supported by little or no market activity.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. In accordance with ASC Topic 820, the Company measures its securities available for sale at fair value. The securities available for sale are classified within Level 1 since they are valued using quoted market prices (see Note 4).

F-12

Note 4 – SECURITIES AVAILABLE FOR SALE

Securities available for sale consist of the following:

	March 31, 2015
	Amortized		Unrealized		Unrealized			Market		Average
	Cost		Gains		Losses			Value		Duration (1)
Corporate bonds	$	1,568,102	$	13,350	$	(5,245	)	$	1,576,207		4.79
Corporate notes		567,261		-		(11,071	)		556,190		3.07
Variable rate notes		-		-		-			-		-
Total debt securities	$	2,135,363	$	13,350	$	(16,316	)	$	2,132,397

	March 31, 2014
	Amortized		Unrealized		Unrealized			Market		Average
	Cost		Gains		Losses			Value		Duration (1)
Corporate bonds	$	1,786,057	$	23,069	$	(26,346	)	$	1,782,780		2.56
Corporate notes		998,750		-		(23,750	)		975,000		3.56
Variable rate notes		1,943,785		21,080		(60,625	)		1,904,240		Perpetual
Total debt securities	$	4,728,592	$	44,149	$	(110,721	)	$	4,662,020

(1)

Average remaining duration to maturity, in years

F-13

The following table shows the gross unrealized losses and fair value of the Company’s investments, aggregated by investment category and length of time that the individual securities have been in a continuous unrealized loss position, as of March 31, 2015:

	Less than 1 year				1 Year or More					Total
	Market		Unrealized		Market		Unrealized			Market		Unrealized
	Value		Losses		Value		Losses			Value		Loss
Corporate bonds	$	-	$	-	$	492,156	$	(5,245	)	$	492,156	$	(5,245	)
Corporate notes		-		-		556,190		(11,071	)		556,190		(11,071	)
Variable rate notes		-		-		-		-			-		-
Total debt securities	$	-	$	-	$	1,048,346	$	(16,316	)	$	1,048,346	$	(16,316	)

Declines in the fair value of available for sale securities below their cost that are deemed to be other than temporary are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. In estimating other-than-temporary impairment losses, management considers, among other things: (i) the length of time and the extent to which the fair value has been less than cost; (ii) the financial condition and near-term prospects of the issuer; and (iii) the intent and ability to retain the investment in the issuer for a period of time sufficient to allow for any anticipated recovery in cost.

There were 10 securities in an unrealized loss position at March 31, 2015. Management does not intend to sell any of the securities classified as available for sale which have unrealized losses and believes that it is not likely that the Company will have to sell any such securities before a recovery of cost. The unrealized losses are largely due to increases in market interest rates over the yields available at the time the underlying securities were purchased and are not the result of deteriorated credit quality. The fair value is expected to recover as the bonds approach their maturity or re-pricing date or if market yields for such investments decline. Management does not believe such securities are other-than-temporarily impaired due to reasons of credit quality.

Investment securities with a book value of $5,915,505 were sold during the year ended March 31, 2015. The Company recognized a loss of $53,398 on the sale of those securities.

Note 5 – INVENTORIES

The components of inventories were as follows:

	March 31,		March 31,
	2015		2014

Raw material and supplies	$	42,302	$	43,407
Finished goods		261,546		575,512
	$	303,848	$	618,919

F-14

Note 6 – PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	March 31,			March 31,
	2015			2014

Leasehold improvements	$	340,783		$	341,941
Automobiles		154,724			214,235
Property and plant		947,333			945,806
Computer equipment		116,603			116,578
Furniture and fixtures		80,241			90,576
Machinery and equipment		361,874			361,321
		2,001,558			2,070,457
Less: Accumulated depreciation		(1,107,429	)		(972,149	)
	$	894,129		$	1,098,308

For the years ended March 31, 2015 and 2014, depreciation expense was $186,948 and $271,489, respectively.

F-15

Note 7 - RELATED PARTY TRANSACTIONS

The Company uses the “EFT” name, a trademark owned and licensed to it by EFT Assets Limited, a Company that Wendy Qin, a director of EFT International Ltd., served as a director until March 2015. The Company is required to pay an annual royalty to EFT Assets equal to a percentage of its gross sales for the previous fiscal year. The percentage is 5% for the first $30 million in gross sales, 4% for the $10 million in gross sales in excess of $30 million, 3% for the $10 million in gross sales in excess of $40 million; 2% for the $10 million in gross sales in excess of $50 million; and 1% for the $10 million in gross sales in excess of $60 million, with a minimum annual royalty of $500,000. EFT Assets Limited is owned by a number of persons, including Wendy Qin. Ms.Qin is the sister of Jack Jie Qin, the Company’s president. During the years ended March 31, 2015 and 2014, the royalties paid to EFT Assets Limited both were $500,000. In March 2015, Wendy Qin resigned her position as a director of EFT Assets Limited.

In March 2010, one of the Company’s subsidiaries, EFT International Ltd., entered into a consultancy agreement with JFL Capital Limited, a company in which Wendy Qin serves as a director and is one of the principal shareholders. Under this agreement, EFT International Ltd. engaged JFL Capital Limited to provide EFT International Ltd. consultancy services on administration, financial matters, corporate planning and business development commencing April 1, 2010, and the annual fee will be increased at the rate of $15,000 each year. The agreement may be terminated by either party on three months’ written notice. For the years ended March 31, 2015 and 2014, EFT International Ltd. paid JFL Capital Limited $375,000 and $360,000, respectively.

Until March 31, 2015, the Company rented office space for its satellite training center in Hong Kong. Until March 31, 2014, the lease was for 6,500 square feet with a monthly rental of $30,900. Beginning on April 1, 2014, the Company reduced the rented space to 1,150 square feet and the monthly rental was reduced to $10,735. The office was located at Langham Office Tower, 8 Argyle Street, Kowloon, Hong Kong SAR. The space that was subject to the lease is owned by a number of persons, including Wendy Qin, a director of EFT (HK) Ltd and the sister of Jack Jie Qin, the Company’s president. The lease for this space expired on March 31, 2015 and was then extended to June 24, 2015 with monthly rent increased to $15,319. During the years ended March 31, 2015 and 2014, the Company paid the lessor $223,711 and 371,134, respectively.

Note 8 – PREPAYMENT ON DEVELOPMENT IN PROGRESS

EFT Investment Co. Ltd., “EFT Investment”, is a wholly-owned subsidiary of the Company in Taiwan. Hong Dong Chen (a.k.a. Thomas Chen), the former General Manager of EFT Investment, recommended that the Company purchase an industrial office building located in Taipei, Taiwan, the “Taiwan Building”. As one of the five towers of the “CBD Project”, of which Meifu Development Co., Ltd. “Meifu” and TransGlobe Life Insurance Inc. “TransGlobe” were two of the developers, the Taiwan Building consists of 14 floors and 144 parking spaces. Cheng Hao Peng (a.k.a. Tom Peng) exercised actual control over both Meifu and TransGlobe.

The Company alleges that without authorization by the Company, Thomas Chen, the former General Manager of EFT Investment, entered into two sets of purchase agreements on behalf of the Company in July 2011, one set with Meifu and the other set with TransGlobe. The agreements signed with Meifu were related to the purchase of the 8^th-14^thfloors, 1 out of 2 units on the 7^thfloor and 79 parking spaces, while the agreements signed with TransGlobe were for the purchase of the 1^st-6^thfloors, the other unit on the 7^thfloor and the remaining 65 parking spaces in the Taiwan Building. EFT Investment intended to retain one floor of the Taiwan Building for its own business operations and planned to sell the majority of the remaining floors.

The Company alleges that Thomas Chen had represented that potential buyers for individual floors were in place, and that execution of the agreements were necessary for securing an option to purchase the Taiwan Building. However, the Company has subsequently determined that there was no such option, preliminary or otherwise. The Company alleges that Thomas Chen had further represented that payment of deposits was necessary for EFT Investment to secure its right under the option to purchase the Taiwan building at some point in the future. The Company subsequently determined that this was not the case. Option payments of NTD600 million, approximately $20.8 million, were made during the year ended March 31, 2012. EFT Investments chose not to exercise any option it may have had to purchase the building from Meifu and TransGlobe under the Taiwan Building Agreements and therefore suspended any future option payments to either company. EFT Investment determined not to exercise the option to purchase the Taiwan building due to the fact that it had reasons to suspect that Thomas Chen had breached his fiduciary duties and had, jointly with Meifu and TransGlobe, committed fraud and misrepresentation related to the transactions.

