Castle Brands Inc.
Annual Report 2015

Plain-text annual report

CASTLE BRANDS INC FORM 10-K (Annual Report) Filed 06/15/15 for the Period Ending 03/31/15 Address Telephone CIK 122 EAST 42ND STREET SUITE 4700 NEW YORK, NY 10168 646-356-0200 0001311538 Symbol ROX SIC Code Industry 2080 - Beverages Beverages (Alcoholic) Sector Consumer/Non-Cyclical Fiscal Year 03/31 http://www.edgar-online.com © Copyright 2015, EDGAR Online, Inc. All Rights Reserved. Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use. z UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended March 31, 2015 or (cid:3) 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 001-32849 Castle Brands Inc. (Exact name of registrant as specified in its charter) Registrant’s telephone number, including area code (646) 356-0200 Securities registered pursuant to Section 12(b) of the Act: Securities registered pursuant to Section 12(g) of the Act: None. Indicate by check mark whether the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes (cid:3) No (cid:4) Indicate by check mark whether the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes (cid:3) No (cid:4) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (cid:4) No (cid:3) 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 (§229.405 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 (cid:4) No (cid:3) 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, 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. (cid:4) Indicate by check mark whether the registrant is a large accelerated filer, 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. Florida 41-2103550 (State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.) 122 East 42nd Street, Suite 4700 New York, New York 10168 (Address of principal executive offices) (Zip Code) Title of Each Class Name of Each Exchange on Which Registered Common stock, $0.01 par value NYSE MKT (cid:3) Large accelerated filer  Accelerated filer (cid:3) Non-accelerated filer (cid:3) Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes (cid:3) No (cid:4) The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant based on the September 30, 2014 closing price was approximately $86,400,000 based on the closing price per share as reported on the NYSE MKT on such date. The registrant had 157,781,544 shares of common stock outstanding at June 15, 2015. EXPLANATORY NOTE The registrant met the accelerated filer requirements as of the end of the fiscal year ended March 31, 2015 pursuant to Rule 12b-2 of the Securities Exchange Act of 1934, as amended, or Exchange Act. However, pursuant to Rule 12b-2 and SEC Release No. 33-8876, the registrant (as a smaller reporting company transitioning to the larger reporting company system) is not required to satisfy the larger reporting company disclosure requirements until its first quarterly report on Form 10-Q for the fiscal year ending March 31, 2016. DOCUMENTS INCORPORATED BY REFERENCE Part III (Items 10, 11, 12, 13 and 14) of this annual report on Form 10-K is incorporated by reference from the definitive Proxy Statement for the 2015 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission no later than 120 days after the end of the registrant’s fiscal year covered by this report.  CASTLE BRANDS INC. FORM 10-K TABLE OF CONTENTS Page PART I 3 Item 1. Business 3 Item 1A. Risk Factors 11 Item 1B. Unresolved Staff Comments 16 Item 2. Properties 17 Item 3. Legal Proceedings 17 Item 4. Mine Safety Disclosures 17 PART II 17 Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities 17 Item 6. Selected Financial Data 18 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 29 Item 8. Financial Statements and Supplementary Data 30 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure 54 Item 9A. Controls and Procedures 54 Item 9B. Other Information 56 PART III 57 Item 10. Directors, Executive Officers and Corporate Governance 57 Item 11. Executive Compensation 57 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters 57 Item 13. Certain Relationships and Related Transactions, and Director Independence 57 Item 14. Principal Accounting Fees and Services 57 PART IV 57 Item 15. Exhibits, Financial Statement Schedules 57 SIGNATURES 61  PART I Item 1. Business Overview We develop and market premium and super premium brands in the following beverage alcohol categories: rum, whiskey, liqueurs, vodka and tequila. We distribute our products in all 50 U.S. states and the District of Columbia, in thirteen primary international markets, including Ireland, Great Britain, Northern Ireland, Germany, Canada, Israel, Bulgaria, France, Finland, Norway, Sweden, Denmark, China and the Duty Free markets, and in a number of other countries. We market the following brands, among others: Our brands We market the premium and super premium brands listed below. Gosling’s rum and ginger beer . We are the exclusive U.S. distributor for Gosling’s rums, including Gosling’s Black Seal Dark Rum, Gosling’s Gold Bermuda Rum and Gosling’s Old Rum. The Gosling family produces these rums in Bermuda, where Gosling’s rums have been under continuous production and ownership by the Gosling family for over 200 years. We hold a 60% controlling interest in Gosling-Castle Partners Inc., a global export venture between us and the Gosling family. Gosling-Castle Partners has the exclusive long-term export and distribution rights for the Gosling’s rum products for all countries other than Bermuda. The Gosling’s rum brands accounted for approximately 30% and 34% of our revenues for our 2015 and 2014 fiscal years, respectively. We also distribute Gosling’s Stormy Ginger Beer, an essential non-alcoholic ingredient in Gosling’s trademarked Dark ‘n Stormy ® rum cocktail and the Gosling's Dark ‘n Stormy ® cocktail in a ready-to-drink can. Jefferson’s bourbons and rye whiskey . We develop and market four premium, very small batch bourbons: Jefferson’s, Jefferson’s Reserve, Jefferson’s Ocean Aged at Sea and Jefferson’s Presidential Select. Each of these four distinct premium Kentucky bourbons is blended in batches using select barrels of certain mash bills and ages to produce specific flavor profiles. We also market Jefferson's Straight Rye Whiskey, a premium whiskey distilled from 100% North American rye, Jefferson’s Chef’s Collaboration, a blend of bourbon and rye, and Jefferson’s The Manhattan: Barrel Finished Cocktail, a ready-to-drink cocktail. Pallini liqueurs . We have the long-term exclusive U.S. distribution rights (excluding duty free sales) for Pallini Limoncello and its related brand extensions. Pallini Limoncello is a premium lemon liqueur, which is served iced cold, on the rocks or as an ingredient in a wide variety of drinks, ranging from martinis to iced tea. It is also used in cooking, particularly for pastries and cakes. Pallini Limoncello is crafted from an authentic family recipe. It is made with Italy’s finest Sfusato Amalfitano lemons that are hand-selected for optimal freshness and flavor. There are two other flavor extensions of this Italian liqueur: Pallini Peachcello, made with white peaches, and Pallini Raspicello, made from a combination of raspberries and other berries. • Gosling’s rum ® • Gosling’s Stormy Ginger Beer • Gosling’s Dark ‘n Stormy ® ready-to-drink cocktail • Jefferson’s ® bourbon • Jefferson’s Reserve ® • Jefferson’s Ocean Aged at Sea ® • Jefferson’s The Manhattan: Barrel Finished Cocktail • Jefferson’s Chef’s Collaboration • Jefferson's Presidential Select™ • Jefferson’s Rye whiskey • Pallini ® liqueurs • Clontarf ® Irish whiskey • Knappogue Castle Whiskey ® • Brady's ® Irish Cream • Boru ® vodka • Tierras™ tequila • Celtic Honey ® liqueur • Castello Mio ® sambuca • Gozio ® amaretto 3  Clontarf Irish whiskeys . Our family of Clontarf Irish whiskeys currently represents a majority of our case sales of Irish whiskey. Clontarf, an accessible and smooth premium Irish whiskey, is distilled using quality grains and pure Irish spring water. Clontarf is then aged in bourbon barrels and mellowed through Irish oak charcoal. Clontarf is available in single malt and classic versions. Knappogue Castle whiskies . We developed our Knappogue Castle Whiskey, a single malt Irish whiskey, to build on both the popularity of single malt Scotch whisky and the growth in the Irish whiskey category. Knappogue Castle Whiskey is distilled in pot stills using malted barley and is aged twelve years. We have introduced Knappogue Twin Wood, the first Sherry Finished Knappogue Castle Whiskey. The whiskey is matured for sixteen years in two types of wood resulting in a perfectly balanced single malt Irish whiskey with a complex, rich taste and a slightly sweet sherry finish. Knappogue Castle 1951 is a pure pot-still whiskey that was distilled in 1951 and then aged for 36 years in sherry casks. The name comes from an Irish castle, formerly owned by Mark Edwin Andrews, the originator of the brand and the father of Mark Andrews, our chairman. Brady’s Irish Cream liqueurs . Brady’s Irish Cream, a high quality Irish cream, is made in small batches using Irish whiskey, dairy fresh cream and natural flavors. Boru vodka . Boru vodka, a premium vodka produced in Ireland, was developed in 1998 and is named after the legendary High King of Ireland, Brian Boru, who united the Irish clans and drove foreign invaders out of Ireland. It is five-times distilled using pure spring water for smoothness and filtered through ten feet of charcoal made from Irish oak for increased purity. Celtic Honey liqueur . Celtic Honey is a premium brand of Irish liqueur that is a unique combination of Irish spirits, cognac and a taste of honey. Gaelic Heritage Corporation Limited, an affiliate of one of our bottlers, has the exclusive rights to produce and supply us with Celtic Honey. Castello Mio sambucas. In May 2013, we introduced Castello Mio, a super premium sambuca. Castello Mio Sambuca is made by Brotto Distilleries S.r.L. (“Brotto”), a family company with a tradition of crafting fine liqueurs in the Veneto region of Italy since the 1800’s, and is available in the “classico” style as well as espresso. Tierras tequila s . “Tequila Tierras Autenticas de Jalisco”™ or “Tierras” is an organic, super-premium, USDA certified organic tequila and is available as blanco, reposado and añejo. We are the exclusive U.S. importer and marketer of Tierras. Gozio amaretto . In 2011, we became the exclusive U.S. distributor for Gozio amaretto, which is made from a secret recipe that combines selected fruits from four continents. Our strategy Our objective is to continue building Castle Brands into a profitable international spirits company, with a distinctive portfolio of premium and super premium spirits brands. To achieve this, we continue to seek to: Production and supply There are several steps in the production and supply process for beverage alcohol products. First, all of our spirits products are distilled. This is a multi-stage process that converts basic ingredients, such as grain, sugar cane or agave, into alcohol. Next, the alcohol is processed and/or aged in various ways depending on the requirements of the specific brand. For our vodka, this processing is designed to remove all other chemicals, so that the resulting liquid will be odorless and colorless, and have a smooth quality with minimal harshness. Achieving a high level of purity involves a series of distillations and filtration processes. • focus on our more profitable brands and markets. We continue to focus our distribution efforts, sales expertise and targeted marketing activities on our more profitable brands and markets; • grow organically. We believe that continued organic growth will enable us to achieve long-term profitability. We focus on brands that have profitable growth potential and staying power, such as our rums and whiskies, sales of which have grown approximately 46% over the past two fiscal years; • build consumer awareness. We use our existing assets, expertise and resources to build consumer awareness and market penetration for our brands; • leverage our distribution network. Our established distribution network in all 50 U.S. states enables us to promote our brands nationally and makes us an attractive strategic partner for smaller companies seeking U.S. distribution; and • selectively add new brand extensions and brands to our portfolio. We intend to continue to introduce new brand extensions and expressions. For example, we have leveraged our successful Jefferson’s portfolio by introducing a number of brand extensions. We continue to explore strategic relationships, joint ventures and acquisitions to selectively expand our premium spirits portfolio. We expect that future acquisitions or agency relations, if any, would involve some combination of cash, debt and the issuance of our stock. 4  For our spirits brands, rather than removing flavor, various complex flavor profiles are achieved through one or more of the following techniques: infusion of fruit, addition of various flavoring substances, and, in the case of rums and whiskeys, aging of the brands in various types of casks for extended periods of time and the blending of several rums or whiskeys to achieve a unique flavor profile for each brand. After the distillation, purification and flavoring processes are completed, the various liquids are bottled. This involves several important stages, including bottle and label design and procurement, filling of the bottles and packaging the bottles in various configurations for shipment. We do not have significant investments in distillation, bottling or other production facilities or equipment. Instead, we have entered into relationships with several companies to provide those services to us. We believe that these types of arrangements allow us to avoid committing significant amounts of capital to fixed assets and permit us to have the flexibility to meet growing sales levels by dealing with companies whose capacity significantly exceeds our current needs. These relationships vary on a brand-by-brand basis as discussed below. As part of our ongoing cost-containment efforts, we intend to continue to review each of our business relationships to determine if we can increase the efficiency of our operations. Gosling’s rum and ginger beer Gosling’s rums have been produced by the Gosling’s family in Hamilton, Bermuda for over 200 years and, under our distribution arrangements with Gosling's Export (Bermuda) Limited (“Gosling’s Export”), they have retained the right to act as the sole supplier to Gosling-Castle Partners Inc. with respect to our Gosling’s rum requirements. Gosling's sources its rums in the Caribbean and transports them to Bermuda where they are blended according to proprietary recipes. The rums are then sent to Heaven Hill Distilleries, Inc.’s plant in Bardstown, Kentucky where they are bottled, packaged, stored and shipped to our third-party warehouse. In 2007, Gosling’s increased its blending and storage facilities in Bermuda to accommodate our supply needs for the foreseeable future. We believe Heaven Hill has ample capacity to meet our projected bottling needs for the foreseeable future. See “Strategic brand-partner relationships.” Our Gosling’s Stormy Ginger Beer is produced by Polar Beverages (“Polar”), the country’s largest independent soft-drink bottler, a fourth-generation, family-owned business that traces its roots back to 1882. Polar produces the ginger beer according to Gosling’s formula and requirements and cans and bottles the product at one of its facilities in the United States. We believe Polar has ample capacity to meet our projected needs for the foreseeable future. Knappogue Castle and Clontarf Irish whiskeys In 2012, we entered into two long-term supply agreements with Irish Distillers Limited (“IDL”), a subsidiary of Pernod Ricard, under which it has agreed to supply us with the aged single malt and grain whiskeys used in our Knappogue Castle whiskey products and all of our Clontarf Irish whiskey products. The first supply agreement provides for the production of blended Irish whiskeys for us until the contract is terminated by either party in accordance with the terms of the agreement. IDL may terminate the contract if it provides at least six years prior notice, except for breach. Under this agreement, we provide IDL with a forecast of the estimated amount of liters of pure alcohol we require for the next four fiscal contract years and agree to purchase that amount, subject to certain annual adjustments. The second supply agreement provides for the production of single malt Irish whiskeys for us until the contract is terminated by either party in accordance with the terms of the agreement. IDL may terminate the contract if it provides at least thirteen years prior notice, except for breach. Under this agreement, we provide IDL with a forecast of the estimated amount of liters of pure alcohol we require for the next twelve fiscal contract years and agree to purchase that amount, subject to certain annual adjustments. We are not obligated to pay for any product not yet received. The whiskeys are then sent to Terra Limited (“Terra”) in Baileyboro, Ireland, where they are bottled in bottles we designed and packaged for shipment. We believe that Terra, which also acts as bottler for certain of our Boru vodka and as producer and bottler of our Brady’s Irish Cream (and as bottler for Celtic Honey, which is supplied to us by one of Terra’s affiliates), has sufficient bottling capacity to meet our current needs, and both Terra and IDL have the capacity to meet our anticipated future supply needs. Terra provides intake, storage, sampling, testing, filtering, filling, capping and labeling of bottles, case packing, warehousing and loading and inventory control for our Knappogue Castle and Clontarf Irish whiskeys at prices that are adjusted annually by mutual agreement based on changes in raw materials and consumer price indexes increases up to 3.5% per annum. This agreement also provides for maintenance of product specifications and minimum processing procedures, including compliance with applicable food and alcohol regulations and maintenance, storage and stock control of all raw products and finished products delivered to Terra. Terra holds all alcohol on its premises under its customs and excise bond. Our bottling and services agreement with Terra will expire on June 30, 2015. We expect to continue to operate under the terms of the expiring contract as we negotiate a new agreement with Terra. We believe we could obtain alternative sources of bottling and services if we are unable to renew the existing Terra contract. Jefferson’s whiskeys Jefferson’s, Jefferson’s Reserve, Jefferson’s Ocean Aged at Sea and Jefferson’s Presidential Select bourbons, Jefferson’s Chef’s Collaboration blended bourbon and rye, Jefferson’s rye and Jefferson’s The Manhattan: Barrel Finished Cocktail are bottled for us by Luxco, Inc. (“Luxco”), in Cleveland, OH, from our stocks of aged bourbon and rye. We blend no more than eight to twelve barrels to produce specific flavor profiles of each of our bourbon products. Bourbon has been in short supply in the U.S. in recent years, and we have been actively seeking alternate sourcing for future supply. We have acquired stocks of aged bourbon, which we anticipate will supply our currently forecasted needs for the Jefferson’s brand, although there is no assurance we can source adequate amounts of bourbon or rye, if demand is greater than expected, at satisfactory prices. 5  Pallini liqueurs Pallini SpA ("Pallini"), as successor in interest to I.L.A.R. S.p.A., an Italian company based in Rome and owned since 1875 by the Pallini family, produces Pallini Limoncello, Raspicello and Peachcello. Pallini bottles the liqueurs at its plant in Rome and ships them to us under our long-term exclusive U.S. marketing and distribution agreement. We believe that Pallini has adequate facilities to produce and bottle sufficient Limoncello, Peachcello and Raspicello to meet our foreseeable needs. See “Strategic brand-partner relationships.” Boru vodka We have a supply agreement with Cargill Plc, a leading European producer of grain neutral spirits, to provide us with the distilled alcohol used in our Boru vodka. The supply agreement provides for Cargill to produce natural spirit for us with specified levels of alcohol content pursuant to specifications set forth in the agreement and at specified prices through its expiration in December 2015, in quantities designated by us. We believe that Cargill has sufficient distilling capacity to meet our needs for Boru vodka for the foreseeable future. In the event that we do not renew the Cargill agreement, we believe that we will be able to obtain grain neutral spirits from another supplier. The five-times distilled alcohol is delivered from Cargill to the bottling premises at Terra, where it is filtered in several proprietary ways, and pure water is added to achieve the desired proof. Depending on the size of the bottle, Boru vodka is then either bottled at Terra or shipped in bulk to the U.S. and bottled at Luxco, where we bottle certain sizes for the U.S. market. We believe that both Terra and Luxco have sufficient bottling capacity to meet our current needs, and both have the capacity to meet our anticipated future supply needs. As described above, our bottling and services agreement with Terra will expire on June 30, 2015. We expect to continue to operate under the terms of the expiring contract as we negotiate a new agreement with Terra. We believe we could obtain alternative sources of bottling and services if we are unable to renew the existing Terra contract. Brady’s Irish Cream Brady’s Irish Cream is produced for us by Terra. Fresh cream is combined with Irish whiskey, grain neutral spirits and various flavorings to our specifications, and then bottled by Terra in bottles designed for us. We believe that Terra has the capacity to meet our foreseeable supply needs for this brand. As described above, our bottling and services agreement with Terra will expire on June 30, 2015. We expect to continue to operate under the terms of the expiring contract as we negotiate a new agreement with Terra. We believe we could obtain alternative sources of bottling and services if we are unable to renew the existing Terra contract. Celtic Honey liqueur Gaelic Heritage Corporation Limited, an affiliate of Terra, has a contractual right to act as the sole supplier to us of Celtic Honey. Gaelic Heritage mixes the ingredients comprising Celtic Honey using a proprietary formula and then Terra bottles it for them in bottles designed for us. We believe that the necessary ingredients are available to Gaelic Heritage in sufficient supply and that Terra’s bottling capacity is currently adequate to meet our projected supply needs. See “Strategic brand-partner relationships.” Castello Mio sambucas Castello Mio sambucas are produced for us by Brotto in Carnuda, Italy. Grain neutral spirits, sugar and various natural flavor essences are combined to our specifications, and then bottled by Brotto in bottles designed for us. We believe that Brotto has the capacity to meet our foreseeable supply needs for this brand. Gozio amaretto We are the exclusive U.S. distributor for Gozio amaretto. Gozio amaretto is produced by Distillerie Franciacorta, a spirits company founded in 1901 and owned by the Gozio family. The company is located in Franciacorta, in the Italian Region of Lombardy. We believe that Distillerie Franciacorta has sufficient capacity to meet our foreseeable supply needs for this brand. Tierras tequila s Tierras Tequila Autenticas de Jalisco or “Tierras” is being produced for us in Mexico by Autentica Tequilera S.A. de C.V. Autentica Tequilera currently sources organic agave from third-parties, and together with its affiliates is in the process of cultivating its own supply of organic agave. Autentica Tequilera distills and bottles the tequila at its facility in the Jalisco region of Mexico. Tierras is available as blanco, reposado and añejo. The blanco is unaged, the reposado is aged in oak barrels at the distillery for up to one year, and the añejo is aged in oak barrels at the distillery for at least one year. We believe that, given the ability of Autentica Tequilera to purchase organic agave and its anticipated cultivation of organic agave, Autentica Tequilera has sufficient capacity to meet our foreseeable supply needs for this brand. Distribution network We believe that the distribution network that we have developed with our sales team and our independent distributors and brokers is one of our strengths. We currently have distribution and brokerage relationships with third-party distributors in all 50 U.S. states, as well as distribution arrangements in approximately 20 other countries. 6  U.S. distribution Background. Importers of beverage alcohol in the U.S. must sell their products through a three-tier distribution system. Typically, an imported brand is first sold to a U.S. importer, who then sells it to a network of distributors, or wholesalers, covering the U.S., in either “open” states or “control” states. In the 33 open states, the distributors are generally large, privately-held companies. In the 17 control states, the states themselves function as the distributor, and regulate suppliers such as us. The distributors and wholesalers in turn sell to individual retailers, such as liquor stores, restaurants, bars, supermarkets and other outlets licensed to sell beverage alcohol. In larger states such as New York, more than one distributor may handle a brand in separate geographical areas. In control states, importers sell their products directly to state liquor authorities, which distribute the products and either operate retail outlets or license the retail sales function to private companies, while maintaining strict control over pricing and profit. The U.S. spirits industry has consolidated dramatically over the last ten years due to merger and acquisition activity. There are currently eight major spirits companies, each of which own and operate their own importing businesses. All companies, including these large companies, are required by law to sell their products through wholesale distributors in the U.S. The major companies are exerting increasing influence over the regional distributors and as a result, it has become more difficult for smaller companies to get their products recognized by the distributors. We believe our established distribution network in all 50 states allows us to overcome a significant barrier to entry in the U.S. beverage alcohol market and enhances our attractiveness as a strategic partner for smaller companies lacking comparable distribution. For fiscal 2015, our U.S. sales represented approximately 86.2% of our revenues, and we expect them to remain relatively consistent as a percentage of our total sales in the near future. See note 16 to our accompanying consolidated financial statements. Importation. We currently hold the federal importer and wholesaler license required by the Alcohol and Tobacco Tax and Trade Bureau of the U.S. Treasury Department, and the requisite state license in all 50 states and the District of Columbia. Our inventory is strategically maintained in large bonded warehouses and shipped nationally by an extensive network of licensed and bonded carriers. Wholesalers and distributors. In the U.S., we are required by law to use state-licensed distributors or, in the control states, state-owned agencies performing this function, to sell our brands to retail outlets. As a result, we depend on distributors for sales, for product placement and for retail store penetration. We currently have no distribution agreements or minimum sales requirements with any of our U.S. alcohol distributors, and they are under no obligation to place our products or market our brands. All of the distributors also distribute our competitors’ products and brands. As a result, we must foster and maintain our relationships with our distributors. Through our internal sales team, we have established relationships for our brands with wholesale distributors in each state, and our products are currently sold in the U.S. by approximately 80 wholesale distributors, as well as by various state beverage alcohol control agencies. International distribution In our foreign markets, most countries permit sales directly from the brand owner to retail establishments, including liquor stores, chain stores, restaurants and pubs, without requiring that sales go through a wholesaler tier. In our international markets, we rely primarily on established spirits distributors in much the same way as we do in the U.S. We have contracted with an international beverage alcohol broker to represent our brands in approximately twenty international markets. We use Terra and other bonded warehouses and logistic providers to handle the billing, inventory and shipping for us for some products in certain of our non-U.S. markets. As in the U.S., the beverage alcohol industry has undergone consolidation internationally, with considerable realignment of brands and brand ownership. The number of major spirits companies internationally has been reduced significantly due to mergers and brand ownership consolidation. While there are still a substantial number of companies owning one or more brands, most business is now done by the eight major companies, each of which owns and operates its own distribution company that distributes in the major international markets. These captive distribution companies focus primarily on the brands of the companies that own them. Even though we do not utilize the direct route to market in our international operations, we do not believe that we are at a significant disadvantage, because the local importers/distributors typically have established relationships with the retail accounts and are able to provide extensive customer service, in store merchandising and on premise promotions. Also, even though we must compensate our wholesalers and distributors in each market in which we sell our brands, we are, as a result of using these distributors, still able to benefit from substantially lower infrastructure costs and centralized billing and collection. Our primary international markets are Ireland, Great Britain, Northern Ireland, Germany, Canada, Israel, Bulgaria, France, Finland, Norway, Sweden, Denmark, China and the Duty Free markets. We also have sales in other countries in continental Europe, Latin America, the Caribbean and Asia. For fiscal 2015, non-U.S. sales represented approximately 13.8% of our revenues. See note 16 to our accompanying consolidated financial statements. 