Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-K

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 20152016

or

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                                to                               

Commission file number: 0-33519000-33519

GLOBAL FUTURE CITY HOLDING INC.

(Exact name of registrant as specified in its Charter)

2 Park Plaza, Suite 400, Irvine, CA  92614

(Address of principal executive offices)

Registrant’s telephone number, including area code:(949) 769-3550

Securities registered pursuant to Section 12(b) of the Act:None

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

Common Stock, $0.001 par value

(Title of Class)

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

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.o YesxNo

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.x YesoNo

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 o

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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company.o Yesx No

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant onwas $33,710,357 based upon the price ($2.60) at which the common stock was last sold as of June 30, 2015: $34,121,910

2016, the last business day of the registrant’s most recently completed second fiscal quarter, multiplied by the approximate number of shares of common stock held by persons other than executive officers, directors and five percent stockholders of the registrant without conceding that any such person is an “affiliate” of the registrant for purposes of the federal securities laws.

The registrant had 48,617,02940,431,680 shares of common stock outstanding as of April 13 2016.

17, 2017.

NOTE REGARDING FORWARD LOOKING STATEMENTS

Certain information included in this Annual Report on Form 10-K and other filings of the Registrant under the Securities Act of 1933, as amended (the “Securities Act”), and the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as well as information communicated orally or in writing between the dates of such filings, contains or may contain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements in this Annual Report on Form 10-K, including without limitation, statements related to our plans, strategies, objectives, expectations, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks, trends and uncertainties that could cause actual results to differ materially from expected results. Among these risks, trends and uncertainties are the availability of working capital to fund our operations, the competitive market in which we operate, our ability to generate a profit and execute our business plan, the retention of key personnel, our ability to protect and defend our intellectual property, the effects of governmental regulation and other risks identified in the Registrant’s filings with the Securities and Exchange Commission from time to time.

In some cases, forward-looking statements can be identified by terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such terms or other comparable terminology. Although the Registrant believes that the expectations reflected in the forward-looking statements contained herein are reasonable, the Registrant cannot guarantee future results, levels of activity, performance, or achievements. Moreover, neither the Registrant, nor any other person, assumes responsibility for the accuracy and completeness of such statements. The Registrant is under no duty to update any of the forward-looking statements contained herein after the date of this Annual Report on Form 10-K.

TABLE OF CONTENTS

PART I

ITEM 1.          BUSINESS

When used in this report, the terms “Global”, “Company”, “we”, “our or “us” mean, unless the context otherwise indicates, Global Future City Holding Inc. and its subsidiaries.

The following discussion should be read in conjunction with the Risk Factors presented in Item 1A of Part I and the Cautionary Statement for Forward-Looking Information and Management's Discussion and Analysis of Financial Condition and Results of Operations set forth in Item 7 of Part II.

Corporate History

Our Company was incorporated in the State of Nevada on October 12, 2000 under the name Cogen Systems, Inc. We changed our name to Snocone Systems, Inc. on December 6, 2001. On April 1, 2005, Snocone Systems, Inc. and its wholly-owned subsidiary, WYD Acquisition Corp., a California corporation (the “Merger Sub”), merged with Who’s Your Daddy, Inc. (“WYD”), an unrelated, privately held California corporation, whereby the Merger Sub merged with and into WYD. After the merger, WYD continued its corporate existence as a direct, wholly-owned subsidiary of Snocone Systems, Inc. under the laws of the State of California. On April 13, 2005, we changed our name to Who’s Your Daddy, Inc. and, effective June 1, 2010, we changed our name to FITT Highway Products, Inc. Effective October 29, 2013, we merged with F.I.T.T. Energy Products, Inc. (“FITT”) whereby FITT merged into our Company, with our Company being the surviving entity. Effective October 29, 2014 the name of our Company was changed to Global Future City Holding Inc. (the “Company” or “we”) and our trading symbol changed from “FHWY” to “FTCY.”

Detention of our Former Chief Executive Officer

On August 30, 2016, we reported on Form 8-K that our former Chief Executive Officer (“CEO”), President, and Chairman of the Board of Directors, Ning Liu, was detained in the People’s Republic of China (“PRC”) and we had begun investigating the facts and circumstances surrounding his detainment. On September 9, 2016, we filed Form 8-Kreporting that Mr. Liu was taking a 30 day leave of absence from all positions he held with our Company. Finally, on October 21, 2016, because of his ongoing legal challenges in the PRC, Mr. Liu resigned from all his positions in our Company. Also on October 21, 2016, our Board of Directors appointed Michael R. Dunn to the positions of Chief Executive Officer (“CEO”), President and Chairman of the Board.

Mr. Liu continues to be detained in the PRC. We have been informed by Mr. Liu’s attorney in the PRC that, on March 2, 2017, he was convicted in Hunan Province for violations of the PRC’s multi-level marketing regulations and sentenced to 10 years in prison. We have likewise been informed by Mr. Liu’s attorney that he has an appeal hearing scheduled in Hunan Province in the near future and, if he is unsuccessful in that hearing, he can appeal to a national court in Beijing China. This process could take months and it is very difficult to get reliable information on the particulars of Mr. Liu’s case to make any intelligent assessment as to the final outcome. While many of the facts of his detention and conviction are unclear, we have been informed that Mr. Liu allegedly raised capital through the sale of a digital coin, named Wan Fu Bi, all while representing himself as the CEO of our Company and an unaffiliated private company, Great Coin Inc. (“Great Coin”). As further described below, Great Coin, which was co-owned by Mr. Liu and Michael Dunn, is a technology company that developed the GX Coin, a digital currency, and a trading platform for the GX Coin. Through a February 2016 agreement with Great Coin, our Company’s direct-selling program members were able to convert a portion of their membership accounts into GX Coins. It is unclear whether investors in Wan Fu Bi believed it was the same as the GX Coin. Even though Mr. Liu was allegedly representing himself as the CEO of our Company and also of Great Coin, his activities were never authorized by either company, Wan Fu Bi has no affiliation with either company or Michael Dunn, and no funds resulting from the alleged activities were ever received by our Company, Great Coin or Michael Dunn.

While no actions have been filed against our Company as a result of Mr. Liu’s actions, his detention and legal challenges have had, and continue to have, a material adverse impact on us. We believe that potential business partners have refused and or avoided doing business with us due to Mr. Liu’s actions. Our efforts to implement our direct selling program became significantly more difficult due to questions surrounding Mr. Liu’s detention. In addition, our investment in Global Future City Regional LLC, an EB-5 Regional Center, was significantly impaired due to Mr. Liu’s actions, and potential project partners decided to investigate their opportunities elsewhere.

While Mr. Liu is no longer involved with our Company, many potential investors and strategic partners, particularly those in the PRC, became distrustful of us, resulting in significant harm to our credibility, our brand and our ability to raise capital. As a result of Mr. Liu’s alleged actions, we were forced to suspend our direct selling program (the “GX-Life Direct Selling Program”) in the fourth quarter of 2016 and to abandon and write-off our investment in our EB-5 Regional Center line of business. We believe Mr. Liu’s alleged actions were the primary factor in our stock price falling from a high of $3.64 per share in the first quarter of 2016 to a low of $0.51 per share in the fourth quarter of 2016, causing us to experience significant lost opportunities to raise capital. In addition, after focusing a significant portion of our resources for several months attempting to redirect our marketing strategy to an online sales program with little success, we were forced to lay off a majority of our employees in January 2017 to reduce costs to a minimal level.

In response to Mr. Liu’s alleged actions and their significant harm to our Company, on March 20, 2017 we entered into a Stock Issuance Cancellation Agreement with Mr. Liu and certain of his affiliates (the “Stockholders”) under which the Stockholders agreed to return 8,349,906 common shares owned by them to our Company for cancellation. We retain the right in the future to bring actions against Mr. Liu for any and all further damages his alleged actions may have caused. In a separate agreement, Mr. Liu also relinquished his 50% ownership in Great Coin to Mr. Dunn and Mr. Dunn retains the right to bring future actions against Mr. Liu for any damages his alleged actions may have caused.

Business Summary

We are a holding company currently focused in the area of consumer product sales through our wholly-owned subsidiary, GX-Life Global, Inc. (“GX-Life”). During late 2015 and early 2016, we spent considerable resources developing the GX-Life Direct Selling Program, including hiring specialized staff and retaining legal counsel with direct sales program experience. Our goal was to implement the GX-Life Direct Selling Program initially in both the U.S. and China and then, if successful, to expand it internationally. As a result of Mr. Liu’s alleged actions, as described above, we were forced to suspend the GX-Life direct selling program in the fourth quarter of 2016. We are currently pursuing relationships with a number of sales organizations who can purchase our existing inventory for resale purposes in an attempt to establish a wholesale relationship with these organizations. We believed that gaining consumer acceptance in this way would allow us to overcome any difficulties encountered in our direct-selling business.