F-16

On June 15, 2012, EFT Investment received a letter, the “Meifu Letter”, from Meifu wherein Meifu served notice of termination, as of that date, of its contracts with EFT Investment for the purchase of the Taiwan Building and a purported forfeiture of EFT Investment’s deposit of approximately $16.4 million, the “Deposit”. Subsequently, on June 29, 2012, EFT Investment’s local counsel issued a letter to Meifu alleging fraud and misrepresentation by Meifu during the course of the transactions. EFT Investment contended that the Meifu Letter and the purported termination of contracts between Meifu and EFT Investment were invalid and demanded the return of the Deposit. On July 3, 2012, EFT Investment’s local counsel issued a letter to TransGlobe with substantially the same contentions as contained in the June 29, 2012 letter to Meifu, and therein argued that the contracts between TransGlobe and EFT Investment were terminated and requested that all payments made to TransGlobe be returned. On October 10, 2012, EFT Investment received a letter from TransGlobe by which TransGlobe served a “notice of termination”, as of that date, of its contracts with EFT Investment for the option to purchase the Taiwan Building and a purported forfeiture of EFT Investment’s deposit of approximately $3.3 million, the “Deposit”. Subsequently, on November 7, 2012, EFT Investment's local counsel issued a letter to Meifu and TransGlobe alleging fraud and misrepresentation by Meifu and TransGlobe during the course of the transactions.

EFT Investment has alleged that there was fraud and misrepresentation by Meifu and TransGlobe jointly with Thomas Chen during the course of the Taiwan Building transactions. EFT Investment filed a statement of complaint against Thomas Chen, Tom Peng, Meifu and TransGlobe with the local prosecutor’s office in Taiwan. While the prosecutor’s office in Taiwan decided not to prosecute the above parties, the investigation by Taiwan’s government nevertheless confirmed that Thomas Chen has received and/or has intended to receive substantial secret profits from Tom Peng in the Taiwan Building transactions. Moreover, Taiwan’s government determined that Meifu and TransGlobe have violated the local insurance laws in their operations. Therefore, the Company has commenced civil proceedings against TransGlobe, MeiFu, Peng Cheng-Hao (President of Meifu) and Thomas Chen, a former director of EFTI, pertaining to the Taiwan Building transactions.

As required by U.S. GAAP, the Company performed an impairment analysis related to the prepayment on the development in progress asset and determined that the remaining book value of this asset should be impaired. An impairment of approximately $8,966,000 was recorded during the year ended March 31, 2014. Notwithstanding such impairments, the Company and its subsidiary EFT Investment have continued to vigorously pursue the recovery of the full value of the prepayment on the development in progress asset.

Note 9 - DECONSOLIDATION OF SUBSIDIARY – EXCALIBUR

On October 25, 2008, the Company through its wholly-owned subsidiary, EFT Investment, acquired a 48.81% equity interest in Excalibur International Marine Corporation (“Excalibur”) for $19,193,000. Between July 2008 and Feburary 2015, the Company made loans to Excalibur aggregating approximately $6.78 million, which bore interest at 8% per annum and were due from July 2014 to June 2015. The loans were primarily used by Excalibur to acquire its vessel, the Ocean La La, and to fund operating costs. Since the Company provided funding and exercised control over Excalibur, Excalibur was treated as a Subsidiary and its accounts were consolidated into the Group’s financial statements. Accordingly, these loans were not included in the Company’s consolidated financial statements.

On October 3, 2014, the Ministry of Economic Affairs of Taiwan issued a letter to the Company stating that the registrations for the issuance of shares of Excalibur on May 16 and June 15, 2007 were judged to be false by the Taiwan High Court. Therefore, these two registrations were cancelled and all subsequent registrations that followed based upon the untrue basis of the two false share registrations were cancelled as well.

As the acquisition of Excalibur’s shares 48.81% by EFT Investment was made after these two invalid share registrations in May and June 2007, the share registration regarding EFT Investment’s purchase of Excalibur’s shares was also cancelled.

F-17

In regards to the historical financial reporting treatment, considering the facts that the Company has provided financial support to Excalibur’s operations and was committed to absorb the losses from Excalibur’s operations, the Company has concluded the investment in Excalibur would be considered a Variable Interest Entity (“VIE”) in accordance with ASC 810. As a result of the Company’s investment in Excalibur being considered a VIE, the Company would have consolidated the accounts of Excalibur from the time of its investment and there would have been no impact on the historical financial statements previously presented for the Company.

In view of the loss of the Company’s shareholding right and the fact that the Company will not provide financial support to Excalibur in the future, Excalibur was deconsolidated from the Company’s consolidated accounts effective on October 1, 2014. The Company recognized a loss of $2,622,906 as a result of disposal of Excalibur in October 2014, which included gain from disposal of subsidiary of $7,042,255 and the write-off of intercompany loan receivables from Excalibur of $9,665,161.

The Company consolidated Excalibur based on a three-month lag with the Company’s reporting periods. All inter-company accounts and transactions were eliminated in consolidation. During the year ended March 31,2015, the financial statements of Excalibur were consolidated based on September 30, 2014 due to Excalibur’s deconsolidation from the Company effective on October 1, 2014. The following table provides a summary of balance sheet and statement of operations information for Excalibur, which is consolidated in the Company’s financial statements:

	September 30, 2014				December 31, 2013
	NTD*		USD		NTD*			USD
Total assets, net		-		-		8,244,403			275,827
Total liabilities, net		-		-		105,326,659			3,523,808
Net assets		-		-		(97,082,256	)		(3,247,981	)
48.81% ownership		-		-		(47,385,849	)		(1,585,340	)

	Nine Months Ended						Year Ended
	September 30, 2014						December 31, 2013
	NTD*			USD			NTD*			USD
Operating cost		1,105,876			36,605			11,744,081			394,691
Selling, general and administrative expenses		1,050,973			34,791			4,501,059			151,271
Interest income		(75	)		(2	)		(1,571	)		(53	)
Interest expense		2,595,465			85,914			19,788,313			665,042
Foreign exchange gain		(4,025,712	)		(133,257	)		(1,380,205	)		(46,385	)
Loss on disposal of fixed assets		89,626			2,967			(13,889,748	)		(466,804	)
Other income		-			-			(3,507,221	)		(117,870	)
Other loss		-			-			619,048			20,805
Net loss		816,153			27,018			17,873,756			600,697
48.81% ownership		398,364			13,187			8,724,180			293,200

*NTD: New Taiwan Dollar

F-18

Note 10- INVESTMENT IN CTX VIRTUAL TECHNOLOGIES

CTX Virtual Technologies, Inc. (Pink Sheets: CTXV), is a technology company that manufactures and distributes mobile telecommunication, IT data management, virtual imaging and mobile data input accessories.

In July 2010, the Company lent $5,000,000 to CTX Virtual Technologies, Inc, “CTX”. The loan to CTX was unsecured, bore interest at 8% per year and had a term of one year to July 26, 2011. At any time during the one-year term, the Company could at its option convert the loan into 8,474,576 units, with each unit consisting of one share of CTX’s common stock and one warrant. Each warrant allows the Company to purchase one additional share of CTX’s common stock at a price of $1.00 at any time on or before June 23, 2015. At any time after January 26, 2011 and before July 26, 2011, CTX could, at its option, cause the loan to be converted into the same 8,474,576 units. If CTX common stock was not listed on the American Stock Exchange, the OTC Bulletin Board or NASDAQ by February 28, 2011, the number of shares of common stock and warrants issuable on conversion of the loan would be increased by 25%.

On March 12, 2011, CTX elected to convert the full principal amount of $5,000,000 and paid the Company in full all accrued and unpaid interest owing. Because CTX common stock was not listed on any of the American Stock Exchange, the OTC Bulletin Board or NASDAQ by February 28, 2011, the number of shares of common stock and warrants issued on conversion of the loan was increased by 25% to 10,593,220. The common stock of CTX is quoted on the Pink OTC market. On March 31, 2011, the closing market price of CTX common stock, as reported by NASDAQ, was $1.93. However, this company’s common stock is very thinly traded and, as reported by NASDAQ, a total of 174,487 common shares were traded during the year ended March 31, 2011 at an average price, based on reported closing prices, of $1.21 per share. Because of the lack of a sufficiently active market, the Company does not believe that quoted market prices for CTX’s common stock are a reliable indicator of fair value of the investment. Despite repeated inquires and requests to CTX for current financial information that would allow the Company to assess the recoverability of its investment, the Company has not been able to obtain any information to enable it to assess the fair value of this investment. Accordingly, management concluded that it would be prudent to conclude, in the absence of persuasive evidence to the contrary (and, in particular, in light of CTX’s refusal to provide the Company with any financial information), that the investment should be considered impaired and therefore the Company has recorded an impairment loss of $5,000,000 during the year ended March 31, 2011.

On June 12, 2013, CTX released its audited annual financial results for the year ended December 31, 2012. CTX reported consolidated revenue of $119.2 million, gross profit of $20 million and income from operations of $14.7 million. After non-operating income of $9.5 million, an income tax expense of $5.5 million and loss from deconsolidation of subsidiary of $5.1 million, CTX reported net income for the year of $13.6 million.

The financial statements of CTX for the year ended December 31, 2012 state that there were 20,261,341 common shares outstanding. Although EFT would appear to have a majority of the common stock outstanding, as 10,593,220 common shares were issued to EFT on conversion of EFT’s loan in March 2011, CTX also has outstanding a class of preferred stock that has super-majority voting rights. As a result, EFT does not control CTX. In addition, CTX has outstanding a class of preferred stock that has a liquidation preference that substantially exceeds CTX’s reported net book value.