7  Significant customers Sales to one distributor, Southern Wine and Spirits and related entities, accounted for approximately 29.7% of our consolidated revenues for fiscal 2015. Our sales team While we currently expect more rapid growth in the U.S., our primary market, international markets hold potential for future growth and are part of our global strategy. We currently have a total sales force of 20 people, including six regional U.S. vice presidents with an average of over 17 years of industry experience with premium beverage alcohol brands. Our sales personnel are engaged in the day-to-day management of our distributors, which includes setting quotas, coordinating promotional plans for our brands, maintaining adequate levels of stock, brand education and training and sales calls with distributor personnel. Our sales team also maintains relationships with key retail customers through independent sales calls. They also schedule promotional events, create local brand promotion plans, host in-store tastings where permitted and provide wait staff and bartender training and education for our brands. Advertising, marketing and promotion To build our brands, we must effectively communicate with three distinct audiences: our distributors, the retail trade and the end consumer. Advertising, marketing and promotional activities help to establish and reinforce the image of our brands in our efforts to build substantial brand value. We believe our execution of disciplined and strategic branding and marketing campaigns will continue to drive our future sales. We employ full-time, in-house marketing, sales and customer service personnel who work together with third party design and advertising firms to maintain a high degree of focus on each of our product categories and build brand awareness through innovative marketing activities. We use a range of marketing strategies and tactics to build brand equity and increase sales, including consumer and trade advertising, price promotions, point-of-sale materials, event sponsorship, in-store and on-premise promotions and public relations, as well as a variety of other traditional and non-traditional marketing techniques, including social media marketing, to support our brands. Besides traditional advertising, we also employ three other marketing methods to support our brands: public relations, event sponsorships and tastings. Our significant U.S. public relations efforts have helped gain editorial coverage for our brands, which increases brand awareness. Event sponsorship is an economical way for us to have influential consumers taste our brands. We actively contribute product to trend-setting events where our brand has exclusivity in the brand category. We also conduct hundreds of in-store and on-premise promotions each year. We support our brand marketing efforts with an assortment of point-of-sale materials. The combination of trade and consumer programs, supported by attractive point-of-sale materials, also establishes greater credibility for us with our distributors and retailers. Strategic brand-partner relationships We forge strategic relationships with emerging and established spirits brand owners seeking opportunities to increase their sales beyond their home markets and achieve global growth. This ability is a key component of our growth strategy and one of our competitive strengths. Our original relationship with the Boru vodka brand was as its exclusive U.S. distributor. To date, we have also established strategic relationships for Gosling’s rums, Pallini liqueurs, Celtic Honey liqueur, Tierras tequilas and Gozio amaretto, as described below, and we intend to seek to expand our brand portfolio through similar future arrangements. Gosling-Castle Partners Inc./Gosling’s rums and ginger beer In 2005, we entered into an exclusive national distribution agreement with Gosling’s Export for the Gosling’s rum products. We subsequently purchased a 60% controlling interest in Gosling-Castle Partners Inc., a strategic export venture with the Gosling family. Gosling's Export holds the exclusive distribution rights for Gosling’s rum and related products on a worldwide basis (other than in Bermuda), through Gosling-Castle Partners, and assigned to Gosling-Castle Partners all of Gosling’s Export’s interest in our January 2005 U.S. distribution agreement with them. The export agreement expires in April 2020, subject to a 15 year extension if certain case sale targets are met. Under the export agreement, Gosling-Castle Partners is generally entitled to a share of the proceeds from the sale, if ever, of the ownership of any of the Gosling’s brands to a third-party, through a sale of the stock of Gosling’s Export or its parent, with the size of such share depending upon the number of case sales made during the twelve months preceding the sale. Also, prior to selling the ownership of any of their brands that are subject to these agreements, Gosling’s Export must first offer such brand to Gosling-Castle Partners and then to us. The Goslings, through Gosling’s Brothers Limited, have the right to act as the sole supplier to Gosling-Castle Partners for our Gosling’s rum requirements. Pallini SpA/Pallini liqueurs We have a long-term, exclusive marketing and distribution agreement with Pallini under which we distribute Pallini Limoncello, Peachcello and Raspicello liqueurs in the U.S. We began shipping these products in September 2005. 8  Our agreement with Pallini expires on March 31, 2016, subject to successive five-year renewals unless either party delivers a notice of non-renewal six months prior to the end of the term. Under the agreement, if minimum volume targets are not achieved and not cured, Pallini has the right to terminate the agreement without payment of termination fees to us. However, if such targets are met, we have the right under the agreement to receive certain termination payments and other payments upon the non-renewal of the agreement, certain terminations of the agreement or the sale of the brand. The exclusive territory under the agreement is the 50 states of the U.S. and the District of Columbia. Autentica Tequilera S.A. de C.V./Tierras tequilas In February 2008, we entered into an importation and marketing agreement with Autentica Tequilera S.A. de C.V., under which we became the exclusive U.S. importer of Tierras. In February 2013, the agreement renewed for an additional five years in accordance with its terms. During the term, we have the right to purchase tequila at stipulated prices. Autentica Tequilera must maintain certain standards for its products, and we have input into the product and packaging. We are required to prepare periodic reports detailing the development of the brand’s sales. Under this agreement, we have rights of first refusal for any new market for Tierras (except Mexico), and any new Autentica Tequilera products in any market (except Mexico). We also have a right of first refusal on any sale of the Tierras brand, and a right to acquire up to 35% of the economic benefit of any such sale with a third-party based upon the achievement of certain cumulative sales targets. Gozio amaretto In November 2011, we entered into an exclusive distribution agreement with Distillerie Franciacorta Spa under which we are the exclusive distributor of Gozio amaretto in the U.S. The agreement has a five-year term, with automatic five-year renewals based upon sales targets. During the term, we have the right to purchase Gozio amaretto at stipulated prices and Distillerie Franciacorta Spa must maintain certain standards for its products. We are required to prepare periodic reports detailing the development of the brand’s sales and prepare annual strategic marketing and growth plans. Intellectual property Trademarks are an important aspect of our business. We sell our products under a number of trademarks, which we own or use under license. Our brands are protected by trademark registrations or are the subject of pending applications for trademark registration in the U.S., the European Community and most other countries where we distribute, or plan to distribute, our brands. The trademarks may be registered in the names of our subsidiaries and related companies. Generally, the term of a trademark registration varies from country to country, and, in the U.S., trademark registrations need to be renewed every ten years. We expect to register our trademarks in additional markets as we expand our distribution territories. We have entered into distribution agreements for brands owned by third parties, such as the Gosling’s rums, the Pallini liqueurs, Tierras tequilas and Gozio amaretto. The Gosling’s rum brands, Pallini liqueurs and Gozio amaretto are registered by their respective owners and we have the exclusive right to distribute the Gosling’s rums on a worldwide basis (other than in Bermuda) and the Pallini liqueur brands and Gozio amaretto in the U.S. Gosling’s also has a trademark for their signature rum cocktail, Dark ‘n Stormy. Autentica Tequiliera holds the registered U.S. trademark for Tequila Tierras Autenticas de Jalisco and its distinctive label. See “Strategic brand-partner relationships.” Seasonality Our industry is subject to seasonality with peak retail sales generally occurring in the fourth calendar quarter (our third fiscal quarter) primarily due to seasonal holiday buying. Historically, this holiday demand typically resulted in slightly higher sales for us in our second and/or third fiscal quarters. However, the growth of Gosling’s rums in recent years has led to improved fourth fiscal quarter revenues. Competition The beverage alcohol industry is highly competitive. We believe that we compete on the basis of quality, price, brand recognition and distribution strength. Our premium brands compete with other alcoholic and nonalcoholic beverages for consumer purchases, retail shelf space, restaurant presence and wholesaler attention. We compete with numerous multinational producers and distributors of beverage alcohol products, many of which have greater resources than us. Over the past ten years, the U.S. wine and spirits industry has undergone dramatic consolidation and realignment of brands and brand ownership. The number of major importers in the U.S. has declined significantly. Today there are eight major companies: Diageo PLC, Pernod Ricard S.A., Bacardi Limited, Brown-Forman Corporation, Beam Suntory Inc., Davide Campari Milano-S.p.A., Remy Cointreau S.A. and LVMH Moët Hennessy Louis Vuitton S.A. We believe that we are sometimes in a better position to partner with small to mid-size brands than the major importers. Despite our relative capital position and resources, we have been able to compete with these larger companies in pursuing agency distribution agreements and acquiring brands by being more responsive to private and family-owned brands, offering flexible transaction structures and providing brand owners the option to retain local production and “home” market sales. Given our size relative to our major competitors, most of which have multi-billion dollar operations, we believe that we can provide greater focus on smaller brands and tailor transaction structures based on individual brand owner preferences. However, our relative capital position and resources may limit our marketing capabilities, limit our ability to expand into new markets and limit our negotiating ability with our distributors. 9  By focusing on the premium and super-premium segments of the market, which typically have higher margins, and having an established, experienced sales force, we believe we are able to gain relatively significant attention from our distributors for a company of our size. Our U.S. regional vice presidents, who average over 17 years of industry experience, provide long-standing relationships with distributor personnel and with their major customers. Finally, the continued consolidation among the major companies is expected to create an opportunity for small to mid-size wine and spirits companies, such as ourselves, as the major companies contract their portfolios to focus on fewer brands. Government regulation We are subject to the jurisdiction of the Federal Alcohol Administration Act, U.S. Customs Laws, Internal Revenue Code of 1986, and the Alcoholic Beverage Control Laws of all fifty states. The U.S. Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau regulates the production, blending, bottling, sales and advertising and transportation of alcohol products. Also, each state regulates the advertising, promotion, transportation, sale and distribution of alcohol products within its jurisdiction. We are also required to conduct business in the U.S. only with holders of licenses to import, warehouse, transport, distribute and sell spirits. In Europe, we are subject to similar regulations related to the production of spirits. We are subject to U.S. and European regulations on the advertising, marketing and sale of beverage alcohol. These regulations range from a complete prohibition of the marketing of alcohol in some countries to restrictions on the advertising style, media and messages used. Labeling of spirits is also regulated in many markets, varying from health warning labels to importer identification, alcohol strength and other consumer information. All beverage alcohol products sold in the U.S. must include warning statements related to risks of drinking beverage alcohol products. We are also subject to certain regulatory requirements regarding minimum aging of spirits. In the U.S. control states, the state liquor commissions act in place of distributors and decide which products are to be purchased and offered for sale in their respective states. Products are selected for purchase and sale through listing procedures which are generally made available to new products only at periodically scheduled listing interviews. Consumers may purchase products not selected for listings only through special orders, if at all. The distribution of alcohol-based beverages is also subject to extensive federal and state taxation in the U.S. and internationally. Most foreign countries in which we do business impose excise duties on wines and distilled spirits, although the form of such taxation varies from a simple application on units of alcohol by volume to intricate systems based on the imported or wholesale value of the product. Several countries impose additional import duty on distilled spirits, often discriminating between categories in the rate of such tariffs. Import and excise duties may have a significant effect on our sales, both through reducing the consumption of alcohol and through encouraging consumer switching into lower-taxed categories of alcohol. We believe that we are in material compliance with applicable federal, state and other regulations. However, we operate in a highly regulated industry which may be subject to more stringent interpretations of existing regulations. Future compliance costs due to regulatory changes could be significant. Since we import distilled spirits products produced primarily outside the U.S., adverse effects of regulatory changes are more likely to materially affect earnings and our competitive market position rather than capital expenditures. Capital expenditures in our industry are normally associated with either production facilities or brand acquisition costs. Because we are not a U.S. producer, changes in regulations affecting production facility operations may indirectly affect the costs of the brands we purchase for resale, but we would not anticipate any resulting material adverse impact upon our capital expenditures. Global conglomerates with international brands dominate our industry. The adoption of more restrictive marketing and sales regulations or increased excise taxes and customs duties could materially adversely affect our earnings and competitive industry position. Large international conglomerates have greater financial resources than we do and would be better able to absorb increased compliance costs. Employees As of March 31, 2015, we had 51 full-time employees, 32 of which were in sales and marketing and 19 of which were in management, finance and administration. We had 45 full-time employees as of March 31, 2014. As of March 31, 2015, 48 of our employees were located in the U.S. and three were located in Ireland. 10  Geographic Information We operate in one business — premium beverage alcohol. Our product categories are rum and related products, whiskey, liqueurs, vodka and tequila. We report our operations in two geographical areas: International and U.S. See note 16 to our accompanying consolidated financial statements. Corporate Information We are a Florida corporation, which was incorporated in 2009. We are the successor to a Delaware corporation, which was incorporated in Delaware in 2003. Available Information Our corporate filings, including our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, our proxy statements and reports filed by our officers and directors under Section 16(a) of the Exchange Act and any amendments to those filings, are available, free of charge, on our investor website, http://investor.castlebrandsinc.com , as soon as reasonably practicable after we or our officers and directors electronically file or furnish such material with the SEC. You may also find our code of business conduct, nominating and corporate governance committee charter and audit committee charter on our website. We do not intend for information contained in our website, or those of our subsidiaries, to be a part of this annual report on Form 10-K. Shareholders may request paper copies of these filings and corporate governance documents, without charge, by written request to Castle Brands Inc., 122 East 42nd St., Suite 4700, New York, NY 10168, Attn: Investor Relations. Also, you may read and copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE., Washington, DC 20549, on official business days during the hours of 10 a.m. to 3 p.m. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site (http://www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Item 1A. Risk Factors Risks Relating To Our Business We have never been profitable, and believe we will continue to incur net losses for the foreseeable future. We have incurred losses since our inception, including a net loss of $3.8 million for fiscal 2015, and had an accumulated loss of $143.4 million as of March 31, 2015. We believe that we will continue to incur net losses as we expect to make continued significant investment in product development and sales and marketing and to incur significant administrative expenses as we seek to grow our brands. We also anticipate that our cash needs will exceed our income from sales for the near future. Some of our products may never achieve widespread market acceptance and may not generate sales and profits to justify our investment. Also, we may find that our expansion plans are more costly than we anticipate and that they do not ultimately result in commensurate increases in our sales, which would further increase our losses. We expect we will continue to experience losses and negative cash flow, some of which could be significant. Results of operations will depend upon numerous factors, some of which are beyond our control, including market acceptance of our products, new product introductions and competition. We incur substantial operating expenses at the corporate level, including costs directly related to being an SEC reporting company. Recent worldwide and domestic economic trends and financial market conditions could adversely impact our financial performance. The worldwide and domestic economies have experienced adverse conditions and may be subject to further deterioration for the foreseeable future. We are subject to risks associated with these adverse conditions, including economic slowdown and the disruption, volatility and tightening of credit and capital markets. This global economic situation could adversely impact our major suppliers, distributors and retailers. The inability of suppliers, distributors or retailers to conduct business or to access liquidity could impact our ability to distribute our products. There can be no assurance that market conditions will improve in the near future. A prolonged downturn, further worsening or broadening of the adverse conditions in the worldwide and domestic economies could affect consumer spending patterns and purchases of our products, and create or exacerbate credit issues, cash flow issues and other financial hardships for us and for our suppliers, distributors, retailers and consumers. Depending upon their severity and duration, these conditions could have a material adverse impact on our business, liquidity, financial condition and results of operations. We may require additional capital, which we may not be able to obtain on acceptable terms, or at all. Our inability to raise such capital, as needed, on beneficial terms or at all could restrict our future growth and severely limit our operations. 11  We have limited capital compared to other companies in our industry. This may limit our operations and growth, including our ability to continue to develop existing brands, service our debt obligations, maintain adequate inventory levels, fund potential acquisitions of new brands, penetrate new markets, attract new customers and enter into new distribution relationships. If we have not generated sufficient cash from operations to finance additional capital needs, we will need to raise additional funds through private or public equity and/or debt financing. We cannot assure you that, if and when needed, additional financing will be available to us on acceptable terms or at all. If additional capital is needed and either unavailable or cost prohibitive, our operations and growth may be limited as we may need to change our business strategy to slow the rate of, or eliminate, our expansion or reduce or curtail our operations. Also, any additional financing we undertake could impose covenants upon us that restrict our operating flexibility, and, if we issue equity securities to raise capital our existing shareholders may experience dilution and the new securities may have rights, preferences and privileges senior to those of our common stock. If our brands do not achieve more widespread consumer acceptance, our growth may be limited. Most of our brands are early in their growth cycle and have not achieved extensive brand recognition. Also, brands we may acquire in the future are unlikely to have established extensive brand recognition. Accordingly, if consumers do not accept our brands, we will not be able to penetrate our markets and our growth may be limited. We depend on a limited number of suppliers. Failure to obtain satisfactory performance from our suppliers or loss of our existing suppliers could cause us to lose sales, incur additional costs and lose credibility in the marketplace. We also have annual purchase obligations with certain suppliers. We depend on a limited number of third-party suppliers for the sourcing of all of our products, including both our own proprietary brands and those we distribute for others. These suppliers consist of third-party distillers, bottlers and producers in the U.S., Bermuda, the Caribbean, Australia and Europe. We rely on the owners of Gosling’s rum, Pallini liqueurs, Gozio amaretto and Tierras tequila to produce their brands for us. For our proprietary products, we may rely on a single supplier to fulfill one or all of the manufacturing functions for a brand. For instance, Cargill is the sole producer for Boru vodka; IDL is the sole provider of our single malt, blended and grain Irish whiskeys; Gaelic Heritage Corporation Limited is the sole producer of our Celtic Honey Irish liqueur; Terra Limited is not only the sole producer of our Brady’s Irish Cream liqueur but also the only bottler of our Irish whiskeys; and Polar is the sole producer of our Gosling’s Stormy Ginger Beer. We do not have long-term written agreements with all of our suppliers. We do not currently have a long-term source for supply of aged bourbon or rye and there can be no assurance we can source adequate amounts of aged bourbon or rye at satisfactory prices, or at all. Also, if we fail to complete purchases of products ordered annually, certain suppliers have the right to bill us for product not purchased during the period. The termination of our written or oral agreements or an adverse change in the terms of these agreements could have a negative impact on our business. If our suppliers increase their prices, we may not have alternative sources of supply and may not be able to raise the prices of our products to cover all or even a portion of the increased costs. Also, our suppliers’ failure to perform satisfactorily or handle increased orders, delays in shipments of products from suppliers or the loss of our existing suppliers, especially our key suppliers, could cause us to fail to meet orders for our products, lose sales, incur additional costs and/or expose us to product quality issues. In turn, this could cause us to lose credibility in the marketplace and damage our relationships with distributors, ultimately leading to a decline in our business and results of operations. If we are not able to renegotiate these contracts on acceptable terms or find suitable alternatives, our business could be negatively impacted. We depend on our independent wholesale distributors to distribute our products. The failure or inability of even a few of our distributors to adequately distribute our products within their territories could harm our sales and result in a decline in our results of operations. We are required by law to use state licensed distributors or, in 17 states known as “control states,” state-owned agencies performing this function, to sell our products to retail outlets, including liquor stores, bars, restaurants and national chains in the U.S. We have established relationships for our brands with wholesale distributors in each state; however, failure to maintain those relationships could significantly and adversely affect our business, sales and growth. Over the past decade there has been increasing consolidation, both intrastate and interstate, among distributors. As a result, many states now have only two or three significant distributors. Also, there are several distributors that now control distribution for several states. For the fiscal year ended March 31, 2015, sales to one distributor accounted for 29.7% of revenues. As a result, if we fail to maintain good relations with a distributor, our products could in some instances be frozen out of one or more markets entirely. The ultimate success of our products also depends in large part on our distributors’ ability and desire to distribute our products to our desired U.S. target markets, as we rely significantly on them for product placement and retail store penetration. We have no formal distribution agreements or minimum sales requirements with any of our distributors and they are under no obligation to place our products or market our brands. Moreover, all of them also distribute competitive brands and product lines. We cannot assure you that our U.S. alcohol distributors will continue to purchase our products, commit sufficient time and resources to promote and market our brands and product lines or that they can or will sell them to our desired or targeted markets. If they do not, our sales will be harmed, resulting in a decline in our results of operations. While most of our international markets do not require the use of independent distributors by law, we have chosen to conduct our sales through distributors in all of our markets and, accordingly, we face similar risks to those set forth above with respect to our international distribution. Some of these international markets may have only a limited number of viable distributors. If we are unable to identify and successfully acquire additional brands that are complementary to our existing portfolio, our growth could be limited, and, even if additional brands are acquired, we may not realize planned benefits due to integration difficulties or other operating issues. 