Note 7 - LOANS TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS

The board of directors of the Company approved a non-interest bearing demand loan in the amount of $1,567,000 on July 25, 2008 to Yeuh-Chi Liu, a vendor to the Company. The $1,567,000 loan was used by Yeuh-Chi Liu to purchase a 3.97% ownership interest in Excalibur, see Note 8, and is collateralized by that interest. Yeuh-Chi Liu has served as a member of the board of directors of Excalibur since July 23, 2008. The Company does not expect that this loan will be repaid and the loan was written off as of December 31, 2010. The Company has not yet enforced its interest in the collateral.

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 16, 2007, the ownership of the “EFT” trademark was transferred to EFT Assets Limited, a company in which Wendy Qin, a director of EFT International Ltd., serves as a director. Pursuant to an agreement 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. During the six months ended September 30, 2014 and 2013, royalty fees incurred pursuant to the agreement with EFT Assets Limited were $250,000 and $80,404, 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 six months ended September 30, 2014 and 2013, EFT International Ltd. paid JFL Capital Limited $187,500 and $180,000, respectively.

The Company rents a 6,500 square foot office space at market rate for its satellite training center in Hong Kong. This office is located at Langham Office Tower, 8 Argyle Street, Suite 3706, Kowloon, Hong Kong SAR. The leased space is owned by a number of persons, including Wendy Qin, a director of EFT (HK) Ltd and the sister of Jack Jie Qin, the Company’s president. The lease for this space expires on March 31, 2015, with a monthly rental of $30,900. On May 1, 2014, the Company sublet a portion of the rental office space, approximately 1,230 square feet, to a third party at a market rate in an effort to reduce the Company’s costs. On November 1, 2014, the Company further sublet approximately 2,200 square feet of office space to another third party at a market rate to further reduce the Company’s costs. During the six months ended September 30, 2014 and 2013, the Company paid the lessor $146,907 and $185,567, respectively, in rent.