UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the quarterly period ended ~~December 31~~June 30, ~~2014~~2015

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

For the transition period from _____ to _______

Commission File Number: 000-53730

EFT HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Nevada		22-1211204
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

17800 Castleton St., Suite 300

City of Industry, CA 91748

(Address of Principal Executive Offices) (Zip Code)

Registrant's telephone number including area code: (626) 581-3335

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

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). Yes x No ¨

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

Larger accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

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

As of the latest practicable date, August ~~February 13~~19, 2015, the registrant had 75,983,201 outstanding shares of common stock.

INDEX

		Page
	Part I — Financial Information	4
Item 1.	Financial Statements.	4
	Consolidated Balance Sheets as of December 31, 2014 and March 31, 2014 (Unaudited)	4
	Consolidated Balance Sheets as of June 30, 2015 and March 31, 2015 (Unaudited)	4
	Consolidated Statements of Operations for the Nine Months Ended December 31, 2014 and 2013 (Unaudited)	5
	Consolidated Statements of Operations for the Three Months Ended June 30, 2015 and 2014 (Unaudited)	5
	Consolidated Statements of Comprehensive Income for the Nine Months Ended December 31, 2014 and 2013 (Unaudited)	6
	Consolidated Statements of Comprehensive Income for the Three Months Ended June 30, 2015 and 2014 (Unaudited)	6
	Consolidated Statements of Cash Flows for the Nine Months Ended December 31, 2014 and 2013 (Unaudited)	7
	Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2015 and 2014 (Unaudited)	7
	Notes to Consolidated Financial Statements for the Nine Months Ended December 31, 2014 and 2013 (Unaudited)	8
	Notes to Consolidated Financial Statements for the Three Months Ended June 30, 2015 and 2014 (Unaudited)	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	2320
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	3228
Item 4.	Controls and Procedures.	3329
	Part II — Other Information	29
Item 1.	Legal Proceedings.	3329
Item 1A.	Risk Factors.	3329
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	3329
Item 3.	Defaults Upon Senior Securities.	3329
Item 4.	Mine Safety Disclosures.	3329
Item 5.	Other Information.	3329
Item 6.	Exhibits.	3430
Signatures		3531

Cautionary Statement

This quarterly report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or the Company’s future financial performance. The Company has attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should” or “will” or the negative of these terms or other comparable terminology. Such statements are subject to certain risks and uncertainties, including the matters set forth in this report or other reports or documents the Company files with the Securities and Exchange Commission from time to time, which could cause actual results or outcomes to differ materially from those projected. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. The Company undertakes no obligation to update these forward-looking statements. The Company’s expectations are as of the date this Form 10-Q is filed, and the Company does not intend to update any of the forward-looking statements after the date this quarterly report on Form 10-Q is filed to conform these statements to actual results, unless required by law. All of the forward-looking statements are qualified in their entirety by reference to the factors discussed under Item 1A. “Risk Factors” in the Company’s Annual Report on Form 10-K for the year ended March 31, ~~2014~~2015 as filed with the Securities and Exchange Commission.

PART I - FINANCIAL INFORMATION

Item 1.

Financial Statements.

EFT HOLDINGS, INC.

Consolidated Balance Sheets

(Unaudited)

	December 31, 2014			March 31, 2014
	June 30, 2015			March 31, 2015
ASSETS
Current assets
Cash and cash equivalents	$	2,~~944~~004,~~277~~788		$	12,~~770~~332,~~206~~595
Securities available for sale		21,~~651~~417,~~773~~014			42,~~662~~132,~~020~~397
Inventories		~~291~~260,~~078~~287			~~618~~303,~~919~~848
Prepaid expenses		~~742~~429,~~622~~063			~~620~~593,~~337~~586
Other receivables		~~291~~278,~~845~~228			~~492~~293,~~001~~088
Current assets of discontinued operations		-			64,879
Total current assets		4,389,380			5,655,514
Total current assets		6,921,595			8,228,362
Property and equipment, net		840,458			894,129
Property and equipment, net		937,832			1,098,308
Security deposit		373,237			360,203
Security deposit		356,478			422,029
Total assets	$	5,603,075		$	6,909,846
Non-current assets of discontinued operations		-			210,948
Total assets	$	8,215,905		$	9,959,647
LIABILITIES AND EQUITY (DEFICIENCY)
Current liabilities
Accounts payable	$	1,~~191~~290,~~070~~207		$	1,~~189~~073,~~494~~795
Commission payable		3,~~771~~695,~~835~~168			3,~~884~~785,~~774~~004
Other liabilities		5,~~868~~973,~~619~~965			5,~~729~~874,~~073~~187
Unearned revenues		3,~~245~~277,~~126~~376			3,~~268~~198,~~916~~776
Short-term loan		~~447~~113,~~956~~001			~~319~~281,~~245~~240
Contingent liabilities		~~213~~214,~~674~~019			~~213~~214,~~674~~019
Current liabilities of discontinued operations		-			3,523,808
Total liabilities		14,563,736			14,427,021
Total liabilities		14,738,280			18,128,984
Deficiency
Equity
EFT Holdings, Inc. stockholders' 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 December 31 and March 31, 2014		760			760
Common stock, $0.00001 par value, 4,975,000,000 shares authorized, 75,983,201 shares issued and outstanding at June 30, 2015 and March 31, 2015		760			760
Additional paid in capital		52,854,891			52,854,891
Retained deficits		(59,305,564	)		(54,963,024	)
Retained deficit		(61,735,504	)		(60,304,126	)
Accumulated other comprehensive income		(25,475	)		680,052
Accumulated other comprehensive loss		(29,066	)		(19,178	)
Total EFT Holdings, Inc. stockholders’ equity (deficiency)		(6,475,388	)		(1,427,321	)
Total EFT Holdings, Inc. stockholders’ deficiency		(8,908,919	)		(7,467,653	)
Non-controlling interest		(4651,~~987~~742	)		(649,~~742,016~~522	)
Total equity (deficiency)		(6,522,375	)		(8,169,337	)
Total deficiency		(8,960,661	)		(7,517,175	)
Total liabilities and equity (deficiency)	$	8,215,905		$	9,959,647
Total liabilities and deficiency	$	5,603,075		$	6,909,846

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

EFT HOLDINGS, INC.

Consolidated Statements of Operations

(Unaudited)

	Three Months Ended						~~Nine Months Ended~~
	December 31,			December 31,			December 31,			December 31,
	June 30, 2015			June 30, 2014
	2014			2013			2014			2013
Sales revenues, net	$	76,316		$	229,573
Sales revenues, net	$	263,373		$	348,096		$	611,907		$	1,280,325
Shipping charges		24,051			68,405
Shipping charges		74,724			85,753			188,133			307,230
Total revenues, net		100,367			297,978
Total revenues, net		338,097			433,849			800,040			1,587,555
Cost of sales		48,068			78,349
Cost of goods sold		109,013			97,639			249,544			462,328
Shipping costs		175			5,303
Shipping costs		2,010			10,882			34,156			39,761
Total cost of revenues		48,243			83,652
Total cost of revenues		111,023			108,521			283,700			502,089
Gross profit		52,124			214,326
Gross profit		227,074			325,328			516,340			1,085,466
Operating expenses:
Operating expenses:
Selling, general and administrative expenses		1,345,197			1,742,219
Selling, general and administrative expenses		1,535,096			1,769,614			4,125,890			5,030,503
Provision for inventory obsolescence		6,409			56,976
Provision for inventory obsolescence		32,942			293,501			152,173			398,708
Royalty expenses - related party		125,000			21,798
Royalty expenses - related party		125,000			35,482			375,000			115,886
Total operating expenses		1,476,606			1,820,993
Total operating expenses		1,693,038			2,098,597			4,653,063			5,545,097
Operating loss		(1,424,482	)		(1,606,667	)
Operating loss		(1,465,964	)		(1,773,269	)		(4,136,723	)		(4,459,631	)
Other income/(expense)
Other income/(expense)
Interest income		20,739			51,027
Interest income		32,558			69,706			126,682			228,601
Interest expense		(42,913	)		(31,696	)
Interest expense		(41,795	)		(1,720	)		(114,051	)		(5,669	)
Gain/(loss) on disposal of securities available for sale (includes $9,060 and $8,562 accumulated other comprehensive income/(loss) reclassifications for unrealized net gains on securities available for sale for three months ended June 30, 2015 and 2014, respectively)		(3,592	)		16,172
Gain/(loss) on disposal of securities available for sale
Dividend income		-			4,305
(includes $(56,824) and $74,198 accumulated other comprehensive income/(loss) reclassifications for unrealized net gains on securities available for sale for the nine months ended December 31, 2014 and 2013, respectively)		(6,155	)		(4,209	)		(62,832	)		46,408
Foreign exchange loss		(408	)		(195	)
Dividend income		-			-			8,787			-
Other income		17,057			29,813
Foreign exchange gain/(loss)		(255	)		152			(2,789	)		448
Gain on sales of long-term investment		-			984,722
Other income/(losses)		11,797			80,674			67,489			81,982
Total other income/(expense)		(9,117	)		1,054,148
Gain on sale of long-term investment		-			-			2,407,038			-
Loss from continuing operations before income taxes		(1,433,599	)		(552,519	)
Total other income/(expense)		(3,850	)		144,603			2,430,324			351,770
Income taxes		-			-
Loss from continuing operations before income
Loss from continuing operations		(1,433,599	)		(552,519	)
taxes		(1,469,814	)		(1,628,666	)		(1,706,399	)		(4,107,861	)
Discontinued operations
Income taxes expense		4,177			7,741,386			6,049			7,732,653
Income from operation of Excalibur		-			31,914
Loss from continuing operations		(1,473,991	)		(9,370,052	)		(1,712,448	)		(11,840,514	)
Total income from discontinued operations		-			31,914
Discontinued operations
Net loss		(1,433,599	)		(520,605	)
Loss from operation of Excalibur		(29,606	)		(108,572	)		(27,018	)		(295,711	)
Loss (income) from non-controlling interest		2,221			(14,192	)
Loss from disposal of Excalibur		(2,622,906	)		-			(2,622,906	)		-
Net loss attributable to EFT Holdings, Inc.	$	(1,431,378	)	$	(534,797	)
Total loss from discontinued operations		(2,652,512	)		(108,572	)		(2,649,924	)		(295,711	)
Net loss per share – continuing operations
Net loss		(4,126,503	)		(9,478,624	)		(4,362,372	)		(12,136,225	)
Basic and diluted	$	(0.02	)	$	(0.01	)
Loss from non-controlling interest		16,981			57,413			19,832			157,188
Net income per share – discontinued operations
Net loss attributable to EFT Holdings, Inc.	$	(4,109,522	)	$	(9,421,211	)	$	(4,342,540	)	$	(11,979,037	)
Basic and diluted	$	-		$	-
Net loss per share – continuing operations
Net loss per common share attributable to EFT
Basic and diluted	$	(0.02	)	$	(0.12	)	$	(0.02	)	$	(0.16	)
Holdings, Inc.
Net loss per share – discontinued operations
Basic and diluted	$	(0.02	)	$	(0.01	)
Basic and diluted	$	(0.03	)	$	(0.00	)	$	(0.03	)	$	(0.00	)
Weighted average common shares outstanding
Net loss per common share attributable to EFT
Basic and diluted		75,983,201			75,983,201
Holdings, Inc.
Basic and diluted	$	(0.05	)	$	(0.12	)	$	(0.06	)	$	(0.16	)
Weighted average common shares outstanding
Basic and diluted		75,983,201			75,983,201			75,983,201			75,983,201