12  A component of our growth strategy is the acquisition of additional brands that are complementary to our existing portfolio through acquisitions of such brands or their corporate owners, directly or through mergers, joint ventures, long-term exclusive distribution arrangements and/or other strategic relationships. If we are unable to identify suitable brand candidates and successfully execute our acquisition strategy, our growth could be limited. Also, even if we are successful in acquiring additional brands, we may not be able to achieve or maintain profitability levels that justify our investment in, or realize operating and economic efficiencies or other planned benefits with respect to, those additional brands. The addition of new products or businesses entails numerous risks with respect to integration and other operating issues, any of which could have a detrimental effect on our results of operations and/or the value of our equity. These risks include: Also, there are special risks associated with the acquisition of additional brands through joint venture arrangements. We may not have a majority interest in, or control of, future joint ventures in which we may enter. There is, therefore, risk that our joint venture partners may at any time have economic, business or legal interests or goals that are inconsistent with our interests or goals or those of the joint venture. There is also risk that our current or future joint venture partners may be unable to meet their economic or other obligations and that we may be required to fulfill those obligations alone. Our ability to grow through the acquisition of additional brands will also be dependent upon the availability of capital to complete the necessary acquisition arrangements. We intend to finance our brand acquisitions through a combination of our available cash resources, third -party financing and, in appropriate circumstances, the further issuance of equity and/or debt securities; however, our ability to finance such acquisitions may be limited by the terms of our other equity and/or debt securities. Acquiring additional brands could have a significant effect on our financial position, and could cause substantial fluctuations in our quarterly and yearly operating results. Also, acquisitions could result in the recording of significant goodwill and intangible assets on our financial statements, the amortization or impairment of which would reduce reported earnings in subsequent years. Currency exchange rate fluctuations and devaluations may have a significant adverse effect on our revenues, sales, costs of goods and overall financial results. For fiscal 2015, non-U.S. operations accounted for approximately 13.8% of our revenues. Therefore, gains and losses on the conversion of foreign payments into U.S. dollars could cause fluctuations in our results of operations, and fluctuating exchange rates could cause reduced revenues and/or gross margins from non-U.S. dollar-denominated international sales and inventory purchases. Also, for fiscal 2015, Euro denominated sales accounted for approximately 9.1% of our total revenue, so a substantial change in the rate of exchange between the U.S. dollar and the Euro could have a significant adverse effect on our financial results. Our ability to acquire spirits and produce and sell our products at favorable prices will also depend in part on the relative strength of the U.S. dollar. We do not currently hedge against these risks. We must maintain a relatively large inventory of our products to support customer delivery requirements, and if this inventory is lost due to theft, fire or other damage or becomes obsolete, our results of operations would be negatively impacted. We must maintain relatively large inventories to meet customer delivery requirements for our products. We are always at risk of loss of that inventory due to theft, fire or other damage, and any such loss, whether insured against or not, could cause us to fail to meet our orders and harm our sales and operating results. Also, our inventory may become obsolete as we introduce new products, cease to produce old products or modify the design of our products’ packaging, which would increase our operating losses and negatively impact our results of operations. Either our or our strategic partners’ failure to protect our respective intellectual property rights could compromise our competitive position and decrease the value of our brand portfolio. Our business and prospects depend in part on our, and with respect to our agency or joint venture brands, our strategic partners’, ability to develop favorable consumer recognition of our brands and trademarks. Although both we and our strategic partners actively apply for intellectual property registrations of our brands and trademarks, they could be imitated in ways that we cannot prevent. Also, we rely on trade secrets and proprietary know-how, concepts and formulas. We cannot be certain that the steps taken to protect these intellectual property rights will be sufficient to protect these rights. Our business could be adversely affected by the material infringement of such intellectual property rights. We are also subject to risks and costs associated with the enforcement of our and our partners’ intellectual property rights. Moreover, we may face claims of misappropriation or infringement of third parties’ rights that could interfere with our use of this information. Defending these claims may be costly and, if unsuccessful, may prevent us from continuing to use this proprietary information in the future and result in a judgment or monetary damages being levied against us. We do not maintain non-competition agreements with all of our key personnel or with some of our key suppliers. If competitors independently develop or otherwise obtain access to our or our strategic partners’ trade secrets, proprietary know-how or recipes, the appeal, and thus the value, of our brand portfolio could be reduced, negatively impacting our financial results and ability to develop our business. A failure of one or more of our key information technology systems, networks, processes, associated sites or service providers, including • difficulties in assimilating acquired operations or products; • unanticipated costs that could materially adversely affect our results of operations; • negative effects on reported results of operations from acquisition related charges and amortization of acquired intangibles; • diversion of management’s attention from other business concerns; • adverse effects on existing business relationships with suppliers, distributors and retail customers; • risks of entering new markets or markets in which we have limited prior experience; and • the potential inability to retain and motivate key employees of acquired businesses. as a result of evolving cyber security and other technological risks, could have a material adverse impact on our business. 13  We rely on information technology (IT) systems, networks, and services, including internet sites, data hosting and processing facilities and tools, hardware (including laptops and mobile devices), software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist us in the management of our business. The various uses of these IT systems, networks, and services include, but are not limited to: hosting our internal network and communication systems; ordering and managing materials from suppliers; supply/demand planning; production; shipping product to customers; hosting our branded websites and marketing products to consumers; collecting and storing customer, consumer, employee, investor, and other data; processing transactions; summarizing and reporting results of operations; hosting, processing, and sharing confidential and proprietary research, business plans, and financial information; complying with regulatory, legal or tax requirements; providing data security; and handling other processes necessary to manage our business. Increased IT security threats and more sophisticated cyber crime pose a potential risk to the security of our IT systems, networks, and services, as well as the confidentiality, availability, and integrity of our data. If the IT systems, networks, or service providers we rely upon fail to function properly, or if we suffer a loss or disclosure of business or other sensitive information, due to any number of causes, ranging from catastrophic events to power outages to security breaches, and our business continuity plans do not effectively address these failures on a timely basis, we may suffer interruptions in our ability to manage operations and reputational, competitive and/or business harm, which may adversely affect our business operations and/or financial condition. In addition, such events could result in unauthorized disclosure of material confidential information, and we may suffer financial and reputational damage because of lost or misappropriated confidential information belonging to us or to our partners, our employees, customers, suppliers or consumers. In any of these events, we could also be required to spend significant financial and other resources to remedy the damage caused by a security breach or to repair or replace networks and IT systems. The trend toward public notifications of such incidents could exacerbate the harm to our business operations or financial condition. Our failure to attract or retain key executive or employee talent could adversely affect our business. Our success depends upon the efforts and abilities of our senior management team, other key employees, and a high-quality employee base, as well as our ability to attract, motivate, reward, and retain them. We do not maintain and do not intend to obtain key man insurance on the life of any executive or employee. Difficulties in hiring or retaining key executive or employee talent, or the unexpected loss of experienced employees could have an adverse impact on our business performance. In addition, we could experience business disruption and/or increased costs related to organizational changes, reductions in workforce, or other cost-cutting measures. The sales of our products could decrease significantly if we cannot maintain listings in the control states. In the control states, the state liquor commissions act in place of distributors and decide which products are to be purchased and offered for sale in their respective states. Products selected for listing must generally reach certain volumes and/or profit levels to maintain their listings. Products are selected for purchase and sale through listing procedures which are generally made available to new products only at periodically scheduled listing interviews. Products not selected for listings can only be purchased by consumers in the applicable control state through special orders, if at all. If, in the future, we are unable to maintain our current listings in the control states, or secure and maintain listings in those states for any additional products we may acquire, sales of our products could decrease significantly. An impairment in the carrying value of goodwill or other acquired intangible assets could negatively affect our operating results and shareholders’ equity. The carrying value of goodwill represents the fair value of acquired businesses in excess of identifiable assets and liabilities as of the acquisition date, net of any cumulative impairments. The carrying value of other intangible assets represents the fair value of trademarks, trade names and other acquired intangible assets as of the acquisition date, net of impairments and accumulated amortization. Goodwill and other acquired intangible assets expected to contribute indefinitely to our cash flows are not amortized, but must be evaluated for impairment by our management at least annually. If carrying value exceeds current fair value as determined based on the discounted future cash flows of the related business, the intangible asset is considered impaired and is reduced to fair value via a non-cash charge to earnings. If the value of goodwill or other acquired intangible assets is impaired, our earnings and shareholders’ equity could be adversely affected. Risks Related to Our Industry Demand for our products may be adversely affected by many factors, including changes in consumer preferences and trends. Consumer preferences may shift due to a variety of factors including changes in demographic and social trends, public health initiatives, product innovations, changes in vacation or leisure activity patterns and a downturn in economic conditions, which may reduce consumers’ willingness to purchase distilled spirits or cause a shift in consumer preferences toward beer, wine or non-alcoholic beverages. Our success depends in part on fulfilling available opportunities to meet consumer needs and anticipating changes in consumer preferences with successful new products and product innovations. 14  Our business performance is substantially dependent upon the continued growth of rum and whiskey sales. A significant part of our business is based on rum and whiskey sales. Changes in consumer preferences regarding these categories of beverage alcohol products may have an adverse effect on our sales and financial condition. Given the importance of our rum and whiskey brands to our overall Company success, a significant or sustained decline in volume or selling price of these products would likely have a negative effect on our growth and our stock price. Additionally, should we not be successful in our efforts to maintain and increase the relevance of the brands in the minds of today’s and tomorrow’s consumer, our business and operating results could suffer. We face substantial competition in our industry and many factors may prevent us from competing successfully. We compete on the basis of product taste and quality, brand image, price, service and ability to innovate in response to consumer preferences. The global spirits industry is highly competitive and is dominated by several large, well-funded international companies. It is possible that our competitors may either respond to industry conditions or consumer trends more rapidly or effectively or resort to price competition to sustain market share, which could adversely affect our sales and profitability. Adverse public opinion about alcohol could reduce demand for our products. Anti-alcohol groups have, in the past, advocated successfully for more stringent labeling requirements, higher taxes and other regulations designed to discourage alcohol consumption. More restrictive regulations, negative publicity regarding alcohol consumption and/or changes in consumer perceptions of the relative healthfulness or safety of beverage alcohol could decrease sales and consumption of alcohol and thus the demand for our products. This could, in turn, significantly decrease both our revenues and our revenue growth, causing a decline in our results of operations. Class action or other litigation relating to alcohol abuse or the misuse of alcohol could adversely affect our business. Our industry faces the possibility of class action or similar litigation alleging that the continued excessive use or abuse of beverage alcohol has caused death or serious health problems. It is also possible that governments could assert that the use of alcohol has significantly increased government funded health care costs. Litigation or assertions of this type have adversely affected companies in the tobacco industry, and it is possible that we, as well as our suppliers, could be named in litigation of this type. Also, lawsuits have been brought in a number of states alleging that beverage alcohol manufacturers and marketers have improperly targeted underage consumers in their advertising. Plaintiffs in these cases allege that the defendants’ advertisements, marketing and promotions violate the consumer protection or deceptive trade practices statutes in each of these states and seek repayment of the family funds expended by the underage consumers. While we have not been named in these lawsuits, we could be named in similar lawsuits in the future. Any class action or other litigation asserted against us could be expensive and time-consuming to defend against, depleting our cash and diverting our personnel resources and, if the plaintiffs in such actions were to prevail, our business could be harmed significantly. Regulatory decisions and legal, regulatory and tax changes could limit our business activities, increase our operating costs and reduce our margins. Our business is subject to extensive regulation in all of the countries in which we operate. This may include regulations regarding production, distribution, marketing, advertising and labeling of beverage alcohol products. We are required to comply with these regulations and to maintain various permits and licenses. We are also required to conduct business only with holders of licenses to import, warehouse, transport, distribute and sell beverage alcohol products. We cannot assure you that these and other governmental regulations applicable to our industry will not change or become more stringent. Moreover, because these laws and regulations are subject to interpretation, we may not be able to predict when and to what extent liability may arise. Additionally, due to increasing public concern over alcohol-related societal problems, including driving while intoxicated, underage drinking, alcoholism and health consequences from the abuse of alcohol, various levels of government may seek to impose additional restrictions or limits on advertising or other marketing activities promoting beverage alcohol products. Failure to comply with any of the current or future regulations and requirements relating to our industry and products could result in monetary penalties, suspension or even revocation of our licenses and permits. Costs of compliance with changes in regulations could be significant and could harm our business, as we could find it necessary to raise our prices in order to maintain profit margins, which could lower the demand for our products and reduce our sales and profit potential. Also, the distribution of beverage alcohol products is subject to extensive taxation both in the U.S. and internationally (and, in the U.S., at both the federal and state government levels), and beverage alcohol products themselves are the subject of national import and excise duties in most countries around the world. An increase in taxation or in import or excise duties could also significantly harm our sales revenue and margins, both through the reduction of overall consumption and by encouraging consumers to switch to lower-taxed categories of beverage alcohol. We could face product liability or other related liabilities that increase our costs of operations and harm our reputation. Although we maintain liability insurance and will attempt to limit contractually our liability for damages arising from our products, these measures may not be sufficient for us to successfully avoid or limit liability. Our product liability insurance coverage is limited to $1.0 million per occurrence and $2.0 million in the aggregate and our general liability umbrella policy is capped at $10.0 million. Further, any contractual indemnification and insurance coverage we have from parties supplying our products is limited, as a practical matter, to the creditworthiness of the indemnifying party and the insured limits of any insurance provided by these suppliers. In any event, extensive product liability claims could be costly to defend and/or costly to resolve and could harm our reputation. 15  Contamination of our products and/or counterfeit or confusingly similar products could harm the image and integrity of, or decrease customer support for, our brands and decrease our sales. The success of our brands depends upon the positive image that consumers have of them. Contamination, whether arising accidentally or through deliberate third-party action, or other events that harm the integrity or consumer support for our brands, could affect the demand for our products. Contaminants in raw materials purchased from third parties and used in the production of our products or defects in the distillation and fermentation processes could lead to low beverage quality as well as illness among, or injury to, consumers of our products and could result in reduced sales of the affected brand or all of our brands. Also, to the extent that third parties sell products that are either counterfeit versions of our brands or brands that look like our brands, consumers of our brands could confuse our products with products that they consider inferior. This could cause them to refrain from purchasing our brands in the future and in turn could impair our brand equity and adversely affect our sales and operations. Risks Relating to Owning Our Stock We may not be able to maintain our listing on the NYSE MKT, which may limit the ability of our shareholders to sell their common stock. If we do not meet the NYSE MKT continued listing criteria, we may be delisted and trading of our common stock could be conducted in the OTC Bulletin Board or the interdealer quotation systems of the OTC Markets Group Inc. In such case, a shareholder likely would find it more difficult to trade our common stock or to obtain accurate market quotations for it. If our common stock is delisted, it will become subject to the Securities and Exchange Commission’s “penny stock rules,” which impose sales practice requirements on broker-dealers that sell that common stock to persons other than established customers and “accredited investors.” Application of this rule could make broker-dealers unable or unwilling to sell our common stock and limit the ability of shareholders to sell their common stock in the secondary market. Our executive officers, directors and principal shareholders own a substantial percentage of our voting stock, which allows them to significantly influence matters requiring shareholder approval. They could make business decisions for us that cause our stock price to decline. As of June 12, 2015, our executive officers, directors and principal shareholders beneficially owned approximately 44% of our common stock, including options that are exercisable within 60 days of the date of this annual report and assuming full exercise of such options and conversion of our 5% October 2013 Convertible notes held by such persons. As a result, if they act in concert, they could significantly influence matters requiring approval by our shareholders, including the election of directors, and could have the ability to prevent or cause a corporate transaction, even if other shareholders oppose such action. This concentration of voting power could also have the effect of delaying, deterring, or preventing a change of control or other business combination, which could cause our stock price to decline. Provisions in our articles of incorporation, our bylaws and Florida law could make it more difficult for a third party to acquire us, discourage a takeover and adversely affect existing shareholders. Our articles of incorporation, our bylaws and the Florida Business Corporation Act contain provisions that may have the effect of making more difficult, delaying, or deterring attempts by others to obtain control of our company, even when these attempts may be in the best interests of our shareholders. These include provisions limiting the shareholders’ powers to remove directors. Our articles of incorporation also authorize our board of directors, without shareholder approval, to issue one or more series of preferred stock, which could have voting and conversion rights that adversely affect or dilute the voting power of the holders of our common stock. Florida law also imposes conditions on certain "affiliated transactions” with “interested shareholders.” These provisions and others that could be adopted in the future could deter unsolicited takeovers or delay or prevent changes in our control or management, including transactions in which shareholders might otherwise receive a premium for their shares over then current market prices. These provisions may also limit the ability of shareholders to approve transactions that they may deem to be in their best interests. Negative publicity could affect our stock price and business performance. Unfavorable media related to our industry, company, brands, marketing, personnel, operations, business performance, or prospects could negatively affect our corporate reputation, stock price, ability to attract high quality talent, and/or the performance of our business, regardless of its accuracy or inaccuracy. Adverse publicity or negative commentary on social media outlets could cause consumers to avoid our brands and/or choose brands offered by our competitors, which could negatively affect our financial results. Item 1B. Unresolved Staff Comments. Not applicable. 16  Item 2. Properties Our executive offices are located in New York, NY, where we lease approximately 4,800 square feet of office space under a lease that expires in April 2016. We also lease approximately 750 square feet of office space in Dublin, Ireland under a lease that expires in October 2016 and approximately 1,700 square feet of office space in Houston, TX under a lease that expires in June 2018. Item 3. Legal Proceedings We believe that neither we nor any of our wholly-owned subsidiaries is currently subject to litigation which, in the opinion of our management, is likely to have a material adverse effect on us. We may, however, become involved in litigation from time to time relating to claims arising in the ordinary course of our business. These claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources. Item 4. Mine Safety Disclosures Not applicable. PART II Item 5. Market for Registrant’s Common Equity, Related Shareholder Matters and Issuer Purchases of Equity Securities Price range of common stock Our common stock trades on the NYSE MKT under the symbol “ROX.” The following table sets forth the high and low sales prices for our common stock for the periods specified. Holders At June 9, 2015, there were approximately 200 record holders of our common stock. Dividend policy We did not declare or pay any cash dividends in fiscal 2015 or 2014 and we do not intend to pay any cash dividends with respect to our common stock in the foreseeable future. We currently intend to retain any earnings for use in the operation of our business and to fund future growth. Any future determination to pay cash dividends will be at our board’s discretion and will depend upon our financial condition, operating results, capital requirements and such other factors as our board deems relevant. Further, our ability to declare and pay cash dividends is restricted by certain covenants in our loan agreements. Equity Compensation Plan Information The following table sets forth information at March 31, 2015 regarding compensation plans under which our equity securities are authorized for issuance. Fiscal 2015 High Low First Quarter (April 1 — June 30, 2014) $ 1.41 $ 0.78 Second Quarter (July 1 — September 30, 2014) $ 1.32 $ 0.80 Third Quarter (October 1 — December 31, 2014) $ 2.03 $ 1.20 Fourth Quarter (January 1 — March 31, 2015) $ 1.70 $ 1.15 Fiscal 2014 First Quarter (April 1 — June 30, 2013) $ 0.42 $ 0.27 Second Quarter (July 1 — September 30, 2013) $ 0.99 $ 0.30 Third Quarter (October 1 — December 31, 2013) $ 1.10 $ 0.65 Fourth Quarter (January 1 — March 31, 2014) $ 1.55 $ 0.71 17  Item 6. Selected Financial Data We are transitioning from a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Overview Our objective is to continue building Castle Brands into a profitable international spirits company, with a distinctive portfolio of premium and super premium spirits brands. To achieve this, we continue to seek to: Recent developments Common stock equity distribution agreement In November 2014, we entered into an Equity Distribution Agreement (the "2014 Distribution Agreement") with Barrington Research Associates, Inc. ("Barrington"), as sales agent, under which we may issue and sell over time and from time to time, to or through Barrington, shares (the "Shares") of our common stock, $0.01 par value per share ("Common Stock") having a gross sales price of up to $10.0 million. Sales of the Shares pursuant to the 2014 Distribution Agreement may be effected by any method permitted by law deemed to be an "at-the-market" offering as defined in Rule 415 of the Securities Act of 1933, as amended, including without limitation directly on the NYSE MKT LLC or any other existing trading market for the Common Stock or through a market maker, up to the amount specified, and otherwise to or through Barrington in accordance with the placement notices delivered by the Company to Barrington. Also, with our prior consent, some or all of the Shares issued pursuant to the 2014 Distribution Agreement may be sold in privately negotiated transactions. Between November 20, 2014 and June 11, 2015, we sold approximately 1.9 million Shares of Common Stock under the 2014 Distribution Agreement for gross proceeds of approximately $3.1 million, before deducting sales agent and offering expenses of approximately $0.1 million. We used a portion of the proceeds to finance our investment in Copperhead Distillery Company as well as for general corporate purposes. Investment in Copperhead Distillery Company In June 2015, we purchased approximately 20% of Copperhead Distillery Company (“Copperhead”) for $0.5 million. Copperhead owns and operates the Kentucky Artisan Distillery. The investment is part of a wide-reaching agreement to build a new warehouse to store Jefferson’s bourbons, provide distilling capabilities using special mash-bills made from locally grown grains, and create a visitor center and store to enhance Plan category Number of securities to be issued upon exercise of outstanding options, warrants, restricted stock and rights Weighted-average exercise price of outstanding options, warrants, restricted stock and rights Number of securities remaining available for future issuance under equity compensation plans Equity compensation plans approved by security holders 12,108,188 $ 0.65 7,221,000 Equity compensation plans not approved by security holders - - - Total 12,108,188 $ 0.65 7,221,000 • focus on our more profitable brands and markets. We continue to focus our distribution efforts, sales expertise and targeted marketing activities on our more profitable brands and markets; • grow organically. We believe that continued organic growth will enable us to achieve long-term profitability. We focus on brands that have profitable growth potential and staying power, such as our rums and whiskies, sales of which have grown approximately 46% over the past two fiscal years; • build consumer awareness. We use our existing assets, expertise and resources to build consumer awareness and market penetration for our brands; • leverage our distribution network. Our established distribution network in all 50 U.S. states enables us to promote our brands nationally and makes us an attractive strategic partner for smaller companies seeking U.S. distribution; and • selectively add new brand extensions and brands to our portfolio. We intend to continue to introduce new brand extensions and expressions. For example, we have leveraged our successful Jefferson’s portfolio by introducing a number of brand extensions. We continue to explore strategic relationships, joint ventures and acquisitions to selectively expand our premium spirits portfolio. We expect that future acquisitions or agency relations, if any, would involve some combination of cash, debt and the issuance of our stock. the consumer experience for the Jefferson’s brand. Our investment will be used for the construction of a new warehouse in Crestwood, Kentucky dedicated exclusively to Jefferson’s. The warehouse will have the capacity to store up to 10,000 barrels, with room for expansion, and will facilitate the continued growth of Jefferson’s wood finishes and barrel-aged cocktails. A Jefferson’s visitor center, including a tasting room and store, which will showcase the Jefferson’s brand is expected to open in the summer of 2015. Operations overview We generate revenue through the sale of our products to our network of wholesale distributors or, in control states, state-operated agencies, which, in turn, distribute our products to retail outlets. In the U.S., our sales price per case includes excise tax and import duties, which are also reflected as a corresponding increase in our cost of sales. Most of our international sales are sold “in bond”, with the excise taxes paid by our customers upon shipment, thereby resulting in lower relative revenue as well as a lower relative cost of sales, although some of our United Kingdom sales are sold “tax paid”, as in the U.S. The difference between sales and net sales principally reflects adjustments for various distributor incentives. Our gross profit is determined by the prices at which we sell our products, our ability to control our cost of sales, the relative mix of our case sales by brand and geography and the impact of foreign currency fluctuations. Our cost of sales is principally driven by our cost of procurement, bottling and packaging, which differs by brand, as well as freight and warehousing costs. We purchase certain products, such as Gosling’s rums and ginger beer, Pallini liqueurs, Gozio amaretto and Tierras tequila, as finished goods. For other products, such as Jefferson’s bourbons, we purchase the components, including the distilled spirits, bottles and packaging materials, and have arrangements with third parties for bottling and packaging. Our U.S. sales typically have a higher absolute gross margin than in other markets, as sales prices per case are generally higher in the U.S. Selling expense principally includes advertising and marketing expenditures and compensation paid to our marketing and sales personnel. Our selling expense, as a percentage of sales and per case, is higher than that of our competitors because of our brand development costs, level of marketing expenditures and established sales force versus our relatively small base of case sales and sales volumes. However, we believe that maintaining an infrastructure capable of supporting future growth is the correct long-term approach for us. While we expect the absolute level of selling expense to increase in the coming years, we expect selling expense as a percentage of revenues and on a per case basis to decline, as our volumes expand and our sales team sells a larger number of brands. 