We were previously also focused in the area of EB-5 investments for foreign investors who are interested in acquiring lawful permanent residence in the United States through our acquisition of Global Future City Regional Center LLC. However, with the difficulties encountered because of Mr. Liu’s detention resulting from his alleged actions, we have begun the process of looking into alternative strategies to utilize or sell our EB-5 Regional Center. We may not be able to utilize or find a buyer for the EB-5 Regional Center and cannot determine at this point whether it has any value at all.

Prior Acquisitions and Agreements

We entered into the following agreements during 2015 that helped pave and shape our business in its current direction.direction:

Sky Rover Stock Purchase Agreement

On April 17, 2015, we completed the closing of a Stock Purchase Agreement (the “SPA”) with Sky Rover Holdings, Ltd., a corporation formed under the laws of the Republic of Seychelles (“Sky Rover”). Under the SPA, certain unaffiliated parties (collectively, the “Acquiring Shareholders”) cumulatively acquired approximately 87.3% of the outstanding shares of stock of our Company in exchange for our receipt of $400,000 in cash and the contribution of 4,000,000 E-Gold crypto-assets (“EGD”) to our then wholly-owned subsidiary, Global Modern Enterprise Limited, a Hong Kong entity (the “EGD Subsidiary”). In connection with the closing of the SPA, Mr. Lei Pei, an officer of Sky Rover, purchased 6,000,000 newly-issued shares of our common stock for $3,000,000 cash in a separate transaction that closed on March 30, 2015, which was meant to provide working capital for our business. Additionally, Mr. Lei Pei, provided the initial down payment of $150,000 for the acquisition of Global Future City Regional Center, LLC (f/k/aPowerdyne Regional Center, LLC) which is described below. On August 17, 2015, Mr. Pei, resigned from our Company as its Chief Executive Officer, Chief Financial Officer and Chairman, and sold the 6,000,000 shares he owned in our Company in a private transaction.

In connection with the share purchase by Sky Rover, we intended to market and deploy theoffer EGD throughin connection with a reward program (“Rewarded EGD”). In orderWe attempted to ensuregain additional assurance that any sale or use of the EGD was in compliance with existing securities regulations, and on February 10, 2015, we filed a Request for No-Action Reliefrelief (the “No-Action Letter”Request”) with the Securities and Exchange Commission (“SEC”) to obtain clarification that the SEC would not recommend enforcement action against our Companyus and itsour related subsidiaries regarding our potential use of the EGD. Despite several inquiries,However, we didwere not receive a substantive response from the SEC on the No-Action Letter. This led managementable to elect to rescind the previous contribution of EGDobtain any such assurance or clarification, and to focus on the acquisition of GX-Life as described below. As a result,we spun-off our EGD-related holdings on October 9,2, 2015 we(as further explained below), and withdrew the No-Action Letter from consideration by the SEC.Request on October 8, 2015.

GX-Life Share Exchange Agreement

On October 2, 2015, we completed a Share Exchange Agreement with GX-Life Global, Inc. (“GX-Life”), whereby we spun-off 100% of our ownership interest in the EGD Subsidiary (including the 4,000,000 EGD received under the SPA) in exchange for 100% of the outstanding common stock of GX-Life, a private company owned primarily by our CEO, Ning Liu, and our COO/CEO/CFO, Michael Dunn. GX-Life has developed a robust, scalable platform to support direct sellingdirect-selling opportunities throughout the world. This platform, coupled with its complement of 25 consumer products to initially be marketed through the direct selling platform, is intended to replace our previous interest in EGD.world (the “GX-Life Direct Selling Program”).

In a related transaction, on October 2, 2015, the former shareholders of GX-Life sold all of their interests in the EGD Subsidiary to the Acquiring Shareholders in the Sky Rover SPA in exchange for 21,280,000 shares of our Company’s common stock previously acquired in the Sky Rover SPA. Collectively, these two transactions are referred to as the “GX-Life Transactions”. As a result of the GX-Life Transactions, much of the Sky Rover SPA has been effectively unwound, as our Company (i) did not create three (3) of the four (4) subsidiaries it had intended to create under the SPA, (ii) did not receive the IP Technology that was intended to calculate Rewarded EGD, and (iii) no longer owns or controls the EGD Subsidiary or the 4,000,000 EGD crypto-assets are no longer owned or controlled byit received under the Sky Rover SPA. Furthermore, of the four (4) entities that received shares in our Company or any of our subsidiaries.(Future Continental Limited, Discover Future Limited, Global Future Development Limited, and Master Power Holdings Group), only Master Power Holdings Group retained the 9,120,000 shares it received under the Sky Rover SPA.

The GX-Life Transactions effectuatedeffected a change in control of our Company, as the former shareholders of GX-Life acquired 21,280,000 shares of our common stock representing an aggregate voting power of 45.9%44.7%. Individually, following the GX-Life Transactions, (i) Michael Dunn acquired an additionalheld a total of 24.1% of the voting power of our common stock, (ii) Ning Liu acquiredheld a total of 2.6% of the voting power of our common stock, and (iii) Tomoe Masuya acquired an additional 26.65%held a total of 32.9% of the voting power of our common stock. The former shareholders of GX-Life are all unaffiliated from one another and none of them have a beneficial interest or hold any ownership interest in each other's entity and disclaim status as a "group" as defined by SEC Rules.Rules under Section 13(d) of the Exchange Act.

As described above, we had previously intended to market the EGD throughin connection with a reward program. GX-Life has determinedbelieves that incorporating a crypto-asset other than EGD into a reward program would be important to itsGX-Life’s success. As a result, on October 21, 2015, GX-Life entered into a Subscription Agreementsubscription agreement (the “Subscription Agreement”) with Great Coin. Great Coin Inc.,is a Nevada corporation (“Great Coin”), atechnology development company co-owned by our CEO and our COO/CFO. Underthat focuses on the Subscription Agreement, we agreed to purchase 5,000,000development of “GX Coins”, an open source digital currencya cryptocurrency that functions as a store of value and a medium of exchange, and the associated online cryptocurrency platform (the “GX Coin Platform”). Great Coin intends for GX Coins, as a cryptocurrency, to be tradable on the GX Coin Platform that is open to the public, and the ownership and transfer of GX Coins is intended to be recorded on an encrypted, distributed ledger system that is based on blockchain technology developed and made available by Ethereum Foundation, a Switzerland company (“Ethereum”). The software utilized by Ethereum to record GX Coin transactions on the GX Coin Platform is developed by third parties that are beyond the control of our Company, its subsidiaries, or Great Coin, and may contain material defects and vulnerabilities. In the event that Ethereum or its software changes, becomes obsolete, gets regulated adversely in one more jurisdictions, does not meet the expectations of its users, or suffers a breach in security, such event may have an adverse effect on the value of GX Coin and thereby our business.

Great Coin has created seventy-five million (75,000,000) GX Coins using 256-bit encryption. To incorporate GX Coins into GX-Life's new business model, GX-Life originally agreed to purchase 5,000,000 GX Coins, at a price of $0.50 eachper GX Coin, for a total subscription price of $2,500,000. In October 2015, weGX-Life paid Great Coin $350,000 for 700,000 GX Coins under the agreement.Subscription Agreement. However, while Great Coin retained the purchase$350,000 that was paid, the GX Coins were never consummated becausedelivered to GX-Life. Instead, the Subscription Agreement was subsequently superseded and replaced by way of ouron February 17, 2016 by a Software License and Services Agreement with(the “Services Agreement”) between GX-Life and Great Coin, as amended on June 30, 2016 (the “Software License“Access and Services Agreement”) under which Great Coin granted a license for. Under the GX Coins forAccess and Services Agreement, GX-Life agreed to pay an upfront license fee of $350,000 which was deemed paid by aGX-Life's previous payment made to Great Coin in October 2015, for GX Coins and the remaining obligations under the Subscription Agreement were canceled. In connection therewith,The material difference(s) between the License Agreement and Access and Services Agreement is that under the Access and Services Agreement, (i) GX-Life Members receive their entire commissions in the form of GX-Coins as stated in the conversion notice provided to GX-Life rather than receiving their entire commissions in the form of GX-Coins over the course of twenty weeks, and (ii) clarifies that the conversion fee paid by GX-Life to Great Coin shall be calculated without any reference to any discounts, rewards, or incentives that a GX-Life Member may receive under the GX-Life Global Compensation Plan.

Under the Access and Services Agreement, Great Coin has agreed to make available and manage the GX Coin Platform, in connection with which GX-Life Members will be managingable to receive their commissions in the form of either a trading platform thatdebit card, Automatic Clearing House (“ACH”) deposit, or GX Coins. The GX Coin Platform will also allow for our members to convert status or rewards points into GX Coins and will allow them alsoGX-Life Members to sell GX CoinCoins to other members.users of the GX Coin Platform, including the public and other GX-Life Members.

Great Coin is a technology company that is in the process of developing the GX Coin. Initially, seventy-five million (75,000,000) GX Coins will be created with secure, 256-bit encryption. As a digital currency, GX Coin will be tradable on an online platform; the ownership and transfer of which will be recorded on an encrypted, secured distributed ledger system using technology similar to the distributed ledger technology used for trading digital currencies.