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

EFT HOLDINGS, INC.

Consolidated Statements of Comprehensive Losses

(Unaudited)

	Three Months Ended						~~Nine Months Ended~~
	December 31,			December 31,			December 31,			December 31,
	June 30, 2015			June 30, 2014
	2014			2013			2014			2013
Net loss	$	(1,433,599	)	$	(520,605	)
Net loss	$	(4,126,503	)	$	(9,478,624	)	$	(4,362,372	)	$	(12,136,225	)
Other comprehensive income/(loss)
Other comprehensive income/(loss)
Foreign currency translation adjustment		3,990			16,680
Foreign currency translation adjustment		(847,715	)		(159,098	)		(582,804	)		(109,562	)
Unrealized income/(loss) on securities available for sale		(13,877	)		15,687
Unrealized income/(loss) on securities available for sale		(9,723	)		17,517			50,227			(135,134	)
Comprehensive loss		(1,443,486	)		(488,238	)
Comprehensive loss		(4,983,941	)		(9,620,205	)		(4,894,949	)		(12,380,921	)
Less: Comprehensive income/(loss) attributable to non-controlling interests		(2,220	)		25,805
Less: Comprehensive income/(loss) attributable to non-controlling interests		(30,689	)		(168,231	)		153,118			(166,373	)
Comprehensive loss attributable to EFT Holdings, Inc.	$	(1,441,266	)	$	(514,043	)
Comprehensive loss attributable to EFT Holdings, Inc.	$	(4,953,252	)	$	(9,451,974	)	$	(5,048,067	)	$	(12,214,548	)

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

EFT HOLDINGS, INC.

Consolidated Statements of Cash Flows
(Unaudited)

	Nine Months Ended
	Three Months Ended
	December 31,			December 31,
	June 30, 2015			June 30, 2014
	2014			2013
Cash flows from operating activities:
Net loss	$	(4,362,372	)	$	(12,136,225	)
Net loss from continuing operations	$	(1,433,599	)	$	(552,519	)
Net loss from discontinued operations		(2,649,924	)		(295,711	)
Net income from discontinued operations		-			31,914
Net loss from continuing operations		(1,712,448	)		(11,840,514	)
Net loss		(1,433,599	)		(520,605	)
Adjustments to reconcile net loss to net cash provided by/(used in) operating activities:
Depreciation and amortization		~~143~~42,~~137~~259			~~208~~49,~~704~~864
(Gain)/loss from securities available for sale		623,~~832~~592			(4616,~~408~~172	)
Provision for inventory obsolescence		~~152~~6,~~173~~409			~~398~~56,~~708~~976
(Gain)/loss on disposal of fixed assets		(111,~~725~~432	)		5(2,~~251~~282	)
Changes in operating assets and liabilities:
Contingent liabilities		-			216,816
Inventories		37,151			50,403
Inventories		175,671			440,627
Prepaid expenses		155,477			205,023
Prepaid expenses		431,979			309,762
Other receivables		6,669			16,992
Other receivables		157,872			86,814
Accounts receivable		8,719			157,503
Accounts receivable		44,291			(89,998	)
Accounts payable		216,412			(169,658	)
Accounts payable		1,575			(28,616	)
Commission payable		(89,836	)		(43,176	)
Commission payable		(112,938	)		(225,646	)
Other liabilities		99,337			757,780
Other liabilities		140,681			7,950,193
Unearned revenues		78,600			(56,310	)
Unearned revenues		(23,790	)		(245,520	)
Net cash provided by/(used in) continuing operations		(857,378	)		486,338
Net cash used in continuing operations		(540,690	)		(2,859,827	)
Net cash provided by discontinued operations		-			44,938
Net cash provided by discontinued operations		-			30,704
Net cash provided by/(used in) operating activities		(857,378	)		531,276
Net cash used in operating activities		(540,690	)		(2,829,123	)
Cash flows from investing activities:
Additions to fixed assets		-			(~~7,023~~387	)
Proceeds from disposal of fixed assets		~~20,145~~-			917,~~405~~678
Proceeds from maturity of corporate notes		-			-
Purchase of securities available for sale		-			(522,873	)
Purchase of securities available for sale		(3,188,408	)		(1,933,275	)
Proceeds from available for sale securities		697,916			2,070,417
Proceeds from available for sale securities		5,186,716			4,763,717
Net cash provided by continuing operations		697,916			1,564,835
Net cash provided by continuing operations		2,018,453			2,832,824
Net cash provided by discontinued operations		-			-
Net cash provided by investing activities		2697,~~018,453~~916			21,~~832~~564,~~824~~835
Cash flows from financing activities:
Repayment of installment plan		(374,489	)		(319,966	)
Repayment of short-term loan		(168,239	)		(190,974	)
Net cash used in continuing operations		(~~374~~168,~~489~~239	)		(~~319~~190,~~966~~974	)
Net cash provided by discontinued operations		-			-
Net cash used in financing activities		(~~374~~168,~~489~~239	)		(~~319~~190,~~966~~974	)
Effect of exchange rate changes on cash		~~70,797~~(106	)		~~(78~~9,~~673~~564	)
Net increase/(decrease) in cash		1(327,~~174,071~~807	)		~~(394~~1,~~938~~914,701	)
Cash, beginning of period		12,~~770~~332,~~206~~595			1,~~732~~770,~~270~~206
Cash, end of period	$	2,~~944~~004,~~277~~788		$	13,~~337~~684,~~332~~907
Supplemental disclosures of cash flow information:
Interest expenses paid in cash	$	4,377		$	5,669
Interest paid in cash	$	2,021		$	2,294

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

EFT HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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.

Note 2 - 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 $710,~~816~~174,~~685~~ 356 and an accumulated deficit of $5961,~~305~~735,~~564~~504 as of ~~December~~June 3130, ~~2014~~2015, and ~~has~~it reported net losses and did not generate cash from operations for the past two ~~fiscal~~ years. The Company expects to continue incurring losses for the foreseeable future and may need to raise additional capital from external sources ~~such as bank borrowings or capital issuances~~ in order to continue the long-term efforts contemplated under its ~~current~~ business plan. Management is also considering different marketing strategies to generate more revenues and plans to continue to reduce certain operating expenses going forward. In addition, the Company is seeking to recover $21 million through the U.S. federal courts, but there can be no assurance that it will be successful in doing so. 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.

Note 3 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of presentation

The unaudited financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the unaudited financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments, necessary to present fairly the financial position as of ~~December~~June 3130, ~~2014~~2015 and the results of operations and cash flows for the periods ended ~~December~~June 3130, ~~2014~~2015 and ~~2013~~2014. The financial data and other information disclosed in these notes to the interim financial statements related to these periods are unaudited. The results for the ~~nine and~~ three months ended June ~~December 31~~30, ~~2014~~ 2015 are not necessarily indicative of the results to be expected for any subsequent periods or for the year ending March 31, ~~2015~~2016. The balance sheet at March 31, ~~2014~~2015 has been derived from the audited financial statements at that date.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States have been condensed or omitted pursuant to the Securities and Exchange Commission’s rules and regulations. These unaudited financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto for the year ended March 31, ~~2014~~2015 as included in the Company’s Annual Report on Form 10-K for the year ended March 31, ~~2014~~2015.

Principles of Consolidation

The consolidated financial statements include the accounts of ~~EFT~~the ~~Holdings~~Company and its subsidiaries, all of which are wholly owned except for Digital Development Partners, Inc., ~~and~~“Digital”, ~~its~~which ~~subsidiaries~~is 91.74% owned by the Company. All material intercompany transactions and balances have been eliminated.

Reclassification

Certain amounts for prior periods have been reclassified to conform to the current period presentation.

Uses of estimates in the preparation of financial statements

The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and this 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 consolidated financial statements and reported amounts of revenue and expenses during the reporting period. The significant areas requiring the use of management estimates include, but not limited to, the allowance for doubtful accounts receivable, estimated useful life and residual value of property, plant and equipment, provision for staff benefit, inventory markdown allowance, recognition and measurement of deferred income taxes and valuation allowance for deferred tax assets. Although these estimates are based on management’s knowledge of current events and actions management may undertake in the future, actual results may ultimately differ from those estimates.