On March 31, 2014, the closing market price of CTX common stock, as reported by NASDAQ, was $1.80 per share, based on a trade of 1,100 shares on March 28, 2014. Prior to that trade, the closing market price of CTX common stock, as reported by NASDAQ, was $2.05 per share. This company’s common stock continues to be very thinly traded and, as reported by NASDAQ, a total of 157,700 common shares were traded during the year ended March 31, 2014 at an average price, based on reported closing prices, of $1.47. Because of the lack of a sufficiently active market, the Company does not believe that quoted market prices for CTX’s common stock are a reliable indicator of the fair value of its investment.

On August 8, 2012, the Company filed a complaint against Edward Carter, a former consultant, in the Superior Court of California, County of Los Angeles, in which the Company alleges, among other things, that Mr. Carter breached his consulting contract and fiduciary duty and committed fraud and misrepresentation in respect to the Company’s investment in CTX, as sponsored by Buckman, Buckman & Reid, Inc., “BB&R”, a financial consulting firm and placement agent.

On December 6, 2013, the Company joined George Curry (a former director and officer of the Company) in the CTX lawsuit as one of the defendants in the Superior Court of California, county of Los Angeles, in which the Company alleges, among other things, that Mr. Curry breached his fiduciary duty and committed fraud and misrepresentation in respect of the Company’s investment in CTX.

During the year ended March 31, 2015, the Company sold approximately 5 million shares of CTX for approximately $2.5 million less commissions and other fees and reported a gain of approximately $2.4 million in the accompanying consolidated statement of operations.

The Company intends to sell the remaining 5.6 million shares of CTX that it owns but there can be no assurance that it will be able to do so at favorable prices or at all.

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Note 11 - OTHER LIABILITIES

Other liabilities consist of the following:

	March 31, 2015		March 31, 2014
Payroll liabilities	$	46,289	$	53,003
Warranty liabilities		2,025		2,593
Accrued expenses		384,135		375,786
Provision for tax, interest and penalties		5,438,335		5,295,033
Others		3,403		2,658
	$	5,874,187	$	5,729,073

The Company records warranty liabilities at the time of sale for the estimated costs that may be incurred under its limited warranty. Changes in the warranty liability for standard warranties which are included in current liabilities on the Company’s Consolidated Balance Sheets are presented in the following tables:

	March 31, 2015			March 31, 2014
Warranty liability as at beginning of period, current	$	2,593		$	5,005
Cost accrued		6,330			4,855
Service obligations honored		(6,898	)		(7,267	)
Warranty liability as at end of period, current	$	2,025		$	2,593

Note 12 - CONTINGENT LIABILITIES

In 2009, the Company’s subsidiary, Tianquan, engaged a general contractor to construct a water manufacturing plant for RMB 4,758,600 (US$766,000). Upon completion, EFT inspected the plant and found several material construction defects, including, but not limited to, the fact that the contractor used inferior construction material, inconsistent construction plans and substandard insulation material. As a result, EFT conditioned its final construction payment to the contractor in the amount of RMB 698,896 (US$112,500) on the rectification of all construction defects. On March 22, 2012, the contractor brought a case against EFT in Baiquan People’s Court in Heilongjiang Province seeking approximately RMB 1,912,000 of purported outstanding payments under the contract and interest thereon. On January 16, 2014, Tianquan received an unfavorable decision issued by Baiquan People’s Court in Heilongjiang Province awarding the contractor approximately RMB 1,326,916 (US$213,700) of purported outstanding payments under the contract and interest thereon. The Company filed an appeal to Qiqihar intermediate People’s Court on January 27, 2014. On August 18, 2014, the Qiqihar Intermediate People’s Court issued a judgment rescinding the unfavorable decision issued by the Baiquan People’s Court and ordered the case to be reheard at the Baiquan People’s Court. On September 25, 2014, the Company received a favorable decision from Baiquan People’s Court as the court indicted that the company stamps affixed on all of the Contractor’s legal documents were fake. On November 5, 2014, the sub-contractor brought another civil case against Tianquan in the Baiquan People’s Court in Heilongjiang Province seeking RMB 1,823,787.91 of purported outstanding payments under the same contract and interest thereon. On December 8, 2014, Tianquan filed a civil lawsuit against sub-contractor for the compensation of material construction defects. The final resolutions of these two cases are now pending.

Note 13 – SHORT-TERM LOANS

The Company received a $571,200 loan from a third party, Insurance Financing, Inc., “IFI”, to finance the directors’ and officers’ insurance premium. The loan bore an interest rate of 4.95% per annum, and was to be repaid over a nine-month period which began on December 15, 2012. The terms of the agreement allowed for the Company to make nine equal payments of $64,783 and the loan was fully repaid during the quarter ended September 30, 2013.

The Company renewed coverage for the 2013-2014 period and received a loan in the amount of $571,200 from IFI to finance the directors’ and officers’ insurance premium bearing an interest rate of 3.60% per annum. The loan was repaid over a nine-month period beginning on December 15, 2013. The terms of the agreement allowed for the Company to make nine equal payments of $64,422 each.

The Company renewed coverage for the 2014-2015 period and received a new loan in the amount of $503,200 from IFI to finance the directors’ and officers’ insurance premium bearing an interest rate of 3.60% per annum. The loan is to be repaid over a nine-month period beginning on December 15, 2014. The terms of the agreement allow for the Company to make nine equal payments of $56,753 each.

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Note 14 – WARRANTS

As of March 31, 2014, the Company’s subsidiary Digital Development Partners Inc. had 2,000,000 common stock warrants outstanding, and 330,665 Series A and 330,665 Series B warrants outstanding, which were accounted for as equity instruments. The 2,000,000 warrants expired on June 1, 2014 and permitted the holders to purchase one share of Digital’s common stock at an exercise price of $1.00 per share. The Series A and Series B warrants expired on September 30, 2014 and permitted the holders to purchase one share of Digital’s common stock at an exercise price of $1.00 per share and $1.25 per share, respectively. There were no warrants exercised in the years ended March 31, 2015 and 2014.

Note 15 - INCOME TAXES

The Company was incorporated in the United States and has operations in five tax jurisdictions - the United States, the Hong Kong Special Administrative Region (“HK SAR”), mainland China, Taiwan, and the BVI.

The Company generated substantially all of its net income from its BVI operations for the years ended March 31, 2015 and 2014. According to BVI tax law, this income is not subject to any taxes. The Company’s HK SAR subsidiaries are subject to a 16.5% profit tax based on its taxable net profit. EFT (HK) Ltd provides management service to a BVI subsidiary, and the BVI subsidiary reimburses EFT (HK) Ltd for its total operating expenses plus a 5% mark up, and the income is subject to a 16.5% profit tax. The deferred tax assets for the Company’s US operations were immaterial for the years ended March 31, 2015 and 2014.

The Company’s Taiwan subsidiary, EFTI, and its factory in mainland China are subject to a 17% and 25% standard enterprise income tax, respectively, based on its taxable net profit. These operations have incurred net accumulated operating losses for income tax purposes and management believes that it is more likely than not that these net accumulated operating losses will not be utilized in the future. Therefore, it has provided full valuation allowance for the deferred tax assets arising from the losses as of March 31, 2015 and 2014.

The income tax expenses consist of the following:

	Year Ended March 31,
	2015		2014
Current:
Domestic	$	6,672	$	57
Foreign		2,097		14,492
Effect of IRS audits		-		3,546,761
Deferred		-		-
Income tax expenses	$	8,769	$	3,561,310

A reconciliation of income taxes, with the amounts computed by applying the statutory federal income tax rate of 37% to income before income taxes, is as follows:

	Year Ended March 31,
	2015			2014

Income tax at U.S. statutory rate	$	(1,963,265	)	$	(6,091,998	)
State tax		6,672			57
Deferred tax valuation allowance		1,958,132			6,071,227
Nondeductible expenses		5,133			20,771
Foreign subsidiaries Income tax		2,097			14,492
Effect of IRS audits		-			3,546,761
Income tax expenses	$	8,769		$	3,561,310

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The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction, and various states and foreign jurisdictions. With few exceptions, the Company is no longer subject to U.S. federal, state and local, or non-U.S. income tax examinations by tax authorities for tax years before 2006 (March 31, 2007).

The Company has not provided deferred taxes on unremitted earnings attributable to international companies that have been considered to be reinvested indefinitely. Because of the availability of U.S. foreign tax credits, it is not practicable to determine the income tax liability that would be payable if such earnings were not indefinitely reinvested. In accordance with ASC Topic 740, interest associated with unrecognized tax benefits is classified as income tax and penalties are classified in selling, general and administrative expenses in the statements of operations.

Income tax expense decreased to $8,769 for the year ended March 31, 2015 from approximately $3.6 million for the year ended March 31, 2014. As discussed above the IRS has revised its audit report of the Company’s returns for the years 2008 through 2010 and has reduced its proposed adjustments from $12.3 million to $4.5 million of additional tax liabilities for the years 2008 through 2010. The Company plans to continue to challenge most of the remaining proposed adjustments as set forth in the revised report and is in the process of appealing the proposed adjustments with the IRS.

The extent of the Company’s operations involves dealing with uncertainties and judgments in the application of complex tax regulations in a multitude of jurisdictions. The final taxes paid are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from federal, state and international tax audits. The Company recognizes potential liabilities and records tax liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due.