18  General and administrative expense relates to corporate and administrative functions that support our operations and includes administrative payroll, occupancy and related expenses and professional services. We expect general and administrative expense in fiscal 2016 to be higher than fiscal 2015 due to costs associated with our status as an accelerated filer. However, we expect our general and administrative expense as a percentage of sales to decline due to economies of scale. We expect to increase our case sales in the U.S. and internationally over the next several years through organic growth, and through the introduction of product line extensions, acquisitions and distribution agreements. We will seek to maintain liquidity and manage our working capital and overall capital resources during this period of anticipated growth to achieve our long-term objectives, although there is no assurance that we will be able to do so. We continue to believe the following industry trends will create growth opportunities for us, including: Our growth strategy is based upon partnering with other brands, acquiring smaller and emerging brands and growing existing brands. To identify potential partner and acquisition candidates we plan to rely on our management’s industry experience and our extensive network of industry contacts. We also plan to maintain and grow our U.S. and international distribution channels so that we are more attractive to spirits companies who are looking for a route to market for their products. We expect to compete for foreign and small private and family-owned spirits brands by offering flexible and creative structures, which present an alternative to the larger spirits companies. We intend to finance any future brand acquisitions through a combination of our available cash resources, third party financing and, in appropriate circumstances, the further issuance of equity and/or debt securities. Acquiring additional brands could have a significant effect on our financial position, and could cause substantial fluctuations in our quarterly and yearly operating results. Also, the pursuit of acquisitions and other new business relationships may require significant management attention. We may not be able to successfully identify attractive acquisition candidates, obtain financing on favorable terms or complete these types of transactions in a timely manner and on terms acceptable to us, if at all. Financial performance overview The following table provides information regarding our spirits case sales for the periods presented based on nine-liter equivalent cases, which is a standard spirits industry metric (table excludes related non-alcoholic beverage products): • the divestiture of smaller and emerging non-core brands by major spirits companies as they continue to consolidate; • increased barriers to entry, particularly in the U.S., due to continued consolidation and the difficulty in establishing an extensive distribution network, such as the one we maintain; and • the trend by small private and family-owned spirits brand owners to partner with, or be acquired by, a company with global distribution. We expect to be an attractive alternative to our larger competitors for these brand owners as one of the few modestly-sized publicly-traded spirits companies. Year ended March 31, 2015 2014 Cases United States 310,106 307,584 International 82,632 81,790 Total 392,738 389,374 Rum 171,189 166,939 Vodka 46,347 55,145 Liqueur 89,369 91,832 Whiskey 84,713 70,592 Tequila 1,106 1,153 Wine — 3,709 Other spirits 14 4 Total 392,738 389,374 Percentage of Cases United States 79.0 % 79.0 % International 21.0 % 21.0 % Total 100.0 % 100.0 % Rum 43.6 % 42.8 % Vodka 11.8 % 14.2 %  Liqueur 22.7 % 23.6 % Whiskey 21.6 % 18.1 % Tequila 0.3 % 0.3 % Wine —% 1.0 % Other spirits 0.0 % 0.0 % Total 100.0 % 100.0 % 19  The following table provides information regarding our case sales of related non-alcoholic beverage products, which primarily consists of Gosling’s Stormy Ginger Beer, for the periods presented: Critical accounting policies and estimates A number of estimates and assumptions affect our reported amounts of assets and liabilities, amounts of sales and expenses and disclosure of contingent assets and liabilities in our financial statements. On an ongoing basis, we evaluate these estimates and assumptions based on historical experience and other factors and circumstances. We believe our estimates and assumptions are reasonable under the circumstances; however, actual results may differ from these estimates. We believe that the estimates and assumptions discussed below are most important to the portrayal of our financial condition and results of operations in that they require our most difficult, subjective or complex judgments and form the basis for the accounting policies deemed to be most critical to our operations. Revenue recognition We recognize revenue from product sales when the product is shipped to a customer (generally a distributor), title and risk of loss has passed to the customer under the terms of sale (FOB shipping point or FOB destination) and collection is reasonably assured. We do not offer a right of return but will accept returns if we shipped the wrong product or wrong quantity. Revenue is not recognized on shipments to control states in the U.S. until such time as the product is sold through to the retail channel. Accounts receivable We record trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect any loss anticipated on the trade accounts receivable balances and charged to the allowance for doubtful accounts. We calculate this allowance based on our history of write-offs, level of past due accounts based on contractual terms of the receivables and our relationships with, and economic status of, our customers. Inventory valuation Our inventory, which consists of distilled spirits, non-beverage alcohol products, dry good raw materials (bottles, cans, labels and caps), packaging and finished goods, is valued at the lower of cost or market, using the weighted average cost method. We assess the valuation of our inventories and reduce the carrying value of those inventories that are obsolete or in excess of our forecasted usage to their estimated realizable value. We estimate the net realizable value of such inventories based on analyses and assumptions including, but not limited to, historical usage, future demand and market requirements. Reduction to the carrying value of inventories is recorded in cost of goods sold. Year ended March 31, 2015 2014 Cases United States 682,190 403,195 International 33,232 26,323 Total 715,422 429,518 United States 95.4 % 93.9 % International 4.6 % 6.1 % Total 100.0 % 100.0 % 20  Goodwill and other intangible assets As of March 31, 2015 and 2014, we recorded $0.5 million of goodwill that arose from acquisitions. Goodwill represents the excess of purchase price and related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Intangible assets with indefinite lives consist primarily of rights, trademarks, trade names and formulations. We are required to analyze our goodwill and other intangible assets with indefinite lives for impairment on an annual basis as well as when events and circumstances indicate that an impairment may have occurred. Certain factors that may occur and indicate that an impairment exists include, but are not limited to, operating results that are lower than expected and adverse industry or market economic trends. We evaluate the recoverability of goodwill and indefinite lived intangible assets using a two-step impairment test approach at the reporting unit level. In the first step the fair value for the reporting unit is compared to its book value including goodwill. If the fair value of the reporting unit is less than the book value, a second step is performed which compares the implied fair value of the reporting unit’s goodwill to the book value of the goodwill. The fair value for the goodwill is determined based on the difference between the fair values of the reporting units and the net fair values of the identifiable assets and liabilities of such reporting units. If the fair value of the goodwill is less than the book value, the difference is recognized as an impairment. The fair value of each reporting unit was determined at each of March 31, 2015 and 2014 by weighting a combination of the present value of our discounted anticipated future operating cash flows and values based on market multiples of revenue and earnings before interest, taxes, depreciation and amortization (“EBITDA”) of comparable companies. We did not record any impairment on goodwill or other intangible assets for fiscal 2015 or 2014. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives to the estimated residual values and reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We are required to amortize intangible assets with estimable useful lives over their respective estimated useful lives to the estimated residual values and to review intangible assets with estimable useful lives for impairment in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 310, “Accounting for the Impairment or Disposal of Long-lived Assets.” Stock-based awards We follow current authoritative guidance regarding stock-based compensation, which requires all share-based payments, including grants of stock options, to be recognized in the income statement as an operating expense, based on their fair values on the grant date. Stock-based compensation was $0.8 million and $0.4 million for fiscal 2015 and 2014, respectively. We used the Black-Scholes option-pricing model to estimate the fair value of options granted. The assumptions used in valuing the options granted during fiscal 2015 and 2014 are included in note 12 to our consolidated financial statements. Fair value of financial instruments ASC 825, “Financial Instruments”, defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties and requires disclosure of the fair value of certain financial instruments. We believe that there is no material difference between the fair value and the reported amounts of financial instruments in the balance sheets due to the short-term maturity of these instruments, or with respect to the debt, as compared to the current borrowing rates available to us. Results of operations The following table sets forth, for the periods indicated, the percentage of net sales of certain items in our consolidated financial statements. Year ended March 31, 2015 2014 Sales, net 100.0 % 100.0 % Cost of sales 62.0 % 63.0 % Provision for obsolete inventory 0.5 % 0.4 % Gross profit 37.5 % 36.6 % Selling expense 26.5 % 26.0 % General and administrative expense 11.3 % 11.5 % Depreciation and amortization 1.6 % 1.8 % Loss from operations (1.9 )% (2.7 )% Loss from equity investment in non-consolidated affiliate 0.0 % (1.0 )% Foreign exchange loss (0.0 )% (0.6 )% Interest expense, net (2.0 )% (2.2 )% Net change in fair value of warrant liability 0.0 % (11.2 )% Income tax (expense) benefit, net (2.2 )% 1.2 %  Net loss (6.1 )% (16.5 )% Net income attributable to noncontrolling interests (0.6 )% (1.9 )% Net loss attributable to controlling interests (6.7 )% (18.4 )% Dividend to preferred shareholders 0.0 % (0.8 )% Net loss attributable to common shareholders (6.7 )% (19.2 )% 21  The following is a reconciliation of net loss attributable to common shareholders to EBITDA, as adjusted: Earnings before interest, taxes, depreciation and amortization, or EBITDA, adjusted for allowances for doubtful accounts and obsolete inventory, stock-based compensation expense, other income, net, loss from equity investment in non-consolidated affiliate, foreign exchange loss, net change in fair value of warrant liability, net income attributable to noncontrolling interests and dividend to preferred shareholders is a key metric we use in evaluating our financial performance. EBITDA, as adjusted, is considered a non-GAAP financial measure as defined by Regulation G promulgated by the SEC under the Securities Act of 1933, as amended. We consider EBITDA, as adjusted, important in evaluating our performance on a consistent basis across various periods. Due to the significance of non-cash and non-recurring items, EBITDA, as adjusted, enables our Board of Directors and management to monitor and evaluate the business on a consistent basis. We use EBITDA, as adjusted, as a primary measure, among others, to analyze and evaluate financial and strategic planning decisions regarding future operating investments and allocation of capital resources. We believe that EBITDA, as adjusted, eliminates items that are not indicative of our core operating performance or are based on management’s estimates, such as allowance accounts, are due to changes in valuation, such as the effects of changes in foreign exchange or fair value of warrant liability, or do not involve a cash outlay, such as stock-based compensation expense. Our presentation of EBITDA, as adjusted, should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items or by non-cash items, such as stock-based compensation, which is expected to remain a key element in our long-term incentive compensation program. EBITDA, as adjusted, should be considered in addition to, rather than as a substitute for, income from operations, net income and cash flows from operating activities. Our EBITDA, as adjusted, improved to $1.1 million for the year ended March 31, 2015, as compared to $0.5 million for the prior year, primarily as a result of our increased sales and gross profit. Fiscal 2015 compared with fiscal 2014 Net sales. Net sales increased 19.4% to $57.5 million for the year ended March 31, 2015, as compared to $48.1 million for the prior year, due to the overall growth of our Gosling's Stormy Ginger Beer, Jefferson's and Jefferson’s Reserve bourbons, Clontarf Irish whiskey and Pallini liqueurs. Our international spirits case sales as a percentage of total spirits case sales were 21.0% for each of the years ended March 31, 2015 and 2014. Our overall spirits sales volume for fiscal 2015 was negatively impacted by the cessation of sales of Hasse Apple Pie Liqueurs and wines, as well as our inability to source supply for Jefferson’s Rye in the current year, all of which we sold in fiscal 2014 but did not sell in fiscal 2015. Sales volume was also negatively impacted by lower sales volume of vodka and destocking of Gosling’s rums at the wholesale level. These shortfalls were partially offset by increases in sales of our Jefferson’s, Jefferson’s Reserve and Jefferson’s Ocean Aged at Sea bourbons and our Irish whiskey portfolio. Also, fiscal 2015 sales of our Gosling’s Stormy Ginger Beer increased by 286,140 cases, or 66.7%, overall, including a 279,231 case increase, or 69.4%, in U.S. case sales as compared to fiscal 2014. We anticipate continued growth of Gosling’s Stormy Ginger Beer in the near term as compared to comparable prior-year periods, although there is no assurance that we will attain such results. We continue to focus on our faster growing brands and markets, both in the U.S. and internationally. Year ended March 31, 2015 2014 Net loss attributable to common shareholders $ (3,799,742 ) $ (9,291,346 ) Adjustments: Interest expense, net 1,129,047 1,062,219 Income tax expense (benefit), net 1,278,999 (590,414 ) Depreciation and amortization 907,540 860,254 EBITDA loss (484,156 ) (7,959,287 ) Allowance for doubtful accounts 236,000 403,049 Allowance for obsolete inventory 281,000 200,000 Stock-based compensation expense 787,710 393,914 Other income, net (16,602 ) — Loss from equity investment in non-consolidated affiliate — 502,518 Foreign exchange loss 4,564 284,962 Net change in fair value of warrant liability — 5,392,594 Net income attributable to noncontrolling interests 325,829 935,035 Dividend to preferred shareholders — 384,599 EBITDA, as adjusted 1,134,345 537,384 22  The table below presents the increase or decrease, as applicable, in case sales by spirits product category for the year ended March 31, 2015 as compared to the year ended March 31, 2014: The following table presents the increase in case sales of related non-alcoholic beverage products for the year ended March 31, 2015 as compared to the year ended March 31, 2014: Gross profit. Gross profit increased 22.5% to $21.6 million for the year ended March 31, 2015 from $17.6 million for the prior year, and our gross margin increased to 37.5% for the year ended March 31, 2015 compared to 36.6% for the prior year. The increase in gross profit was primarily due to increased revenue in the current period, while the increase in gross margin was due to an increase in sales of our more profitable brands, in particular the Jefferson’s bourbons and our Irish whiskey brands. During the year ended March 31, 2015, we recorded a net allowance for obsolete and slow moving inventory of $0.3 million, as compared to $0.2 million for the prior year. We recorded these allowances on both raw materials and finished goods, primarily in connection with label and packaging changes made to certain brands, as well as certain cost variances. The net charges have been recorded as an increase to cost of sales in each period. Net of the allowance for obsolete inventory, our gross margin for the year ended March 31, 2015 was 38.0% as compared to 37.0% for the prior year. Selling expense. Selling expense increased 21.7% to $15.3 million for the year ended March 31, 2015 from $12.5 million for the prior year, primarily due to a $0.7 million increase in shipping costs, a $0.9 million increase in advertising, marketing and promotion expense related to the timing of certain sales and marketing programs, a $0.2 million increase in commissions, associated with increased sales volume and a $0.9 million increase in employee costs. The increase in sales resulted in selling expense as a percentage of net sales remaining relatively constant at 26.5% for the year ended March 31, 2015 as compared to 26.0% for the prior year. General and administrative expense . General and administrative expense increased 17.3% to $6.5 million for the year ended March 31, 2015 from $5.5 million for the prior year, primarily due to a $0.3 million increase in each of professional fees, employee expense and non-cash stock-based compensation expense, and a $0.1 million increase in insurance expense. The increase in sales resulted in general and administrative expense as a percentage of net sales remaining relatively constant at 11.3% for the year ended March 31, 2015 as compared to 11.5% for the prior year. However, as a result of our becoming an accelerated filer, we expect general and administrative expense to increase due to the costs and fees associated with the additional regulatory requirements. Depreciation and amortization. Depreciation and amortization was $0.9 million for each of the years ended March 31, 2015 and 2014. Loss from operations . As a result of the foregoing, loss from operations improved to ($1.1) million for the year ended March 31, 2015 from ($1.3) million for the prior year. As a result of our focus on our stronger growth markets and better performing brands, and expected growth from our existing brands, we anticipate improved results of operations in the near term as compared to comparable prior-year periods, although there is no assurance that we will attain such results. Net change in fair value of warrant liability. We recorded the fair market value of the warrants issued in connection with our June 2011 private placement (the “2011 Warrants”) at their initial fair value. Changes in the fair value of the 2011 Warrants were recognized in earnings for each reporting period. In November 2013, in accordance with certain terms of the 2011 Warrants, the down-round provisions included in the terms of the warrant ceased to be in effect due to the historical VWAP and trading volume of our Common Stock. As a result, the then outstanding warrant liability of $6.2 million was eliminated and recognized as an increase to additional paid-in capital. In April 2014, we called for cancellation all remaining 1.7 million unexercised 2011 Warrants pursuant to their terms after satisfying applicable conditions. Pursuant to the call for cancellation, holders of all 1.7 million unexercised 2011 Warrants exercised such warrants and received 1.7 million shares of Common Stock. We received $0.6 million in cash upon the exercise of these 2011 Warrants. As a result, no 2011 Warrants were outstanding as of March 31, 2015. Accordingly, we no longer recognize any changes in fair value of the 2011 Warrants. For the year ended March 31, 2014, we recorded a non-cash charge for loss on the change in the value of the warrants of ($5.4) million, primarily due to the effects of our increased share price on the Black-Scholes valuation. Increase/(decrease) Percentage in case sales increase/(decrease) Overall U.S. Overall U.S. Rum 4,250 2,239 2.5 % 1.8 % Whiskey 14,121 11,301 20.0 % 26.4 % Liqueur (2,463 ) (2,406 ) (2.7 )% (2.7 )% Vodka (8,798 ) (4,865 ) (16.0 )% (10.4 )% Tequila (47 ) (48 ) (4.1 )% (4.1 )% Wine (3,709 ) (3,709 ) (100.0 )% (100.0 )% Other Spirits 10 10 233.3 % 233.3 % Total 3,364 2,522 0.9 % 0.8 % Increase Percentage in case sales increase Overall U.S. Overall U.S. Related Non-Alcoholic Beverage Products 285,904 278,995 66.6 % 69.2 %  23  Income tax (expense) benefit, net. Income tax (expense) benefit, net is the estimated tax expense attributable to the net taxable income recorded by our 60% owned subsidiary, Gosling-Castle Partners Inc., adjusted for changes in the deferred tax asset and deferred tax liability during the periods, and was net expense of ($1.3) million for the year ended March 31, 2015 as compared to a benefit of $0.6 million for the prior year. Foreign exchange loss. Foreign exchange loss for the year ended March 31, 2015 was de minimis as compared to a loss of ($0.3) million for the prior year due to the net effects of fluctuations of the U.S. dollar against the Euro and its impact on our Euro-denominated intercompany balances due to our foreign subsidiaries for inventory purchases. Interest expense, net. We had interest expense, net of ($1.1) million for each of the years ended March 31, 2015 and 2014 due to balances outstanding under our credit facilities. Due to expected borrowings under the Keltic Facility as defined below to support additional inventory purchases and other working capital needs, we expect interest expense, net to increase in the near term as compared to prior-year periods. Net income attributable to noncontrolling interests. Net income attributable to noncontrolling interests for the year ended March 31, 2015 was ($0.3) million as compared to ($0.9) million for the prior year, both the result of allocated net income recorded by our 60% owned subsidiary, Gosling-Castle Partners Inc. Dividend to preferred shareholders. Pursuant to the mandatory conversion of our 10% Convertible Series A Preferred Stock, in February 2014, all outstanding shares of Series A Preferred Stock, and accrued dividends thereon, converted into Common Stock. Accordingly, after February 2014, we no longer recognize a dividend to preferred shareholders. For the year ended March 31, 2014, we recognized a dividend on our Series A Preferred Stock of $0.4 million. Net loss attributable to common shareholders. As a result of the net effects of the foregoing, including the non-cash charge for loss on the net change in fair value of warrant liability and the dividend accrual in the prior year, net loss attributable to common shareholders improved to ($3.8) million for the year ended March 31, 2015 as compared to a loss of ($9.3) million for the prior year. Net loss per common share, basic and diluted, was ($0.02) per share for the year ended March 31, 2015 as compared to ($0.08) per share for the prior year. Net loss per common share, basic and diluted, as reported in the current period benefited from an increase in the weighted-average shares outstanding in the year ended March 31, 2015 as compared to the prior year. Liquidity and capital resources Overview Since our inception, we have incurred significant operating and net losses and have not generated positive cash flows from operations. For the year ended March 31, 2015, we had a net loss of $3.5 million, and used cash of $8.9 million in operating activities. As of March 31, 2015, we had cash and cash equivalents of $1.2 million and had an accumulated deficit of $143.4 million. Existing Financing In August 2011, we and our wholly-owned subsidiary Castle Brands (USA) Corp. entered into a loan agreement with Keltic Financial Partners II, LP (“Keltic”), which, as amended, provides for availability (subject to certain terms and conditions) of a facility of up to $12.0 million (the “Keltic Facility”) for the purpose of providing us with working capital and a term loan of up to $4.0 million to finance purchases of aged whiskies (the “Bourbon Term Loan”). No borrowings under the Bourbon Term Loan were outstanding as of the date of this report. We may borrow up to an additional $1.5 million under the Bourbon Term Loan subject to the terms and conditions described below. In September 2014, we entered into an Amended and Restated Loan and Security Agreement (the “Loan Agreement”) with ACF FinCo I LP, a Delaware limited partnership (“ACF”), as successor in interest to Keltic, pursuant to which the Keltic Facility was further amended to modify certain aspects of the existing Keltic Facility, including increasing the maximum amount of the Keltic Facility from $8.0 million to $12.0 million and increasing the inventory sub-limit from $4.0 million to $6.0 million. In addition, the term of the Keltic Facility was extended from December 31, 2016 to July 31, 2019 (the "Maturity Date"). The monthly facility fee was reduced from 1.00% per annum of the maximum Keltic Facility amount to 0.75%. The Loan Agreement also modified certain aspects of the EBITDA covenant that was contained in the previously existing loan and security agreement, dated as of August 19, 2011, as amended. We paid ACF an aggregate $120,000 amendment fee in connection with the execution of the Loan Agreement. 