~~The~~Fair ~~significant~~value accounting policies used in preparation of these consolidated financial statements for the nine months ended December 31, 2014 are consistent with those discussed in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended March 31, 2014. The Company consolidates Excalibur International Marine Corporation (“Excalibur”) based on a three-month lag with the Company’s reporting periods as discussed in Note 8.measurements

Recent accounting pronouncements

In January 2015, the FASB issued ASU 2015-01, Income Statement—Extraordinary and Unusual Items (Subtopic 225-20). This ASU simplifies the income statement presentation requirements in Subtopic 225-20 by eliminating the concept of extraordinary items. The amendments in this ASU apply to all entities. They are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company does not believe the adoption of this ASU will have a material effect on its consolidated financial statements.

In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements-Going Concern (Subtopic 205-40). This ASU provides guidance about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern and to provide related footnote disclosures. The revised accounting guidance applies to all entities. It is effective for the first annual period ending after December 15, 2016, and for annual periods and interim periods thereafter. Early application is permitted. The Company does not believe the adoption of this ASU will have a material effect on its consolidated financial statements.

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 nine months ended December 31, 2014 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 4 - 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.

~~Assets~~The ~~measured~~significant ataccounting ~~fair~~policies used ~~value~~in preparation of these consolidated financial statements for the three months ended June 30, 2015 are ~~summarized~~consistent with those ~~below:~~discussed in Note 2 to the consolidated financial statements in the Company’s Annual Report on Form 10-K for the year ended March 31, 2015.

	December 31, 2014
	Level 1 Quoted Prices in Active Markets for Identical Assets		Level 2 Significant Other Observable Inputs		Level 3 Significant Unobservable Inputs		Total
Securities available for sale - Debt securities	$	2,651,773	$	-	$	-	$	2,651,773
Total assets measured at fair value	$	2,651,773	$	-	$	-	$	2,651,773

Recent accounting pronouncements

	March 31, 2014
	Level 1 Quoted Prices in Active Markets for Identical Assets		Level 2 Significant Other Observable Inputs		Level 3 Significant Unobservable Inputs		Total
Securities available for sale - Debt securities	$	4,662,020	$	-	$	-	$	4,662,020
Total assets measured at fair value	$	4,662,020	$	-	$	-	$	4,662,020

There are no new accounting pronouncements adopted or enacted during the three months ended June 30, 2015 that had, or are expected to have, a material impact on the Company’s financial statements.

Note 54 – SECURITIES AVAILABLE FOR SALE

Securities available for sale consist of the following:

December 31, 2014

June 30, 2015

Amortized

Unrealized

Market

Average

Cost

Gains

Losses

Value

Duration (1)

Corporate bonds

2866,~~102,394~~595

~~9,562~~295

(13,~~994~~191

)

2853,~~097,962~~699

4.7953

Corporate notes

~~565~~567,~~724~~263

(113,~~913~~948

)

~~553~~563,~~811~~315

32.3282

Total debt securities

21,~~668~~433,~~118~~858

~~9,562~~295

(2517,~~907~~139

)

21,~~651~~417,~~773~~014

	March 31, 2014
	March 31, 2015
	Amortized		Unrealized		Unrealized			Market		Average
	Cost		Gains		Losses			Value		Duration (1)
Corporate bonds	$	1,~~786~~568,~~057~~102	$	2313,~~069~~350	$	(265,~~346~~245	)	$	1,~~782~~576,~~780~~207		24.5679
Corporate notes		~~998~~567,~~750~~261		-		(2311,~~750~~071	)		~~975~~556,~~000~~190		3.5607
Variable rate notes		1,943,785		21,080		(60,625	)		1,904,240		Perpetual
Total debt securities	$	2,135,363	$	13,350	$	(16,316	)	$	2,132,397
Total debt securities	$	4,728,592	$	44,149	$	(110,721	)	$	4,662,020

(1)

Average remaining duration to maturity, in years

All securities were classified as available for sale as of each date presented.

109

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 ~~December~~June 3130, ~~2014~~2015:

Less than 1 year

1 Year or More

Total

Market

Unrealized

Market

Unrealized

Market

Unrealized

Value

Losses

Value

Losses

Value

Loss

Corporate bonds

1723,~~301,342~~980

(13,~~994~~191

)

1723,~~301,342~~980

(13,~~994~~191

)

Corporate notes

~~553~~563,~~811~~315

(113,~~913~~948

)

~~553~~563,~~811~~315

(113,~~913~~948

)

Total debt securities

1,~~855~~287,~~153~~295

(2517,~~907~~139

)

1,~~855~~287,~~153~~295

(2517,~~907~~139

)

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 of cost.

There were 2122 securities in an unrealized loss position at ~~December 31~~June 30, ~~2014.~~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 $5701,~~249,548~~508 were sold during the ~~nine~~three months ended ~~December~~June 3130, ~~2014~~2015. The Company recognized a loss of $623,~~832~~592 on the sale of those securities.

Note 65 – INVENTORIES

Inventories are valued at the lower of cost, determined on a first-in, first-out or market basis. Inventory consists of nutritional, personal care, automotive additive, environmentally safe products, portable drinking containers and the EFT-Phone. 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.

The components of inventories were as follows:

	December 31, 2014			March 31, 2014
	June 30, 2015			March 31, 2015
Raw materials and supplies	$	42,~~234~~302		$	4342,~~407~~302
Finished goods		1217,~~283,549~~985			1261,~~495,349~~546
		1,325,783			1,538,756
	$	260,287		$	303,848
Less: Provision for inventory obsolescence		(1,034,705	)		(919,837	)
	$	291,078		$	618,919

1110

Note 76 - LOANS TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS

The ~~“EFT” trademark was owned by Top Capital Inc. beginning in the 1990s and was operated for its online business in China. At the time when Top Capital Inc. merged with the~~ Company on ~~November~~uses ~~16, 2007,~~ the ~~ownership of the~~ “EFT” name, a trademark ~~was~~owned ~~transferred~~and licensed to it by EFT Assets Limited, a ~~company~~Company inthat ~~which~~ Wendy Qin, a director of EFT International Ltd., served ~~serves~~ as a director. ~~Pursuant~~until toMarch an2015. ~~agreement~~The ~~between the~~ Company ~~and EFT Assets Limited at the time of the merger, the Company uses the “EFT” name and~~ is required to pay an annual royalty to EFT Assets ~~Limited~~ 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. In March 2015, Wendy Qin resigned her position as a director of EFT Assets Ltd. During the three ~~nine~~ months ended ~~December~~ended 31June 30, ~~2014~~2015 and ~~2013~~2014, ~~royalty~~ ~~fees~~the ~~incurred~~royalties ~~pursuant~~payable to ~~the agreement with~~ EFT Assets Limited were $~~375~~125,000 and $~~115~~21,~~886~~798, respectively.

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 ~~from~~ 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 ~~nine~~three months ended ~~December~~June 3130, ~~2014~~2015 and ~~2013~~2014, EFT International Ltd. paid JFL Capital Limited $~~281~~97,~~250~~500 and $~~270~~93,~~000~~750, respectively.

~~The~~Until ~~Company~~June ~~rents~~24, a2015, 6the Company rented 2,500 square ~~foot~~feet of office space ~~at market rate~~ for its satellite training center in Hong Kong. The ~~This~~ office iswas located at Langham Office Tower, 8 Argyle Street, ~~Suite 3706,~~ Kowloon, Hong Kong SAR. The ~~leased~~ 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. Until ~~The~~March 31, ~~lease~~2014, ~~for~~the ~~this~~lease ~~space~~was ~~expires~~for ~~on March 31~~6,500 ~~2015,~~square feet with a monthly rental of $30,900. On May 1, 2014, the Company ~~sublet~~reduced ~~a portion of~~ the ~~rental office~~ rented space, ~~approximately~~to 14,~~230~~356 square feet, ~~to a third party at a market rate~~ in an effort to reduce the Company’s costs and the monthly rental was reduced to $23,972. On November 1, 2014, the Company further ~~sublet~~reduced ~~approximately~~ the rented space to 2,~~200~~500 square feet ofand ~~office~~the ~~space~~monthly rental was reduced to ~~another~~$10,735. ~~third~~Beginning on ~~party~~April at1, a2015 ~~market~~through ~~rate~~June to24, ~~further~~2015, ~~reduce~~the monthly rent for the ~~Company’s~~2,500 ~~costs~~square feet of rented space increased to $15,319. During ~~the~~ ~~nine~~the three months ended ~~December~~June 3130, ~~2014~~2015 and ~~2013~~2014, the Company paid the lessor $~~191~~42,~~794~~893 and $~~278~~77,~~351~~419, respectively, in rent.

Note 87 - 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 February 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 Company initially loaned funds to Excalibur in July 2008 and subsequently has continued to provide Excalibur with loans to fund its operations. 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 eliminated 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 by Lu Zhuo-Jun 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 by EFT Investment Co. Ltd. (“EFTI”) Taiwan was made after these two invalid share registrations in May and June 2007, the share registration regarding EFTI Taiwan’s purchase of Excalibur’s shares was also cancelled.

As the acquisition of 48.81% of Excalibur’s shares 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.