F-22

Note 16 - COMMITMENTS

Lease commitment

The Company leases 3,367 square feet of space in California that serves as its principal executive offices. The lease expires in February 2018. The monthly rent for the fiscal year ended March 31, 2015 is $9,455. Future minimum lease payments under the lease are as follows:

Year Ending March 31,

2016	$	113,838
2017	$	118,390
2018	$	112,497

The Company rents office space for its satellite training center in Hong Kong. The lease expired on March 31, 2015 with a monthly rental of $10,735 and was then extended to June 24, 2015 with monthly rent increased to $15,319. The Company has moved to a 1,100 square foot office with a two-year lease term expiring on June 23, 2017. Future minimum lease payments under the operating lease are as follows:

Year Ending March 31,

2016	$	118,683
2017	$	113,760

The Company rents storage space for its satellite training center in Hong Kong. The lease provides for monthly lease payments approximating $955 starting on January 4, 2013 until January 3, 2015, and $1,019 starting January 4, 2015 with expiration on January 3, 2017. Future minimum lease payments under the operating lease are as follows:

Year Ending March 31,

2016	$	12,228
2017	$	9,171

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The Company rents office space for its operation in Taiwan. The lease expires on December 16, 2015, and the monthly rental is $1,260. Future minimum lease payments under the operating lease are as follows:

Year Ending March 31,

2016	$	11,340

The Company also leases a 40,000 square meter property from Yongqin county of Baiquan, Heilongjiang Province, the PRC and constructed a bottled water factory there. The land is leased commencing on December 31, 2009 for a term of fifty years, with a yearly land use right’s fee of $3,865. Future minimum lease payments under the operating lease are as follows:

Year Ending March 31,

2016	$	3,865
2017	$	3,865
2018	$	3,865
2019	$	3,865
2020	$	3,865
Thereafter	$	150,735

Total rent expenses for the years ended March 31, 2015 were $370,271 and $555,747, respectively.

Employment Agreements

Jack Jie Qin

On January 1, 2009, the Company entered into an employment agreement with Jack Jie Qin, the Company’s president and chief executive officer. The employment agreement has an initial term of seven years, and will be automatically extended, without any action on the part of Mr. Qin or the Company, for additional, successive one-year periods. The agreement may be terminated by either party on 60 days’ written notice.

During the initial seven year period of the agreement, the Company will pay Mr. Qin an annual base salary of $200,000 per year for the first calendar year. In each subsequent calendar year during the term of the agreement, the Company will pay Mr. Qin an annual base salary determined by the compensation increase scale as reviewed and approved by the Company’s Compensation Committee and approved by the Company’s board of directors. Mr. Qin is eligible to receive an annual base salary adjustment in each subsequent calendar year as a cost of living increase at 10% per annum. Mr. Qin is also eligible to receive an annual bonus pursuant to the executive bonus scale in effect for executive employees of the Company.

In the event that Mr. Qin’s employment is terminated without cause by the Company or if Mr. Qin terminates the agreement for good reason, or if, following a change in control, Mr. Qin’s employment is terminated or not renewed, the Company has agreed to pay Mr. Qin an amount equal to twice the total of his annual base salary and his target bonus as established by the Compensation Committee and to maintain his benefits for a period of two years. At the expiration of the initial term of the agreement or any successive one-year renewal period, if the Company elects not to renew the agreement, the Company has agreed to pay Mr. Qin an amount equal to the total of his annual base salary and his target bonus as established by the Compensation Committee and to maintain his benefits for a period of one year.

Purchase obligation

As discussed in Note 8, the Company’s wholly owned subsidiary, EFT Investment Co. Ltd, entered into agreements to secure an option to purchase an office building located in Taipei, Taiwan. The total purchase price for the office building is NTD7.1 billion, equivalent to approximately $233.1 million.

Pursuant to the terms of these agreements, EFT Investments made payments to secure an option to purchase an office building in Taiwan from Meifu Development Co., Ltd (“Meifu”) and TransGlobe Life Insurance Inc. (“TransGlobe”). EFT Investment did not exercise any option that it may have had to purchase the Taiwan building and subsequently suspended all future payments to both Meifu and TransGlobe. EFT Investments’ decision to not exercise its option to purchase the office building was due to the fact that it had reasons to suspect that the former General Manager of EFT Investment had breached his fiduciary duties and had, jointly with Meifu and TransGlobe committed fraud and misrepresentation related to the transactions (see Note 18).

F-24

Note 17 – SEGMENT INFORMATION

The Company’s business is classified by management into two reportable business segments: online and beverage. The online business reportable segment is an aggregation of the Company’s online operating segments, which are organized to sell the Company’s products to Affiliates through its websites. The online business reportable segment derives revenue from the sales of nutritional products, personal care products and EFT-phones and access fees from its network platform. The beverage business reportable segment derives revenue and expense from the bottled water factory in Baiquan, Heilongjiang Province, the PRC. Unallocated items comprise mainly corporate expenses and corporate assets.

Although substantially all of the Company’s revenue is generated from Mainland China, the Company is organizationally structured along business segments. The accounting policies of each of the Company’s operating segments are the same as those described in Note 2, “Summary of Significant Accounting Policies.”

The following tables provide the business segment information as of and for the years ended March 31, 2015 and 2014. Income tax allocations have been determined based on statutory rates in the applicable business segment.

	Year ended March 31, 2015
	Online			Beverage			Unallocated
	business			business			items			Total
Total revenues, net	$	967,831		$	-		$	-		$	967,831
Total cost of revenues		(356,680	)		-			-			(356,680	)
Gross profit		611,151			-			-			611,151
Operating expenses:
Selling, general and administrative expenses		2,125,387			218,151			2,861,585			5,205,123
Provision for inventory obsolescence		130,787			-			-			130,787
Royalty expenses		500,000			-			-			500,000
Total operating expenses		2,756,174			218,151			2,861,585			5,835,910
Net operating loss		(2,145,023	)		(218,151	)		(2,861,585	)		(5,224,759	)
Other income		161,990			4,725			2,353,268			2,519,983
Allocated income tax expense		(2,097	)		-			(6,672	)		(8,769	)
Loss after income tax		(1,985,130	)		(213,426	)		(514,989	)		(2,713,545	)

Total long-lived assets		19,760			872,881			1,488			894,129

Additions to long-lived assets		-			-			-			-

	Year ended March 31, 2014
	Online			Beverage			Unallocated
	business			business			items			Total
Total revenues, net	$	1,858,844		$	7,834		$	-		$	1,866,678
Total cost of revenues		(594,182	)		(8,017	)		-			(602,199	)
Gross profit/(loss)		1,264,662			(183	)		-			1,264,479
Operating expenses:
Selling, general and administrative expenses		2,595,067			566,945			3,458,831			6,620,843
Provision for inventory obsolescence		888,320			-			-			888,320
Royalty expenses		500,000			-			-			500,000
Total operating expenses		3,983,387			566,945			3,458,831			8,009,163
Net operating loss		(2,718,725	)		(567,128	)		(3,458,831	)		(6,744,684	)
Other income/(expense)		268,272			3			(9,703,284	)		(9,435,009	)
Allocated income tax expense		(14,492	)		-			(3,546,818	)		(3,561,310	)
Loss after income tax		(2,464,945	)		(567,125	)		(16,708,933	)		(19,741,003	)

Total long-lived assets		62,701			1,032,057			3,550			1,098,308

Additions to long-lived assets		1,517			-			5,091			6,608

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Note 18 – LITIGATION

On October 1, 2010, EFT Investment Co. Ltd. (EFTI) filed a lawsuit against Hsiao Zhong-Xing, former general manager of Excalibur, and Lu Zhuo-Jun, former vice general manager of Excalibur, collectively "Defendants,” in the Taiwan Shihlin District Prosecutor’s Office. EFT Investment Co. Ltd. alleges, among other things, that Defendants committed the offences of capital forging, fraud, breach of trust, and document fabrication. On April 30, 2013, the Taiwan Shihlin District Court found that both Hsaio Zhong-Xing and Lu Zhuo-Jun were guilty of fraudulent increase of paid-up capital and dismissed all other charges. As a result, Hsiao Zhong-Xing received a six-month jail sentence and Lu Zhuo-Jun received a five-month jail sentence. Both of their jail sentences can be converted into a fine. On May 27, 2013, the Shihlin District Prosecutor filed an appeal in the Taiwan High court for reconsideration of the judgment entered by the District Court. On February 19, 2014, the Taiwan High Court sustained the District Court’s decision and found Hsaio Zhong-Xing guilty and sentenced him to a mandatory ten-month jail sentence; and found Lu Zhuo-Jun guilty and sentenced him to a mandatory eight-month jail sentence. This decision is final and confirmed. Based on the Taiwan Shihlin District Court’s judgment of fraudulent increase of paid-up capital, Excalibur filed a civil lawsuit against Hsiao Zhong-Xing, Lu Zhuo-Jun and Jiao Ren-He on January 7, 2014 for the unpaid capital amount of NTD 475,312,500. On January 13, 2015, being the largest creditor of Excalibur, EFT Investment Co. Ltd. filed a submission to the court to apply for joining the case and the court’s decision is pending. On April 14, 2015, Excalibur filed to the court to withdraw the case and the court approved.