Acquisition of Global Future City Regional Center, LLC (formerly, Powerdyne Regional Center, LLC) (“Powerdyne”)

On March 26, 2015, we purchasedentered into a Membership Interest Purchase and Sale Agreement (the “Membership PSA”) with Powerdyne, Inc. (the “Selling Entity”), an entity which owned 100% of the membership interests in Powerdyne Regional Center, LLC (“Powerdyne” or “Regional Center”). Powerdyne is an EB-5 Regional Center designated(USCIS ID Number 1215250671) that was approved on March 28, 2013 by the U.S. Citizen and Immigration Service (“USCIS”) as eligible to receive immigrant investor capital to promote economic growth, improve regional productivity, create jobs, and increase domestic capital investment. Our investment in Powerdyne allows us to expand our business scope to real estate development as we have plans to raise funding for qualified real estate development projects within. The closing (“Closing”) of the EB-5 vehicle.Membership PSA occurred on March 27, 2015.

TheUnder the terms of the Membership PSA, we purchased 100% of the membership interest of Powerdyne (the “Purchased Membership Interest”) from the Selling Entity for the total purchase price for Powerdyne wasof $250,000 (the “Purchase Price”) of which $200,000 has been$125,000 (the “Deposit”) was paid as of December 31, 2015. $175,000 of this was contributed by our former CEO Lei Pei. We paid an additional $25,000 on October 1, 2015, andus at the remainingClosing with the balance of $50,000 is to be paid in twofive (5) quarterly installments of $25,000 which are(the “Installment Payments”) due on April 1, 2015, July 1, 2015, October 1, 2015, January 1, 2016, and April 1, 2016 (collectively “Installment Payments”).

2016. As collateral for the timely payment of the Installment Payments, we pledged and granted a security interest in the acquired membershipPurchased Membership Interest of Powerdyne to the Selling Entity, until the Purchase Price was paid in full. As of the date of this filing, all remaining payments have been made for total payments of $250,000.

Shortly after the Closing, we submitted an Amendment to Articles of Organization (the “Amended Articles”) of Powerdyne to change its name to “Global Future City Regional Center, LLC” to better align its identity and brand with the public company. Such Amended Articles was filed and approved by the California Secretary of State on April 9, 2015.

As discussed above, due to the difficulties encountered because of Mr. Liu’s detention resulting from his alleged actions, we have commenced looking at alternative strategies to utilize or sell our interest in Powerdyne. However, because of the inactivity of the Regional Center, the USCIS has considered the project frozen, and accordingly, the value it may have to the seller,a third party may minimal until such time all Installment Payments have been made.conditions change.

The purchase of Powerdyne is considered an asset purchase for accounting purposes based on the guidance of ASC 805Prior Operations - Business Combinations, as the Regional Center does not have features of a business nor does it have any operations. Through this acquisition, we acquired the right to issue licenses to projects such that the projects will benefit from its regional center approved status.FITT Energy

Form S-1 Registration Statement

On May 8, 2015, we filed a Form S-1 Registration Statement under the Securities Act of 1933 (“S-1”) with the SEC for the initial registration of 10 million shares of our common stock, and on July 6, 2015, the S-1 was declared effective by the SEC. On October 8, 2015, we submitted a Post-Effective Amendment No. 1 to our S-1 incorporating the new information resulting from the GX-Life Transactions and resignation of our former CEO, Lei Pei. The Post-Effective Amendment No. 1 was declared effective by the SEC on October 19, 2015. On December 2, 2015, we submitted a Post-Effective Amendment No. 2 to our S-1 incorporating certain information contained in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015, that was filed with the SEC on November 17, 2015. The Post-Effective Amendment No. 2 was declared effective by the SEC on December 22, 2015. The offering is priced at $3.50 per share. The S-1 has been qualified for sale in California and New York and we are free to sell under the S-1 in those jurisdictions within the United States. Subsequent to December 31, 2015, we arranged for the sale of 1,000,000 shares under the S-1 for a total of $3,500,000. In that regard, we have received $999,975 to date and we are in the process of finalizing the paperwork and remaining funding with respect to the sale.

Previous Business

Historically, we marketed and distributed three, two-ounce energy drink shots which are F.I.T.T.marketed under the FITT Energy for Life, F.I.T.T.brand. All three energy shots were designed in collaboration with Dr. Rand Scott, a Board Certified Anesthesiologist and Pain Management Specialist who has experience with the use of herbal products. At the recommendation of Dr. Scott, we incorporated a number of ingredients into the FITT Energy Extreme, and F.I.T.T. Energy Rx. Weproducts to reduce the amount of caffeine in each product.

Although we have implemented new business operations as outlined above, we have retained the FITT energyEnergy drink division, and FITT is still operating as a business while we consider terrestrial and online marketing and distribution strategies for the FITT products. We intend to incorporatebrand by incorporating the sale of FITT energy drinks under different names, into GX-Life’s consumer product sales business.the GX-Life direct-selling program as well as the online program selling direct to consumers.

DescriptionCurrent Business Operations

GX-Life Operations (Consumer Products)

GX-Life is our wholly-owned subsidiary selling a variety of Businessconsumer products which are described below. GX-Life began offering its products using a direct-selling platform to support sales opportunities throughout the world (the “GX-Life Direct Selling Program”). The GX-Life Direct Selling Program incorporated the use of GX Coins to allow its members to receive rewards, commissions and other forms of compensation. During the fourth quarter of 2016, we suspended the GX-Life Direct Selling Program due to difficulties resulting from Mr. Liu’s detention, as previously described. We may decide to reactivate this program in the future, but such reactivation cannot be assured.

In its place, we retained a consulting firm with significant experience in online sales to help us develop an online direct-to-consumer sales program (“GX-Life D2C Program”) to sell our products. After spending considerable resources in connection with this program, we were unable to generate any appreciable results and have now abandoned this potential sales avenue.

We are currently pursuing relationships with a holding company focusednumber of sales organizations who can purchase our existing inventory for resale purposes in the areas of (i) consumer product sales (throughan attempt to establish a membership program) and (ii) EB-5 investments. A discussion of each area is further described below:

CONSUMER PRODUCT SALES

We sell high quality consumer products such as personal care, wellness, and quality-of-life products under the brand, “GX-Life” via direct sales to consumers and e-commerce channels on an international basis. We acquired GX-Life, a business which has developed a robust, scalable network marketing platform which utilizes iMatrix’s software to support direct selling opportunities throughout the world. In January 2016, we began selling our products in certain areas of China, Taiwan and North America and selling directly to consumers through an e-commerce retail platform. Our objectives are to enrich the lives of those who use our productswholesale relationship with these organizations as well as enableliquidate large quantities of inventory to extract value before certain of the product reach an expiration date. Given the damage done to our members to benefit financially fromCompany’s credibility by Mr. Liu’s actions and detention, there is no assurance that we will be successful in this endeavor.

GX-Life Products

Below is a list of products offered by GX-Life. These products were formulated mainly for the market in China and packaged with our direct selling them.program in mind.

GX-Life is marketing a membership-based program in which a member may purchase an initial complement of 25offers high quality consumer products concentrated in the areas of beauty, nutrition, energy drinks, and tea. Intea under the brand, “GX-Life”. Products have historically been sold via GX-Life’s Direct Selling Program to GX-Life Members and consumers and e-commerce channels on an international basis. During the fourth quarter of 2016, we suspended the GX-Life Direct Selling Program and are pursuing wholesale avenues.

GX-Life obtains its beauty category, GX-Life has developed a lineproducts of high-end moisturizers, serums, and creams designed to protect the skin and combat the signs of aging.aging from Advanced Medical Research Laboratories, Inc. (“AMR”). AMR is a health and beauty contract manufacturer that creates beauty product formulas using the latest innovations in active ingredients. In the nutrition category,this regard, GX-Life offers a rangeuses AMR’s services to create unique beauty formulas for all of nutraceutical and dietGX-Life’s beauty products, including its foaming cleanser, night cream, eye cream, regenerative pump, and skin pump, and tailors each beauty product’s look, feel, bottling, labeling, and packaging according to GX-Life’s instructions. After a multivitamin,finished product is made, GX-Life places purchases orders to AMR to acquire beauty product inventory that GX-Life sells to its customers.

In a similar fashion to GX-Life’s beauty products, GX-Life obtains its nutraceutical products from VFR Import Export, Inc (“VFR”). VFR is a vitamin and supplement contract manufacturer. In this regard, GX-Life uses VFR’s services to create unique formulas for all of GX-Life’s nutraceutical products, including its slim down caplets, berry shake, multi-vitamin, joint tablets, detox softgels, enxymas capsules, and probiotic digestive enzyme, joint reliever, detoxifier, calcium supplement,capsules, and organic “superfood” powder.tailors each nutraceutical product’s taste, labeling, bottling, and packaging according to GX-Life’s instructions. After a finished product is made, GX-Life places purchases orders to VFR to acquire nutraceutical product inventory that GX-Life sells to its customers.