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 ~~the~~ disposal of Excalibur in October 2014, which included gain from disposal of subsidiary of $7,042,255 and the write-off of 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 three months and nine months ended December 31, 2014, the financial statements of Excalibur were consolidated based on Excalibur’s September 30, 2014 financial statements. 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:11

12Note 8- INVESTMENT IN CTX VIRTUAL TECHNOLOGIES

	Excalibur International Marine Corporation
	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	)
	For the three months ended
	September 30, 2014						September 30, 2013
	NTD*			USD			NTD*			USD
Operating cost	-			-			3,410,705			114,334
Selling, general and administrative expenses		19,706			653			1,014,577			34,006
Interest income		-			-			-			-
Interest expense		874,663			28,953			-			-
Foreign exchange loss		-			-			73			34
Loss on disposal of fixed assets		-			-			-			-
Other income		-			-			(1,187,282	)		(39,802	)
Net loss		894,369			29,606			3,238,073			108,572
48.81% ownership		436,541			14,450			1,580,503			52,994
	For the nine months ended
	September 30, 2014						September 30, 2013
	NTD*			USD			NTD*			USD
Operating cost		1,105,876			36,605			10,409,525			349,430
Selling, general and administrative expenses		1,050,973			34,791			3,264,861			109,597
Interest income		(75	)		(2	)		(741	)		(25	)
Interest expense		2,595,465			85,914			-			-
Foreign exchange gain		(4,025,712	)		(133,257	)		(1,380,205	)		(46,331	)
Loss on disposal of fixed assets		89,626			2,967			25,740			864
Other income		-			-			(3,509,989	)		(117,824	)
Net loss		816,153			27,018			8,809,191			295,711
48.81% ownership		398,364			13,187			4,299,766			144,337
*NTD: New Taiwan Dollar

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

~~Note~~The 9Company currently owns 5,626,914 shares of common stock of CTX. The original investment of $5,000,000 for 10,593,220 shares of CTX common stock was recorded as a long-term ~~INVESTMENT~~investment INcarried on the cost method. Although the Company appeared at the time of the investment to hold a majority of the common stock outstanding, CTX ~~VIRTUAL~~also had outstanding classes of preferred stock that had super-majority voting rights. As ~~TECHNOLOGIES~~a result, EFT does not control CTX. During the year ended March 31, 2011, the Company recorded a full impairment of the investment, bringing its carrying value to zero.

~~The~~During ~~Company~~the ~~currently~~three ~~owns~~months ~~5,626,914~~ended ~~shares of common stock~~June ~~of CTX Virtual Technologies~~30, ~~Inc. (“CTX”) (Pink Sheets: CTXV). The original investment of $5~~2014,~~000,000~~ ~~for 10,593,220 shares of CTX common stock was recorded as a long-term investment carried on~~ the ~~cost method. Although the~~ Company ~~appeared~~sold ~~at the~~approximately ~~time~~2 ofmillion ~~the~~shares ~~investment to hold a majority~~ of ~~the~~its ~~common~~holdings ~~stock~~in ~~outstanding,~~ CTX ~~also~~for ~~had~~approximately ~~outstanding~~$1.0 ~~classes~~million ofless ~~preferred stock~~commissions ~~that~~and ~~had~~other ~~super-majority~~fees ~~voting~~and ~~rights.~~reported As a ~~result,~~gain ~~EFT~~of ~~does~~approximately ~~not control CTX. During the year ended March 31~~$985,000 ~~2011,~~in the ~~Company recorded~~accompanying aconsolidated ~~full~~statement ~~impairment~~ of ~~the investment, bringing its carrying value to zero~~operations.

During the nine months ended December 31, 2014, 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 but there can be no assurance that it will be able to do so.

1312

Note 109 - OTHER LIABILITIES

Other liabilities consist of the following:

	December 31, 2014		March 31, 2014
	June 30, 2015		March 31, 2015
Payroll liabilities	$	5646,~~766~~289	$	5346,~~003~~289
Warranty liabilities		21,~~439~~500		2,~~593~~025
Accrued interest		-		2,867
Accrued expenses		443,557		384,135
Accrued expenses		407,207		372,919
Provision for tax		5,479,227		5,438,335
Provision for tax		5,399,550		5,295,033
Others		3,392		3,403
Others		2,657		2,658
	$	5,973,965	$	5,874,187
	$	5,868,619	$	5,729,073

Note 11 10 - 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,~~300~~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 ~~the~~ Baiquan People’s Court in Heilongjiang Province seeking approximately RMB 1,912,000 (US$308,400) 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 with 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 indicated 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 (US$294,200) of purported outstanding payments under the same contract and interest thereon. On December 8, 2014, Tianquan filed a civil lawsuit against the sub-contractor for compensation for material construction defects. The final ~~resolution~~resolutions of ~~this~~these ~~case~~two iscases are now pending.

Note 12 11 – SHORT-TERM LOAN

InThe ~~November 2013, 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 34.6095% per annum., ~~The~~and ~~loan~~ was to be repaid over a nine-month period ~~beginning~~which began on December 15, ~~2013~~ 2012. The terms of the agreement allowed for the Company to make nine equal ~~monthly~~ payments of $64,~~422~~783 ~~each.~~and ~~The~~the loan ~~has~~was ~~been~~ fully repaid during inthe ~~full~~quarter asended of September 30, ~~2014~~2013.

InThe ~~November~~Company ~~2014,~~renewed coverage for the ~~Company~~2013-2014 period and received a ~~new~~ loan in the amount of $~~503~~571,200 from IFI to finance the directors’ and officers’ insurance premium. ~~The~~bearing ~~loan bears~~ an interest rate of 3.60% per annum. The loan iswas ~~to be~~ repaid over a nine-month period beginning on December 15, ~~2014~~2013. The terms of the agreement ~~allow~~allowed for the Company to make nine equal ~~monthly~~ payments of $5664,~~753~~422 each.

~~Note~~The 13Company –renewed ~~WARRANTS~~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.

~~Prior~~Note to12 ~~September~~– 30, 2014, the Company’s subsidiary Digital Development Partners Inc. had 330,665 Series A warrants and 330,665 Series B warrants outstanding, which were accounted for as equity instruments. The Series A warrants and Series B warrants 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. These warrants expired on September 30, 2014.WARRANTS

14As of March 31, 2014, the Company’s subsidiary Digital had 2,000,000 common stock warrants outstanding and 330,665 Series A warrants and 330,665 Series B warrants outstanding, which were accounted for as equity instruments. The 2,000,000 common stock 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 warrants 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 three months ended June 30, 2014 and 2015.

~~Note 14 - INCOME TAXES~~13

~~The~~Note ~~Company~~13 ~~was incorporated in the United States and has operations in five tax jurisdictions~~ - ~~the~~INCOME ~~United States, the Hong Kong Special Administrative Region (“HK SAR”), mainland China, Taiwan, and the BVI.~~TAXES

The Company ~~generated~~was ~~substantially~~incorporated ~~all of its net income from~~in ~~its BVI operations for~~ the ~~nine~~United ~~months~~States ~~ended~~and ~~December~~has ~~31,~~operations ~~2014. According~~in tofive ~~BVI~~ tax ~~law,~~jurisdictions ~~this~~- ~~income~~the isUnited ~~not~~States, ~~subject to~~the ~~any~~Hong ~~taxes.~~Kong ~~The~~Special ~~Company’s~~Administrative Region, “HK SAR”, ~~subsidiaries~~mainland ~~are subject to a 16.5% profit tax based on its taxable net profit. EFT (HK) Ltd provides management service to a BVI subsidiary~~China, ~~and the BVI subsidiary reimburses EFT HK Ltd for its total operating expenses plus 5% mark up~~Taiwan, and the ~~income is subject to 16~~BVI.~~5% profit tax. The deferred tax assets for the Company’s US operations were immaterial for the nine months ended December 31, 2014.~~

The Company’s ~~Taiwanese~~generated ~~subsidiary,~~substantially all ~~EFT~~of ~~Investment~~its ~~Co. Ltd.,~~net ~~and~~income from its ~~factory~~BVI inoperations ~~mainland~~for ~~China~~the ~~are~~three ~~subject~~months toended aJune ~~17%~~30, 2015 and ~~25%~~2014. ~~standard~~According ~~enterprise~~to ~~income~~BVI tax, ~~respectively~~law, ~~based~~this income onis ~~their taxable~~not ~~net~~subject ~~profit~~to any taxes. ~~These~~The ~~operations~~Company’s ~~have~~HK ~~incurred~~SAR ~~net~~subsidiaries ~~accumulated~~are ~~operating~~subject ~~losses~~to ~~for~~a ~~income~~16.5% profit tax ~~purposes~~based ~~and~~on ~~management~~its ~~believes~~taxable ~~that~~net itprofit. isEFT ~~more~~(HK) ~~likely~~Ltd ~~than~~provides ~~not~~management ~~that~~service ~~these~~to ~~net~~a ~~accumulated~~BVI subsidiary, and the BVI subsidiary reimburses EFT (HK) Ltd for its total operating ~~losses~~expenses ~~will~~plus ~~not~~a be5% ~~utilized~~mark inup, and the ~~future.~~income ~~Therefore,~~is itsubject ~~has provided~~to ~~full~~a ~~valuation~~16.5% ~~allowance~~profit ~~for~~tax. ~~the~~The deferred tax assets ~~arising~~for ~~from~~the Company’s US operations were immaterial for the ~~losses~~three asmonths ofended ~~December~~June 3130, ~~2014~~2015 and ~~2013~~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 June 30, 2015 and 2014.

The income tax expenses consist of the following:

	Nine Months Ended December 31,
	Three Months Ended June 30,
	2014		2013
	2015		2014
Current:
Domestic	$	-	$	57-
Foreign		~~977~~-		~~(8,790~~-	)
Under provision for prior years		5,072		7,741,386
Deferred		-		-
Income tax expenses	$	~~6,049~~-	$	~~7,732,653~~-

A reconciliation of income taxes, with the amounts computed by applying the statutory federal income tax rate, 37% for the ~~nine~~three months ended ~~December~~June 3130, ~~2014~~2015 and ~~2013~~ 2014, to income before income taxes for the ~~nine~~three months ended ~~December~~June 3130, ~~2014~~2015 and ~~2013~~2014, is as follows:

	Nine Months Ended December 31,
	Three Months Ended June 30,
	2014			2013
	2015			2014
Income tax provision at U.S. statutory rate	$	(1,594,505	)	$	(4,432,244	)
Income tax credit at U.S. statutory rate	$	(529,610	)	$	(197,875	)
State tax		-			57
Deferred tax valuation allowance		528,747			196,402
Deferred tax valuation allowance		1,591,128			4,421,371
Nondeductible expenses		863			1,473
Nondeductible expenses		3,377			10,873
Income tax expenses	$	-		$	-
Foreign subsidiary income tax		977			(8,790	)
Under provision for prior years		5,072			7,741,386
Income tax expenses	$	6,049		$	7,732,653

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 the year ended 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~~interest ~~tax~~expense and penalties are classified in selling, general and administrative expenses in the statements of operations.