EFT Investment Co. Ltd. filed a civil lawsuit against Jiao Ren-Ho, Chang Hui-Ying, Hsiao Zhong-Xing, and Lu Zhuo-Jun, collectively “Defendants,” in the Taiwan Shihlin District court on February 12, 2010. EFT Investment Co. Ltd. alleges Defendants committed tortious acts, including but not limited to the offences of capital forging, fraud, breach of trust and document fabrication. The Shihlin District Court found in favor of all Defendants in the case. EFT filed an appeal in the appellate court for reconsideration of the judgment entered by the District Court. The appellate court remanded the case to District Court for the second review and the District Court found in favor of all defendants for the second time. EFT therefore filed a second appeal in the appellate court for reconsideration of the judgment entered by the District Court. The final resolution of this case is pending.

Marinteknik Shipbuilders (S) Pte Ltd., a Singapore company, filed a lawsuit against Excalibur in the Taiwan Taichung District Court on July 9, 2009 for unpaid service fees and out-of-pocket expenses of NTD 8,050,832, equivalent to approximately $254,700. On August 20, 2009, the Taiwan Taipei district court froze Excalibur’s cash of $203,402 in response to the suit. The final resolution of this case is pending. However, a contingent liability for the restricted cash has been recorded. As EFT Investment Co. Ltd. is Excalibur’s largest creditor, in consideration of recovering the frozen cash, EFT Investment Co. Ltd. filed a submission to the court to apply for joining the case on January 13, 2015 and the court’s decision is pending.

On August 2, 2010, the Company commenced a legal proceeding against Marinteknik Shipbuilders (S) Pte Ltd. and six other persons in the High Court of the Republic of Singapore alleging fraud, misrepresentation, and deceit on the part of the defendants with respect to Excalibur’s purchase of the Ocean La La. The Company claims that the wrongful actions of the defendants resulted in damages of $19,000,000 to the Company. On December 11, 2012, the High Court issued a decision whereby it dismissed EFT’s actions against Marinteknik and Lim Lan Eng (Priscilla), a director of Marinteknik. On January 8, 2013, EFT filed an appeal against the decision made by the High Court. On November 29, 2013, the appellate court issued its order and sustained the High Court’s decision and awarded legal fees to the defendants. The Company has accrued a liability in the amount of $200,000 for the legal costs. The High Court dismissed the appeal by the Company, but criticized the defendants, stating that their actions were “wholly lacking in probity” and “likely also to have been unlawful”. After seeking further legal advice and balancing all factors, however, it was decided that commencing further legal proceedings on this matter is not beneficial to the commercial interests of the Company. The Company is waiting to hear the court’s decision on the amount of defendants’ legal costs EFT is obligated to bear.

F-26

In 2009, EFT’s subsidiary, Heilongjiang Tianquan Manor Soda Drinks Co. Ltd., engaged a general contractor, the “Contractor”, to construct a water manufacturing plant, the “Plant”, for RMB 4,758,600 (US$776,300). Upon completion, EFT inspected the Plant and found several material construction defects, including, but not limited to, the fact that the Contractor used inferior construction material, inconsistent construction plans and substandard insulation material. As a result, in 2010, EFT conditioned its final construction payment to the Contractor in the amount of RMB 698,896 (US$112,500) on the rectification of all construction defects. On March 22, 2012, the Contractor brought a case against EFT in Baiquan People’s Court in Heilongjiang Province seeking approximately RMB 1,912,000 of purported outstanding payments under the contract and interest thereon. On January 16, 2014, EFT’s subsidiary, Heilongjiang Tianquan Manor Soda Drinks Co. Ltd., received an unfavorable decision issued by Baiquan People’s Court in Heilongjiang Province awarding the contractor approximately RMB 1,326,916 of purported outstanding payments under the contract and interest thereon. The Company filed an appeal with the Qiqihar Intermediate People’s Court on January 27, 2014. On August 18, 2014, the Qiqihar Intermediate People’s Court issued a judgment rescinding the unfavorable decision issued by the Baiquan People’s Court and ordered the case to be reheard at the Baiquan People’s Court. On September 25, 2014, the Company received a favorable decision from Baiquan People’s Court as the court indicted that the company stamps affixed on all of the Contractor’s legal documents were fake. On November 5, 2014, the sub-contractor brought another civil case against Tianquan in the Baiquan People’s Court in Heilongjiang Province seeking RMB 1,823,787.91 of purported outstanding payments under the same contract and interest thereon. On December 8, 2014, Tianquan filed a civil lawsuit against sub-contractor for the compensation of material construction defects. The final resolutions of these two cases are now pending.

On August 8, 2012, the Company filed a complaint against Edward Carter, a former consultant, in the Superior Court of California, county of Los Angeles, in which the Company alleges, among other things, that Mr. Carter breached his consulting contract, fiduciary duty and committed fraud and misrepresentation in respect to the Company’s investment in CTX Virtual Technologies, Inc., “CTX”, as sponsored by Buckman, Buckman & Reid, Inc., “BB&R”, a financial consulting firm and placement agent. This matter was dismissed as part of a mutual settlement that was entered into between parties on or around February 25, 2015.

On January 28, 2013, EFTI filed a criminal complaint against Tom Peng a.k.a. Cheng Hao Peng (President of Meifu Development Co., Ltd., “Meifu”), Thomas Chen a.k.a. Hong Dong Chen (former General Manager and Director of EFTI), Steven Peng a.k.a. Tien Te Peng (Vice Chairman of Transglobe Life Insurance Inc., “Transglobe”), Xian Jue Liu (Chairman of Transglobe ), Shih Kuei Chang (General Manager of Meifu), Yi Feng Cheng (Real Estate Department Manager of Transglobe ) and Da Min Wu, an individual, collectively called “Defendants”, in the Taipei District Prosecutor’s Office. EFTI alleges, among other things, that Thomas Chen colluded with Tom Peng and other Defendants, and that Thomas Chen had made numerous misrepresentations to the Company and EFTI in connection with transactions related to a building in Taiwan, of which Meifu and Transglobe were developers. The Company also alleges that Thomas Chen breached his fiduciary duty, as the General Manager of EFTI, by binding EFTI in various agreements and making payments from EFTI to Meifu and Transglobe, which are named Defendants, and that the Defendants had committed violations of securities law, insurance law, corporation law and tax law, as well as money laundering, fraud and breach of trust.

On June 6, 2013, the Company filed a civil complaint in Los Angeles, California against Meifu Development Co., Ltd., Transglobe Life Insurance Inc. and certain individuals related to the purchase of the Taiwan Building. On January 27, 2014, the Company voluntarily dismissed the civil complaints without prejudice in Los Angeles, California, in return for a good faith settlement negotiation initiated by such defendants. However, due to a lack of good faith of the defendants in negotiation of a settlement, on May 30, 2014, the Company re-filed civil complaints against Meifu Development Co. Ltd., Transglobe Life Insurance, Inc., Tom Peng and Thomas Chen in the Los Angeles Supreme Court, alleging deceit, conversion, breach of fiduciary duty and other illegal acts against the Company. The final resolution of this case is pending.

On July 23, 2013, the Taipei District Prosecutor’s Office issued a non-indictment decision on charges of fraud against the Defendants, which the Company believes is unwarranted. The decision not to indict the Defendants was made despite the fact that the Taiwan Investigation Bureau, Ministry of Justice had confirmed that Thomas Chen, the former GM of EFTI, has received and/or has intended to receive secret profits from Tom Peng, who admitted his full control over Meifu and Transglobe. A report by the Taiwan Investigation Bureau, Ministry of Justice, further revealed, among other fraudulent activities, that Tom Peng and his son, Steven Peng, a.k.a. Tien Te Peng, were involved in illegal inter-company transactions and illegal related party transactions. Documents received by the Company through Court petition indicated that, on June 14, 2013, the Prosecutor in Taiwan, despite what the Company believes to have been ample evidence of illegality, instructed the Taiwan Investigation Bureau to halt all further investigations into EFTI’s criminal complaint prior to his written decision not to indict the Defendants. Subsequently, on August 22, 2013, EFTI completed the filing of the appeal with the Taiwan High Prosecutor’s Office for reconsideration of the non-indictment charges against the Defendants. This appeal was rejected on August 29, 2013, which the Company believes was not enough time for the Prosecutor’s Office to fully reconsider the appeal. On September 12, 2013, EFTI filed a final petition to the Taipei District Court for judgment of the decision made by the Taiwan High Prosecutor’s Office, but the petition was rejected on March 5, 2014. The Company is considering various legal options against the Defendants in Taiwan.