Unlike GX-Life’s beauty and nutraceutical products, GX-Life created the formulas for its energy drink products which include GX-Life Sustain, GX-Life F.I.T.T. Extreme, and GX-Life F.I.T.T. Rx Gel packs in collaboration with Dr. Rand Scott. GX-Life provides Universal Nutrients, LLC, a contract manufacturer (“Universal Nutrients”), the raw materials, formulas, and instructions needed to create each energy drink. In order to obtain energy drink products, GX-Life merely places a purchase order and provides the raw materials to Universal Nutrients to create the energy category,drink product that GX-Life offers F.I.T.T. Energy® two-ounce energy shots and one-ounce energy gel packs. Inthen sells to its customers.

GX-Life obtains its tea products from Guangdong Authenmole Biotech, Inc. (“Authenmole”), a tea manufacturer located in the tea category, GX-Life offersPeople’s Republic of China, to provide single-serve sachets of six Authentea® organic tea extracts, and three Herbalsoul®Herbalsoul herbal tea extracts, in addition to various teawares. GX-Life has no input on these products as GX-Life merely acts as a reseller of the tea wares.

Below is a list of proprietary products currently being offeredmanufactured and produced by GX-Life:

GX-Life currently provides its members with the opportunity to purchase all-inclusive travel packages with first-class air transportation and luxury hotel accommodations, and fine art from the Japanese royal collection. GX-Life also intends to expand its business by offering lifestyle products and services which include discounted plastic surgery, medical consultation and tourism packages. GX-Life will provide its members with direct access and information on the medical professionals providing such services for members who wish to purchase this particular service.Authenmole.

More information about GX-Life and the products that we offerit offers can be found on our website at: www.gx-life.com

MarketingGX-Life Direct-Selling Program

The GX-Life Direct Selling Program was developed to support sales opportunities throughout the world. Under the program, enrolled members received various benefits depending on their enrolled status (based on each member’s deposit). Benefits were calculated under a compensation plan which was based on most recent industry developments and Distribution of Consumer Products

Sponsorship

All new GX-Life members initially enroll in ourbest practices for direct selling programs, at a standard level. After being enrolled at a standard level, each member may choose to increase their status to a VIP status leveland benefits included product discounts, bonuses, commissions, etc. Our program also incorporated the use of Gold, Platinum, Diamond, or Jade. Members enrolling within the network may purchase our products solely for their own personal consumption, for resale, or both. Newly enrolled members are assigned into network positions that can be “under” other members, which is referred toGX Coins as “down-line”. Down-line members can also enroll new members creating additional levels within thepart of an award structure. We do not pay any commissions for members enrolling new members.

People seeking new opportunities for income can build a networkDuring the fourth quarter of members2016, we suspended the GX-Life Direct Selling Program due to difficulties resulting from Mr. Liu’s detention, as previously described, and product users. Financial incentives are provided by GX-Lifewe may or may not reactivate the program in the future. If we reactivate the program, we will again be subject to those who succeed in building their member network. However, members are not required to enroll other members as their down-line member. Members receive product samples, brochures,all regulations, both foreign and other sales materials from GX-Life but members are primarily responsible for enrolling and educating their new down-line members with respect to our products, compensation plan, and how to build a successful membership network. People are often attracted to become members after using our products or after attending introductory seminars. Members are able to purchase products directly from us at wholesale prices via the internet.

domestic, governing direct selling programs.

Prior to the suspension of the GX-Life Direct Selling Program, members had made deposits, net of repayments, of $5.2 million into the program, $4.7 million of which was converted into GX Coins in accordance with the terms of a February 17, 2016 License Agreement between GX-Life and Great Coin. The amount not converted into GX Coins, approximately $551,000, is reflected in Member Deposits as a current liability on our consolidated Balance Sheet at December 31, 2016.

As of December 31, 2016, GX-Life had 111 accounts established under this program, 66 of which were held by residents of China and the remainder by residents of the United States. With the exception of repayment of the Member Deposit current liability described above, we have met all of our obligations to the program’s account holders due to the suspension of the program.

Compensation PlansGX Coins

Under our compensation plan, standard members do not earn sales commissions on their down-line members’ product sales, but can earn a commission on the sale of certain products. VIP members may earn sales commissions on their down-line members’ product sales. VIP members (and standard members for the sale of certain products) are paid weekly commissions

GX-Life entered into an Access and Services Agreement (see discussion above) with Great Coin that would allow GX-Life to distribute rewards to GX-Life Members in the form of reward points for product sales purchased by a member’s down-line member network across all geographic markets, except China, where our subsidiary maintains an e-commerce retail platform and does not pay any commissions. Our unique compensation plan enables a member located in one country to sponsor other members located in other countries. VIP members also have the exclusive opportunity to earn overriding commissions on the product sales of members up to three levels below them on their trees. Overriding commissions for VIP member’s range from 0.65% to 35% of sales volume depending on status level and position in his/her tree. Commissions are accrued on a daily basis in the form of reward points, which are redeemable for cash (subject to certain limitations), additional products, or GX Coins.

As the member’s business expands or his/her VIP status level increases, the member receives higher commissions payouts from purchases made by their expanding down-line network. To be eligible to receive commissions, a member may be required to make nominal periodic purchases of our products. Commission increases occur when the number of levels of down-line members included within the member’s commissionable group increases and the number of memberships directly below the member increases.

From time to time, we may make modifications and enhancements to our compensation plan to help motivate our members. We may also enter into agreements for business or market development, which may result in additional compensation to specific members. We intend to continue to examine and adjust our member compensation plan to reflect market place competition, demand, and U.S. regulations and foreign jurisdictions. Because of this, we recognize that we may have different compensation plans for different jurisdictions.

GX Coin Rewards

Incorporating the GX Coin into our reward program structure differentiates us from other direct selling companies and is an integral part of our business plan. GX Coin is a formcryptocurrency that functions as a store of digital currencyvalue and medium of exchange that was created by Great Coin and is intended to be traded on an online platformthe GX Coin Platform, where the price of GX-CoinGX Coin may fluctuate depending on traditional market forces. GX-Life intends to use GX Coins as part of the GX-Life Global Compensation Plan for GX-Life Members. In order to qualify for GX Coin related benefits, receive GX-Coins, or participate on the GX-Coin Platform (collectively, the “GX-Coin Benefits”), GX-Life Members must reside in a state or territory where Great Coin is approved and authorized to conduct business. Currently, only GX-Life Members who reside in California are eligible to receive the GX-Coin Benefits within the United States. GX-Life Members who reside in China may receive GX-Coin Benefits as well. All other GX-Life Members that reside outside of California or China will not be eligible to receive GX-Coin Benefits, and must receive their commissions in the form of a debit card or ACH deposit until Great Coin is approved and authorized to conduct business in the state or territory where such GX-Life Member resides.

Our members can acquire GX Coins by converting status or reward points into GX Coins. A member can chooseGX-Life Direct-to-Consumer Program

After suspending our Direct Selling Program in the fourth quarter of 2016, we retained a consulting firm, Digital Market Labs (“DML”), to help us develop an online direct-to-consumer sales program (“GX-Life D2C Program”) to sell our products. DML has significant experience in online sales and had developed numerous similar programs for other clients in the past. Based on their VIP membership status level, rangingprior experience, DML stated that we should expect an approximate 1.5% conversion ratio for each online target. During a three-month period from Gold ($1,500), Platinum ($10,000), Diamond ($50,000), or Jade ($250,000)late 2016 to acquire status points that can then be converted into GX Coins at any time. The member’s VIP status level will remain constantearly 2017 we focused a significant portion of our resources to redesigning our products’ packaging and advertising for the following 12 months unlessonline consumer and, in the member electsend, our results were minimal. We have since abandoned this effort due to convert status points into GX Coins or acquire additional status points. A member may choose any VIP membership status level for each subsequent 12-month period and acquire additional GX Coins corresponding to the status level chosen. Members earn reward points from his/herDML’s estimated sales commissions which may be converted into GX Coins. Under the terms of the Software License Agreement, when a member converts his/her status or rewards points into GX Coins, we will record operating income, excluding the conversion fee payable to Great Coin, equal to 80% of the conversion amount, up to $4,000,000 in total conversion amounts, and 50% of the conversion amount thereafter.

Members who acquire GX Coins can (i) keep the GX Coins, (ii) sell the GX Coins for cash by utilizing the trading platform developed by Great Coin, (iii) or use the GX Coins to purchase products offered by GX-Life. A member can utilize Great Coin’s trading platform by signing up for an account by following the easy steps illustrated online. Once a GX Coin account is established, a unique and secure digital wallet that stores GX Coins will be issued. Upon Great Coins’ administrative review and registration approval, the account can be used to start selling (or buying) GX Coins. Great Coin’s highly secure trading platform utilizes an advanced Ethereum blockchain technology that records GX Coin transactions on a 256-bit encrypted and secure ledger that is also used in bank transactions which provides the safest way to store money and GX Coins.

As of March 15, 2016, Great Coin began accepting applications for electronic wallets and anticipates the commencement of operations on its trading platform in May 2016.

More information about Great Coin and its trading platform can be found at: www.gx-coin.com.