15In 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 provision to $8.6 million during the quarter ended December 31, 2014. Even though the Company increased its income tax provision as a result of this report, the Company continued to challenge the IRS findings.

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. After receiving further information from the Company subsequent to the issuance of its original report, 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 $34.65 million of additional tax liabilities for the years 2008 through 2010. ~~The~~Accordingly, ~~Company plans to continue to challenge most of~~ the ~~remaining~~Company ~~proposed~~has ~~adjustments~~revised asits ~~set~~provision ~~forth~~for inincome ~~the~~taxes ~~revised report~~ and ~~is in the process of appealing the proposed adjustments with the IRS. Based on the IRS report, the Company~~ has ~~recorded federal~~reversed ~~and California state tax liabilities of~~ $34.61 million ~~and~~of ~~$0.8 million, respectively, for~~ the ~~years~~provision ~~2008~~recorded ~~through 2010~~previously.

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.

Note 15 14 – ~~COMMITMENTS~~SEGMENT INFORMATION

~~Lease~~The ~~commitments~~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 for 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.

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 period ended December 31, 2014 is $9,455. Future minimum lease payments under the lease are as follows:

Year Ending March 31,
	2015	$	28,365
	2016	$	113,838
	2017	$	118,390
	2018	$	112,497

The Company rents office space for its satellite training center in Hong Kong. For additional information please refer to Note 7. The lease expires on March 31, 2015, with a monthly rental of $23,226 until October 31, 2014. Since November 1, 2014, the monthly rental is reduced to $10,735 until the expiration of the lease. Future minimum lease payments under the operating lease are as follows:

Year Ending March 31,
	2015			$	32,205

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 on January 4, 2015 with expiration on January 3, 2017. Future minimum lease payments under the operating lease are as follows:

Year Ending March 31,
	2015	$	3,057
	2016	$	12,228
	2017	$	9,171

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,
	2015	$	3,780
	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 rights fee of $3,865.

Year Ending March 31,
	2015	$	966
	2016	$	3,865
	2017	$	3,865
	2018	$	3,865
	2019	$	3,865
	Thereafter	$	153,634

Total rent expense for the nine months ended December 31, 2014 and 2013, was $274,625 and $424,318, respectively.

Note 16 – SEGMENT INFORMATION

The Company’s business is currently 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 for its network platform. The beverage business reportable segment derives revenue and expense from the bottled water factory in Baiquan, Heilongjiang Province, the PRC.

Until March 31, 2014, the Company had a third reportable business segment, the transportation segment. The transportation segment, which derived revenue from transporting passengers and cargo between Taiwan and Mainland China through the Taiwan Strait, was discontinued during the quarter ended June 30, 2014. It was classified as a discontinued operation until September 30, 2014 as a result of the fact that the Company’s shareholding right in this transportation company was rescinded by the Ministry of Economic Affairs of Taiwan on October 3, 2014.

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 three months ended ~~December~~June 3130, ~~2014~~2015 and ~~2013~~2014. Income tax allocations have been determined based on statutory rates in the applicable business segment.

Three months ended December 31, 2014

Three months ended June 30, 2015

Online

Beverage

Unallocated

business

items

Total

Total revenues, net

~~338~~100,~~097~~367

Total cost of revenues

(~~111~~48,~~023~~243

)

(~~111~~48,~~023~~243

)

Gross profit

~~227~~52,~~074~~124

Operating expenses:

Selling, general and administrative expenses

~~540~~449,~~262~~386

5246,~~367~~514

~~942~~849,~~467~~297

1,~~535~~345,~~096~~197

Provision for inventory obsolescence

326,~~942~~409

Royalty expenses

125,000

Total operating expenses

~~698~~580,~~204~~795

5246,~~367~~514

~~942~~849,~~467~~297

1,~~693~~476,~~038~~606

Net operating loss

(~~471~~528,~~130~~671

)

(5246,~~367~~514

)

(~~942~~849,~~467~~297

)

(1,~~465~~424,~~964~~482

)

Other income/(expense)

2326,~~568~~505

~~(16~~-

)

(2735,~~402~~622

)

(39,~~850~~117

)

Allocated income tax expense

~~(977~~-

)

~~(3,200~~-

)

~~(4,177~~-

)

Loss after income tax

(~~448~~502,~~539~~166

)

(5246,~~383~~514

)

(~~973~~884,~~069~~919

)

(1,~~473~~433,~~991~~599

)

Total long-lived assets

282,~~319~~640

~~907~~836,~~576~~722

1,~~937~~096

~~937~~840,~~832~~458

Additions to long-lived assets

	Three months ended June 30, 2014
	Online			Beverage			Unallocated
	business			business			items			Total
Total revenues, net	$	297,978		$	-		$	-		$	297,978
Total cost of revenues		(83,652	)		-			-			(83,652	)
Gross profit		214,326			-			-			214,326
Operating expenses:
Selling, general and administrative expenses		378,405			59,124			1,304,690			1,742,219
Provision for inventory obsolescence		56,976			-			-			56,976
Royalty expenses		21,798			-			-			21,798
Total operating expenses		457,179			59,124			1,304,690			1,820,993
Net operating loss		(242,853	)		(59,124	)		(1,304,690	)		(1,606,667	)
Other income		102,142			5,342			946,664			1,054,148
Allocated income tax expense		-			-			-			-
Loss after income tax		(140,711	)		(53,782	)		(358,026	)		(552,519	)

Total long-lived assets		50,213			984,371			263			1,034,847

Additions to long-lived assets		387			-			-			387

Note 15 – 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. EFTI 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, EFTI filed a submission to the court to apply to join the case and the court’s decision is pending. On April 14, 2015, Excalibur filed with the court to withdraw the case and the court approved.

EFTI 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. EFTI 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 EFTI is Excalibur’s largest creditor, in consideration of recovering the frozen cash, EFTI filed a submission to the court to apply to join 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 it is obligated to bear.

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 indicated 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 the sub-contractor for compensation for material construction defects. The final resolutions of these two cases are now pending.

	Three months ended December 31, 2013
	Online			Beverage			Unallocated
	Business			business			items			Total
Total revenues, net	$	433,849		$	-		$	-		$	433,849
Total cost of revenues		(106,916	)		(1,605	)		-			(108,521	)
Gross profit/(loss)		326,933			(1,605	)		-			325,328
Operating expenses:
Selling, general and administrative expenses		737,303			304,997			727,314			1,769,614
Provision for inventory obsolescence		293,501			-			-			293,501
Royalty expenses		35,482			-			-			35,482
Total operating expenses		1,066,286			304,997			727,314			2,098,597
Net operating loss		(739,353	)		(306,602	)		(727,314	)		(1,773,269	)
Other income		89,185			-			55,418			144,603
Allocated income tax expense		(7,741,386	)		-			-			(7,741,386	)
Loss after income tax		(8,391,554	)		(306,602	)		(671,896	)		(9,370,052	)
Total long-lived assets		85,191			1,100,010			4,142			1,189,343
Additions to long-lived assets		387			-			12			399

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 the 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.

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.

~~The~~On January ~~following~~30, ~~tables~~2015, ~~provide~~a ~~the~~class ~~business~~action ~~segment~~entitled ~~information~~Wang, et al. v. EFT Holdings, Inc., et al. was filed on behalf of a putative class asof 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 ~~nine~~Central ~~months~~District ~~ended~~of ~~December~~California. On 31April 14, ~~2014~~2015, Plaintiffs filed a first amended complaint. On April 29, 2015, the Court consolidate this action with the Li, et al. v. Qin, et al. and ~~2013~~Li, et al. ~~Income~~v. ~~tax~~EFT ~~allocations~~Holdings, ~~have~~Inc., ~~been~~et ~~determined~~al. ~~based~~actions. On onMay ~~statutory~~7, 2015, Plaintiffs filed a motion for class ~~rates~~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 competition, 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.. On July 21, 2015, the Court entered an order dismissing Plaintiffs’ RICO claims with prejudice. The Court further dismissed Plaintiffs’ state law claims for operation of an endless chain scheme, deception and common law fraud, unfair competition and false advertising with respect to all defendants except the Company and Jack Qin. On July 28, 2015, the Court granted in part the ~~applicable~~Company’s ~~business~~motion ~~segment~~to strike, deeming certain of Plaintiffs’ counsel inadequate to represent the class. On August 11, 2015, a third amended and consolidated complaint was filed alleging claims for operation of an endless chain scheme, deception and common law fraud, false advertising and unfair competition. The complaint seeks, among other things, compensatory and punitive damages. This case is currently pending. The Company believes that the claims asserted are without merit and intends to defend against them vigorously.

	Nine months ended December 31,2014
	Online			Beverage			Unallocated
	business			business			items			Total
Total revenues, net	$	800,040		$	-		$	-		$	800,040
Total cost of revenues		(283,700	)		-			-			(283,700	)
Gross profit		516,340			-			-			516,340
Operating expenses:
Selling, general and administrative expenses		1,435,612			166,824			2,523,454			4,125,890
Provision for inventory obsolescence		152,173			-			-			152,173
Royalty expenses		375,000			-			-			375,000
Total operating expenses		1,962,785			166,824			2,523,454			4,653,063
Net operating loss		(1,446,445	)		(166,824	)		(2,523,454	)		(4,136,723	)
Other income		110,289			4,770			2,315,265			2,430,324
Allocated income tax expense		(977	)		-			(5,072	)		(6,049	)
Loss after income tax		(1,337,133	)		(162,054	)		(213,261	)		(1,712,448	)
Total long-lived assets		28,319			907,576			1,937			937,832
Additions to long-lived assets		-			-			-			-

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.