F-27

On November 27, 2013, a class action entitled Li, et al. v. EFT Holdings, Inc., et al. was filed on behalf of a putative class of all purchasers of one or more of the Company’s products against the Company and Jack Qin in the United States District Court for the Central District of California. A first amended complaint was filed on July 11, 2014. On October 10, 2014, the Court dismissed all class claims with prejudice. On November 19, 2014, the Court denied Plaintiffs’ Motion for Relief from the October 10, 2014 Order. On January 7, 2015, the Court entered an order dismissing Plaintiffs’ claims for breach of warranty with prejudice and all claims against Jack Qin without prejudice, and clarified that Plaintiff cannot seek disgorgement or state claims based on any stock-related fraud. On January 30, 2015, a second amended complaint was filed alleging individual claims for unfair competition, false advertising and fraud. The second amended complaint sought, among other things, restitution, compensatory and punitive damages and injunctive relief. On April 29, 2015, the Court consolidated this action with the Wang, et al. v. EFT Holdings, Inc., et al. action. On May 7, 2015, Plaintiffs voluntarily dismissed the claims of the individual plaintiffs without prejudice.

On November 27, 2013, a class action entitled Li, et al. v. Qin, et al. was filed on behalf of a putative class of all purchasers of the Company’s products against the Company and certain of its current and former officers and directors in the United States District Court for the Central District of California. A first amended complaint was filed on July 11, 2014. On October 10, 2014, the Court dismissed all class claims with prejudice. On November 19, 2014, the Court denied Plaintiffs’ Motion for Relief from the October 10, 2014 Order. On January 6, 2015, the Court entered an order dismissing Plaintiffs’ corporate waste and gift claims, and Plaintiffs’ Racketeer Influenced and Corrupt Organizations (RICO) Act claims based on alleged corporate looting and operation of a pump-and-dump scheme. The Court further dismissed Plaintiffs’ deception and common law fraud claims with respect to all defendants except the Company and Jack Qin. On January 30, 2015, a second amended complaint was filed alleging individual claims for operation of an endless chain scheme, deception and common law fraud, and RICO violations. The complaint sought, among other things, compensatory, treble and punitive damages. On April 29, 2015, the Court consolidated this action with the Wang, et al. v. EFT Holdings, Inc., et al. action. On May 7, 2015, Plaintiffs voluntarily dismissed the claims of the individual plaintiffs without prejudice.

On January 30, 2015, a class action entitled Wang, et al. v. EFT Holdings, Inc., et al. was filed on behalf of a putative class of all purchasers of the Company’s products against the Company and certain of its current and former officers and directors in the United States District Court for the Central District of California. On April 14, 2015, Plaintiffs filed a first amended complaint. On April 29, 2015, the Court consolidated this action with the Li, et al. v. Qin, et al. and Li, et al. v. EFT Holdings, Inc., et al. actions. On May 7, 2015, Plaintiffs filed a motion for class certification, which is currently pending. On May 11, 2015, Plaintiffs filed a second amended and consolidated complaint, alleging claims for operation of an endless chain scheme, deception and common law fraud, unfair completion, false advertising, and RICO violations. On May 29, 2015, the Company filed a motion to dismiss and a motion to strike the class allegations from the second amended and consolidated complaint, which is currently pending. The case is currently pending. The Company believes that the claims asserted are without merit and intends to defend against them vigorously.

On December 6, 2013, the Company named George Curry (a former director and officer of the Company) as one of the defendants in the Superior Court of California, county of Los Angeles, with reference to the CTX investment transaction, in which the Company alleges, among other things, that Mr. Curry breached his fiduciary duty and committed fraud and misrepresentation in respect of the Company’s investment in CTX Virtual Technologies, Inc. (“CTXV”).

On April 18, 2014, George Curry filed a Notice of Removal for the action above to be brought in the District Court of Claifornia, Los Angeles (Western District). In the same action, he brought a counterclaim against EFT Holdings, Inc., Jack Qin and Pyng Soon and sought implied and equitable indemnity, declaratory relief and apportionment of fault. On or around December 11, 2014 George Curry filed a Motion for Summary Judgement against EFT and all other Cross Defendants in the matter. The Motion was heard on February 26, 2015, wherein the Court denied George Curry’s Motion. The final resolution of the entire matter is still pending..

On May 30, 2014, the Company filed a civil lawsuit in the Superior Court of the State of California for the County of Los Angeles - East District against Meifu and others. alleging deceit, conversion, breach of fiduciary duty and money had and received against the defendants. Also named as defendants in this action are TransGlobe, Peng Cheng-Hao (President of Meifu) and Thomas Chen, a former director of EFTI.

On June 9, 2014, the arbitrators awarded in favor of Ezone, with counterclaims of Excalibur dismissed by the arbitrators. After taking into account the advice from the Company’s solicitors, the Company has decided not to appeal the arbitration award.

On March 4, 2015, the Company filed a civil lawsuit in the United States District Court, Central District of California, against CTX, Buckman, Buckman & Reid, Cliff Rhee and Peter Lau alleging breach of covenant of good faith and fair dealing, breach of fiduciary duty, fraud, misrepresentation, concealment, negligent misrepresentation and negligence.

On April 14, 2015, Defendant CTX filed a Motion to Dismiss. On May 28, 2015, the Court granted CTX’s motion, in part, with leave to amend. The Company filed a First Amended Complaint on June 8, 2015, asserting causes of action for: (1) breach of covenant of good faith and fair dealing; (2) breach of fiduciary duty; (3) fraud-misrepresentation; and (4) fraud-concealment. On June 24, 2015, CTX filed an answer to the First Amended Complaint. Buckman, Buckman & Reid and Peter Lau filed an answer to the First Amended Complaint on July 9, 2015.

On April 14, 2015, Plaintiffs filed a first amended complaint. On April 29, 2015, the Court consolidated this action with the Li, et al. v. Qin, et al. and Li, et al. v. EFT Holdings, Inc., et al. actions. On May 11, 2015, Plaintiffs filed a second amended and consolidated complaint, alleging claims for operation of an endless chain scheme, deception and common law fraud, unfair completion, false advertising, and RICO violations. On May 29, 2015, the Company filed a motion to dismiss and a motion to strike the class allegations from the second amended and consolidated complaint, which is currently pending. The Company believes that the claims asserted are without merit and intends to defend against them vigorously.

On May 7, 2015, Plaintiffs voluntarily dismissed the claims of the individual plaintiffs without prejudice.

On June 4, 2015, the Superior Court of California, County of Los Angeles ruled that since the Company has its principal place of business in California, the matter is stayed to allow the Company time to file in the appropriate forum. The Court further ordered that Taiwan is a suitable forum for the Company’s complaint. An order to show cause is set for December 4, 2015.

Note 19 - SUBSEQUENT EVENTS

The Company has reviewed its subsequent events through the date these consolidated financial statements were issued and has determined that no material subsequent events have occurred through such date.

F-28

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Not applicable.

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this annual report, an evaluation was carried out by the Company’s management, with the participation of its principal executive officer and its principal financial officer, of the effectiveness of its disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of March 31, 2015. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.

Based on that evaluation, the Company’s management concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective as of March 31, 2015.

Management’s Report on Internal Control over Financial Reporting

The Company’s management is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of its principal executive officer and its principal financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of its financial statements in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

The Company’s management conducted an assessment of the effectiveness of its internal control over financial reporting as of March 31, 2015, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

A material weakness is a control deficiency, or combination of control deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The Company’s management concluded that its internal control over financial reporting as of March 31, 2015 was effective.

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.

Changes in Internal Controls over Financial Reporting

There were no changes in the Company’s internal control over financial reporting that have materially affected, or are likely to materially affect, its internal control over financial reporting during the year ended March 31, 2015.

ITEM 9B. OTHER INFORMATION

None

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The following table lists the names, ages, certain positions and offices held by the Company’s directors and named executive officers as of the date of this filing.

Name	Age	Title
Jack Jie Qin	55	President, chief executive officer, and a director
William E. Sluss	60	Principal financial and accounting officer
Visman Chow	60	Director
Norman Ko	51	Director
Pyng Soon	55	General counsel

Directors serve in such capacity until the next annual meeting of the Company’s stockholders and until their successors have been elected and qualified. The Company’s officers serve at the discretion of its Board of Directors, until their death, or until they resign or have been removed from office.

Jack Jie Qin

Mr. Qin has been serving as the Company’s president, chief executive officer and chairman of the Board of Directors since November 2007. Since January 2004, Mr. Qin has been serving as the president of EFT BioTech, Inc. From July 1998 to December 2002, Mr. Qin served as the President of eFastTeam International, Inc. located in Los Angeles, California. From June 1992 to December 1997, he served as the president of LA Import & Export Company located in Los Angeles, California. In May 1991, Mr. Qin earned an MBA from Emporia State University in Kansas. In May 1982, Mr. Qin graduated from Jiangxi Engineering Institute, located in Nanchang, China, with a major in Mechanical Engineering.

William E. Sluss

Mr. Sluss has been serving as the Company’s corporate controller since August 2010 and was promoted to the position of chief financial and accounting officer in October 2012. Mr. Sluss has twenty years of experience providing financial, operational and managerial expertise for companies in both the private and public sectors. His background includes experience in the banking, manufacturing, nuclear and logistics industries. He has extensive experience with SEC reporting companies and U.S. GAAP, including acting as the controller during the successful initial public offering of Heritage Federal Bank, FSB (NYSE). His experience includes four years with Quebecor Printing (one of the world’s largest printers of bibles and textbooks) and two years with Flour City International (a U.S. publicly traded (Nasdaq) construction /manufacturing company). In 2002, Mr. Sluss joined Studsvik, Inc. (a publicly traded nuclear service company (Stockholm Exchange) headquartered in Stockholm, Sweden) as its chief financial officer for the U.S. operations. Mr. Sluss has extensive experience with IFRS over his career while working for several international companies. In addition, throughout his career, Mr. Sluss has worked closely with the world's largest accounting firms (e.g., KPMG and PricewaterhouseCoopers), serving as the main contact with those firms. He also has extensive experience with the COSO framework and SOX compliance. Mr. Sluss received a Bachelor of Science Degree in Accounting from the University of Virginia’s College at Wise in 1990 and became a licensed Certified Public Accountant (“CPA”) in the same year.