24  We may borrow up to the maximum amount of the Keltic Facility, provided that we have a sufficient borrowing base (as defined in the Loan Agreement). The Keltic Facility interest rate is the rate that, when annualized, is the greatest of (a) the Prime Rate plus 3.00%, (b) the LIBOR Rate plus 5.50% and (c) 6.0%. The Bourbon Term Loan interest rate is the rate that, when annualized, is the greatest of (a) the Prime Rate plus 4.25%, (b) the LIBOR Rate plus 6.75% and (c) 7.50%. Interest is payable monthly in arrears, on the first day of every month on the average daily unpaid principal amount of the Keltic Facility and the Bourbon Term Loan. After the occurrence and during the continuance of any "Default" or "Event of Default" (as defined under the Loan Agreement) we are required to pay interest at a rate that is 3.25% per annum above the then applicable Keltic Facility or Bourbon Term Loan, as applicable, interest rate. The Loan Agreement contains EBITDA targets allowing for further interest rate reductions in the future. The Keltic Facility currently bears interest at 6.0% and the Bourbon Term Loan would currently bear interest at 7.50%. We are required to pay down the principal balance of the Bourbon Term Loan within 15 banking days from the completion of a bottling run of bourbon from our bourbon inventory stock purchased on or about the date of the Bourbon Term Loan in an amount equal to the purchase price of such bourbon. The unpaid principal balance of the Bourbon Term Loan, all accrued and unpaid interest thereon, and all fees, costs and expenses payable in connection with the Bourbon Term Loan are due and payable in full on the Maturity Date. In addition to closing fees, ACF receives an annual facility fee and a collateral management fee (each as set forth in the Loan Agreement). The Loan Agreement contains standard borrower representations and warranties for asset-based borrowing and a number of reporting obligations and affirmative and negative covenants. The Loan Agreement includes negative covenants that, among other things, restrict our ability to create additional indebtedness, dispose of properties, incur liens, and make distributions or cash dividends. At March 31, 2015, we were in compliance, in all material respects, with the covenants under the Loan Agreement. Keltic required as a condition to funding the Bourbon Term Loan that Keltic had entered into a participation agreement providing for an aggregate of $750,000 of the initial $2.5 million principal amount of the Bourbon Term Loan to be purchased by junior participants. Certain related parties of ours purchased a portion of these junior participations in the Bourbon Term Loan, including Frost Gamma Investments Trust ($500,000), an entity affiliated with Phillip Frost, M.D., a director and principal shareholder of ours, Mark E. Andrews, III ($50,000), a director of ours and our Chairman, and an affiliate of Richard J. Lampen ($50,000), a director of ours and our President and Chief Executive Officer. Under the terms of the participation agreement, the junior participants receive interest at the rate of 11% per annum. We are not a party to the participation agreement. However, we are party to a fee letter with the junior participants (including the related party junior participants) pursuant to which we pay the junior participants an aggregate commitment fee of $45,000 paid in three equal annual installments of $15,000. In May 2015, the Bourbon Term Loan was paid in full in accordance with its standard terms in the normal course of business. We may borrow up to an additional $1.5 million under the Bourbon Term Loan subject to the identification of junior participants to purchase a portion of such additional borrowings. In August 2013, we entered into a Loan Agreement (the "Junior Loan Agreement"), by and between us and the lending parties thereto (the "Junior Lenders"), which provided for an aggregate $1.25 million unsecured loan (the "Junior Loan") to us. The Junior Loan bore interest at a rate of 11% per annum, payable quarterly in arrears commencing November 1, 2013, and was set to mature on October 15, 2015. The Junior Loan Agreement provided for a funding fee of 2% per annum on the then outstanding Junior Loan balance (pro-rated for any period of less than one year), payable pro rata among the Junior Lenders on the date of the Junior Loan Agreement and on the first and second anniversaries thereof. The Junior Lenders included Frost Gamma Investments Trust, Mark E. Andrews, III and an affiliate of Richard J. Lampen. In September 2014, in connection with the amendment and restatement of the Keltic Facility described above, we used proceeds from the Keltic Facility to repay the $1.25 million principal amount outstanding, and all accrued but unpaid interest, to the Junior Lenders. In December 2009, Gosling-Castle Partners, Inc., a 60% owned subsidiary, issued a promissory note in the aggregate principal amount of $0.2 million to Gosling's Export (Bermuda) Limited in exchange for credits issued on certain inventory purchases. This note matures on April 1, 2020, is payable at maturity, subject to certain acceleration events, and calls for annual interest of 5%, to be accrued and paid at maturity. We have arranged various credit facilities aggregating €0.3 million or $0.3 million (translated at the March 31, 2015 exchange rate) with an Irish bank, including overdraft coverage, creditors’ insurance, customs and excise guaranty, and a revolving credit facility. These facilities are payable on demand, continue until terminated by either party, are subject to annual review, and call for interest at the lender’s AA1 Rate minus 1.70%. We have deposited €0.3 million or $0.3 million (translated at the March 31, 2015 exchange rate) with the bank to secure these borrowings. We are in compliance in all material respects with the covenants of our Irish bank facilities as of March 31, 2015. In October 2013, we entered into a 5% Convertible Subordinated Note Purchase Agreement (the "Note Purchase Agreement"), with the purchasers party thereto (the "Purchasers"), which provides for the issuance of an aggregate initial principal amount of $2.1 million unsecured subordinated notes (the "Convertible Notes"). We used a portion of the proceeds to finance the acquisition of additional bourbon inventory in support of the growth of our Jefferson's bourbon brand. The Convertible Notes bear interest at a rate of 5% per annum and mature on December 15, 2018. The Convertible Notes and accrued but unpaid interest thereon are convertible in whole or in part from time to time at the option of the holders thereof into shares of our Common Stock at a conversion price of $0.90 per share (the "Conversion Price"). The Convertible Notes may be prepaid in whole or in part at any time without penalty or premium, but with payment of accrued interest to the date of prepayment. The Convertible Notes contain customary events of default, which, if uncured, entitle each noteholder to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the Convertible Notes. We issued the Convertible Notes on October 31, 2013. The Purchasers included certain related parties of ours, including an affiliate of Dr. Phillip Frost ($500,000), Mark E. Andrews, III ($50,000), an affiliate of Richard J. Lampen ($50,000), an affiliate of Glenn Halpryn ($200,000), a director of ours, Dennis Scholl ($100,000), a former director of ours, and Vector Group Ltd. ($200,000), a more than 5% shareholder of ours, of which Richard Lampen is an executive officer and Henry Beinstein, a director of ours, is a director.  25  We may forcibly convert all or any part of the Convertible Notes and all accrued but unpaid interest thereon if (i) the average daily volume of the Common Stock (as reported on the principal market or exchange on which the Common Stock is listed or quoted for trading) exceeds $50,000 per trading day and (ii) the volume weighted average price of the Common Stock for at least twenty (20) trading days during any thirty (30) consecutive trading day period exceeds 250% of the then-current Conversion Price. Any forced conversion will be applied ratably to the holders of all Convertible Notes issued pursuant to the Note Purchase Agreement based on each holder’s then-current note holdings. In November 2014, we entered into the 2014 Distribution Agreement with Barrington as sales agent, under which we may issue and sell over time and from time to time, to or through Barrington, Shares of our Common Stock having a gross sales price of up to $10.0 million. The 2014 Distribution Agreement replaced the prior equity distribution agreement entered into with Barrington in November 2013 (together with the 2014 Distribution Agreement, the “Distribution Agreement”), under which we could offer and sell shares of our Common Stock having a gross sale price of up to $6.0 million. Sales of the Shares pursuant to the 2014 Distribution Agreement may be effected by any method permitted by law deemed to be an "at-the-market" offering as defined in Rule 415 of the Securities Act of 1933, as amended, including without limitation directly on the NYSE MKT LLC or any other existing trading market for the Common Stock or through a market maker, up to the amount specified, and otherwise to or through Barrington in accordance with the placement notices delivered by us to Barrington. Also, with our prior consent, some of the Shares issued pursuant to the 2014 Distribution Agreement may be sold in privately negotiated transactions. During the year ended March 31, 2015, we sold approximately 2.5 million Shares under the Distribution Agreements resulting in gross proceeds of approximately $3.3 million, before deducting sales agent and offering expenses of approximately $0.2 million. Between April 1, 2015 and June 11, 2015, we sold an additional 0.6 million Shares pursuant to the 2014 Distribution Agreement, resulting in gross proceeds of approximately $1.0 million, before deducting sales agent and offering expenses of approximately $0.02 million. We intend to use a portion of the proceeds to finance our investment in Copperhead Distillery Company and for general corporate purposes. As of June 11, 2015, approximately $7.0 million million remained available for issuance pursuant to the 2014 Distribution Agreement. Liquidity Discussion As of March 31, 2105, we had shareholders’ equity of $21.1 million as compared to $19.9 million at March 31, 2014. This increase is primarily due to the net issuance of $3.1 million of Common Stock under the Distribution Agreements and the exercise of $0.6 million of our 2011 Warrants, partially offset by our total comprehensive loss for the year ended March 31, 2015. We had working capital of $25.7 million at March 31, 2015 as compared to $19.1 million at March 31, 2014. This increase is primarily due to the current year net loss of $3.5 million, a $7.2 million increase in inventory and a $1.7 million increase in accounts receivable, partially offset by a $0.3 million decrease in deferred tax benefit, a $0.1 million decrease in prepaid expenses and a net combined $1.3 million increase in accounts payable, accrued expenses and due to related parties. As of March 31, 2015, we had cash and cash equivalents of approximately $1.2 million as compared to $0.9 million at March 31, 2014, with increases primarily attributable to the equity issued and debt incurred partially offset by the funding of our operations and working capital needs for the year ended March 31, 2015. At March 31, 2015, we also had approximately $0.3 million of cash restricted from withdrawal and held by a bank in Ireland as collateral for overdraft coverage, creditors’ insurance, revolving credit and other working capital purposes. The following may materially affect our liquidity over the near-to-mid term: We continue to implement a plan to support the growth of existing brands through sales and marketing initiatives that we expect will generate cash flows from operations in the next few years. As part of this plan, we seek to grow our business through expansion to new markets, growth in existing markets and strengthened distributor relationships. As our brands continue to grow, our working capital requirements will increase. In particular, the growth of our Jefferson’s brands requires a significant amount of working capital relative to our other brands, as we are required to purchase and hold ever increasing amounts of aged bulk bourbon to meet growing demand. While we are seeking solutions to our long-term bourbon supply needs, we are required to purchase and hold several years’ worth of bulk bourbon in inventory until such time as it is aged to our specific brand taste profiles, increasing our working capital requirements and negatively impacting cash flows. We are also seeking additional brands and agency relationships to leverage our existing distribution platform. We intend to finance our brand acquisitions through a combination of our available cash resources, borrowings and, in appropriate circumstances, additional issuances of equity and/or debt securities. Acquiring additional brands could have a significant effect on our financial position, could materially reduce our liquidity and could cause substantial fluctuations in our quarterly and yearly operating results. We continue to look to control expenses, seek improvements in routes to market and contain production costs to improve cash flows. • continued significant levels of cash losses from operations; • our ability to obtain additional debt or equity financing should it be required; • an increase in working capital requirements to finance higher levels of inventories and accounts receivable; • our ability to maintain and improve our relationships with our distributors and our routes to market; • our ability to procure raw materials at a favorable price to support our level of sales; • potential acquisitions of additional brands; and • expansion into new markets and within existing markets in the U.S. and internationally. As of March 31, 2015, we had borrowed $10.1 million of the $12.0 million available under the Keltic Facility, leaving $1.9 million in then potential availability for working capital needs. As of the date of this report, we had borrowed $7.7 million of the $12.0 million available under the Keltic Facility, leaving $4.3 million in potential availability for working capital needs. We believe our current cash and working capital, the availability under the Keltic Facility, and the proceeds that have been raised, and additional funds to be raised, under the Distribution Agreements, will enable us to fund our losses until we achieve profitability, ensure continuity of supply of our brands, and support new brand initiatives and marketing programs through at least March 2016. 26  Cash flows The following table summarizes our primary sources and uses of cash during the periods presented: Operating activities. A substantial portion of available cash has been used to fund our operating activities. In general, these cash funding requirements are based on operating losses, driven chiefly by the costs in maintaining our distribution system and our sales and marketing activities. We have also utilized cash to fund our inventories. In general, these cash outlays for inventories are only partially offset by increases in our accounts payable to our suppliers. On average, the production cycle for our owned brands is up to three months from the time we obtain the distilled spirits and other materials needed to bottle and package our products to the time we receive products available for sale, in part due to the international nature of our business. We do not produce Gosling’s rums or ginger beer, Pallini liqueurs, Tierras tequila, or Gozio amaretto. Instead, we receive the finished product directly from the owners of such brands. From the time we have products available for sale, an additional two to three months may be required before we sell our inventory and collect payment from customers. Further, our inventory at March 31, 2015 included significant additional stores of bulk bourbon purchased in advance of forecasted production requirements. We expect to reduce the bulk bourbon in the normal course of future sales, generating positive cash flows in future periods. During the year ended March 31, 2015, net cash used in operating activities was $8.9 million, consisting primarily of a $7.2 million increase in inventory, a net loss of $3.5 million, a $0.3 million increase in other assets and a $1.7 million increase in accounts receivable. These uses of cash were partially offset by a $1.3 million increase in accounts payable and accrued expenses, a $0.1 million decrease in prepaid expenses, stock based compensation expense of $0.8 million, depreciation and amortization expense of $0.9 million, a provision for obsolete inventories of $0.3 million and $0.3 million in deferred income tax expense, net. During the year ended March 31, 2014, net cash used in operating activities was $5.8 million, consisting primarily of a net loss of $8.0 million, a $2.0 million increase in accounts receivable, a $1.2 million increase in inventory, a $0.6 million decrease in accounts payable and accrued expenses, a $0.6 million increase in prepaid expenses, a $0.2 million increase in other assets and $0.6 million in deferred tax benefit. These uses of cash were partially offset by a change in fair value of warrant liability of $5.4 million, a $0.5 million loss on equity investment in non-consolidated affiliate, stock-based compensation expense of $0.4 million, depreciation and amortization expense of $0.9 million, and a provision for obsolete inventories of $0.2 million. Investing Activities. Net cash used in investing activities was $0.5 million for the year ended March 31, 2015, representing $0.5 million used in the acquisition of fixed and intangible assets. Net cash used in investing activities was $0.2 million for the year ended March 31, 2014, representing $0.3 million used in the acquisition of fixed and intangible assets, partially offset by $0.06 million from a change in restricted cash. Financing activities. Net cash provided by financing activities for the year ended March 31, 2015 was $9.6 million, consisting of $8.2 million in net proceeds from the Keltic Facility, $3.1 million in net proceeds from the issuance of Common Stock under the Distribution Agreements, $0.6 million in proceeds from the exercise of 2011 Warrants and $0.2 million in proceeds from the exercise of stock options, partially offset by the $1.25 million repayment of the Junior Loan and the $1.3 million paid on the Bourbon Term Loan. Net cash provided by financing activities for the year ended March 31, 2014 was $6.5 million, consisting of $4.3 million in net proceeds from the issuance of Common Stock under the Distribution Agreement, $3.8 million in proceeds from the exercise of 2011 Warrants, $2.1 million from the issuance of 5% Convertible Notes, $1.25 million from issuance of the Junior Loan, offset by the $4.5 million paid on the Keltic Facility, $0.5 million paid on the Bourbon Term Loan and $0.1 million paid on the foreign revolving credit facilities. Year ended March 31, 2015 2014 (in thousands) Net cash provided by (used in): Operating activities $ (8,852 ) $ (5,820 ) Investing activities (495 ) (208 ) Financing activities 9,627 6,494 Effect of foreign currency translation 3 3 Net increase in cash and cash equivalents $ 283 $ 469 27  Obligations and commitments Irish bank facilities. For a discussion of our Irish Bank Facilities, please see Existing Financing in “Liquidity and capital resources” above. Keltic Facility. For a discussion of the Keltic Facility, please see Existing Financing in “Liquidity and capital resources” above. Bourbon Term Loan. For a discussion of the Bourbon Term Loan, please see Existing Financing in “Liquidity and capital resources” above. 5% Convertible Subordinated Notes. For a discussion of the 5% Convertible Subordinated Notes, please see Existing Financing in “Liquidity and capital resources” above. Gosling-Castle Partners note. For a discussion of the Gosling-Castle Partners note, please see Existing Financing in “Liquidity and capital resources” above. Currency Translation The functional currencies for our foreign operations are the Euro in Ireland and the British Pound in the United Kingdom. With respect to our consolidated financial statements, the translation from the applicable foreign currencies to U.S. Dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. The resulting translation adjustments are recorded as a component of other comprehensive income. Where in this annual report we refer to amounts in Euros or British Pounds, we have for your convenience also in certain cases provided a conversion of those amounts to U.S. Dollars in parentheses. Where the numbers refer to a specific balance sheet account date or financial statement account period, we have used the exchange rate that was used to perform the conversions in connection with the applicable financial statement. In all other instances, unless otherwise indicated, the conversions have been made using the exchange rates as of March 31, 2015, each as calculated from the Interbank exchange rates as reported by Oanda.com. On March 31, 2015, the exchange rate of the Euro and the British Pound in exchange for U.S. Dollars was €1.00 = U.S.$1.08501 (equivalent to U.S.$1.00 = €0.92152) and £1.00 = U.S.$1.48339 (equivalent to U.S.$1.00 = £0.67402). These conversions should not be construed as representations that the Euro and British Pound amounts actually represent U.S. Dollar amounts or could be converted into U.S. Dollars at the rates indicated. Impact of inflation We believe that our results of operations are not materially impacted by moderate changes in the inflation rate. Inflation and changing prices did not have a material impact on our operations during fiscal 2015 or 2014. Severe increases in inflation, however, could affect the global and U.S. economies and could have an adverse impact on our business, financial condition and results of operations. Recent accounting pronouncements We discuss recently issued and adopted accounting standards in the “Accounting standards adopted” and “Recent accounting pronouncements” sections of note 1 of the “Notes to Consolidated Financial Statements” in the accompanying consolidated financial statements. Cautionary Note Regarding Forward-Looking Statements This annual report includes certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements, which involve risks and uncertainties, relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, liquidity and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable. We use words such as “may”, “will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “seeks”, “predicts”, “could”, “projects”, “potential” and similar terms and phrases, including references to assumptions, in this report to identify forward-looking statements. These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks and factors relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements. These risks and other factors include those listed under “Risk Factors” and as follows: • our history of losses ; • recent worldwide and domestic economic trends and financial market conditions could adversely impact our financial performance; 28  We assume no obligation to publicly update or revise these forward-looking statements for any reason, or to update the reasons actual results could differ materially from those anticipated in, or implied by, these forward-looking statements, even if new information becomes available in the future. Item 7A. Quantitative and Qualitative Disclosures about Market Risk We are transitioning from a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item. • our potential need for additional capital, which, if not available on acceptable terms or at all, could restrict our future growth and severely limit our operations; • our brands could fail to achieve more widespread consumer acceptance, which may limit our growth; • our dependence on a limited number of suppliers, who may not perform satisfactorily or may end their relationships with us, which could result in lost sales, incurrence of additional costs or lost credibility in the marketplace; • our annual purchase obligations with certain suppliers; • the failure of even a few of our independent wholesale distributors to adequately distribute our products within their territories could harm our sales and result in a decline in our results of operations; • the potential limitation to our growth if we are unable to identify and successfully acquire additional brands that are complementary to our existing portfolio, or integrate such brands after acquisitions; • currency exchange rate fluctuations and devaluations may significantly adversely affect our revenues, sales, costs of goods and overall financial results; • our need to maintain a relatively large inventory of our products to support customer delivery requirements, which could negatively impact our operations if such inventory is lost due to theft, fire or other damage; • the possibility that we or our strategic partners will fail to protect our respective trademarks and trade secrets, which could compromise our competitive position and decrease the value of our brand portfolio; • the possibility that we cannot secure and maintain listings in control states, which could cause the sales of our products to decrease significantly; • an impairment in the carrying value of our goodwill or other acquired intangible assets could negatively affect our operating results and shareholders’ equity; • changes in consumer preferences and trends could adversely affect demand for our products; • there is substantial competition in our industry and the many factors that may prevent us from competing successfully; • adverse changes in public opinion about alcohol could reduce demand for our products; • class action or other litigation relating to alcohol misuse or abuse could adversely affect our business; and • adverse regulatory decisions and legal, regulatory or tax changes could limit our business activities, increase our operating costs and reduce our margins. 29  Item 8. Financial Statements and Supplementary Data Index to Financial Statements Page Report of Independent Registered Public Accounting Firm 31 Consolidated Balance Sheets as of March 31, 2015 and 2014 32 Consolidated Statements of Operations for the years ended March 31, 2015 and 2014 33 Consolidated Statements of Comprehensive Loss for the years ended March 31, 2015 and 2014 34 Consolidated Statements of Changes in Equity for the years ended March 31, 2015 and 2014 35 Consolidated Statements of Cash Flows for the years ended March 31, 2015 and 2014 36 Notes to Consolidated Financial Statements 37 30  REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Shareholders Castle Brands Inc. We have audited the accompanying consolidated balance sheets of Castle Brands Inc. and subsidiaries (the “Company”) as of March 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended March 31, 2015. The financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of March 31, 2015 and 2014, and the consolidated results of its operations and its cash flows for each of the years in the two-year period ended March 31, 2015, in conformity with accounting principles generally accepted in the United States of America. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the Company’s internal control over financial reporting as of March 31, 2015, based on criteria established in the 1992 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”), and our report dated June 15, 2015 expressed an unqualified opinion thereon. /s/ EisnerAmper LLP New York, New York June 15, 2015 31  CASTLE BRANDS INC. AND SUBSIDIARIES Consolidated Balance Sheets March 31, 2015 March 31, 2014 ASSETS Current Assets Cash and cash equivalents $ 1,191,603 $ 908,501 Accounts receivable — net of allowance for doubtful accounts of $154,434 and $204,418 at March 31, 2015 and 2014, respectively 10,550,990 8,858,146 Due from shareholders and affiliates 138,750 115,288 Inventories— net of allowance for obsolete and slow moving inventory of $267,557 and $266,473 at March 31, 2015 and 2014, respectively 21,068,241 14,650,029 Deferred tax asset 37,000 473,330 Prepaid expenses and other current assets 1,492,806 1,575,947 Total Current Assets 34,479,390 26,581,241 Equipment — net 665,373 568,395 Intangible assets — net of accumulated amortization of $6,713,774 and $6,058,005 at March 31, 2015 and 2014, respectively 7,683,227 8,178,888 Goodwill 496,226 496,226 Restricted cash 329,471 416,565 Other assets 385,253 280,195 Total Assets $ 44,038,940 $ 36,521,510 LIABILITIES AND EQUITY Current Liabilities Foreign revolving credit facility $ 34,141 $ 20,205 Accounts payable 5,753,617 4,483,764 Accrued expenses 1,067,460 1,073,188 Due to shareholders and affiliates 1,963,883 1,936,241 Total Current Liabilities 8,819,101 7,513,398 Long-Term Liabilities Keltic facility 10,123,544 1,953,037 Bourbon term loan (including $179,063 and $484,375 of related-party participation at March 31, 2015 and 2014, respectively) 744,900 2,015,000 Notes payable - Junior loan (including $300,000 of related party participation at March 31, 2014) — 1,250,000 Notes payable – 5% Convertible notes (including $1,100,000 of related party participation at March 31, 2015 and 2014) 1,675,000 2,125,000 Notes payable – GCP Note 211,580 211,580 Deferred tax liability 1,370,152 1,518,304 Total Liabilities 22,944,277 16,586,319 Commitments and Contingencies (Note 14) Equity Preferred stock, $.01 par value, 25,000,000 shares authorized, no shares issued and outstanding at March 31, 2015 and 2014 — — Common stock, $.01 par value, 300,000,000 shares authorized at March 31, 2015 and 2014, 157,187,658 and 151,841,133 shares issued and outstanding at March 31, 2015 and 2014, respectively 1,571,877 1,518,411 Additional paid-in capital 162,626,893 157,485,965 Accumulated deficit (143,361,711 ) (139,561,969 ) Accumulated other comprehensive loss (2,285,925 ) (1,724,916 ) Total controlling shareholders’ equity 18,551,134 17,717,491  See accompanying notes to the consolidated financial statements. Noncontrolling interests 2,543,529 2,217,700 Total equity 21,094,663 19,935,191 Total Liabilities and Equity $ 44,038,940 $ 36,521,510 32  CASTLE BRANDS INC. AND SUBSIDIARIES Consolidated Statements of Operations *Sales, net and Cost of sales include excise taxes of $6,754,453 and $6,420,730 for the years ended March 31, 2015 and 2014, respectively. See accompanying notes to the consolidated financial statements. Years ended March 31, 2015 2014 Sales, net* $ 57,457,421 $ 48,140,483 Cost of sales* 35,603,632 30,336,667 Provision for obsolete inventory 281,000 200,000 Gross profit 21,572,789 17,603,816 Selling expense 15,254,818 12,529,684 General and administrative expense 6,488,336 5,533,711 Depreciation and amortization 907,540 860,254 Loss from operations (1,077,905 ) (1,319,833 ) Other income, net 16,602 — Loss from equity investment in non-consolidated affiliate — (502,518 ) Foreign exchange loss (4,564 ) (284,962 ) Interest expense, net (1,129,047 ) (1,062,219 ) Net change in fair value of warrant liability — (5,392,594 ) Income tax (expense) benefit, net (1,278,999 ) 590,414 Net loss (3,473,913 ) (7,971,712 ) Net income attributable to noncontrolling interests (325,829 ) (935,035 ) Net loss attributable to controlling interests (3,799,742 ) (8,906,747 ) Dividend to preferred shareholders — (384,599 ) Net loss attributable to common shareholders $ (3,799,742 ) $ (9,291,346 ) Net loss per common share, basic and diluted, attributable to common shareholders $ (0.02 ) $ (0.08 ) Weighted average shares used in computation, basic and diluted, attributable to common shareholders 155,456,341 116,511,444 33  CASTLE BRANDS INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Loss See accompanying notes to the consolidated financial statements. Years ended March 31, 2015 2014 Net loss $ (3,473,913 ) $ (7,971,712 ) Other comprehensive (loss) income: Foreign currency translation adjustment (561,009 ) 193,178 Total other comprehensive (loss) income: (561,009 ) 193,178 Comprehensive loss $ (4,034,922 ) $ (7,778,534 ) 34  CASTLE BRANDS INC. AND SUBSIDIARIES Consolidated Statements of Changes in Equity See accompanying notes to the consolidated financial statements. Accumulated Additional Other Preferred Stock Common Stock Paid-in Accumulated Comprehensive Noncontrolling Total Shares Amount Shares Amount Capital Deficit (Loss) Income Interests Equity BALANCE, MARCH 31, 2013 6,701 $ 67,013 108,773,034 $ 1,087,730 $ 142,661,542 $ (130,270,623 ) $ (1,918,094 ) $ 1,282,665 $ 12,910,233 Net (loss) income (8,906,747 ) 935,035 (7,971,712 ) Foreign currency translation adjustment 193,178 193,178 Issuance of common stock, net of issuance costs 5,394,608 53,946 4,293,356 4,347,302 Conversion of series A preferred stock and accrued dividends (6,701 ) (67,013 ) 27,465,610 274,656 (207,643 ) — Exercise of common stock warrants 10,127,123 101,271 3,747,061 3,848,332 Exercise of common stock options 80,758 808 25,168 25,976 Accrued dividends - series A convertible preferred stock 384,599 (384,599 ) — Reclassification of liability to equity-warrant 6,187,968 6,187,968 Stock-based compensation 393,914 393,914 BALANCE, MARCH 31, 2014 — $ — 151,841,133 $ 1,518,411 $ 157,485,965 $ (139,561,969 ) $ (1,724,916 ) $ 2,217,700 $ 19,935,191 Net (loss) income (3,799,742 ) 325,829 (3,473,913 ) Foreign currency translation adjustment (561,009 ) (561,009 ) Issuance of common stock, net of issuance costs 2,537,924 25,379 3,108,189 3,133,568 Exercise of common stock warrants 1,657,802 16,578 613,387 629,965 Surrender of common stock in connection with exercise of common stock warrant (27,902 ) (279 ) (30,971 ) (31,250 ) Conversion of 5% convertible notes and accrued interest thereon 501,574 5,017 446,400 451,417 Exercise of common stock options 677,127 6,771 216,213 222,984 Stock-based compensation 787,710 787,710 BALANCE, MARCH 31, 2015 — $ — 157,187,658 $ 1,571,877 $ 162,626,893 $ (143,361,711 ) $ (2,285,925 ) $ 2,543,529 $ 21,094,633 35  CASTLE BRANDS INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Years ended March 31, 2015 2014 CASH FLOWS FROM OPERATING ACTIVITIES: Net loss $ (3,473,913 ) $ (7,971,712 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 907,540 860,254 Provision for doubtful accounts (49,984 ) 133,726 Amortization of deferred financing costs 166,942 161,178 Change in fair value of warrant liability — 5,392,594 Deferred income tax expense (benefit), net 288,178 (590,414 ) Loss from equity investment in non-consolidated affiliate — 502,518 Effect of changes in foreign exchange 4,564 284,962 Stock-based compensation expense 787,710 393,914 Provision for obsolete inventories 281,000 200,000 Changes in operations, assets and liabilities: Accounts receivable (1,671,925 ) (1,959,593 ) Due from affiliates (23,462 ) (193,680 ) Inventory (7,223,601 ) (1,246,553 ) Prepaid expenses and supplies 77,587 (591,188 ) Other assets (272,000 ) (188,867 ) Accounts payable and accrued expenses 1,321,722 (597,127 ) Accrued interest — 6,379 Due to related parties 27,642 (416,064 ) Total adjustments (5,378,087 ) 2,152,039 NET CASH USED IN OPERATING ACTIVITIES (8,852,000 ) (5,819,673 ) CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment (333,742 ) (234,693 ) Acquisition of intangible assets (160,109 ) (26,980 ) Change in restricted cash (929 ) 60,137 Payments under contingent consideration agreements — (5,940 ) NET CASH USED IN INVESTING ACTIVITIES (494,780 ) (207,476 ) CASH FLOWS FROM FINANCING ACTIVITIES: Net proceeds from (payments on) Keltic facility 8,170,507 (4,548,284 ) Payments on Bourbon term loan (1,270,100 ) (481,000 ) (Payments on) proceeds from Junior loan (1,250,000 ) 1,250,000 Proceeds from 5% Convertible notes — 2,125,000 Net proceeds from (payments on) from foreign revolving credit facility 21,278 (73,797 ) Proceeds from issuance of common stock 3,319,915 4,531,643 Payments for costs of stock issuance (186,347 ) (184,341 ) Proceeds from exercise of common stock warrants 598,715 3,848,332 Proceeds from exercise of common stock options 222,984 25,976 NET CASH PROVIDED BY FINANCING ACTIVITIES 9,626,952 6,493,529 EFFECTS OF FOREIGN CURRENCY TRANSLATION 2,930 2,798 NET INCREASE IN CASH AND CASH EQUIVALENTS 283,102 469,178 CASH AND CASH EQUIVALENTS — BEGINNING 908,501 439,323 CASH AND CASH EQUIVALENTS — ENDING $ 1,191,603 $ 908,501 SUPPLEMENTAL DISCLOSURES: Schedule of non-cash investing and financing activities: Conversion of series A preferred stock to common stock $ — $ 8,349,539 Conversion of 5% convertible note, and accrued interest thereon, to common stock $ 451,417 $ —  See accompanying notes to the consolidated financial statements. Surrender of common stock in connection with exercise of common stock warrant $ 31,250 $ — Interest paid $ 937,973 $ 867,782 Income taxes paid $ 293,525 $ 14,848 36  CASTLE BRANDS INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements NOTE 1 — ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Description of business — The consolidated financial statements include the accounts of Castle Brands Inc. (the “Company”), its wholly-owned domestic subsidiaries, Castle Brands (USA) Corp. (“CB-USA”) and McLain & Kyne, Ltd. (“McLain & Kyne”), the Company’s wholly-owned foreign subsidiaries, Castle Brands Spirits Group Limited (“CB-IRL”) and Castle Brands Spirits Marketing and Sales Company Limited, and the Company’s 60 % ownership interest in Gosling-Castle Partners Inc. (“GCP”), with adjustments for income or loss allocated based upon percentage of ownership. The accounts of the subsidiaries have been included as of the date of acquisition. All significant intercompany transactions and balances have been eliminated. B. Organization and operations — The Company is principally engaged in the importation, marketing and sale of premium and super premium brands of rums, whiskey, liqueurs, vodka and tequila in the United States, Canada, Europe and Asia. C. Brands — Rum and Ginger Beer — Gosling’s rums, a family of premium rums with a 200-year history, including the award-winning Gosling’s Black Seal rum, for which the Company is, through its export venture GCP, the exclusive marketer outside of Bermuda, and Gosling’s Stormy Ginger Beer, an essential non-alcoholic ingredient in Gosling’s trademarked Dark ‘n Stormy ® rum cocktail. Whiskey —Premium small batch bourbons: Jefferson’s, Jefferson’s Reserve, Jefferson’s Chef’s Collaboration, Jefferson’s Ocean Aged at Sea and Jefferson’s Presidential Select, Jefferson’s Rye, an aged rye whiskey, and Jefferson’s The Manhattan: Barrel Finished Cocktail, a ready-to-drink cocktail; the Clontarf Irish whiskeys, a family of premium Irish whiskeys, available in single malt and classic pure grain versions; Knappogue Castle Whiskey, a vintage-dated premium single-malt Irish whiskey; Knappogue Castle 1951, a pure pot-still whiskey that has been aged for 36 years, and Knappogue Twin Wood, the first Sherry Finished Knappogue Castle Whiskey. Liqueur — Pallini Limoncello, Raspicello and Peachcello premium Italian liqueurs, pursuant to an exclusive U.S. marketing arrangement; Brady’s Irish Cream, a premium Irish cream liqueur; Castello Mio, a super premium Sambuca; Celtic Honey, a premium Irish liqueur; and Gozio amaretto, a premium Italian liqueur, pursuant to a U.S. distribution agreement. Vodka — Boru vodka, an ultra-pure, five-times distilled and specially filtered premium vodka. Boru is produced in Ireland. Tequila — a USDA certified organic, super-premium tequila, Tequila Tierras Autenticas de Jalisco or Tierras. The Company is the exclusive U.S. importer and marketer of Tierras, which is available as blanco, reposado and añejo. D. Cash and cash equivalents — The Company considers all highly liquid instruments with a maturity at date of acquisition of three months or less to be cash equivalents. E. Equity investments - Equity investments are carried at original cost adjusted for the Company’s proportionate share of the investees’ income, losses and distributions. The Company assesses the carrying value of its equity investments when an indicator of a loss in value is present and records a loss in value of the investment when the assessment indicates that an other-than-temporary decline in the investment exists. The Company classifies its equity earnings of non-consolidated affiliate equity investment as a component of net income or loss. F. Trade accounts receivable — The Company records trade accounts receivable at net realizable value. This value includes an appropriate allowance for estimated uncollectible accounts to reflect anticipated losses on the trade accounts receivable balances. The Company calculates this allowance based on its history of write-offs, level of past due accounts based on contractual terms of the receivables and its relationships with and economic status of its customers. For the years ended March 31, 2015 and 2014, the Company recorded allowances for doubtful accounts of $236,000 and $403,409, respectively. G. Revenue recognition — Revenue from product sales is recognized when the product is shipped to a customer (generally a distributor), title and risk of loss has passed to the customer in accordance with the terms of sale (FOB shipping point or FOB destination), and collection is reasonably assured. Revenue is not recognized on shipments to control states in the United States until such time as product is sold through to the retail channel. H. Inventories — Inventories are comprised of distilled spirits, bulk wine, dry good raw materials (bottles, labels, corks and caps), packaging and finished goods, and are valued at the lower of cost or market, using the weighted average cost method. The Company assesses the valuation of its inventories and reduces the carrying value of those inventories that are obsolete or in excess of the Company’s forecasted usage to their estimated net realizable value. The Company estimates the net realizable value of such inventories based on analyses and assumptions including, but not limited to, historical usage, expected future demand and market requirements. A change to the carrying value of inventories is recorded in cost of goods sold. See Note 3. 37  During the years ended March 31, 2015 and 2014, the Company recorded allowances for obsolete and slow moving inventory of $281,000 and $200,000, respectively. The Company recorded these allowances on both raw materials and finished goods, primarily in connection with the disposition of wine brands, label and packaging changes made to certain brands, as well as wine spoilage and certain cost variances. The charges have been recorded as increases to Cost of Sales in the respective years. I. Equipment — Equipment consists of office equipment, computers and software and furniture and fixtures. When assets are retired or otherwise disposed of, the cost and related depreciation is removed from the accounts, and any resulting gain or loss is recognized in the statement of operations. Equipment is depreciated using the straight-line method over the estimated useful lives of the assets ranging from three to five years. J. Goodwill and other intangible assets — Goodwill represents the excess of purchase price including related costs over the value assigned to the net tangible and identifiable intangible assets of businesses acquired. Goodwill and other identifiable intangible assets with indefinite lives are not amortized, but instead are tested for impairment annually, or more frequently if circumstances indicate a possible impairment may exist. Intangible assets with estimable useful lives are amortized over their respective estimated useful lives, generally on a straight-line basis, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Under Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 350, “Intangibles - Goodwill and Other”, impairment of goodwill must be tested at least annually by comparing the fair values of the applicable reporting units with the carrying amount of their net assets, including goodwill. The required two-step approach uses accounting judgments and estimates of future operating results. Changes in estimates or the application of alternative assumptions could produce significantly different results. The estimates that most significantly affect the fair value calculation are related to revenue growth, cost of sales, selling and marketing expenses and discount rates. Impairment testing is done at the reporting level. If the carrying amount of the reporting unit’s net assets exceeds the unit’s fair value, an impairment loss is recognized in an amount equal to the excess of the carrying amount of goodwill over its implied fair value. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination with the fair value of the reporting unit deemed to be the purchase price paid. Rights, trademarks, trade names and formulations are indefinite lived intangible assets not subject to amortization and are tested for impairment at least annually. The impairment test consists of a comparison of the fair value of the asset group allocated to each reporting unit with its allocated carrying amount. The fair value of each reporting unit was determined at March 31, 2015 and 2014 by weighting a combination of the present value of the Company’s discounted anticipated future operating cash flows and values based on market multiples of revenue and earnings before interest, taxes, depreciation and amortization (“EBITDA”) of comparable companies. K. Impairment and disposal of long-lived assets — Under ASC 310, “Accounting for the Impairment or Disposal of Long-lived Assets”, the Company periodically reviews whether changes have occurred that would require revisions to the carrying amounts of its definite lived, long-lived assets. When the sum of the expected future cash flows is less than the carrying amount of the asset, an impairment loss is recognized based on the fair value of the asset. The Company did not record an impairment on long-lived assets for the years ended March 31, 2015 and 2014. L. Shipping and handling — The Company reflects as inventory costs freight-in and related external handling charges relating to the purchase of raw materials and finished goods. These costs are charged to cost of sales at the time the underlying product is sold. The Company also incurs shipping costs in connection with its various marketing activities, including the shipment of point of sale materials to the Company’s regional sales managers and customers, and the costs of shipping product in connection with its various marketing programs and promotions. These shipping charges are included in selling expense and were $2,574,471 and $1,879,881 for the years ended March 31, 2015 and 2014, respectively. M. Excise taxes and duty — Excise taxes and duty are computed at standard rates based on alcohol proof per gallon/liter and are paid after finished goods are imported into the United States and then transferred out of “bond.” Excise taxes and duty are recorded to inventory as a component of the cost of the underlying finished goods. When the underlying products are sold “ex warehouse”, the sales price reflects the taxes paid and the inventoried excise taxes and duties are charged to cost of sales. N. Distributor charges and promotional goods — The Company incurs charges from its distributors for a variety of transactions and services rendered by the distributor, including product depletions, product samples for various promotional purposes, in-store tastings and training where legal, and local advertising where legal. Such charges are reflected as selling expense as incurred. Also, the Company has entered into arrangements with certain of its distributors whereby the purchase of a particular product or products by a distributor is accompanied by a percentage of the sale being composed of promotional goods or as a predetermined discount percentage of dollars off invoice. In such cases, the cost of the promotional goods is charged to cost of sales and dollars off invoice are a reduction to revenue. 38  O. Foreign currency — The functional currency for the Company’s foreign operations is the Euro in Ireland and the British Pound in the United Kingdom. Under ASC 830, “Foreign Currency Matters”, the translation from the applicable foreign currencies to U.S. Dollars is performed for balance sheet accounts using exchange rates in effect at the balance sheet date and for revenue and expense accounts using a weighted average exchange rate during the period. The resulting translation adjustments are recorded as a component of other comprehensive income. Gains or losses resulting from foreign currency transactions are shown as a separate line item in the consolidated statements of operations. P. Fair value of financial instruments — ASC 825, “Financial Instruments”, defines the fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction between willing parties and requires disclosure of the fair value of certain financial instruments. The Company believes that there is no material difference between the fair-value and the reported amounts of financial instruments in the Company’s balance sheets due to the short term maturity of these instruments, or with respect to the Company’s debt, as compared to the current borrowing rates available to the Company. The Company’s investments are reported at fair value in accordance with authoritative guidance, which accomplishes the following key objectives: - Defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date; - Establishes a three-level hierarchy (“valuation hierarchy”) for fair value measurements; - Requires consideration of the Company’s creditworthiness when valuing liabilities; and - Expands disclosures about instruments measured at fair value. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The three levels of the valuation hierarchy are as follows: - Level 1 — inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. - Level 2 — inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are directly or indirectly observable for the asset or liability for substantially the full term of the financial instrument. - Level 3 — inputs to the valuation methodology are unobservable and significant to the fair value measurement. Q. Income taxes — Under ASC 740, “Income Taxes”, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. A valuation allowance is provided to the extent a deferred tax asset is not considered recoverable. The Company has adopted the provisions of ASC 740 and has recognized no adjustment for uncertain tax provisions. The Company recognizes interest and penalties related to uncertain tax positions in general and administrative expense . R. Research and development costs — The costs of research, development and product improvement are charged to expense as incurred and are included in selling expense. S. Advertising — Advertising costs are expensed when the advertising first appears in its respective medium. Advertising expense, which is included in selling expense, was $3,184,392 and $2,052,819 for the years ended March 31, 2015 and 2014, respectively. T. Use of estimates — The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates include the accounting for items such as evaluating annual impairment tests, derivative instruments and equity issuances, warrant valuation, stock-based compensation, allowances for doubtful accounts and inventory obsolescence, depreciation, amortization and expense accruals. 39  NOTE 2 — BASIC AND DILUTED NET LOSS PER COMMON SHARE Basic net loss per common share is computed by dividing net loss by the weighted average number of common shares outstanding during the U. Recent accounting pronouncements — In April 2015, the FASB issued ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs, which requires that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. The recognition and measurement guidance for debt issuance costs are not affected. Upon adoption, the Company will apply the new guidance on a retrospective basis and adjust the balance sheet of each individual period presented to reflect the period-specific effects of applying the new guidance. This guidance is effective for the Company beginning April 1, 2016. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations, cash flows and financial condition. In February 2015, the FASB issued ASU 2015-02, Consolidation: Amendments to the Consolidation Analysis (“ASU 2015-02”). ASU 2015-02 amends the consolidation requirements and significantly changes the consolidation analysis required. ASU 2015-02 requires management to re-evaluate all legal entities under a revised consolidation model specifically (1) modify the evaluation of whether limited partnership and similar legal entities are Variable Interest Entities (“VIEs”), (2) eliminate the presumption that a general partner should consolidate a limited partnership, (3) affect the consolidation analysis of reporting entities that are involved with VIEs particularly those that have fee arrangements and related party relationships, and (4) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Act of 1940 for registered money market funds. The guidance is effective for annual periods and interim periods beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations, cash flows and financial condition. In August 2014, the FASB issued ASU 2014-15, Presentation of Financial Statements Going Concern (Subtopic 205-40) – Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern. Currently, there is no guidance in U.S. GAAP about management’s responsibility to evaluate whether there is substantial doubt about an entity’s ability to continue as a going concern or to provide related footnote disclosures. The amendments in this update provide that guidance. The amendments are intended to reduce diversity in the timing and content of footnote disclosures. The amendments require management to assess an entity’s ability to continue as a going concern by incorporating and expanding upon certain principles that are currently in U.S. auditing standards. Specifically, the amendments (1) provide a definition of the term “substantial doubt,” (2) require an evaluation every reporting period, including interim periods, (3) provide principles for considering the mitigating effect of management’s plans, (4) require certain disclosures when substantial doubt is alleviated as a result of consideration of management’s plans, (5) require an express statement and other disclosures when substantial doubt is not alleviated, and (6) require an assessment for a period of one year after the date that the financial statements are issued (or available to be issued). The amendments in this update are effective for annual periods ending after December 15, 2016. Early adoption is permitted. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations, cash flows and financial condition. In June 2014, the FASB issued ASU No. 2014-12, Compensation – Stock Compensation (Topic 718); Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period. The amendments in this ASU apply to all reporting entities that grant employees share-based payments in which the award terms provide that a performance target that affects vesting could be achieved after the requisite service period. The amendments require that a performance target that affects vesting and that could be achieved after the requisite service period must be treated as a performance condition. A reporting entity should apply existing guidance in Topic 718 as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments in this ASU are effective for annual periods and interim periods beginning after December 15, 2015. Earlier adoption is permitted. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations, cash flows and financial condition. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, to clarify the principles for recognizing revenue. This guidance includes the required steps to achieve the core principle that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This guidance is effective for fiscal years and interim periods beginning after December 15, 2016. The Company is currently evaluating the new guidance to determine the impact the adoption of this guidance will have on the Company’s results of operations, cash flows and financial condition. The Company does not believe that any other recently issued, but not yet effective accounting standards, if currently adopted, would have a material effect on the accompanying financial statements. V. Accounting standards adopted — In April 2014, the FASB issued ASU No. 2014-08 which provides final guidance to change the criteria for reporting discontinued operations while enhancing disclosures in this area. Under the new guidance, only disposals representing a strategic shift, such as a major line of business, a major geographical area or a major equity investment, should be presented as discontinued operations. The guidance will be applied prospectively to new disposals and new classifications of disposal groups as held for sale after the effective date. The Company adopted the guidance effective April 1, 2015 and the adoption of this guidance did not have a material impact on the Company’s results of operations, cash flows or financial condition. period. Diluted net loss per common share is computed giving effect to all potentially dilutive common shares that were outstanding during the period that are not anti-dilutive. Potentially dilutive common shares consist of incremental shares issuable upon exercise of stock options and warrants or conversion of convertible notes outstanding. In computing diluted net loss per share for the years ended March 31, 2015 and 2014, no adjustment has been made to the weighted average outstanding common shares as the assumed exercise of outstanding options and warrants and the assumed conversion of convertible notes is anti-dilutive. 