Member Support

We are committed to providing a high level of support services tailored to the needs of our members in each marketplace we are serving. We attempt to meet the needs and build the loyalty of members by providing personalized member services through our world-wide strategic partnership with Global Access and a 24/7 client service call center. We also maintain a prompt and easy-to-use product return policy (see “Product Warranties and Returns”). We believe that maximizing a member’s efforts by providing effective member support is the hallmark of our network marketing system that helps members build a profitable business supports our success.

We seek to understand and satisfy the needs of our members through product training meetings, regular conventions, web-based messages, member focus groups, regular telephone conference calls and other personal contacts with members. Our user-friendly websites provide product fulfillment and tracking services that result in timely product distribution that builds members’ reputation and highly rated customer satisfaction.

To help maintain communication with our members, we expect to offer the following support programs:

Technology and Internet Initiatives

We believe that the internet is important to our business as more consumers communicate online and purchase products over the internet as opposed to traditional retail and direct sales channels.estimates not being met. As a result, we have committed significant resourceswere forced to our e-commerce capabilities, and the abilitieslay off a majority of our membersemployees in January 2017 to reduce costs to a minimal level.

GX-Life Wholesale Program

We currently are pursuing relationships with a number of sales organizations who can purchase our existing inventory for resale purposes in an attempt to establish a wholesale relationship with these organizations. This would allow us to take advantage of the internet as mostestablished sales networks and, if successful, create a sustainable stream of our sales take place via the internet. We offer a global web page that allows a member to have a personalized replicating website through which he or she can sell products in all of the countries in which we do business. Links to these websites can be found at our main website for members at www.gx-life.com.

Member Ethics Policy

Our member policies and procedures establish the standards by which members conduct GX-Life business in each market. We communicate with members regarding business activities in an attempt to provide our members with a “level playing field” so that one member may not be disadvantaged by the activities of another. We expect the highest level of professional conduct by our members to present products and business opportunities in an ethical and professional manner. Members are expected to become fully educated of our products they sell so that any presentations to customers are consistent with, and limited to, the product claims and representations made in our literature.

Our policies and procedures state that we produce or pre-approve all sales aids used by members such as presentations videotapes, audiotapes, brochures and promotional clothing. Further, members may not use any form of media advertising to promote products unless it is pre-approved by us. Members are not entitled to use our trademarks or other intellectual property without our prior consent.

Our compliance and member services department reviews reports of alleged member misbehavior. If we determine that a member has violated our member policies or procedures, we may terminate the member’s rights completely or take other remedial actions, such as warnings, probation, withdrawal or denial of an award, suspension of privileges of the membership, fines, withholding commissions, until specified conditions are satisfied or other appropriate injunctive relief. Our members are independent contractors, not employees, and may act independently of us. Further, our members may resign or terminate their membership at any time without notice. See “Item 1A. Risk Factors.”

Government Regulations – Consumer Products

Direct Selling Activities

Direct selling activities are regulated by various federal, state and local governmental agencies in the United States and other countries. These laws and regulations are generally intended to prevent fraudulent or deceptive schemes. The laws and regulations in our current markets often:

The laws and regulations governing direct selling are modified from time to time, and, like other direct selling companies, we may be subject from time to time to government reviews, examinations or investigations in our various markets related to our direct selling activities. This can require us to make changes to our business model and aspects of our global compensation plan in the markets impacted by such changes and examinations.

Based on advice of our engaged outside professionals in existing markets, the nature and scope of inquiries from government regulatory authorities and our history of operations in those markets to date, we believe our method of distribution complies in all material respects with the laws and regulations related to direct selling of the countries in which we currently operate.

Selling Activities in China

At the end of 2005, China adopted new direct selling and anti-pyramiding regulations that are restrictive and contain various limitations, including a restriction on the ability to pay multi-level compensation to independent members. The Chinese government continues to scrutinize the activities of direct selling companies.

However, we do not conduct direct selling in China. Rather, consumers and members purchase our products via our Hong Kong-based website or our e-commerce retail platform in China.revenue. We believe that neither our Hong Kong-based website nor our e-commerce platform in China require a direct selling license in China, which we currently do not hold. If we are able to obtain a direct selling license in China, we believe thatthis approach gives us the incentives inherent inbest opportunity for future success at the direct selling model in China would incrementally benefit our existing business. Increased sales in Chinaleast cost. There is no assurance that could be derived from obtaining a direct selling license may be partially offset by the higher fixed costs associated with the establishment and maintenance of required service centers and branch offices. We are unable to predict whether and when we will be successful in obtaining a direct selling license to operate in China, and if we are successful, when we will be permitted to conduct direct selling operations and whether such operations would be profitable.this endeavor.

The regulatory environment in China is complex, and our operations in China can receive regulatory and potential media attention. Our business continues to be subject to regulations and examinations by municipal and provincial level regulators in China. However, no material changes to our business model have been required so far, and we expect to receive continued guidance and direction as we work with foreign counsel to address our business model and any changes that need to be made to comply with the direct selling regulations.

Regulation of OurGX-Life’s Products – United States and Overseas

Our

Although GX-Life is not required to obtain governmental approval, including the U.S. Food and Drug Administration’s (“FDA”) approval, prior to selling its products to consumers, GX-Life’s products and related promotional and marketing activities are subject to extensive governmental regulation by numerous governmental agencies and authorities in the United States, including the U.S. Food and Drug Administration (the “FDA”),FDA, the Federal Trade Commission (the “FTC”), the Consumer Product Safety Commission, the United States Department of Agriculture, State Attorneys General, and other state regulatory agencies. In ourGX-Life’s foreign markets, the products are generally regulated by similar government agencies.

OurGX-Life’s personal care products are subject to various laws and regulations that regulate cosmetic products and set forth regulations for determining whether a product can be marketed as a “cosmetic” or requires further approval as an over-the-counter (“OTC”) drug. In the United States, regulation of cosmetics is under the jurisdiction of the FDA. The Food, Drug and Cosmetic Act defines cosmetics by their intended use, as “articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body . . . for cleansing, beautifying, promoting attractiveness, or altering the appearance.” Among the products included in this definition are skin moisturizers, eye and facial makeup preparations, perfumes, lipsticks, fingernail polishes, shampoos, permanent waves, hair colors, toothpastes and deodorants, as well as any material intended for use as a component of a cosmetic product. Conversely, a product will not be considered a cosmetic, but may be considered a drug if it is intended for use in the diagnosis, cure, mitigation, treatment, or prevention of disease, or is intended to affect the structure or any function of the body. A product’s intended use can be inferred from marketing or product claims. The other markets in which we operateGX-Life operates have similar regulations.  In China, personal care products are placed into one of two categories, “general” and “drug.” Products in both categories require submission of formulas and other information with the health authorities, and drug products require human clinical studies. The product registration process in China for these products can take from nine to more than 18 months or longer.  Such regulations in any given market can limit ourGX-Life’s ability to import products and can delay product launches as we goGX-Life goes through the registration and approval process for those products.

The markets in which weGX-Life operate all have varied regulations that distinguish foods and nutritional health supplements from “drugs” or “pharmaceutical products.” Because of the varied regulations, some products or ingredients that are recognized as a “food” in certain markets may be treated as a “pharmaceutical” in other markets. These regulations may require usGX-Life to either modify a product or refrain from selling the product in a given market. As a result, weGX-Life must regularly modify the ingredients and/or the levels of ingredients in ourits products for certain markets. In some circumstances, the regulations in foreign markets may require usGX-Life to obtain regulatory approval prior to the introduction of a new product or limit our usesGX-Life’s use of certain ingredients altogether. There has been an increased movement in the United States and other markets to expand the regulation of dietary supplements. This could impose additional restrictions or requirements in the future. Because of this increased regulatory focus, ourGX-Life’s internal review efforts have been enhanced in order to comply with ourits understanding of current regulations.

FDA regulations require current good manufacturing practices (“cGMP”) for dietary supplements. The regulations ensure that dietary supplements are produced in a quality manner, do not contain contaminants or impurities, and are accurately labeled. The regulations include requirements for establishing quality control procedures for usGX-Life and ourits vendors and suppliers, designing and constructing manufacturing plants, and testing ingredients and finished products. The regulations also include requirements for record keeping and handling consumer product complaints. If dietary supplements contain contaminants or do not contain the type or quantity of dietary ingredient they are represented to contain, the FDA would consider those products to be adulterated or misbranded.

OurGX-Life’s business isand products are subject to additional FDA regulations, such as those implementing an adverse event reporting system (“AER’s”), which requires usGX-Life to document and track adverse events and report serious adverse events, which are events involving hospitalization or death, associated with consumers’ use of ourGX-Life’s products.

Most of ourGX-Life’s major markets also regulate advertising and product claims regarding the efficacy of products. This is particularly true with respect to ourGX-Life’s dietary supplements because weGX-Life typically marketmarkets them as foods or health foods. For example, in the United States, we areGX-Life is unable to claim that any of ourits nutritional supplements will diagnose, cure, mitigate, treat or prevent disease. In the United States, the Dietary Supplement Health and Education Act, however, permits substantiated, truthful and non-misleading statements of nutritional support to be made in labeling, such as statements describing general well-being resulting from consumption of a dietary ingredient or the role of a nutrient or dietary ingredient in affecting or maintaining a structure or a function of the body. Most of the other markets in which we operateGX-Life operates have not adopted similar legislation, although weGX-Life may be subject to more restrictive limitations on the claims weit can make about ourits products in these markets.