Visman Chow

Mr. Visman Chow has served as member of the Board of Directors since July 2009. From 1993 to 2012, Mr. Chow served as the chief lending officer and a director of Universal Bank. Between 1983 and 1993 Mr. Chow was the president of Unieast Financial Corporation. From 1979 to 1983, Mr. Chow was with Union Bank where he managed a commercial real estate portfolio of approximately $50 million.

Norman Ko

Mr. Norman Ko has served as a member of the Board of Directors since July 2009. He is a certified public accountant (“CPA”) practicing in California. He received a Bachelor of Science degree from York University, Toronto, Canada and later received a graduate degree in business administration from the University of San Francisco.

Pyng Soon

Since January 2009, Mr. Soon has served as general counsel to the Company. Mr. Soon also served as chairman of the board of directors of Excalibur International Marine Corporation from January 2010 to August 2010. Prior to joining the Company, Mr. Soon was a sole practitioner and a counsel to Murchison & Cumming, LLP from 2006 and focused his practice in the areas of international law, business litigation and business transactions. Mr. Soon earned his bachelor’s degree in science from Lincoln Memorial University, his master’s degree in science from East Tennessee State University, and his Juris Doctor degree from University of West Los Angeles School of Law. Mr. Soon is a licensed certified public accountant.

Mr. Chow and Mr. Ko are independent directors as that term is defined in Section 803.A of the NYSE Amex Company Guide. Mr. Chow and Mr. Ko, the Company’s two independent directors, and Mr. Jack Jie Qin act as its audit committee. Mr. Norman Ko is the Company’s “audit committee financial expert” as that term is defined in the rules and regulations of the Securities and Exchange Commission.

Code of Ethics

The Company currently has a Code of Business Conduct for its directors, principal executive officers and staff. The Company’s Code of Business Conduct will be sent, without charge, to any person requesting a copy of the same. To request a copy, send a letter to the Company at its address on the cover page of this report.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Exchange Act requires the Registrant’s directors and officers, and persons who beneficially own more than 10% of a registered class of the Registrant’s equity securities, to file reports of beneficial ownership and changes in beneficial ownership of the Registrant’s securities with the SEC on Forms 3, 4 and 5. Officers, directors and greater than 10% stockholders are required by SEC regulation to furnish the Registrant with copies of all Section 16(a) forms they file.

Jack Jie Qin, William E. Sluss, Visman Chow, Norman Ko, and Pyng Soon have not filed any required forms under Section 16(a).

ITEM 11. EXECUTIVE COMPENSATION

Compensation Committee Interlocks and Insider Participation

The Company’s Board of Directors acts as its compensation committee. During the year ended March 31, 2015, all of the Company’s directors participated in deliberations concerning executive officer compensation.

During the year ended March 31, 2015, none of the Company’s directors were members of the compensation committee or a director of another entity, which other entity had one of its executive officers serving as one of the Company’s directors or as a member of its compensation committee.

Compensation Discussion and Analysis

The goal of the Company’s executive officers’ compensation levels is to motivate the officers to create long-term value for its stockholders. Toward this goal, the Company establishes compensation levels based on its executive officers’ relevant experience and leadership skills. In addition, the Company considers the executive officers’ ability and likelihood of contributing to its growth and success. The Company also takes into account comparable salary ranges at similar companies in order to attract and retain its executive officers.

The Company does not have a formula or benchmark or necessarily react to short-term changes in business performance when reviewing its executive officers’ salaries. The Company considers their past contributions, their ability to work cohesively with its management team and its expectations regarding their future performance. The Company’s executive officers have an active role in the determination of their compensation and the Company takes into account their opinions and expectations.

Summary Compensation Table

The following table shows, in summary form, the compensation received by (i) the Company’s Chief Executive and Principal Financial Officers and (ii) by each other executive officer who received compensation in excess of $100,000 during the two fiscal years ended March 31, 2015.

Name and Principal Position	Fiscal Year Ended March 31,	Salary(1)		Total(2)
Jack Jie Qin	2015	$	50,000	$	50,000
(Principal Executive Officer)	2014	$	194,000	$	194,000
Pyng Soon(3)	2015	$	136,675	$	136,675
(General Counsel)	2014	$	156,200	$	156,200
Bill Sluss (4)	2015	$	115,933	$	115,933
(Principal Financial Officer)	2014	$	115,933	$	115,933

	(1)	The dollar value of base salary (cash and non-cash) earned and any bonus (cash and non-cash) earned.
	(2)	To date, the Company has not adopted a stock option plan, a stock bonus plan or any other type of incentive plan. The Company has not issued any options to its executive officers, directors or employees or paid them other payments.
	(3)	Pyng Soon was appointed as the general counsel of the Company in January 2009.
	(4)	Bill Sluss was appointed as the Company’s corporate controller since August 2010, appointed as interim principal financial and accounting officer in November 2011, and promoted to be principal financial and accounting officer in October 2012.

Employment Agreements

Please see Note 18 to the Consolidated Financial Statements contained in Item 8 for disclosures with respect to the employment agreements to which certain of the named executive officers described in the above Summary Compensation Table are subject.

Compensation of Directors during Fiscal Year Ended March 31, 2015

Name

Fees Earned or

Paid in Cash

Stock Awards

Option Awards

Total

Visman Chow

24,000

—

24,000

Norman Ko

48,000

—

48,000

Each non-management director receives an annual fee of $24,000, with the Chairman of the Company’s Audit Committee receiving an additional $24,000. Mr. Norman Ko served as the chairman of the Company’s audit committee during the fiscal year ended March 31, 2015. The Company’s directors are also reimbursed for reasonable out-of-pocket expenses incurred in connection with attendance at director and committee meetings.

Stock Option and Bonus Plans

To date, the Company has not adopted a stock option plan, a stock bonus plan or any other type of incentive plan. The Company has not issued any options to its executive officers, directors or employees.

Long-Term Incentive Plans

The Company does not have any pension, stock appreciation rights, long-term incentive or other plans. The Company may implement these plans at a future date, although it has no present intentions to do so.

Employee Pension, Profit Sharing or other Retirement Plans

The Company does not have a defined benefit, pension plan, profit sharing or other retirement plan, although it may adopt one or more of such plans in the future.

Report of the Board of Directors

The Board of Directors (which functions as the Compensation Committee) has reviewed and discussed the Compensation Discussion and Analysis with management. Based on that review and discussion, the Board has determined that the Compensation Discussion and Analysis be included in the Annual Report on Form 10-K for the year ended March 31, 2015.

	The Board of Directors
	Jack Jie Qin
	Visman Chow
	Norman Ko

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table shows the beneficial ownership of the Company’s common stock as of March 31, 2015 by (i) each of its directors and executive officers, (ii) all directors and executive officers as a group and (iii) each owner of more than 5% of its common stock.

Name	Number of Shares Beneficially Owned		Percent of Shares Outstanding
Jack Jie Qin		1,000		*
William E. Sluss		—		—
Visman Chow		—		—
Norman Ko		—		—
Pyng Soon		—		—
Dragon Win Management, Ltd.(1)		52,099,000		68.57	%
Officers and directors as a group (5 persons)		1,000		*

* Less than 1%.

(1)Liu Dong Xin and Zhang Ming are the controlling persons of Dragon Win.

Due to the ownership by Dragon Win of more than 50% of the Company’s common stock, which includes the right to vote a majority of the shares at any meeting of its shareholders, the Company is a controlled corporation, as that term is defined in Section 801(a) of the NYSE Amex Company Guide.

The address of each shareholder listed above, with the exception of Dragon Win, is in care of the Company at 17800 Castleton St., Suite 300, City of Industry, CA 91748. The address of Dragon Win is Palm Grove Houses, P.O. Box 438, Road Town, Tortola, British Virgin Islands.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

See Item 7 of this report (Capital Resources and Liquidity subsection) for information concerning the Company’s outstanding loans to Excalibur International Marine Corporation.

See Note 8 of the Notes to the Consolidated Financial Statements contained in Item 8 for information concerning the Company’s loan to Yeuh-Chi Liu and the related transactions with EFT Assets Limited, JFL Capital Limited and Wendy Qin.

Any proposed transaction with a related party is reviewed by the Company’s Board of Directors. In reviewing the proposed transaction, the Board considers the related party’s relationship with the Company, all conflicts of interest that may exist or otherwise arise on account of the transaction, the material facts relating to the proposed transaction, and whether the transaction is on terms comparable to those that could be obtained in arms-length dealing with an unrelated third party.