	Nine months ended December 31, 2013
	Online			Beverage			Unallocated
	business			business			items			Total
Total revenues, net	$	1,579,721		$	7,834		$	-		$	1,587,555
Total cost of revenues		(494,072	)		(8,017	)		-			(502,089	)
Gross profit/(loss)		1,085,649			(183	)		-			1,085,466
Operating expenses:
Selling, general and administrative expenses		2,209,232			481,568			2,339,703			5,030,503
Provision for inventory obsolescence		398,708			-			-			398,708
Royalty expenses		115,886			-			-			115,886
Total operating expenses		2,723,826			481,568			2,339,703			5,545,097
Net operating loss		(1,638,177	)		(481,751	)		(2,339,703	)		(4,459,631	)
Other income		184,203			1			167,566			351,770
Allocated income tax expense		(7,732,596	)		-			(57	)		(7,732,653	)
Loss after income tax		(9,186,570	)		(481,750	)		(2,172,194	)		(11,840,514	)
Total long-lived assets		85,191			1,100,010			4,142			1,189,343
Additions to long-lived assets		1,904			-			5,119			7,023

On April 18, 2014, George Curry filed a Notice of Removal for the above action to be brought in the District Court of California, 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 judgment 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.

Note 17 – LITIGATION

In October 2008, the Company acquired, through a wholly-owned subsidiary, 48.81% of the capital stock of Excalibur International Marine Corporation, a Taiwanese corporation, for $19,193,000. Excalibur owns a high speed ship which, until August 2010, transported passengers and cargo between Taiwan and mainland China through the Taiwan Strait. Excalibur’s vessel, the Ocean LaLa, was capable of carrying up to 370 passengers and 630 tons of cargo. Excalibur purchased the Ocean LaLa from Ezone Capital Co. Ltd., prior to its acquisition by the Company. The last payment of EURO 2,000,000, equivalent to $2,409,639, was withheld by Excalibur since Excalibur believed that special tooling was not delivered at the time of sale and that an Ezone’s director did not act in good faith and was involved in self-dealing. On August 18, 2010, Excalibur received a statement of claim, equivalent to a complaint in the United States, demanding approximately 2,000,000 Euros. On June 9, 2014, the arbitrators awarded in favor of Ezone, with counterclaims of Excalibur dismissed by the arbitrators. The Company has decided not to appeal the arbitration award. On October 3, 2014, Excalibur received a letter from the Ministry of Economic Affairs, ROC (MOEA) stating that the Company’s capital stock of Excalibur has been voided because of Hsaio Zhong-Xing’s and Lu Zhuo-Jun’s fraudulent activities related to Excalibur.

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 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 to join the case and is awaiting the decision of the court.

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 order to recover the frozen cash, EFT Investment Co. Ltd. filed a submission to the court to apply to join the case on January 13, 2015 and is awaiting the decision of the court.

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 LaLa. 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.

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$112,5000) 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 indicated 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 the sub-contractor for compensation for material construction defects. The final resolution of these two cases is now pending.

On January 28, 2013, EFT Investment Co. Ltd., a wholly owned subsidiary of the Company in Taiwan (“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), Stiven 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 on 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 to negotiate for 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.

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, Stiven 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 on 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.

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 seeks, among other things, restitution, compensatory and punitive damages and injunctive relief. The case is currently pending. The Company believes that the claims asserted are without merit and intends to defend against them vigorously.

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 seeks, among other things, compensatory, treble and punitive damages. 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 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 Virtual Technologies, Inc.

On April 18, 2014, George Curry filed a countersuit against EFT Holdings, Inc., Jack Qin and Pyng Soon in the United States Federal District Court, Central District of California, Los Angeles (Western District). In the complaint, Mr. Curry seeks implied and equitable indemnity, declaratory relief and apportionment of fault.

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.

~~Note~~On 18March 4, -2015, ~~SUBSEQUENT~~the ~~EVENTS~~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 ~~January 30~~April 14, 2015, aDefendant ~~class~~CTX ~~action~~filed ~~entitled~~a ~~Wang,~~motion etto aldismiss. On ~~v. EFT~~May ~~Holdings~~28, ~~Inc.~~2015, etthe ~~al.~~Court ~~was~~granted ~~filed on behalf of a putative class of all purchasers of the Company~~CTX’s ~~products~~motion, ~~against~~in ~~the~~part, with ~~Company~~leave ~~and~~to ~~certain~~amend. The ofCompany ~~its~~filed ~~current~~a ~~and~~First ~~former~~Amended ~~officers~~Complaint ~~and~~on ~~directors~~June in8, ~~the~~2015, ~~United~~asserting ~~States~~causes ~~District~~of ~~Court~~action for: ~~the~~(1) ~~Central District~~breach of ~~California.~~covenant ~~The~~of ~~complaint~~good ~~alleges~~faith ~~claims~~and ~~for~~fair ~~operation~~dealing; of(2) anbreach ~~endless~~of ~~chain~~fiduciary ~~scheme,~~duty; ~~deception~~(3) fraud-misrepresentation; and ~~common~~(4) ~~law~~ fraud~~, securities~~-concealment. ~~fraud~~On ~~under~~June ~~California law~~24, ~~unfair competition~~2015, ~~false~~CTX ~~advertising,~~filed ~~aiding~~an ~~and~~answer ~~abetting,~~to ~~and~~the ~~RICO~~First ~~violations.~~Amended ~~The complaint seeks~~Complaint. Buckman, ~~among~~ ~~other~~Buckman ~~things,~~& ~~compensatory,~~Reid ~~treble~~ and ~~punitive~~Peter ~~damages,~~Lau ~~restitution~~filed ~~and injunctive relief. The case is currently pending.~~an ~~The~~answer ~~Company~~to ~~believes that~~ the ~~claims~~First ~~asserted~~Amended ~~are~~Complaint ~~without~~on ~~merit~~July ~~and~~9, ~~intends to defend against them vigorously~~2015.

22On 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.

On June 22, 2015, a complaint entitled Greenstone Holdings, Inc. v. EFT Holdings, Inc., et al. was filed in the United States District Court for the Central District of California, asserting a claim for express indemnity against the Company. The Company believes that the claim asserted is without merit and intends to defend against it vigorously.

Note 16 - 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.

ITEM 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

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’s ~~nutritional~~generally ~~products~~does ~~are~~not ~~non-pharmaceutical~~have ~~nutritional~~a ~~products.~~return ~~They~~policy ~~are~~but ~~ingestible~~it ~~through~~does ~~oral~~provide ~~liquids,~~a ~~oral~~warranty ~~sprays,~~for ~~tablets~~its ~~and tea~~products. The ~~Company’s~~specific ~~oral~~warranty ~~sprays~~terms and conditions depend upon the product ~~are~~sold, ~~delivered~~but ~~through~~generally ~~very~~include ~~fine~~replacement ~~mist~~of ~~sprayed~~defective ~~directly~~products, ~~into~~but ~~the~~no ~~mouth.~~refunds, ~~The~~during ~~Company’s~~the ~~containers~~six-month ~~used~~period tofollowing ~~deliver~~a ~~its~~sale. ~~nutritional~~Historically, ~~products~~the ~~are~~Company’s ~~small,~~warranty ~~compact~~expenses ~~and~~have ~~easy~~not tobeen ~~carry~~material.

The Company’s nutritional products are all natural, made from pure ingredients, and are designed to address specific goals of the user such as strengthening the immune system, assisting in weight loss, helping to overcome a sore throat and fighting off colds. Each product has been formulated to address specific need, symptom and condition. The Company makes no claims as to the products curing any medical condition, or preventing any medical ailment.

The Company’s personal care products include lip gloss, perfume, mascara, eyeliner and sunscreen.

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 and final~~completed.

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 ~~January~~August 146, 2015, the Company had 1,258,~~457~~918 registered Affiliates, most of which were located in China and Hong Kong. For the ~~nine~~three months ended ~~December~~June 3130, 2015 and 2014, the Company did not have any sales activities in the United States. None of the Company’s Affiliates account for a significant portion of ~~the~~ ~~Company’s~~its business.

23The 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.

~~The~~Full ~~Company~~payment ~~pays~~is ~~its~~required ~~Affiliates~~in aU.S. Dollars ~~commission~~prior onto ~~the~~shipment ~~products they~~of ~~order~~any ~~from the Company~~products. ~~The~~In ~~commission~~most iscases, ~~approximately~~once ~~58%~~payment ofis ~~the~~received, ~~total~~products ~~dollar~~ordered ~~amount of the order. Commissions~~ are ~~considered a~~shipped ~~reduction~~directly ofby the ~~sales price of the~~ Company’s ~~products~~third ~~and~~party ~~are~~manufacturers ~~reflected~~to in the Company’s ~~financial~~distribution ~~statements~~centers ~~as a reduction~~ in ~~revenue.~~Hong ~~The~~Kong ~~commissions~~and ~~earned by each Affiliate are held in book entry form~~China. ~~The~~Once ~~Affiliate can use~~ the ~~commissions~~products toare ~~pay~~received ~~for~~at ~~new~~the ~~orders. With~~distribution ~~this process~~centers, ~~the~~they ~~Company~~are ~~reduces~~shipped ~~operating~~to ~~expense~~the ~~and~~Affiliate ~~eliminates~~placing ~~cumbersome~~the ~~accounting chores such as issuing checks and reconciling bank statements~~order.

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 received at the distribution centers, the products are shipped to the Affiliate placing the order. 20

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 ~~nine~~three months ended ~~December~~ 31June 30, ~~2014~~2015, the Company agreed to waive the access fees in lieu of ToByTo agreeing to purchase a portion of the Company’s overstocked inventory.