U.S. Federal Commodities Regulation.Regulation

As a result of our business activities surroundingstrategic partnership with Great Coin and GX-Life's use of GX Coin as a component of the GX-Life Global Compensation Plan, it is possible that our Company and/or any one or more of our affiliates could be subject to regulation by the U.S. Commodity Futures Trading Commission (the “CFTC”), depending on the CFTC’s views of the regulation of crypto-currencies.cryptocurrencies. In such event, the trading platformGX Coin Platform, which will be managed by Great Coin, may be required to be registered as a “swap execution facility”, as such term is defined by the Commodity Exchange Act, and we and/or one or more of our affiliates may be required to register with the CFTC.

Moreover, the CFTC retains enforcement authority over any contract or sale of any commodity in interstate commerce. Because the definition of "commodity" under the Commodity Exchange Act includes cryptocurrencies, the CFTC retains broad antifraud and anti-manipulation enforcement authority with respect to GX Coin transactions.

Except with respect to the CFTC's broad antifraud and anti-manipulation enforcement authority (discussed above), "spot" or "cash" contracts for commodities (including cryptocurrencies) are generally beyond the regulatory scope of the CFTC, so long as such contracts result in the immediate sale and delivery of the commodity. How the CFTC views what constitutes "actual delivery" in the context of cryptocurrencies is still a developing area of law and regulation. As a result, the CFTC's regulatory and enforcement authority and scope with respect to cryptocurrencies is still a moving target and subject to change as the market and the regulatory oversight landscape develops.

Money Transmitter Laws.

As a result of our business activities surrounding GreatGX-Life’s use of GX Coin and GX Coin,in connection with the GX-Life Global Compensation Plan, our Company and/or any one or more of our affiliates may have to register with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network, or FinCEN as a “moneymoney services business”,business, as such term is defined under applicable FinCEN regulations, and obtain state money transmitter (or its equivalent) licenses, as required by the relevant state laws.

Other Regulatory Issues

As a United States entity selling in foreign jurisdictions, we areGX-Life and/or the Company is subject to foreign exchange control, transfer pricing, and custom laws that regulate the flow of funds between our subsidiaries and use for product purchases, management services and contractual obligations, such as the payment of member commissions. As is the case with most companies that operate in ourGX-Life’s product categories, weGX-Life might receive inquiries from time to time from government regulatory authorities regarding the nature of ourits business and other issues, such as compliance with local direct selling, transfer pricing, customs, taxation, foreign exchange control, securities and other laws.

Effect of Governmental Regulations

GX-Life is subject to general business and governmental regulations and laws relating to its business and products. Existing and future laws and regulations may impede the products that GX-Life sells to its consumers. These regulations and laws may cover items such as: e-commerce, product labeling, product ingredients, pricing, distribution, reporting, consumer protections, and other similar regulations. Unfavorable outcomes of these issues may negatively impact the Company’s business and results of operations.

Product Warranties and Returns – Consumer Products

Our

GX-Life's refund policies and procedures closely follow industry and country-specific standards, which vary greatly by country. For example, in the United States, the Direct Selling Association recommends that direct sellers permit returns during the twelve-month period following the sale, while in Hong Kong the standard return policy is 14 days following the sale. OurGX-Life's return policies typically conform to local laws or the recommendation of the local direct selling association. In most cases, membersGX-Life Members who timely return unopened product that is in resalable condition may receive a refund. The amount of the refund may be dependent on the country in which the sale occurred, the timeliness of the return, and any applicable re-stocking fee. However, membersGX-Life Members must notify usGX-Life about any product returns in writing, and such returns may lead to the member’sGX-Life Member’s termination or a reduction in the member’s status pointsGX-Life Member’s commissions with our Company.GX-Life. Furthermore, weGX-Life may alter ourits return policy in response to special circumstances from time to time.

EB-5 INVESTMENTS

Global Future City Regional LLC is an EB-5 Regional Center approved by the USCIS. As an EB-5 Regional Center, we intend to attract and pool investments from qualified foreign investors for the purpose of job creation within a defined geographic region. Each investor is required to demonstrate that at least 10 new jobs are to be created or saved as a result of the EB-5 investment, which must be a minimum $500,000 if the funds are invested and are at “risk” in certain high-unemployment or rural areas.

As of the filing date of this report, we have initiated the review of projects which may meet the EB-5 requirements but have not yet selected an EB-5 investment project that meets our internal criteria.

Our Industry

We are engaged in the network and direct selling industry, selling wellness, herbal, beauty, lifestyle and home products. More specifically, we are engaged in what is called network marketing. This type of organizational structure and approach to marketing and sales include companies selling lifestyle enhancement products, skin-care products, nutrition supplements, energy and tea products, and the intend to increase its healthy life-style consumer products overtime. Generally, direct selling is based upon an organizational structure in which independent members purchasing a company’s products are compensated for sales made directly to consumers.

Our standard members are compensated based on the sale of certain products, while VIP members are compensated based on sales generated by members they have enrolled and all subsequent members enrolled by their “down-line” network of members. The experience of the network and direct selling industry has been that once a sizeable network of members is established, new and alternative products and services can be offered to those members for sale to consumers and additional members.

Competition

Competition

The direct sellingWe compete with many organizations including companies in the direct-selling and/or network marketing industryindustry. These include very diverse companies, with giant multinational corporations as well as smaller, local operators competing amongst each other. Bigger companies include Nu Skin Enterprises, Inc., USANA Health Sciences, Inc., and Herbalife, Ltd, which have much greater name recognition and financial resources than we doGX-Life does and also have many more members. These companies are publicly traded and therefore serve as informational benchmarks, but we do not overlap with them in termstraded. GX-Life faces significant competition from a wide variety of marketplace or product range. While many medium and small-sized privately held companies, many of whom compete directly with GX-Life. With the exception of GX-Life’s tea products, all cosmetic, nutrition, supplement, and energy drink products are closer to directly competing with us at this time, we servemade in the marketplace with MADE IN USAUnited States. GX-Life believes that the distribution of these “Made in USA” products which we believegives it a competitive advantage over its peers that do not distribute such products because GX-Life believes that these products are in great demand in the Chinese, Taiwanese and Hong Kong markets. As we grow, we believe we have anFurthermore, GX-Life believes that incorporating GX Coins into the GX-Life Global Compensation Plan gives GX-Life a competitive advantage because it differentiates and distinguishes GX-Life from other competing businesses that do not offer GX Coins or similar types of being a wholly-owned subsidiary of a publicly traded company in the United States.programs.

OurGX-Life's ability to compete with other companies depends, in significant part, on ourGX-Life's success in attracting and retaining members.customers to its products. There can be no assurance that our programs for attracting and retaining members will be successful. The pool of individuals interested in our business model is limited in each market, and it is further reduced to the extent that other companies successfully attract these individuals into their businesses. Although we believe that we offer an attractive opportunity for our members, there can be no assurance that other companies will not be able to recruit our existing members or deplete the pool of potential members in a given market.

Furthermore, the network and direct selling channel tends to sell products at a higher price compared to traditional retailers, which poses a degree of competitive risk. Once again, our competitive advantage lies in our skin-care, nutrition, and energy product being manufactured to standards required in the United States which commands a higher price particularly in countries that do not have a system similar to the U.S. to apply and monitor manufacturing standards on these products. However, there is no assurance that we would continueGX-Life will be able to compete effectively against retail stores, internet-based retailers, or other direct sellers.sellers, no matter which sales avenue is used.

Moving ForwardEB-5 Operations

Although

Acquisition of Global Future City Regional Center, LLC (f/k/aPowerdyne Regional Center, LLC)

On March 27, 2015, we planclosed on our acquisition of what became Global Future City Regional Center, LLC, an EB-5 Regional Center (USCIS ID Number 1215250671) that was approved by the USCIS on March 28, 2013. The closing (“Closing”) of the Membership PSA occurred on March 27, 2015. We intended on generating revenue in this line of business by collecting management fees for overseeing the development of a qualified investment project. We were never able to expand our reach and operations by usingfind an EB-5 investment project that met our internal resources,criteria and, given the difficulties caused by Mr. Liu’s alleged actions, our investment in the Regional Center became significantly impaired. Consequently, we also intend to utilize external resources as well. For instance, we use (and will continue to use) iMatrix’s software,have abandoned this line of business and are pursuing a company that provides comprehensive software solutions to manage direct sales marketing programs. We also intend to rely on Global Access, a strategic partner that helps us with cross-border e-commerce technology and shipping solutions. We believe that these third party vendors will help expand our operations, but also provide overhead and cost flexibility with their respective service area expertise.

Intellectual Property

We currently ownbuyer for the trademarks to: (i) “F.I.T.T. Energy” (U.S. Registration No. 4240806), (ii) “F.I.T.T. Energy” (U.S. Registration No. 4115809), and (iii) “Throw A F.I.T.T” (U.S. Registration No. 4462991).Regional Center.