As set forth in Item 10, each of Mr. Chow and Mr. Ko are independent directors as that term is defined in Section 803.A of the NYSE Amex Company Guide.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

Paritz & Company P.A. audited the Company’s financial statements for the years ended March 31, 2015 and 2014. The following table shows the aggregate fees billed to the Company during the years ended March 31, 2015 and 2014, by Paritz & Company P.A.

	2015		2014
Audit Fees	$	65,000	$	65,000
Audit-Related Fees		-		-
Tax Fees		-		-
All Other Fees		-		-

Audit fees represent amounts billed for professional services rendered for the audit of the Company’s annual financial statements and the review of its interim financial statements. Before Paritz & Company P.A. was engaged by the Company to render these services, the engagement was approved by the Company’s Board of Directors.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a)

The following documents are filed as part of this report:

(1)

Financial Statements

The consolidated financial statements filed as part of this Annual Report on Form 10-K are located as set forth in the index on page F-1 of this Report.

(2)

Consolidated Financial Statement Schedule:

Not applicable.

(3)

Exhibits

The list of exhibits included in the below Exhibit Index is hereby incorporated herein by reference.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	EFT HOLDINGS, INC.

	By:	/s/ Jack Jie Qin
		Jack Jie Qin, Principal Executive Officer

	Date: July 14, 2015

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Jack Jie Qin his attorney-in-fact and agent, with the power of substitution, for him in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorney-in-fact, or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature	Title	Date

/s/ Jack Jie Qin	Director and Principal	July 14, 2015
Jack Jie Qin	Executive Officer

/s/ William E. Sluss	Principal	July 14, 2015
William E. Sluss	Financial and Accounting Officer

/s/ Visman Chow
Visman Chow	Director	July 14, 2015

/s/ Norman Ko
Norman Ko	Director	July 14, 2015

Index to Exhibits

Exhibit No.:	Description:

3.1(1)	Articles of Incorporation of GRG, Inc. (now EFT Holdings, Inc.).

3.1.1(1)	Articles of Merger filed December 28, 2004 between HumWare Media Corporation, World Wide Golf Web, Inc. and GRG, Inc.

3.1.2(1)	Certificate of Amendment, effective November 7, 2007, to the Articles of Incorporation of HumWare Media Corporation

3.1.3(9)	Articles of Merger filed December 13, 2010 between QCSC, Inc. and EFT Biotech Holdings, Inc.

3.2(3)	By-laws

4.1(1)	Form of Common Stock Certificate

4.2(1)	Form of Warrant to purchase one share of Common Stock for a purchase price of $3.80 per share until the second anniversary date of the date of issuance

10.1(3)	Share Exchange Agreement, dated as of the 1st day of November, 2007, by and among EFT Holdings, Inc. (formerly HumWare Media Corporation), a Nevada corporation; certain EFT Shareholders and EFT BioTech Corporation, a Nevada corporation

10.2(2)	Subscription Agreement for Units in connection with the Registrant’s Regulation S Private Placement

10.3(3) +	Employment Agreement, dated May 10, 2008, between EFT BioTech Holdings, Inc. and Sharon Tang

10.4(5)	$500,000 Loan Agreement (the “Agreement”), dated November 24, 2008 , between the EFT Biotech Holdings, Inc. (as the lender), EFT Investment Co., LTD., and Excalibur International Marine Corporation (as the borrower).

10.5(5)	First Extension of $500,000 Loan, dated December 25, 2008

10.6(5)	Second Extension of $500,000 Loan, dated May 25, 2009

10.7(6)	$2,000,000 Loan Agreement and promissory note, dated September 23, 2008, between the EFT Biotech Holdings, Inc. (as the lender), EFT Investment Co., LTD., and Excalibur International Marine Corporation (as the borrower) (the “$2,000,000 Loan Agreement”)

10.8(5)	First Extension of $2,000,000 Loan Agreement, dated November 25, 2008

10.9(5)	Second Extension of $2,000,000 Loan Agreement, dated May 25, 2009

10.10(6)	$600,000 Loan Agreement, dated May 13, 2009, between the EFT Biotech Holdings, Inc. (as the lender), EFT Investment Co., LTD., and Excalibur International Marine Corporation (as the borrower) (the “600,000 Loan Agreement”).

10.11(6)	Addendum to $600,000 Loan Agreement, dated May 13, 2009, between the EFT Biotech Holdings, Inc. (as the lender), EFT Investment Co., LTD., and Excalibur International Marine Corporation (as the borrower).

10.12 (7)	$330,000 Loan Agreement, dated July 14, 2008, between EFT BioTechHoldings, Inc. (lender) and Yeuh-Chi Liu (borrower)

10.13 (7)	Addendum to $330,000 Loan Agreement, dated July 15, 2008, between BioTech Holdings, Inc. and Yeuh-Chi Liu

10.14 (7)	$1,567,000 Loan Agreement, dated July 25, 2008, between BioTech Holdings, Inc. (lender) and Yeuh-Chi Liu (borrower)

10.15(8)	Subscription agreement, dated June 30, 2008, between EFT BioTechHoldings, Inc. and Excalibur International Marine Corporation

10.16(8)	Third Extension of $2,000,000 Loan Agreement with Excalibur International Marine Corporation

10.17(8)	First Extension of the $600,000 Loan Agreement, dated November 13, 2010

10.18(8)	Extension of $500,000 loan with Excalibur International Marine Corporation

10.19(9)	Consultancy Agreement, dated March 31, 2010, between EFT International Limited and JFL Capital Limited

10.20(9)	Employment Agreement, dated January 1, 2009, between EFT Biotech Holdings Inc. and Jack Jie Qin

10.21(9)	Employment Agreement, dated January 1, 2009, between EFT Biotech Holdings Inc. and Pyng Soon

10.22(9)	English Translation of Form of Pre-sale Building Unit Purchase and Sale Agreement, A5 Building, Taipei Enterprise Headquarters Park

10.23(9)	English Translation of Agreement Regarding the "Pre-sale Building Unit Purchase and Sale Agreement, A5 Building, Taipei Enterprise Headquarters Park," dated May 31, 2011, among Jack Jie Qin, Meifu Development Co., Ltd. and EFT Investment Co., Ltd.

10.24(9)	English Translation of Agreement Regarding the "Pre-sale Building Unit Purchase and Sale Agreement, A5 Building, Taipei Enterprise Headquarters Park," dated May 31, 2011, among Jack Jie Qin, TransGlobe Life Insurance Inc. and EFT Investment Co., Ltd.

10.25(9)	English Translation of Amendment Agreement to the "Pre-sale Building Unit Purchase and Sale Agreement, A5 Building, Taipei Enterprise Headquarters Park," dated July 1, 2011, among Jack Jie Qin, Meifu Development Co., Ltd. and EFT Investment Co., Ltd.

10.26(9)	English Translation of Amendment Agreement to the "Pre-sale Building Unit Purchase and Sale Agreement, A5 Building, Taipei Enterprise Headquarters Park," dated July 1, 2011, among Jack Jie Qin, TransGlobe Life Insurance Inc. and EFT Investment Co., Ltd.

14.1(3)	Code of Ethics

21.1(9)	List of Subsidiaries

31	Rule 13a-14(a) Certifications

32	Section 1350 Certifications

101	The following materials from the EFT Holdings, Inc. Annual Report on Form 10-K for the year ended March 31, 2015, filed on July 14, 2015 formatted in Extensible Business Reporting Language (XBRL):
	● Consolidated Balance Sheets;
	● Consolidated Statements of Income;
	● Consolidated Statements of Comprehensive Income;
	● Consolidated Statements of Changes in Equity;
	● Consolidated Statements of Cash Flows, and
	● Related notes

+ Management Contract.

(1)	Filed as an exhibit to Form 10 (File No.: 001-34222) filed with the SEC on December 10, 2008 and incorporated by reference herein.
(2)	Filed as an exhibit to Form 10-Q for the quarter ended December 31, 2008 (File No.: 001-34222) filed with the SEC on February 13, 2009 and incorporated by reference herein.
(3)	Filed as an Exhibit to Amendment No. 1 to Form 10 (File No.: 001-34222) filed with the SEC on April 13, 2009 and incorporated by reference herein.
(4)	Filed as an Exhibit to Amendment No. 2 to Form 10 (File No.: 001-34222) filed with the SEC on April 21, 2009 and incorporated by reference herein.
(5)	Filed as an Exhibit to Form 10-K (File No.: 001-34222) filed with the SEC on July 17, 2009 and incorporated by reference herein.
(6)	Filed as an Exhibit to Amendment No. 4 to Form 10 (File No.: 001-34222) filed with the SEC on September 3, 2009 and incorporated by reference herein.
(7)	Filed as an Exhibit to Amendment No. 5 to Form 10 (File No.: 001-34222) filed with the SEC on October 19, 2009 and incorporated by reference herein.
(8)	Filed as an Exhibit to Amendment No. 9 to Form 10 (File No.: 001-34222) filed with the SEC on April 16, 2010.
(9)	Filed as an Exhibit to Form 10-K (File No.:000-53730) as filed with the SEC on August 25, 2011.

EFT Holdings, Inc. - FORM 10-K - July 14, 2015

Attached files

EFT Holdings, Inc. Reports