2421

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 ~~nine~~three months ended ~~December 31~~June 30, ~~2014~~2015, the Company agreed to waive the access fees in lieu of eZGT ~~limited~~Limited agreeing to purchase a portion of the Company’s overstocked inventory for an agreed upon period of time.

Market Environment

The nutritional supplement and cosmetic e-business markets have and continue to become increasingly competitive and are rapidly evolving. 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 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’ marketing and distribution of EFT phones, eZGT’s marketing of the travel program and the Company’s water bottling operations.

2522

Results of Operations

Comparison ~~for~~ for the Three Months Ended ~~December~~June 3130, ~~2014~~2015 and ~~2013~~2014

Sales revenues, net

Sales revenues, net decreased to approximately $~~263~~76,000 for the three months ended ~~December~~June 3130, ~~2014~~2015 from approximately $~~348~~230,000 for the three months ended ~~December~~June 3130, 2014 ~~2013~~ primarily due to a decline in sales demand from the Company’s Affiliates. ~~Sales revenues, net excludes revenue from shipping charges and reflects the deduction of commission expense.~~ The Company’s policy is to pay commissions to Affiliates upon receipt of sales orders even before revenue can be recognized. In addition, sales orders dropped from $~~601~~385,000 to $~~460~~270,~~000~~250 which caused commission expense to decrease to $~~270~~155,~~000~~700 for the three months ended ~~December~~June 3130, ~~2014~~2015 from $~~366~~236,~~000~~700 for the three months ended ~~December 31~~June 30, ~~2013~~2014.

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

The Company’s revenue recognition policy is in accordance with the requirements of Staff Accounting Bulletin (“SAB”) No. 104, Revenue Recognition (“SAB 104”), ACT 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 reasonable assured. Transportation income is generated form transporting passengers and cargo and is recognized at the time when passengers and cargo are conveyed to the destination port. 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.

2623

Shipping charges

Shipping charges decreased to approximately $7524,000 for the three months ended ~~December~~June 3130, ~~2014~~2015 from approximately $8668,000 for the three months ended June ~~December 31~~30, ~~2013~~2014 mainly due to a ~~decrease~~reduction in gross sales.

Cost of ~~goods sold~~ sales

Cost of ~~goods~~sales ~~sold~~ consists mainly of merchandise purchased from vendors. Cost of ~~goods~~sales ~~sold~~decreased ~~increased~~to byapproximately ~~12%~~$48,000 tofor the three months ended June 30, 2015 from approximately $~~109~~78,000 for the three months ended ~~December~~June 3130, 2014, due to a reduction in sales. Gross sales of products declined from approximately $436,000 to $199,000, or 54%. However, cost of sales of products declined by 38.4% from $78,000 for the three months ended June 30, 2014 to $9848,000 for the three months ended ~~December~~June 3130, ~~2013,~~2015 mainly due to the ~~purchase~~sales of ~~packaging~~promotional ~~material~~products of ~~during~~$30,000 and $33,000, respectively for the ~~current~~same periods. Despite the items that were sold at discounted prices, cost of sales as a percentage of gross sales for the three months ended June 30, 2015 was 24%, which was higher than the same period last year by 6%, mainly due to vendor price increases during the period..

Gross profit

Gross profit decreased to approximately $~~227~~52,000 for the three months ended ~~December~~June 3130, ~~2014~~2015 compared to approximately $~~325~~214,000 for the three months ended December 31, ~~2013~~2014. Gross profit, as a percentage of total revenue, was 6751.9% during the current period compared with 7571.9% for the three months ended June ~~December 31~~30, ~~2013~~2014. The decrease in gross profit was due to a reduction in gross sales and the sale of promotional products at cost during the current period ~~and higher shipping costs in the current period for products shipped to China~~.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased to approximately $1,~~535~~345,000 for the three months ended ~~December~~June 3130, ~~2014~~2015 compared to $1,~~770~~742,000 for the three months ended ~~December~~June 3130, ~~2013~~2014, mainly due to lower legal fees, computer service fees, rental charges, wages and depreciation expense in the current period compared with the same period last year.

Inventory obsolescence

Inventory obsolescence decreased to ~~approximately~~ $336,~~000~~409 for the three months ended ~~December~~June 3130, ~~2014~~2015 ~~from~~as ~~approximately~~compared to $~~294~~56,~~000~~976 for the three months ended ~~December~~June 3130, ~~2013~~2014, mainly due to to significantly lower amounts of inventory either at or nearing obsolescence in the current period as compared to the same period last year.

Royalty expenses

Royalty expenses increased to approximately $125,000 for the three months ended ~~December~~June 3130, ~~2014~~2015 as compared to approximately $3522,000 for the three months ended ~~December~~June 3130, ~~2013~~2014. This increase is due to an adjustment to recognize the expense based on a prorated minimum annual payments instead of actual sales revenues. Since current year annualized sales do not meet the minimum sales required to comply with the terms of the agreement, an adjustment was made during the period ended ~~December~~June 3130, ~~2014~~2015 to recognize the expense based on the prorated minimum contract amount for the three months ended.

Interest income

Interest income decreased to approximately $3321,000 for the three months ended ~~December~~June 3130, ~~2014~~2015 as compared to approximately $7051,000 for the three months ended ~~December~~June 3130, ~~2013~~2014. ~~Interest~~ Interest income decreased primarily due to a decrease of investments in corporate bonds as compared to the prior period.

2724

Interest expense

Interest expense increased to approximately $4243,000 for the three months ended ~~December~~June 3130, ~~2014~~2015 as compared to approximately $232,000 for the three months ended ~~December~~June 3130, ~~2013~~2014. The ~~significant~~ increase in interest expense is mainly due to ~~interest~~an increase of $4011,~~000~~490 in interest expense related to the provision for underpayment of tax liabilities for the years 2008 to 2010.

Other ~~Income (Expense)~~income

Other income~~(expense)~~ ~~changed~~decreased to ~~an expense of approximately~~ $417,~~000~~ 057 for the three months ended ~~December~~June 3130, ~~2014~~2015 from ~~income of approximately~~ $~~145~~29,~~000~~813 for the three months ended ~~December~~June 3130, ~~2013.~~ ~~The~~2014 ~~change~~due ~~was~~to ~~mainly~~an ~~due~~increase toof ~~decrease~~$13,714 in loss ~~interest~~on ~~income~~disposal ~~and~~of fixed assets during the current period, which was offset by the slight increase in ~~interest~~the ~~expenses~~sales of expiring products.

~~Loss from disposal of Excalibur~~25

The Company recorded a loss of approximately $2,623,000 in the three months ended December 31, 2014 due to the approximately $9.7 million loss arising from the write-off of the Company’s total receivable from Excalibur. 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.

Results of Operations

Comparison for the Nine Months Ended December 31, 2014 and 2013

Sales revenues, net

Sales revenues, net decreased to approximately $612,000 for the nine months ended December 31, 2014 from approximately $1,280,000 for the nine months ended December 31, 2013 primarily due to a decline in sales demand from the Company’s Affiliates. In addition, sales orders dropped from $2,095,000 to $1,206,000 which caused commission expense to decrease to $703,000 for the nine months ended December 31, 2014 from $1,213,000 for the nine months ended December 31, 2013.

Shipping charges

Shipping charges decreased to approximately $188,000 for the nine months ended December 31, 2014 from approximately $307,000 for the nine months ended December 31, 2013 mainly due to a decrease in sales.

Cost of goods sold

Cost of goods sold decreased by 46% to approximately $250,000 for the nine months ended December 31, 2014 from approximately $462,000 for the nine months ended December 31, 2013, mainly due to the reduction in gross sales. Gross sales declined by 47% to $1,315,000 for the nine months ended December 31, 2014 from approximately $2,493,000 for the nine months ended December 31, 2013 which is consistent with the decline in cost of goods sold.

Gross profit

Gross profit decreased to approximately $516,000 for the nine months ended December 31, 2014 compared to approximately $1,085,000 for the nine months ended December 31, 2013. The decrease in gross profit was mainly due to the drop in sales revenue. Gross profit, as a percentage of total revenue, was 65% during this period compared with 68% for the nine months ended December 31, 2013. The decrease in gross profit was partly due to the sale of promotional products at cost during the current period and higher shipping costs in the current period for products shipped to China.

Selling, general and administrative expenses

Selling, general and administrative expenses decreased to approximately $4,126,000 for the nine months ended December 31, 2014 compared to $5,031,000 for the nine months ended December 31, 2013, mainly due to lower legal fees, computer service fees, rental charges, wages and depreciation expense in the current period compared with the same period last year.

Inventory obsolescence

Inventory obsolescence decreased to approximately $152,000 for the nine months ended December 31, 2014 from approximately $399,000 for the nine months ended December 31, 2013, mainly due to significantly lower amounts of inventory either at or nearing obsolescence in the current period as compared to the same period last year.

Royalty expenses

Royalty expenses increased to approximately $375,000 for the nine months ended December 31, 2014 as compared to approximately $116,000 for the nine months ended December 31, 2013, This increase is due to an adjustment to recognize the expense based on prorated minimum annual payments instead of actual sales revenues. Since current year annualized sales do not meet the minimum sales required to comply with the terms of the agreement, an adjustment was made during the period ended December 31, 2014 to recognize the expense based on the prorated minimum contract amount for the first nine months of the fiscal year.

Interest income

Interest income decreased to approximately $127,000 for the nine months ended December 31, 2014 as compared to approximately $229,000 for the nine months ended December 31, 2013. Interest income decreased due to a decrease of investments in corporate bonds as compared to the prior period.

Interest expense

Interest expense increased to approximately $114,000 for the nine months ended December 31, 2014 as compared to approximately $6,000 for the nine months ended December 31, 2013. The significant increase in interest expense is mainly due to interest of $110,000 related to the provision for underpayment of tax liabilities for the years 2008 to 2010.