Employees

As of the date of this Report, we employ 10 persons, all of whom are full-time.  We retain independent contractors as needed.  Our employees are not represented by a labor union and we believe that our employee relations are satisfactory.

ITEM 1A.       RISK FACTORS

An investment in our common stock involves a high degree of risk. You should carefully consider the following risk factors and the other information in this Annual Report on Form 10-K before investing in our common stock. Our business and results of operations could be seriously harmed by any of the following risks. The risks set out below are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. If any of the following events occur, our business, financial condition and results of operations could be materially adversely affected. In such case, the value and trading price of our common stock could decline, and you may lose all or part of your investment.

RISKS RELATED TO OUR COMPANY, BUSINESS AND INDUSTRY

Risks Related to GX-Life Global

Government regulation of the Internet and e-commerce is evolving, and unfavorable changes could substantially harm our business and results of operations.

We will be subject to general business regulations and laws as well as Federal and state regulations and laws specifically governing the Internet and e-commerce. Existing and future laws and regulations may impede the growth of the Internet, e-commerce or other online services, and increase the cost of providing online services. These regulations and laws may cover sweepstakes, taxation, tariffs, user privacy, data protection, pricing, content, copyrights, distribution, electronic contracts and other communications, consumer protection, broadband residential Internet access and the characteristics and quality of services. It is not clear how existing laws governing issues such as property ownership, sales, use and other taxes, libel and personal privacy apply to the Internet and e-commerce. Unfavorable resolution of these issues may harm our business and results of operations.

We could be harmed by data loss or other security breaches.

As a result of our services being web-based and the fact that we may process, store and transmit large amounts of data, including personal information, for our customers, failure to prevent or mitigate data loss or other security breaches, including breaches of our vendors’ technology and systems, could expose us or our customers to a risk of loss or misuse of such information, adversely affect our operating results, result in litigation or potential liability for us and otherwise harm our business. We will use third party technology and systems for a variety of reasons, including, without limitation, encryption and authentication technology, employee email, content delivery to customers, back-office support and other functions. Although we have developed systems and processes that are designed to protect customer information and prevent data loss and other security breaches, including systems and processes designed to reduce the impact of a security breach at a third party vendor, such measures cannot provide absolute security.

We face risks related to system interruption and lack of redundancy.

We may experience occasional system interruptions and delays that make our websites and services unavailable or slow to respond and prevent us from efficiently fulfilling orders or providing services to third parties, which may reduce our net sales and the attractiveness of our products and services. If we are unable to continually add software and hardware, effectively upgrade our systems and network infrastructure and take other steps to improve the efficiency of our systems, it could cause system interruptions or delays and adversely affect our operating results.

Our computer and communications systems and operations could be damaged or interrupted by fire, flood, power loss, telecommunications failure, earthquakes, acts of war or terrorism, acts of God, computer viruses, physical or electronic break-ins, and similar events or disruptions. Any of these events could cause system interruption, delays, and loss of critical data, and could prevent us from accepting and fulfilling customer orders and providing services, which could make our product and service offerings less attractive and subject us to liability. Our systems are not fully redundant and our disaster recovery planning may not be sufficient. In addition, we may have inadequate insurance coverage to compensate for any related losses. Any of these events could damage our reputation and be expensive to remedy.

We face inventory risk.

We will be exposed to inventory risks that may adversely affect our operating results as a result of seasonality, limitations on shelf-life, new product launches, rapid changes in product cycles and pricing, defective merchandise, changes in consumer demand and consumer spending patterns, changes in consumer tastes with respect to our products and other factors. We endeavor to accurately predict these trends and avoid overstocking or understocking products we manufacture and/or sell. Demand for products, however, can change significantly between the time inventory or components are ordered and the date of sale. In addition, when we begin selling or manufacturing a new product, it may be difficult to establish vendor relationships, determine appropriate product or component selection, and accurately forecast demand. The acquisition of certain types of inventory or components may require significant lead-time and prepayment and they may not be returnable. We carry a broad selection and sizeable inventory levels of certain products, such as consumer electronics, and we may be unable to sell products in sufficient quantities or during the relevant selling seasons. Any one of the inventory risk factors set forth above may adversely affect our operating results.

Our supplier relationships subject us to a number of risks.

We may have significant suppliers, including licensors, and in some cases, limited or single-sources of supply, that are important to our sourcing, services, manufacturing, and any related ongoing servicing of merchandise and content. We do not have long-term arrangements with most of our suppliers to guarantee availability of merchandise, content, components or services, particular payment terms, or the extension of credit limits. If our current suppliers were to stop selling or licensing merchandise, content, components or services to us on acceptable terms, or delay delivery, including as a result of one or more supplier bankruptcies due to poor economic conditions, as a result of natural disasters or for other reasons, we may be unable to procure alternatives from other suppliers in a timely and efficient manner and on acceptable terms, or at all.

We may be subject to product liability claims if people or properties are harmed by the products we sell.

Some of the products we sell or manufacture may expose us to product liability claims relating to personal injury, death, or environmental or property damage, and may require product recalls or other actions. Certain third parties also sell products using our e-commerce platform that may increase our exposure to product liability claims, such as if these sellers do not have sufficient protection from such claims. Although we maintain liability insurance, we cannot be certain that our coverage will be adequate for liabilities actually incurred or that insurance will continue to be available to us on economically reasonable terms, or at all. In addition, some of our agreements with our vendors and sellers do not indemnify us from product liability.

We are subject to payments-related risks.

We accept payments using a variety of methods, including credit card, debit card, credit accounts (including promotional financing), gift certificates, direct debit from a customer’s bank account, consumer invoicing, physical bank check and payment upon delivery. As we offer new payment options to our customers, we may be subject to additional regulations, compliance requirements, and fraud. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability. We rely on third parties to provide payment processing services, including the processing of credit cards, debit cards, electronic checks, and promotional financing, and it could disrupt our business if these companies become unwilling or unable to provide these services to us. We are also subject to payment card association operating rules, including data security rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with these rules or requirements, or if our data security systems are breached or compromised, we may be liable for card issuing banks’ costs, subject to fines and higher transaction fees and lose our ability to accept credit and debit card payments from our customers, process electronic funds transfers, or facilitate other types of online payments, and our business and operating results could be adversely affected. We also offer co-branded credit card programs that represent a significant component of our services revenue. If one or more of these agreements are terminated and we are unable to replace them on similar terms, or at all, it could adversely affect our operating results.

Risks Related to our EB-5 Program

The failure of the EB-5 investor to obtain a Visa following the Regional Center investment may cause problems to our business and reputation and open our Company up to litigation.

After investing with our Company’s EB-5 Regional Center, there is the risk that a specific project does not qualify an investor for the EB-5 Visa. The I-829 application may be denied. There are several possible reasons for the denial of the application:

Each of the above factors, if not carefully monitored by our Company, could result in the denial of an investor’s EB-5 visa application. The denial exposes us to litigation risks and could have a long-term impact on the viability, reputation and ultimate success of our business.

Certain investment projects operated by our Regional Center could be unsuccessful, go into bankruptcy or fail to become fully operational resulting in a loss of the Investor’s principal which may cause problems to our business and reputation and open us up to litigation.

Even if an investor successfully obtains an EB-5 Visa in this process, there is still investment risk associated with the EB-5 Program. Each investor contributes a significant amount of capital that is deployed by our Company into various real estate and business investments. The inherent risk of an investment of this nature may result in investor’s capital not being returned, either in part or in full. There are several possible reasons for a failure to return investor capital:

Each of the above factors, if not carefully monitored by our Company, could result in the failure of the Regional Center’s projects. The failure of the investment, as with any business enterprise, exposes us to litigation risks and could have a long-term impact on the viability, reputation and ultimate success of our business.

We are exposed to the risks resulting from real estate ownership, which could increase our costs, reduce our profitability and limit our ability to respond to market conditions.

The EB-5 program’s assets will consist of real property and other qualified investment projects. Our real estate ownership subjects us to additional risks not applicable to our GX-Life business, including:

Economic and other conditions may materially adversely affect the valuation of our real estate properties resulting in impairment that could have a material adverse effect on our business, results of operations and earnings.

Our EB-5 program will likely hold goodwill, intangible assets and a significant amount of long-lived assets. We evaluate our tangible and intangible assets annually for impairment, or more frequently based on various triggers, including when a property has current or projected operating losses or when other material trends, contingencies or changes in circumstances indicate that a triggering event has occurred, such that an asset’s value may not be recoverable. During times of economic distress, declining demand and declining earnings often result in declining asset values. As a result, we have incurred and we may in the future incur impairment charges, which in the future could be material and adversely affect our results of operations and earnings. The resulting decline in our EB-5 business may then have a substantial negative impact on the operating results of our Companysmaller reporting company as a whole which would likely result in a decrease of our stock price.

General Risks Related to our Company

Our management and certain of our affiliates may have certain conflicts of interest in connection with the management of our business affairs, including, but not limited to, the following: 

Unfavorable economic conditions or other factors may affect our ability to raise capital or the performance of our subsidiaries.