Other income (expense)

Other income(expense) increased to income of approximately $2,430,000 for the nine months ended December 31, 2014 from income of approximately $352,000 for the nine months ended December 31, 2013. The increase was mainly due to the income arising from the Company’s sale of 4.97 million shares of CTX of approximately $2,407,000 net of commissions and other fees. The sale of 4.97 million shares represents roughly 47% of the Company’s total holdings in CTX prior to the sale, and the Company still owns approximately 5.6 million shares of CTX’s common stock.

Loss from disposal of Excalibur

The Company recorded a loss of approximately $2,623,000 in the nine months ended December 31, 2014 due to an approximately $9.7 million loss arising from the write-off of the Company’s total receivable from Excalibur. The loss was offset by an approximately $7 million gain from the deconsolidation of Excalibur as a result of the Company's loss of its shareholding rights in Excalibur.

Capital Resources and Liquidity

The following table shows the Company’s sources of cash for the ~~nine~~three months ended ~~December~~June 3130, ~~2014~~2015 and ~~2013~~2014.

	Nine Months Ended December 31,
	Three months Ended June 30,
	2014			2013
	2015			2014
Net cash used in operating activities	$	(540,690	)	$	(2,829,123	)
Net cash provided by (used in) operating activities	$	(857,378	)	$	531,276
Net cash provided by investing activities		2697,~~018,453~~916			21,~~832~~564,~~824~~835
Net cash used in financing activities		(~~374~~168,~~489~~239	)		(~~319~~190,~~966~~974	)
Effect of exchange rate changes on cash		~~70,797~~(106	)		~~(78~~9,~~673~~564	)
Net increase/(decrease) in cash	$	1(327,~~174,071~~807	)	$	~~(394~~1,~~938~~914,701	)

Operating activities

For the ~~nine~~three months ended ~~December 31~~June 30, ~~2014~~2015, net cash used in operating activities was $~~540~~857,~~690~~378. This was primarily due to a net loss ~~from continuing operations~~ of $1,~~712~~433,~~448~~599 adjusted by non-cash related expenses that included depreciation expense of $~~143~~42,~~137~~259, provision for inventory obsolescence of $~~152~~6,~~173~~409, ~~and~~loss on disposal of fixed assets of $11,432 and a net ~~decrease~~increase in working capital items of $~~815~~512,~~341~~529, and losses realized from the sales of securities available for sale of $623,~~832~~592.

For the ~~nine~~three months ended ~~December 31~~June 30, ~~2013~~2014, net cash ~~used in~~provided by operating activities was $2531,~~829,123~~276. This was primarily due to a net loss ~~from continuing operations~~ of $11520,~~840,514~~ 605 adjusted by non-cash related expenses that included depreciation expense of $~~208~~49,~~704~~864, provision for inventory obsolescence of $~~398~~56,~~708~~976 and a net ~~decrease~~increase in working capital items of $8918,~~414~~557,~~432,~~ which were offset by gains realized from the sale of securities available for sale of $4616,~~408~~172 and gain on disposal of fixed assets of $2,282.

Investing activities

Net cash provided by investing activities for the ~~nine~~three months ended ~~December~~June 3130, ~~2014~~2015 was $2697,~~018~~916,~~453,~~ primarily due to proceeds from the sale of corporate bonds ~~of $5,186,716, which were partially offset by the purchase of $3,188,408 of corporate bonds~~.

Net cash provided by investing activities for the ~~nine~~three months ended ~~December~~June 3130, ~~2013~~2014 was $21,~~832~~564,~~824,~~835 mainly due to proceeds from the sale of corporate bonds of $42,~~763~~070,~~717~~417, which were partially offset by the purchase of ~~$1,933,275 of~~ corporate bonds of $522,873.

Financing activities

Net cash used in financing activities for the ~~nine~~three months ended ~~December~~ 31June 30, ~~2014~~2015 was $~~374~~168,~~489~~239, due to the repayment of a short-term loan for financing of the Company’s current year directors’ and officers’ liability insurance policy. For more information please see Note 1211 to the consolidated financial statements in this Report.

Net cash used in financing activities for the ~~nine~~three months ended ~~December~~ 31June 30, ~~2013~~2014 was $~~319~~190,~~966~~974, primarily due to repayment of a short-term loan for financing of the Company’s directors’ and officers’ insurance policy.

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Working Capital

	December 31, 2014			March 31, 2014
	June 30, 2015			March 31, 2015
Current assets	$	64,~~921~~389,~~595~~380		$	85,~~228~~655,~~362~~514
Current liabilities		14,~~738~~563,~~280~~736			1814,~~128~~427,~~984~~021
Working capital (deficiency)	$	(710,~~816~~174,~~685~~356	)	$	(98,~~900~~771,~~622~~507	)

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 plus accrued interest and penalties 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.

31Balance Sheet Items

Material changes in the Company’s balance sheet items between June 30, 2015 and March 31, 2015 are discussed below:

Securities Available for Sale

Securities available for sale decreased to $1,417,014 at June 30, 2015 compared to $2,132,397 at March 31, 2015, as the Company sold certain securities to fund operations.

Inventories

Inventory decreased to $260,287 at June 30, 2015 compared to $303,848 at March 31, 2015 due to the sale of overstocked or products nearing expiration during the three months ended June 30, 2015 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.

Property and Equipment

Property and equipment decreased to $840,458 at June 30, 2015 compared to $894,129 at March 31, 2015, as a result of scheduled depreciation expense being recorded.

Accounts Payable

Accounts payable increased to $1,290,207 at June 30, 2015 compared to $1,073,795 at March 31, 2015 due to an increase in unpaid legal fees during the period.

Commission Payable

Commission payable slightly decreased to $3,695,168 at June 30, 2015 compared to $3,785,004 at March 31, 2015 due to lower commissions earned by Affiliates during the three months ended June 30, 2015.

Other Liabilities

Other liabilities increased to $5,973,965 at June 30, 2015 compared to $5,874,187 at March 31, 2015. The increase of $99,778 is due to the accrual of interest associated with the $4,527,000 tax liability accrued in the previous year and legal fees.

Unearned Revenue

Unearned revenue slightly increased to $3,277,376 at June 30, 2015 compared to $3,198,776 at March 31, 2015. 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.

Contractual Obligations and Commitments

~~Our~~The ~~contractual~~Company’s contractual obligations and commitments as of ~~December~~June 3130, ~~2014~~ 2015 did not materially change from the amounts set forth in ~~our~~its Annual Report on Form 10-K for the year ended March 31, ~~2014~~2015.

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 this Item 2, 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 Item 1- Note 3 to the financial statements included as part of this report 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 Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon ~~our~~the Company’s consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). ~~Our~~The Company’s significant accounting policies are discussed in Note 2 “Summary of Significant Accounting Policies” to the consolidated financial statements included in ~~our~~its Annual Report on Form 10-K for the year ended March 31, ~~2014~~2015, as filed with the U.S. Securities and Exchange Commission (“SEC”) on July 1514, ~~2014~~2015.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.

3228

Item 4.

Controls and Procedures.

(a)

Disclosure Controls and Procedures

The Company’s management, under the supervision and with the participation of its chief executive officer and chief financial officer, Messrs. Jack Jie Qin and William E. Sluss, respectively, evaluated the effectiveness of the Company’s disclosure controls and procedures as of ~~December~~June 3130, ~~2014~~2015, the end of the period covered by this Report. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this Form 10-Q, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Based on that evaluation, Messrs. Qin and Sluss concluded that the Company’s disclosure controls and procedures were effective as of ~~December 31~~June 30, ~~2014~~2015.

The Company’s disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of its disclosure control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within a company have been detected.

(b)

Changes in Internal Controls

There was no change in the Company’s internal control over financial reporting during the quarter ended ~~December~~June 3130, ~~2014~~2015 that is reasonably likely to materially affect the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1.

Legal Proceedings.

See Note 17 to the financial statements included as part of this Report.

Item 1A.

Risk Factors.

Not applicable.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3.

Defaults upon Senior Securities.

None.

Item 4.

Mine Safety Disclosures.

Not applicable.

Item 5.

Other Information.

None.

3329

Item 6.

Exhibits.

Exhibits

Exhibit No.:	Description:	~~Description:~~
31.1*	Rule 13a-14(a) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Jack Jie Qin.	~~Rule 13a-14(a) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Jack Jie Qin.~~
31.2*	Rule 13a-14(a) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for William E. Sluss.	~~Rule 13a-14(a) Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for William E. Sluss.~~
32.1*	Section 1350 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Jack Jie Qin.	~~Section 1350 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Jack Jie Qin.~~
32.2*	Section 1350 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for William E. Sluss.	~~Section 1350 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for William E. Sluss.~~
101*	The following materials from the EFT Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, filed on August 19, 2015 formatted in Extensible Business Reporting Language (XBRL):	The following materials from the EFT Holdings, Inc. Quarterly Report on Form 10-Q for the quarter ended December 31, 2014, filed on February 17, 2015 formatted in Extensible Business Reporting Language (XBRL):

	(i)	Consolidated Balance Sheets (Unaudited),
	(ii)	Consolidated Statements of Income (Unaudited),
	(iii)	Consolidated Statements of Comprehensive Income (Unaudited),
	(iv)	Consolidated Statements of Changes in Equity (Unaudited),
	(v)	Consolidated Statements of Cash Flows (Unaudited), and
	(vi)	related notes

*Filed herewith.

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SIGNATURES

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

		EFT HOLDINGS, INC.
		(Registrant)
Date: February 17, 2015	By:	/s/ Jack Jie Qin
Date: August 19, 2015	By:	/s/ Jack Jie Qin
		Jack Jie Qin
		Principal Executive Officer
	By:	/s/ William E. Sluss
		William E. Sluss
		Principal Financial Officer

3531

Filing Compare · EFT Holdings, Inc.