Unfavorable economic conditions or other factors could increase our funding costs, limit our access to the capital markets, or result in a decline in the financial performance of our subsidiaries. An inability to successfully access the capital markets could limit our ability to grow our business and fully execute our business strategy and could decrease our earnings, if any.

There is a risk that investors in our common stock may not receive distributions or that our distributions may not grow over time.

We intend to make distributions to our stockholders out of assets legally available for distribution. We cannot assure you that we will achieve investment results that will allow us to make a specified level of cash distributions or year-to-year increases in cash distributions.

We may not be able to compete successfully with other established companies offering the same or similar services and, as a result, we may not achieve our projected revenue and capital appreciation targets.

If we are unable to compete successfully with other businesses in our existing market, we may not achieve our projected revenue and/or user targets. We compete with both start-up and established companies. Compared to our business, some of our competitors may have greater financial and other resources, have been in business longer, have greater name recognition and be better established in the market.

If we have material weaknesses in the financial reporting of our company, it may cause us to restate our financial statements in the event such weaknesses are determined to not be acceptable to financial reporting requirements.

While our review of material weaknesses is ongoing, if we discover any weaknesses that could cause us to have to restate our financial statements, this could cause us to expend additional funds that would have a material impact on our ability to generate profits and on the profits of our business.

The failure to enforce and maintain our intellectual property rights could enable others to use names confusingly similar to our branded products and services and other names and marks useddefined by our business, which could adversely affect the valueRule 12b-2 of the brand.

The successSecurities Exchange Act of our business depends on our continued ability to use our existing trade name in order to increase our brand awareness. In that regard, we believe that our trade name is valuable asset that is critical to our success. The unauthorized use or other misappropriation of our trade name could diminish the value of our business concept1934 and may cause a decline in our revenue.

Any new indebtedness may adversely affect our financial condition, results of operations, limit our operational and financing flexibility and negatively impact our business.

Any revolving credit facility, and other debt instruments we may enter into in the future, may have negative consequences to our business, including butare not limited to the following:

We expect that we will depend primarily upon invested capitalrequired to provide funds to pay our expenses and to pay any amounts that may become duethe information under any new credit facility and any other indebtedness we may incur. Our ability to make these payments depends on our future performance, which will be affected by various financial, business, economic and other factors, many of which we cannot control.this item.

We depend on the services of key executives, the loss of who could materially harm our business and our strategic direction if we were unable to replace them with executives of equal experience and capabilities.

Our senior executives are important to our success because they are instrumental in setting our strategic direction, operating our business, identifying expansion opportunities and arranging any necessary financing. Losing the services of key executives could adversely affect our business until suitable replacements could be found. We do not maintain key person life insurance policies on any of our executives.

We expect to incur substantial expenses to meet our reporting obligations as a public company. In addition, failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting and could harm our ability to manage our expenses.

We estimate that it will cost approximately $60,000 annually to maintain the proper management and financial controls for our filings. In addition, if we do not maintain adequate financial and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, which could cause a decline in our stock price and adversely affect our ability to raise capital.

ITEM 1B.       UNRESOLVED STAFF COMMENTS

None.

ITEM 2.          PROPERTIES

We do not own any real property. Our principal executive offices are located at 2 Park Plaza, Suite 400, Irvine, CA 92614 where we are leasing approximately 5,824 square feet of office space. After completion of tenant improvements in January 2016, the lease commenced with a minimum term of 60 months and requires the following minimum annual payments, excluding property taxes and other common area costs: months 1 through 12 - $176,112; months 13 through 24 - $183,804; months 25 through 36 - $192,192; months 37 through 48 - $200,580; and months 49 through 60 - $209,664. As we have out-sourced manufacturing and product fulfillment, including product storage, we consider our leased office space adequate for the operation of our business.

ITEM 3.          LEGAL PROCEEDINGS

Kevin McAllister

On June 3, 2016 (the “Filing Date”), Kevin McAllister (“Claimant”) filed a claim against the Company and its CFO and director, Michael Dunn, as an individual (collectively, the “Defendants”), for (i) breach of contract and (ii) fraud with the Superior Court of California, County of Orange, in Santa Ana, California. Claimant alleges that he entered into a written contract, a convertible promissory note (the “McAllister Note”), with the Company on or around December 4, 2014, but that the Company breached the McAllister Note by failing to make certain payments owed to Claimant under the terms of the note. Claimant is also alleging that Defendants agreed to perform its duties under the McAllister Note, but because Defendants have not performed or paid Claimant yet, Claimant alleges that Defendants never intended to pay the amounts owed under the McAllister Note. Furthermore, Claimant alleges that the Company has misrepresented information in its financial statements that the McAllister Note (and other debt), has or will be paid, when the Company allegedly refuses to pay such note (and other debt). Claimant is seeking approximately $182,583 in damages as well as costs of collection, attorney’s fees, punitive damages, and expenses.

On June 30, 2016, the Claimant and Defendants entered into a settlement agreement (the “Settlement Agreement”) whereby the Company agreed to pay Claimant $160,000 (the “Settlement Amount”) in full satisfaction of any and all claims related to the Action. The Settlement Amount was paid to Claimant on July 1, 2016. On July 7, 2016, a Request for Dismissal to dismiss the entire Action against the Defendants from all causes of action was filed with prejudice in the Superior Court of California, County of Orange, in Santa Ana, California. Although the Company settled the Action with Claimant, the Company believes that Claimant’s lawsuit was without merit.

Xinai Zhao re: Ning Liu

On September 29, 2016, Xinai Zhao (“Plaintiff”) filed a complaint (the “Complaint”) against Mr. Ning Liu, the Company’s former Chief Executive Officer, President, and Chairman of the Board, Grand Opus Co., Ltd., a California corporation, Goldenrise Development, Inc., a California corporation, and the Company (collectively, the “Defendants”) in the Superior Court of the State of California, County of Los Angeles (Central District) and is seeking to recover no less than $212,993 in damages.

The Complaint alleges, among other things, that in 2009 Mr. Liu sold a total of 150,000 shares in three separate Chinese companies, and 200,000 shares in China Yongxin Pharmaceuticals Inc. (“CYXN”), a Delaware corporation, to the Plaintiff under false and misleading information. The Complaint also alleges that after CYXN’s stock was suspended and delisted on the Nasdaq Smallcap Market, Mr. Liu provided Plaintiff with 100,000 shares of the Company’s common stock (the “Shares”) around June 2016 to help recoup her losses in these investments.

The Company believes that the Complaint has no merit as it pertains to the Company because (i) the Company never sold the Shares to the Plaintiff, (ii) the Shares were gifted to the Plaintiff by Mr. Liu to help recoup her losses, (iii) the Company is not Mr. Liu’s alter ego, and (iv) the Plaintiff’s claims stem from the sole actions of Mr. Liu prior to serving as a director and officer of the Company. As previously discussed, Mr. Liu has resigned as the Company’s Chief Executive Officer, President, and Chairman of the Board on October 21, 2016.

PRC vs. Ning Liu

On August 30, 2016, we reported on Form 8-K that our former Chief Executive Officer (“CEO”), President, and Chairman of the Board of Directors, Ning Liu, was detained in the People’s Republic of China (“PRC”). On October 21, 2016, because of his ongoing legal challenges in the PRC, Mr. Liu resigned from all his positions in our Company. Mr. Liu continues to be detained in the PRC. The charges against Mr. Liu are personal to him and our Company is in no way named as a defendant or subject to the charges. We have been informed by Mr. Liu’s attorney in the PRC that, on March 2, 2017, he was convicted in Hunan province for violations of the PRC’s multi-level marketing regulations and sentenced to 10 years in prison. We have likewise been informed by Mr. Liu’s attorney that he has an appeal hearing scheduled in Hunan Province in the near future and, if he is unsuccessful in that hearing, he can appeal to a national court in Beijing, China.

From time to time, our Company may become subject to various legal proceedings that are currently not a partyincidental to and nonethe ordinary conduct of our property isbusiness. Although we cannot accurately predict the subjectamount of any liability that may ultimately arise with respect to any of these matters, we make provisions for potential liabilities when we deem them probable and reasonably estimable.

Other than as disclosed herein, we know of no material, existing or pending legal proceedings. To our knowledge, no governmental authority is contemplating any such proceedings against us.our company, nor are we involved as a plaintiff in any material proceeding or pending litigation and there are no proceedings in which our directors, officers or any affiliates, or any registered or beneficial shareholder is an adverse party or has a material interest adverse to our interest.

ITEM 4.           MINE SAFETY DISCLOSURES

Not applicable.

PART II

ITEM 5.          MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market Information

Our common stock is currently quoted under the symbol “FTCY” on the OTCQB marketplace.  The following table reflects on a per share basis the reported high and low bid prices of our Common Stock for each quarter for the period indicated as reported by the OTCQB.  Such prices are inter-dealer prices without retail mark-up, mark-down, or commission and may not represent actual transactions.

YEAR ENDED DECEMBER 31, 2016