40  Potential common shares not included in calculating diluted net loss per share are as follows: NOTE 3 — INVENTORIES As of March 31, 2015 and 2014, 10% and 19%, respectively, of raw materials and 4% and 5%, respectively, of finished goods were located outside of the United States. In the years ended March 31, 2015 and 2014, the Company acquired $5,333,763 and $3,343,500 of aged bourbon whiskey, respectively, in support of its anticipated near and mid-term needs. The Company estimates the allowance for obsolete and slow moving inventory based on analyses and assumptions including, but not limited to, historical usage, expected future demand and market requirements. Inventories are stated at the lower of weighted average cost or market. NOTE 4 — EQUITY INVESTMENT Investment in Gosling-Castle Partners Inc. As referenced in Note 11, GCP does not file consolidated tax returns with the Company. For the year ended March 31, 2015, GCP recognized $(288,178) of deferred tax expense on GCP’s estimated stand-alone taxable income. The Company allocated 40% of this expense, or ($115,271), to minority interest for the year ended March 31, 2015. Discontinuation of Investment in DP Castle Partners, LLC In August 2010, CB-USA formed DP Castle Partners, LLC (“DPCP”) with Drink Pie, LLC to manage the manufacturing and marketing of Travis Hasse’s Original Apple Pie Liqueur, Cherry Pie Liqueur and any future line extensions of the brand. In December 2013, CB-USA determined to cease marketing and selling these brands and returned the remaining inventory to Drink Pie, LLC. For the year ended March 31, 2014, CB-USA purchased $170,880 in finished goods from DPCP under a distribution agreement. At March 31, 2014, CB-USA owned 20% of now inactive DPCP. CB-USA also earned a defined rate of interest on its capital contribution to DPCP, based on its ownership in DPCP. For the year ended March 31, 2014, CB-USA earned $4,200 in interest income on its capital contribution to DPCP. The Company accounted for this investment under the equity method of accounting. In connection with the discontinuation of marketing and sales efforts, the Company recognized a loss of $502,518 from its investment in DPCP for the year ended March 31, 2014, including a $120,900 loss on investment and write-offs of $399,618 on the remaining receivable balances due from DPCP. Years ended March 31, 2015 2014 Stock options 11,988,188 11,174,007 Warrants to purchase common stock 120,000 1,777,802 5% Convertible notes 1,861,111 2,361,111 Total 13,969,299 15,312,920 March 31, 2015 2014 Raw materials – net $ 9,250,893 $ 4,502,234 Finished goods – net 11,817,348 10,147,795 Total $ 21,068,241 $ 14,650,029 41  NOTE 5 — EQUIPMENT, NET Equipment consists of the following: Depreciation expense for the years ended March 31, 2015 and 2014 totaled $249,683 and $204,180, respectively. NOTE 6 — GOODWILL AND INTANGIBLE ASSETS The changes in the carrying amount of goodwill for the years ended March 31, 2015 and 2014 were as follows: Intangible assets consist of the following: Accumulated amortization consists of the following: * Other identifiable intangible assets — indefinite lived consists of product formulations and the Company’s relationships with its distillers. March 31, 2015 2014 Equipment and software $ 2,434,340 $ 2,317,310 Furniture and fixtures 40,898 10,325 2,475,238 2,327,635 Less: accumulated depreciation 1,809,865 1,759,240 Balance $ 665,373 $ 568,395 Amount Balance as of March 31, 2013 $ 490,286 Payments under McLain and Kyne agreement 5,940 Balance as of March 31, 2014 $ 496,226 Year ended March 31, 2015 — Balance as of March 31, 2015 $ 496,226 March 31, 2015 2014 Definite life brands $ 170,000 $ 170,000 Trademarks 631,693 535,947 Rights 8,271,555 8,271,555 Product development 161,321 96,959 Patents 994,000 994,000 Other 55,460 55,460 10,284,029 10,123,921 Less: accumulated amortization 6,713,774 6,058,005 Net 3,570,255 4,065,916 Other identifiable intangible assets — indefinite lived* 4,112,972 4,112,972 $ 7,683,227 $ 8,178,888 March 31, 2015 2014 Definite life brands $ 170,000 $ 170,000 Trademarks 295,956 262,098 Rights 5,513,162 4,961,170 Product development 24,002 20,350 Patents 710,654 644,387 Other - - Accumulated amortization $ 6,713,774 $ 6,058,005 42  Amortization expense for the years ended March 31, 2015 and 2014 totaled $655,769 and $654,005, respectively. Estimated aggregate amortization expense for each of the next five fiscal years is as follows: NOTE 7 — RESTRICTED CASH At March 31, 2015 and 2014, the Company had €303,657 or $329,471 (translated at the March 31, 2015 exchange rate) and €302,920 or $416,565 (translated at the March 31, 2014 exchange rate), respectively, of cash restricted from withdrawal and held by a bank in Ireland as collateral for overdraft coverage, creditors’ insurance, customs and excise guaranty and a revolving credit facility as described in Note 8A below. NOTE 8 — NOTES PAYABLE AND CAPITAL LEASE Years ending March 31, Amount 2016 $ 711,696 2017 705,249 2018 646,973 2019 607,478 2020 567,536 Total $ 3,238,932 March 31, 2015 2014 Notes payable consist of the following: Foreign revolving credit facilities (A) $ 34,141 $ 20,205 Note payable – GCP note (B) 211,580 211,580 Keltic facility (C) 10,123,544 1,953,037 Bourbon term loan (D) 744,900 2,015,000 Junior loan (E) — 1,250,000 5% Convertible notes (F) 1,675,000 2,125,000 Total $ 12,789,165 $ 7,574,822 A. The Company has arranged various facilities aggregating €303,657 or $329,471 (translated at the March 31, 2015 exchange rate) with an Irish bank, including overdraft coverage, creditors’ insurance, customs and excise guaranty, and a revolving credit facility. These facilities are payable on demand, continue until terminated by either party, are subject to annual review, and call for interest at the lender’s AA1 Rate minus 1.70%. The balance on the credit facilities included in notes payable totaled €31,466 or $34,141 (translated at the March 31, 2015 exchange rate) and €14,693 or $20,205 (translated at the March 31, 2014 exchange rate), at March 31, 2015 and 2014, respectively. B. In December 2009, GCP issued a promissory note (the “GCP Note”) in the aggregate principal amount of $211,580 to Gosling's Export (Bermuda) Limited in exchange for credits issued on certain inventory purchases. The GCP Note matures on April 1, 2020, is payable at maturity, subject to certain acceleration events, and calls for annual interest of 5%, to be accrued and paid at maturity. At March 31, 2015 and 2014, $10,579 of accrued interest was converted to amounts due to affiliates. At March 31, 2015 and 2014, $211,580 of principal due on the GCP Note was included in long-term liabilities. C. In August 2011, the Company and CB-USA entered into a loan agreement with Keltic Financial Partners II, LP (“Keltic”), which, as amended, provides for availability (subject to certain terms and conditions) of a facility of up to $12.0 million (the “Keltic Facility”) for the purpose of providing the Company with working capital. In September 2014, the Company and CB-USA entered into an Amended and Restated Loan and Security Agreement (the “Amended Agreement”) with ACF FinCo I LP (“ACF”), as successor in interest to Keltic, in order to amend certain terms of the Keltic Facility and the Bourbon Term Loan (defined below). Among other changes, the Amended Agreement modified certain aspects of the existing Keltic Facility, including increasing the maximum amount of the Keltic Facility from $8,000,000 to $12,000,000 and increasing the inventory sub-limit from $4,000,000 to $6,000,000. In addition, the term of the Keltic Facility was extended from December 31, 2016 to July 31, 2019. The Keltic Facility interest rate was reduced to the rate that, when annualized, is the greatest of (a) the Prime Rate plus 3.00%, (b) the LIBOR Rate plus 5.50% and (c) 6.25%. As of December 31, 2014, the Keltic Facility interest rate was 6.25%. The monthly facility fee was reduced from 1.00% per annum of the maximum Keltic Facility amount to 0.75%. In addition, the Amended Agreement contains EBITDA targets allowing for further interest rate reductions in the future. The Amended Agreement also modifies certain aspects of the EBITDA covenant that was contained in the previously existing loan and security agreement, dated as of August 19, 2011, as amended. The Company paid ACF an aggregate $120,000 amendment fee in connection with the execution of the Amended Agreement. 43  Keltic required as a condition to funding the Bourbon Term Loan that Keltic had entered into a participation agreement (the "Participation Agreement") providing for an initial aggregate amount of $750,000 of the Bourbon Term Loan to be purchased by junior participants. Certain related parties of the Company purchased a portion of these junior participations in the Bourbon Term Loan, including Frost Gamma Investments Trust ($500,000), Mark E. Andrews, III ($50,000) and an affiliate of Richard J. Lampen ($50,000) (amounts shown are initial purchase amounts). Under the terms of the Participation Agreement, the junior participants receive interest at the rate of 11% per annum. Neither the Company nor CB-USA is a party to the Participation Agreement. However, the Borrower is party to a fee letter (the "Fee Letter") with the junior participants (including the related party junior participants) pursuant to which the Borrower is obligated to pay the junior participants an aggregate commitment fee of $45,000 in three equal annual installments of $15,000. In August 2013, the Bourbon Term Loan was amended to provide the Company with the ability to increase the maximum aggregate principal amount of the Bourbon Term Loan from $2,500,000 to up to $4,000,000 to finance the purchase of aged whiskies following the identification of junior participants to purchase a portion of the increased Bourbon Term Loan amount. The balance on the Bourbon Term Loan included in notes payable totaled $744,900 and $2,015,000 at March 31, 2015 and 2014, respectively. In May 2015, the Bourbon Term Loan was paid in full in accordance with its standard terms in the normal course of business. In connection with the amendment, the Company and CB-USA entered into the following ancillary agreements: (i) a Reaffirmation Agreement with (a) certain officers of the Company and CB-USA, including John Glover, the Company’s Chief Operating Officer, T. Kelley Spillane, the Company’s Senior Vice President - Global Sales, and Alfred Small, the Company’s Senior Vice President, Chief Financial Officer, Treasurer and Secretary, (b) certain participants in the Bourbon Term Loan and (c) certain junior lenders to the Company, including Frost Gamma Investments Trust, an entity affiliated with Phillip Frost, M.D., a director and principal shareholder of the Company, Mark E. Andrews, III, a director of the Company and the Company’s Chairman, an affiliate of Richard J. Lampen, a director of the Company and the Company’s President and Chief Executive Officer, an affiliate of Glenn Halpryn, a director of the Company, Dennis Scholl, a former director of the Company, and Vector Group Ltd., a more than 5% shareholder of the Company, of which Richard Lampen is an executive officer and Henry Beinstein, a director of the Company, is a director, which, among other things, reaffirms the existing Validity and Support Agreements by and among each officer, the Company, CB-USA and ACF, as successor-in-interest to Keltic; (ii) an Amended and Restated Term Note (the "Term Note"); and (iii) an Amended and Restated Revolving Credit Note (the "Revolving Note"). In connection with the Amended Agreement, on September 22, 2014, ACF entered into an amendment to that certain Subordination Agreement, dated as of August 7, 2013 (as amended, the "Subordination Agreement"), by and among ACF, as successor-in-interest to Keltic, and certain junior lenders to the Company; neither the Company nor CB-USA is a party to the Subordination Agreement. The Company and CB-USA are referred to individually and collectively as the Borrower. The Borrower may borrow up to the maximum amount of the Keltic Facility, provided that the Borrower has a sufficient borrowing base (as defined under the Amended Agreement). For the year ended March 31, 2015, the Company paid interest at 6.5%, until such time as the interest was reduced to 6.25% in connection with the September 2014 amendment. Interest is payable monthly in arrears, on the first day of every month on the average daily unpaid principal amount of the Keltic Facility. After the occurrence and during the continuance of any "Default" or "Event of Default" (as defined under the Amended Agreement), the Borrower is required to pay interest at a rate that is 3.25% per annum above the then applicable Keltic Facility interest rate. There have been no Events of Default under the Keltic Facility. In addition to the fee in connection with the Amended Agreement, the Company paid a $40,000 commitment fee in connection with the first amendment, a $70,000 closing and commitment fee in connection with the second amendment and a $25,000 closing and commitment fee in connection with the third amendment. Keltic also receives a collateral management fee of $1,000 per month (increased to $2,000 after the occurrence of and during the continuance of an Event of Default). The Amended Agreement contains standard borrower representations and warranties for asset-based borrowing and a number of reporting obligations and affirmative and negative covenants. The Amended Agreement includes negative covenants that, among other things, restrict the Borrower’s ability to create additional indebtedness, dispose of properties, incur liens and make distributions or cash dividends. At March 31, 2015, the Company was in compliance, in all respects, with the covenants under the Amended Agreement. At March 31, 2015 and 2014, $10,123,544 and $1,953,037, respectively, due on the Keltic Facility was included in long-term liabilities. D. In March 2013, the Company and CB-USA entered into an inventory term loan of $2,496,000 (the "Bourbon Term Loan") that was used to purchase bourbon inventory on March 11, 2013. Unless sooner terminated in accordance with its terms, the Bourbon Term Loan matures on July 31, 2019. The Bourbon Term Loan interest rate is the rate that, when annualized, is the greatest of (a) the Prime Rate plus 4.25%, (b) the LIBOR Rate plus 6.75% and (c) 7.50%. For the year ended March 31, 2015, the Company paid interest of 7.5%. Interest is payable monthly in arrears, on the first day of every month on the average daily unpaid principal amount of the Bourbon Term Loan. After the occurrence and during the continuance of any "Default" or "Event of Default" (as defined under the loan agreement), the Borrower is required to pay interest at a rate that is 3.25% per annum above the then applicable Bourbon Term Loan interest rate. The Borrower is required to pay down the principal balance of the Bourbon Term Loan within 15 banking days from the completion of a bottling run of bourbon from the bourbon inventory stock purchased on or about the date of the Bourbon Term Loan in an amount equal to the purchase price of such bourbon. The unpaid principal balance of the Bourbon Term Loan, all accrued and unpaid interest thereon, and all fees, costs and expenses payable in connection with the Bourbon Term Loan are due and payable in full on December 31, 2016. 44  Payments due on notes payable are as follows: E. In August 2013, the Company entered into a Loan Agreement (the "Junior Loan Agreement"), by and between the Company and the lending parties thereto (the "Junior Lenders"), which provided for an aggregate $1,250,000 unsecured loan (the "Junior Loan") to the Company. The Junior Loan bore interest at a rate of 11% per annum, payable quarterly in arrears commencing November 1, 2013, and was set to mature on October 15, 2015. The Junior Loan Agreement provided for a funding fee of 2% per annum on the then outstanding Junior Loan balance (pro-rated for any period of less than one year), payable pro rata among the Junior Lenders on the date of the Junior Loan Agreement and on the first and second anniversaries thereof. The Junior Lenders included Frost Gamma Investments Trust ($200,000), Mark E. Andrews, III ($50,000) and an affiliate of Richard J. Lampen ($50,000) In September 2014, in connection with the Amended Agreement described in Note 8C, the Company used proceeds from the Keltic Facility to repay the $1,250,000 principal amount outstanding under the Junior Loan and all accrued and outstanding interest. At March 31, 2014, $1,250,000 of principal due on the Junior Loan was included in long-term liabilities. F. In October 2013, the Company entered into a 5% Convertible Subordinated Note Purchase Agreement (the "Note Purchase Agreement") with the purchasers party thereto, under which the Company issued an aggregate initial principal amount of $2,125,000 of unsecured subordinated notes (the "Convertible Notes"). The Convertible Notes bear interest at a rate of 5% per annum, payable quarterly, until their maturity date of December 15, 2018. The Convertible Notes, and accrued but unpaid interest thereon, are convertible in whole or in part from time to time at the option of the holders thereof into shares of the Company’s common stock at a conversion price of $0.90 per share (the "Conversion Price"). The Convertible Notes may be prepaid in whole or in part at any time without penalty or premium, but with payment of accrued interest to the date of prepayment. The Convertible Notes contain customary events of default, which, if uncured, entitle each note holder to accelerate the due date of the unpaid principal amount of, and all accrued and unpaid interest on, the Convertible Notes. The purchasers of the Convertible Notes include related parties of the Company, including an affiliate of Dr. Phillip Frost ($500,000), Mark E. Andrews, III ($50,000), an affiliate of Richard J. Lampen ($50,000), an affiliate of Glenn Halpryn ($200,000), a director, Dennis Scholl ($100,000), a former director, and Vector Group Ltd. ($200,000). The Company may forcibly convert all or any part of the Convertible Notes and all accrued but unpaid interest thereon if (i) the average daily volume of the Company’s common stock (as reported on the principal market or exchange on which the common stock is listed or quoted for trading) exceeds $50,000 per trading day and (ii) the volume weighted average price of the common stock for at least twenty (20) trading days during any thirty (30) consecutive trading day period exceeds 250% of the then-current conversion price. Any forced conversion will be applied ratably to the holders of all Convertible Notes issued pursuant to the Note Purchase Agreement based on each holder’s then-current note holdings. In connection with the Note Purchase Agreement, each purchaser of the Convertible Notes was required to execute a joinder to the subordination agreement, by and among Keltic and certain other junior lenders to the Company; the Company is not a party to the Subordination Agreement. In the year ended March 31, 2015, Convertible Note holders converted $350,000 of Convertible Notes and $787 of accrued interest thereon into 389,676 shares of common stock. At March 31, 2015 and 2014, $1,675,000 and $2,125,000 of principal due on the Convertible Notes was included in long-term liabilities, respectively. Years ending March 31, Amount 2016 $ 34,141 2017 — 2018 — 2019 1,675,000 2020 10,868,444 Thereafter 211,580 Total $ 12,789,165 45  NOTE 9 — EQUITY Equity distribution agreement — In November 2014, the Company entered into an Equity Distribution Agreement (the "2014 Distribution Agreement") with Barrington Research Associates, Inc. ("Barrington"), as sales agent, under which the Company may issue and sell over time and from time to time, to or through Barrington, shares (the "Shares") of its common stock having a gross sales price of up to $10,000,000. Sales of the Shares pursuant to the 2014 Distribution Agreement, if any, may be effected by any method permitted by law deemed to be an "at-the-market" offering as defined in Rule 415 of the Securities Act of 1933, as amended, including without limitation directly on the NYSE MKT LLC or any other existing trading market for the common stock or through a market maker, up to the amount specified, and otherwise to or through Barrington in accordance with the placement notices delivered by the Company to Barrington. Also, with the prior consent of the Company, some of the Shares may be sold in privately negotiated transactions. Under the 2014 Distribution Agreement, Barrington will be entitled to compensation of 2.0 % of the gross proceeds from the sale of all of the Shares sold through Barrington, as sales agent, pursuant to the 2014 Distribution Agreement. Also, the Company will reimburse Barrington for certain expenses incurred in connection with the matters contemplated by the 2014 Distribution Agreement, up to an aggregate of $50,000, plus up to an additional $7,500 per calendar quarter related to ongoing maintenance; provided, however, that such reimbursement amount shall not exceed 8% of the aggregate gross proceeds received by the Company under the 2014 Distribution Agreement. From November 2014 through March 31, 2015, the Company sold 1,290,581 Shares pursuant to the 2014 Distribution Agreement, with total gross proceeds of $2,088,674, before deducting sales agent and offering expenses of $122,149. In November 2013, the Company entered into an Equity Distribution Agreement (the "2013 Distribution Agreement") with Barrington, as sales agent, under which the Company could issue and sell over time and from time to time, to or through Barrington, Shares of its common stock having a gross sales price of up to $6.0 million. In the three months ended June 30, 2014, the Company sold 1,247,343 Shares pursuant to the 2013 Distribution Agreement, with total gross proceeds of $1,231,241, before deducting sales agent and offering expenses of $64,198. No Shares were sold in the nine-month period from July 1, 2014 through March 31, 2015 under the 2013 Distribution Agreement. The 2013 Distribution Agreement expired in August 2014 upon the expiration of the Company’s Registration Statement on Form S-3 under which the shares were sold. Preferred stock dividends – Holders of the Company’s 10% Series A Convertible Preferred Stock, par value $0.01 per share (“Series A Preferred Stock”) were entitled to receive cumulative dividends at the rate per share (as a percentage of the stated value of $1,000 per share) of 10% per annum, whether or not declared by the Company’s Board of Directors, which were only payable in shares of the Company’s common stock upon conversion of the Series A Preferred Stock or upon a liquidation. For the year ended March 31, 2014, the Company recorded accrued dividends of $384,599, included as an increase in the accumulated deficit and in additional paid-in capital on the accompanying consolidated balance sheets. On February 11, 2014, the Company’s Board of Directors approved the mandatory conversion of all outstanding shares of the Series A Preferred Stock pursuant to their terms, effective on or about February 24, 2014. Pursuant to the mandatory conversion, all 6,271 outstanding shares of Series A Preferred Stock, and accrued dividends thereon, converted into 25,760,881 shares of common stock. Preferred stock conversions — In the period prior to the February 11, 2014 mandatory conversion, holders of Series A Preferred Stock converted 430 shares of Series A Preferred Stock, and accrued dividends thereon, into 1,704,729 shares of common stock. Convertible Notes conversion - In the year ended March 31, 2015, Convertible Note holders converted $350,000 of Convertible Notes and $787 of accrued interest thereon into 389,676 shares of common stock. NOTE 10 — FOREIGN CURRENCY FORWARD CONTRACTS The Company enters into forward contracts from time to time to reduce its exposure to foreign currency fluctuations. The Company recognizes in the balance sheet derivative contracts at fair value, and reflects any net gains and losses currently in earnings. At March 31, 2015 and 2014, the Company had no forward contracts outstanding. Gain or loss on foreign currency forward contracts, which was de minimis during the periods presented, is included in other income and expense. NOTE 11 — PROVISION FOR INCOME TAXES The Company accounts for taxes in accordance with ASC 740, “Income Taxes”, which requires the recognition of tax benefits or expense on the temporary differences between the tax basis and book basis of its assets and liabilities. Deferred tax assets and liabilities are measured using the enacted tax rates expected to apply to taxable income in the years in which those differences are expected to be recovered or settled. 46  Tax years 2012 through 2015 remain open to examination by federal and state tax jurisdictions. The Company has various foreign subsidiaries for which tax years 2009 through 2015 remain open to examination in certain foreign tax jurisdictions. The Company’s income tax expense for the year ended March 31, 2015 and the Company’s income tax benefit for the year ended March 31, 2014 both consist of federal, state and local taxes attributable to GCP, which does not file a consolidated income tax return with the Company, and foreign taxes. As of March 31, 2015, the Company had federal net operating loss carryforwards of approximately $80,200,000 for U.S. tax purposes, which expire through 2035, and foreign net operating loss carryforwards of approximately $19,900,000, which carry forward without limit of time. Utilization of the U.S. tax losses may be limited by the “change of ownership” rules as set forth in section 382 of the Internal Revenue Code. The pre-tax income, on a financial statement basis, from foreign sources totaled $90,466 for the year ended March 31, 2015 and $168,233 for the year ended March 31, 2014. The Company did not have any undistributed earnings from foreign subsidiaries at March 31, 2015 and 2014. Income taxes consist of the following: For the year ended March 31, 2015 the Company incurred $19,501 in interest and penalties which has been included in general and administrative expense on the accompanying consolidated statements of operations. The following table reconciles the effective income tax rate and the federal statutory rate of 34%. The Company revised its prior year presentation of the reconciliation of the effective income tax rate to conform to the current year presentation. In connection with the investment in GCP, the Company recorded a deferred tax liability on the ascribed value of the acquired intangible assets of $2,222,222, increasing the value of the asset. The deferred tax liability is being reversed over the amortization period of the intangible asset (15 years). For the year ended March 31, 2015 the Company recognized $1,278,999 of income tax expense, net and for the year ended March 31, 2014, the Company recognized $590,414 of income tax benefit, net. The tax effects of temporary differences that give rise to deferred tax assets and deferred tax liabilities are presented below. Federal State and Local Total March 31, 2015: Current 608,589 382,232 990,821 Deferred 214,958 73,220 288,178 Total 823,547 455,452 1,278,999 March 31, 2014: Current — 31,068 31,068 Deferred (550,482 ) (71,000 ) (621,482 ) Total (550,482 ) (39,932 ) (590,414 ) Years ended March 31, 2015 2014 % % Computed expected tax benefit, at 34% (34.00 ) (34.00 ) Permanent items 3.10 0.80 Change in valuation allowance 78.30 5.80 Net change in fair value of warrant liability 0.00 25.20 Effect of foreign rate differential 1.80 0.50 Taxes included in minority interest 14.70 (0.30 ) Intercompany profit 2.60 (0.50 ) Other 3.50 3.10 State and local taxes, net of federal benefit (11.70 ) (7.46 ) Income tax expense (benefit) 58.30 (6.86 ) March 31, 2015 2014 Deferred income tax assets: Foreign currency transactions $ 74,000 $ 72,000 Accounts receivable 5,000 5,000 Inventory 518,000 304,000  In preparation of tax returns there was a true-up of March 31, 2014 net operating loss carryforwards - US by $2,520,000 that was offset by a change in the valuation allowance of $2,520,000. Stock based compensation 2,440,000 2,125,000 Amortization of intangibles — 206,000 Net operating loss carryforwards — U.S. 32,676,000 32,186,000 Net operating loss carryforwards — foreign 1,990,000 1,974,000 Other 2,000 2,000 Total gross assets 37,705,000 36,874,000 Less: Valuation allowance (37,668,000 ) (36,401,000 ) Net deferred asset $ 37,000 $ 473,000 Deferred income tax liability: Intangible assets acquired in acquisition of subsidiary $ (629,444 ) $ (629,444 ) Intangible assets acquired in investment in GCP (740,708 ) (888,863 ) Net deferred income tax liability $ (1,370,152 ) $ (1,518,307 ) 47  Through March 31, 2013, the Company recorded a full valuation allowance against its deferred tax assets as it believed it was more likely than not that such deferred tax assets would not be realized. The Company released its deferred tax asset valuation allowance allocated to GCP as of March 31, 2014 due to management’s determination that it was “more likely than not” that the GCP’s deferred tax assets would be realized. “More likely than not” is defined as greater than 50% probability of occurrence. Management considered the guidance in paragraphs 21-23 of ASC 740-10-30 in forming its conclusion. A determination as to the ultimate realization of the deferred tax assets is dependent upon management’s judgment and evaluation of both positive and negative evidence, forecasts of future taxable income, applicable tax planning strategies, and an assessment of current and future economic and business conditions. In 2014, GCP was in a position of cumulative profitability on a pre-tax basis, considering its operating results for the three years ended March 31, 2014. Management concluded that this record of cumulative profitability in recent years, in addition to a long range forecast showing continued profitability for GCP, provided sufficient positive evidence that the net U.S. federal tax benefits more likely than not would be realized. Accordingly, in the year ended March 31, 2014, the Company released the valuation allowance against GCP’s net federal deferred assets, resulting in a $473,330 benefit in provision for income taxes for the year ended March 31, 2014. The Company recognized the $473,330 benefit in provision for income taxes as an expense for the year ended March 31, 2015. In addition, at March 31, 2014, the Company changed its estimate of the cumulative deferred tax asset allocated to the amortization of intangibles. The Company’s income tax benefit and effective tax rate for the years ended March 31, 2015 and 2014 reflect the impact of this valuation allowance reversal and change in estimate. The valuation allowance for deferred tax assets as of March 31, 2015 and 2014 was approximately $37,668,000 and $36,401,000, respectively. The net change in the total valuation allowance for the years ended March 31, 2015 and 2014 was $1,267,000 and $258,000, respectively. The Company does not offset its deferred tax assets and liabilities because its deferred tax assets and liabilities are in different taxable entities which do not file consolidated returns. NOTE 12 — STOCK-BASED COMPENSATION A. Stock Incentive Plan — In July 2003, the Company implemented the 2003 Stock Incentive Plan (the “2003 Plan”), which provides for awards of incentive and non-qualified stock options, restricted stock and stock appreciation rights for its officers, employees, consultants and directors to attract and retain such individuals. Stock option grants under the Plan are granted with an exercise price at or above the fair market value of the underlying common stock at the date of grant, generally vest over a three to five year period and expire ten years after the grant date. As established, there were 2,000,000 shares of common stock available for distribution under the 2003 Plan. In January 2009, the Company’s shareholders approved an amendment to the 2003 Plan to increase the number of shares available under the 2003 Plan from 2,000,000 to 12,000,000 and to establish the maximum number of shares issuable to any one individual in any particular year. As of August 2013, no new awards may be issued under the 2003 Plan. In October 2012, the Company’s shareholders approved the 2013 Incentive Compensation Plan (“2013 Plan”) which provides for awards of incentive and non-qualified stock options, restricted stock and stock appreciation rights for its officers, employees, consultants and directors to attract and retain such individuals. As of March 31, 2015, 2,779,000 shares had been issued under the 2013 Plan, with 7,221,000 shares remaining available for issuance. Stock-based compensation expense for the years ended March 31, 2015 and 2014 amounted to $787,710 and $393,914, respectively, of which $178,137 and $81,567, respectively, is included in selling expense and $609,573 and $312,347, respectively, is included in general and administrative expense for the years ended March 31, 2015 and 2014, respectively. At March 31, 2015, total unrecognized compensation cost amounted to approximately $1,608,518, representing 4,924,055 unvested options. This cost is expected to be recognized over a weighted-average period of 2.22 years. There were 677,127 options and 80,758 options exercised during the years ended March 31, 2015 and 2014, respectively. The Company did not recognize any related tax benefit for the years ended March 31, 2015 and 2014, as the effects were de minimis. Stock Options — A summary of the options outstanding under the 2003 and 2013 Plans is as follows: Years ended March 31, 2015 2014 Weighted Weighted Average Average Exercise Exercise Shares Price Shares Price Outstanding at beginning of year 11,174,007 $ 0.51 8,120,765 $ 0.64 Granted 2,525,000 1.04 3,300,000 0.43 Exercised (677,127 ) 0.33 (80,758 ) 0.32 Forfeited (1,033,692 ) 1.10 (166,000 ) 5.79 Outstanding and expected to vest at end of period 11,988,188 $ 0.58 11,174,007 $ 0.51 Exercisable at period end 7,064,133 $ 0.49 5,511,447 $ 0.63  Weighted average fair value of grants during the period $ 0.65 $ 0.26 48  The following table summarizes activity pertaining to options outstanding and exercisable at March 31, 2015: Total stock options exercisable as of March 31, 2015 were 7,064,133. The weighted average exercise price of these options was $0.49. The weighted average remaining life of the options outstanding was 6.73 years and of the options exercisable was 5.56 years. The following summarizes activity pertaining to the Company’s unvested options for the years ended March 31, 2015 and 2014: The fair value of each award under the 2003 and 2013 Plans is estimated on the grant date using the Black-Scholes option pricing model and is affected by assumptions regarding a number of complex and subjective variables. The use of an option pricing model also requires the use of a number of complex assumptions including expected volatility, risk-free interest rate, expected dividends, and expected term. Expected volatility is based on the Company’s historical volatility and the volatility of a peer group of companies over the expected life of the option. The expected term and vesting of the options represents the estimated period of time until exercise. The expected term was determined using the simplified method available under current guidance. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company has not paid dividends on its common stock in the past and does not plan to pay any dividends on its common stock in the near future. Current authoritative guidance also requires the Company to estimate forfeitures at the time of grant and revise these estimates, if necessary, in subsequent periods if actual forfeitures differ from those estimates. The Company estimates forfeitures based on its expectation of future experience while considering its historical experience. Options Outstanding Options Exercisable Weighted Average Weighted Remaining Average Aggregate Range of Life in Exercise Intrinsic Exercise Prices Shares Years Shares Price Value $0.01 — $0.25 580,300 3.60 580,300 $ 0.22 $ 682,957 $0.26 — $0.40 8,532,888 6.28 6,076,833 0.34 6,470,305 $1.01 — $2.00 2,741,000 9.05 273,000 1.26 69,870 $6.01 — $7.00 17,000 1.99 17,000 6.36 — $7.01 — $8.00 109,500 1.21 109,500 7.57 — $8.01 — $9.00 7,500 1.86 7,500 9.00 — 11,988,188 6.73 7,064,133 $ 0.49 $ 7,223,132 Weighted Average Exercise Shares Price Unvested at March 31, 2013 3,871,807 $ 0.32 Granted 3,300,000 0.43 Canceled or expired (10,000 ) 0.32 Vested (1,499,247 ) 0.32 Unvested at March 31, 2014 5,662,560 $ 0.32 Granted 2,525,000 1.04 Canceled or expired (954,083 ) 0.44 Vested (2,309,422 ) 0.41 Unvested at March 31, 2015 4,924,055 $ 0.70 49  The fair value of options at grant date was estimated using the Black-Scholes option pricing model utilizing the following weighted average assumptions: 2011 Warrants issued in connection with the Series A Preferred Stock The warrants issued in connection with the Series A Preferred Stock (the “2011 Warrants”) had an exercise price of $0.38 per share, subject to adjustment, and were exercisable for a period of five years. The exercise price of the 2011 Warrants was equal to 125% of the conversion price of the Series A Preferred Stock. The Company accounted for the 2011 Warrants issued in June 2011 in the consolidated financial statements as a liability at their initial fair value of $487,022 and accounted for the 2011 Warrants issued in October 2011 as a liability at their initial fair value of $780,972. Changes in the fair value of the 2011 Warrants were recognized in earnings for each subsequent reporting period. In November 2013, in accordance with certain terms of the 2011 Warrants, the down-round provisions included in the terms of the warrant ceased to be in force or effect as a result of the historical volume weighted average price and trading volume of the Company’s common stock. The Company then reclassed the fair value of the outstanding warrant liability of $6,187,968 to equity, resulting in an increase to additional paid-in capital. For the year ended March 31, 2014 the Company recorded a loss on the change in the value of the 2011 Warrants of $5,392,594. The fair value of the warrants is a Level 3 fair value under the valuation hierarchy and was estimated using the Black-Scholes option pricing model utilizing the following assumptions: 2011 Warrants exercised – On April 2, 2014, the Company called for the cancellation of all 1,657,802 unexercised 2011 Warrants pursuant to the terms of such 2011 Warrants after satisfying applicable conditions. Pursuant to the call for cancellation, holders of all 1,657,802 unexercised 2011 Warrants exercised such 2011 Warrants and received 1,657,802 shares of common stock. The Company received $629,965 in cash upon the exercise of these warrants. In the year ended March 31, 2014, holders of 2011 Warrants exercised 10,127,123 2011 Warrants and received shares of common stock. The Company received $3,848,332 in cash upon the exercise of these warrants. These exercised warrants had a weighted average fair market value of $0.50 at exercise date. The following is a summary of the Company’s outstanding warrants for the periods presented: March 31, 2015 2014 Risk-free interest rate 1.47% - 1.76 % 0.86% - 1.85 % Expected option life in years 5.5 - 6.25 5.5 - 6.25 Expected stock price volatility 74% - 77 % 65% - 76 % Expected dividend yield 0 % 0 % B. Warrants — The Company has entered into various warrant agreements. At Conversion Stock price $ 0.92 Risk-free interest rate 0.61 % Expected option life in years 2.63 Expected stock price volatility 55 % Expected dividend yield 0 % For the year ended March 31, 2014, 1,543,214 warrant shares expired unexercised with a weighted average fair market value of $0.00. Weighted Average Exercise Price Warrants Per Warrant Warrants outstanding and exercisable, March 31, 2013 11,904,925 $ 0.46 Granted — — Exercised (10,127,123 ) 0.38 Forfeited — — Warrants outstanding and exercisable, March 31, 2014 1,777,802 $ 0.90 Granted — — Exercised — —  Forfeited (1,657,802 ) 0.38 Warrants outstanding and exercisable, March 31, 2015 120,000 $ 8.00 50  NOTE 13 — RELATED PARTY TRANSACTIONS NOTE 14 — COMMITMENTS AND CONTINGENCIES A. Pallini S.p.A. (“Pallini”), as successor in interest to I.L.A.R. S.p.A., is a shareholder in the Company and one of the officers of Pallini served as a director of the Company until March 26, 2015. In January 2011, CB-USA entered into an agreement ("New Agreement") with Pallini regarding the importation and distribution of certain Pallini brand products. The terms of the New Agreement were effective as of April 1, 2010. Under the New Agreement, the Company is permitted to import Pallini Limoncello and its flavor extensions at a set price, updated annually, and is obligated to set aside a portion of the gross margin toward a marketing fund for Pallini. The New Agreement also encompasses the hiring of a Pallini Brand Manager at the Company with Pallini reimbursing the costs of this position up to a stipulated annual amount. These reimbursements are included in selling expense. For the years ended March 31, 2015 and 2014, the Company purchased goods from Pallini for $3,840,446 and $3,467,812, respectively. As of March 31, 2015 and 2014, Pallini owed the Company $138,750 and $115,288, respectively, for its share of marketing expense, which is included in due from shareholders and affiliates on the consolidated balance sheet. As of March 31, 2015 and 2014, the Company was indebted to Pallini for $511,146 and $229,557, respectively, which is included in due to shareholders and affiliates on the consolidated balance sheet. B. In November 2008, the Company entered into a management services agreement with Vector Group Ltd., a more than 5% shareholder, under which Vector Group agreed to make available to the Company the services of Richard J. Lampen, Vector Group’s executive vice president, effective October 11, 2008 to serve as the Company’s president and chief executive officer and to provide certain other financial and accounting services, including assistance with complying with Section 404 of the Sarbanes-Oxley Act of 2002. In consideration for such services, the Company agreed to pay Vector Group an annual fee of $100,000, plus any direct, out-of-pocket costs, fees and other expenses incurred by Vector Group or Mr. Lampen in connection with providing such services, and to indemnify Vector Group for any liabilities arising out of the provision of the services. The agreement is terminable by either party upon 30 days’ prior written notice. For the years ended March 31, 2015 and 2014, Vector Group was paid $135,475 and $104,746, respectively, under this agreement. These charges have been included in general and administrative expense. C. In November 2008, the Company entered into an agreement to reimburse Ladenburg Thalmann Financial Services Inc. (“LTS”) for its costs in providing certain administrative, legal and financial services to the Company. For the years ended March 31, 2015 and 2014, LTS was paid $210,875 and $126,000, respectively, under this agreement. Mr. Lampen, the Company’s president and chief executive officer and a director, is the president and chief executive officer and a director of LTS and four other directors of the Company serve as directors of LTS, including Phillip Frost, M.D. who is the Chairman and principal shareholder of LTS. D. As described in Note 8D, in March 2013, the Company entered into a Participation Agreement with certain related parties. As described in Notes 8E and 8F, in August and October 2013, the Company entered into various notes with certain related parties. A. The Company has entered into a supply agreement with Irish Distillers Limited (“IDL”), which provides for the production of blended Irish whiskeys for the Company until the contract is terminated by either party in accordance with the terms of the agreement. IDL may terminate the contract if it provides at least six years prior notice to the Company, except for breach. Under this agreement, the Company provides IDL with a forecast of the estimated amount of liters of pure alcohol it requires for the next four fiscal contract years and agrees to purchase 90% of that amount, subject to certain annual adjustments. For the contract year ending June 30, 2015, the Company has contracted to purchase approximately €774,662 or $840,516 (translated at the March 31, 2015 exchange rate) in bulk Irish whiskey, of which €729,533, or $791,551, has been purchased as of March 31, 2015. For the contract year ending June 30, 2016, the Company has contracted to purchase approximately €833,673 or $904,544 (translated at the March 31, 2015 exchange rate) in bulk Irish whiskey. The Company is not obligated to pay IDL for any product not yet received. During the term of this supply agreement, IDL has the right to limit additional purchases above the commitment amount. B. The Company has also entered into a supply agreement with IDL, which provides for the production of single malt Irish whiskeys for the Company until the contract is terminated by either party in accordance with the terms of the agreement. IDL may terminate the contract if it provides at least thirteen years prior notice to the Company, except for breach. Under this agreement, the Company provides IDL with a forecast of the estimated amount of liters of pure alcohol it requires for the next twelve fiscal contract years and agrees to purchase 80% of that amount, subject to certain annual adjustments. For the contract year ending June 30, 2015, the Company has contracted to purchase approximately €303,998 or $329,841 (translated at the March 31, 2015 exchange rate) in bulk Irish whiskey, of which €217,865, or $236,386, has been purchased as of March 31, 2015. For the year ending June 30, 2016, the Company has contracted to purchase approximately €343,787 or $373,012 (translated at the March 31, 2015 exchange rate) in bulk Irish whiskey. The Company is not obligated to pay IDL for any product not yet received. During the term of this supply agreement, IDL has the right to limit additional purchases above the commitment amount. C. The Company has a distribution agreement with Gaelic Heritage Corporation, Ltd., an international supplier, to be the sole-producer of Celtic Honey, one of the Company’s products, for an indefinite period. D. The Company leases office space in New York, NY, Dublin, Ireland and Houston, TX. The New York, NY lease began on May 1, 2010  and expires on April 30, 2016 and provides for monthly payments of $19,975. The Dublin lease commenced on March 1, 2009 and extends through October 31, 2016 and provides for monthly payments of €1,100 or $1,194 (translated at the March 31, 2015 exchange rate). The Houston, TX lease commenced on April 27, 2015 and extends through June 26, 2018 and provides for monthly payments of $3,440. The Company has also entered into non-cancelable operating leases for certain office equipment. 51  Future minimum lease payments for leases with initial or remaining terms in excess of one year are as follows: NOTE 15 — CONCENTRATIONS NOTE 16 — GEOGRAPHIC INFORMATION The Company operates in one reportable segment — the sale of premium beverage alcohol. The Company’s product categories are rum and related products, liqueur, whiskey, vodka and tequila. The Company reports its operations in two geographic areas: International and United States. The consolidated financial statements include revenues and assets generated in or held in the U.S. and foreign countries. The following table sets forth the amounts and percentage of consolidated sales, net, consolidated income (loss) from operations, consolidated net loss attributable to controlling interests, consolidated income tax (expense) benefit and consolidated assets from the U.S. and foreign countries and consolidated sales, net by category. Years ending March 31, Amount 2016 $ 289,379 2017 70,012 2018 42,546 2019 10,742 Total $ 412,679 In addition to the above annual rental payments, the Company is obligated to pay its pro-rata share of utility and maintenance expenses on the leased premises. Rent expense under operating leases amounted to approximately $359,714 and $356,280 for the years ended March 31, 2015 and 2014, respectively, and is included in general and administrative expense. D. Under the amended terms of the agreement under which the Company purchased McLain & Kyne, the Company was obligated to pay an earn-out to the sellers based on the financial performance of the acquired business. As of June 30, 2013, the Company had reached the specified case sale threshold for contingent consideration under the agreement. Accordingly, no further contingent consideration will be due. For the years ended March 31, 2015 and 2014, the sellers earned $0 and $5,940, respectively, under this agreement. E. As described in Note 8C, in August 2011, the Company and CB-USA entered into the Keltic Facility, as amended in July 2012, March 2013, August 2013, November 2013, August 2014 and September 2014. F. Except as set forth below, the Company believes that neither it nor any of its subsidiaries is currently subject to litigation which, in the opinion of management after consultation with counsel, is likely to have a material adverse effect on the Company. The Company may become involved in litigation from time to time relating to claims arising in the ordinary course of its business. These claims, even if not meritorious, could result in the expenditure of significant financial and managerial resources. A. Credit Risk — The Company maintains its cash and cash equivalents balances at various large financial institutions that, at times, may exceed federally and internationally insured limits. The Company has not experienced any losses in such accounts and believes it is not exposed to any significant credit risk or cash. B. Customers — Sales to one customer, the Southern Wine and Spirits of America, Inc. family of companies, accounted for approximately 29.7% and 31.9% of the Company’s net sales for the years ended March 31, 2015 and 2014, respectively, and approximately 30.1% and 35.1% of accounts receivable at March 31, 2015 and 2014, respectively. 52  NOTE 17 — SUBSEQUENT EVENTS Equity distribution agreement - Between April 1, 2015 and June 11, 2015, the Company sold an additional 633,209 Shares pursuant to the 2014 Distribution Agreement, with total gross proceeds of $1,040,541, before deducting sales agent and offering expenses of $20,870. Investment in Copperhead Distillery Company In June 2015, the Company purchased approximately 20% of Copperhead Distillery Company (“Copperhead”) for $500,000. Copperhead owns and operates the Kentucky Artisan Distillery. The investment is part of a wide-reaching agreement to build a new warehouse to store Jefferson’s bourbons, provide distilling capabilities using special mash-bills made from locally grown grains, and create a visitor center and store to enhance the consumer experience for the Jefferson’s brand. The Company’s investment will be used for the construction of a new warehouse in Crestwood, Kentucky dedicated exclusively to Jefferson’s and will be accounted for under the equity method of accounting. Years ended March 31, 2015 2014 Consolidated Sales, net: International $ 7,938,393 13.8 % $ 7,305,516 15.2 % United States 49,519,028 86.2 % 40,834,967 84.8 % Total Consolidated Sales, net $ 57,457,421 100.0 % $ 48,140,483 100.0 % Consolidated Income (Loss) from Operations: International $ 17,172 (1.6 )% $ (266 ) 0.0 % United States (1,095,077 ) 101.6 % (1,319,567 ) 100.0 % Total Consolidated Loss from Operations $ (1,077,905 ) 100.0 % $ (1,319,833 ) 100.0 % Consolidated Net Loss Attributable to Controlling Interests: International $ (101,453 ) 2.7 % $ (153,419 ) 1.7 % United States (3,698,289 ) 97.3 % (8,753,328 ) 98.3 % Total Consolidated Net Loss Attributable to Controlling Interests $ (3,799,742 ) 100.0 % $ (8,906,747 ) 100.0 % Income tax (expense) benefit, net: United States $ (1,278,999 ) 100.0 % $ 590,414 100.0 % Consolidated Sales, net by category: Rum $ 16,998,034 29.6 % $ 16,643,640 34.6 % Whiskey 19,147,028 33.3 % 13,521,875 28.1 % Liqueurs 8,756,376 15.2 % 8,992,277 18.7 % Vodka 2,413,994 4.2 % 2,852,956 5.9 % Tequila 208,845 0.4 % 218,552 0.5 % Wine — 0.0 % 284,806 0.6 % Related Non-Alcoholic Beverage Products 9,933,144 17.3 % 5,626,377 11.6 % Total Consolidated Sales, net $ 57,457,421 100.0 % $ 48,140,483 100.0 % As of March 31, 2015 2014 Consolidated Assets: International $ 2,052,583 4.7 % $ 2,201,343 6.0 % United States 41,986,357 95.3 % 34,320,167 94.0 % Total Consolidated Assets $ 44,038,940 100.0 % $ 36,521,510 100.0 % 53  Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None. Item 9A. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures . We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Exchange Act) that are designed to ensure that information that would be required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer (our Principal Executive Officer and Principal Financial Officer, respectively), as appropriate, to allow timely decisions regarding required disclosure. As of March 31, 2015, we carried out an evaluation, under the supervision and with the participation of our management, including the Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Principal Executive Officer and Principal Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this Annual Report. (b) Management’s Report on Internal Control over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting. As defined in the securities laws, internal control over financial reporting is a process designed by, or under the supervision of, our Principal Executive and Principal Financial Officers and effected by our Board of Directors, management, and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of our assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements. Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an evaluation of the effectiveness of the internal controls over financial reporting (as defined in Rule 13a-15(f) promulgated under the Exchange Act) as of March 31, 2015, based on the framework in Internal Control — Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Management, including the Principal Executive and Principal Financial Officers, have concluded that our internal control over financial reporting was effective as of March 31, 2015 based on their evaluation of our internal control over financial reporting under the framework in Internal Control — Integrated Framework (1992) . EisnerAmper LLP, an independent registered public accounting firm, has audited our consolidated financial statements and the effectiveness of internal controls over financial reporting as of March 31, 2015 as stated in its reports which are included herein. (c) Changes in Internal Control over Financial Reporting There have been no changes in our internal control over financial reporting that occurred in the fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 54  (d) Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders Castle Brands Inc. We have audited Castle Brands Inc. and subsidiaries (the “Company”) internal control over financial reporting as of March 31, 2015, based on criteria established in the 1992 Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of March 31, 2015, based on criteria established in the 1992 Internal Control - Integrated Framework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of the Company as of March 31, 2015 and 2014, and the related consolidated statements of operations, comprehensive loss, changes in shareholders’ equity, and cash flows for each of the years in the two-year period ended March 31, 2015, and our report dated June 15, 2015 expressed an unqualified opinion thereon. /s/ EisnerAmper LLP New York, New York June 15, 2015 55  Item 9B. Other Information None. 56  PART III Item 10. Directors, Executive Officers and Corporate Governance This information will be contained in our definitive proxy statement for our 2015 Annual Meeting of Shareholders, to be filed with the SEC not later than 120 days after the end of our fiscal year covered by this report, and incorporated herein by reference or, alternatively, by amendment to this Form 10-K under cover of Form 10-K/A no later than the end of such 120 day period. Item 11. Executive Compensation This information will be contained in our definitive proxy statement for our 2015 Annual Meeting of Shareholders, to be filed with the SEC not later than 120 days after the end of our fiscal year covered by this report, and incorporated herein by reference or, alternatively, by amendment to this Form 10-K under cover of Form 10-K/A no later than the end of such 120 day period. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Shareholder Matters Information regarding equity compensation plans is set forth in Item 5 of this annual report on Form 10-K and is incorporated herein by reference. The other information required by this Item 12 will be contained in our definitive proxy statement for our 2015 Annual Meeting of Shareholders, to be filed with the SEC not later than 120 days after the end of our fiscal year covered by this report, and incorporated herein by reference or, alternatively, by amendment to this Form 10-K under cover of Form 10-K/A no later than the end of such 120 day period. Item 13. Certain Relationships and Related Transactions, and Director Independence This information will be contained in our definitive proxy statement for our 2015 Annual Meeting of Shareholders, to be filed with the SEC not later than 120 days after the end of our fiscal year covered by this report, and incorporated herein by reference or, alternatively, by amendment to this Form 10-K under cover of Form 10-K/A no later than the end of such 120 day period. Item 14. Principal Accounting Fees and Services This information will be contained in our definitive proxy statement for our 2015 Annual Meeting of Shareholders, to be filed with the SEC not later than 120 days after the end of our fiscal year covered by this report, and incorporated herein by reference or, alternatively, by amendment to this Form 10-K under cover of Form 10-K/A no later than the end of such 120 day period. PART IV Item 15. Exhibits, Financial Statement Schedules (a) The following documents are filed as part of this Report: 1. Financial Statements — See Index to Financial Statements at Item 8 on page 30 of this annual report on Form 10-K. 2. Financial Statement Schedules — Omitted because they are not applicable or not required. 3. Exhibits — The following exhibits are filed as part of, or incorporated by reference into, this annual report on Form 10-K: (b) Exhibit Number Exhibit 1.1 Equity Distribution Agreement, dated November 20, 2014, between Castle Brands Inc. and Barrington Research Associates, Inc., as sales agent (incorporated by reference to Exhibit 1.1 to our current report on Form 8-K filed with the SEC on November 21, 2014) 3.1 Composite Articles of Incorporation of the Company (incorporated by reference to Exhibit 3.1 to our annual report on Form 10-K for the fiscal year ended March 31, 2014 filed with the SEC on June 30, 2014) 3.2 Bylaws of the Company (incorporated by reference to Appendix E to our definitive proxy statement on Schedule 14A filed with the SEC on December 30, 2009) 57  4.1 Form of Common Stock Certificate (incorporated by reference to Exhibit 4.3 to our Post-Effective Amendment No. 1 to Form S-8 (File No. 333-160380) filed with the SEC on March 10, 2010) 4.2 Amended and Restated Loan and Security Agreement, dated as of September 22, 2014, by and among ACF FinCo I LP, the Company and Castle Brands (USA) Corp. (incorporated by reference to Exhibit 4.1 to our current report on Form 8-K filed with the SEC on September 24, 2014) 4.3 Amended and Restated Term Note, dated as of September 22, 2014, in favor of ACF FinCo I LP (incorporated by reference to Exhibit 4.2 to our current report on Form 8-K filed with the SEC on September 24, 2014) 4.4 Amended and Restated Revolving Credit Note, dated as of September 22, 2014, in favor of ACF FinCo I LP (incorporated by reference to Exhibit 4.3 to our current report on Form 8-K filed with the SEC on September 24, 2014) 4.5 5% Convertible Subordinated Note Purchase Agreement , dated as of October 21, 2013, among the Company and the parties set forth on the signature pages attached thereto (incorporated by reference to Exhibit 4.1 to our current report on Form 8-K filed with the SEC on October 25, 2013) 4.6 Form of 5% Subordinated Convertible Note Due 2018, issued by the Company (incorporated by reference to Exhibit 4.1 to our current report on Form 8-K filed with the SEC on November 1, 2013) 10.1 Export Agreement, dated as of February 14, 2005 between Gosling Partners Inc. and Gosling’s Export (Bermuda) Limited (Exhibit 10.1)(1)(2) 10.2 Amendment No. 1 to Export Agreement, dated as of February 18, 2005, by and among Gosling-Castle Partners Inc. and Gosling’s Export (Bermuda) Limited (Exhibit 10.2)(1)(2) 10.3 National Distribution Agreement, dated as of September 3, 2004, by and between Castle Brands (USA) Corp. and Gosling’s Export (Bermuda) Limited (Exhibit 10.3)(1)(2) 10.4 Subscription Agreement, dated as of February 18, 2005, by and between Castle Brands Inc. and Gosling-Castle Partners Inc. (Exhibit 10.4)(1) 10.5 Stockholders' Agreement, dated February 18, 2005, by and among Gosling-Castle Partners Inc. and the persons listed on Schedule I thereto (Exhibit 10.5)(1) 10.6 Agreement, dated as of January 12, 2011, between Pallini SpA and Castle Brands (USA) Corp. (incorporated herein by reference to Exhibit 10.1 to our current report on Form 8-K filed with the SEC on January 18, 2011) (2) 10.7 Supply Agreement, dated as of January 1, 2005, between Irish Distillers Limited and Castle Brands Spirits Group Limited and Castle Brands (USA) Corp. (Exhibit 10.8)(1)(2) 10.8 Amendment No. 1 to Supply Agreement, dated as of September 20, 2005, to the Supply Agreement, dated as of January 1, 2005, among Irish Distillers Limited and Castle Brands Spirits Group Limited and Castle Brands (USA) Corp. (Exhibit 10.9)(1) 10.9 Amended and Restated Worldwide Distribution Agreement, dated as of April 16, 2001, by and between Great Spirits Company LLC and Gaelic Heritage Corporation Limited (Exhibit 10.10)(1) 10.10 Letter Agreement, dated November 7, 2008, between Castle Brands Inc. and Vector Group Ltd. (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed with the SEC on November 12, 2008) 10.11 Form of Indemnification Agreement entered into with directors (incorporated by reference to Exhibit 10.1 to our quarterly report on Form 10-Q filed on August 14, 2013) 10.12 Form of Castle Brands Inc. Stock Option Grant Agreement (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed with the SEC on June 16, 2006)# 10.13 Amended and Restated Employment Agreement, dated as of November 13, 2007, between Castle Brands Inc. and Alfred J. Small (incorporated herein by reference to Exhibit 10.2 to our current report on Form 8-K filed with the SEC on November 13, 2007)# 58  10.14 Third Amended and Restated Employment Agreement, effective as of February 26, 2010, by and between Castle Brands Inc. and Mark Andrews (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed with the SEC on March 1, 2010)# 10.15 Amended and Restated Employment Agreement, effective as of May 2, 2005, by and between Castle Brands Inc. and T. Kelley Spillane (1)# 10.16 Amendment to Amended and Restated Employment Agreement, dated as of May 6, 2010, between Castle Brands Inc. and Alfred J. Small (incorporated herein by reference to Exhibit 10.2 to our current report on Form 8-K filed with the SEC on May 7, 2010)# 10.17 Amendment to Amended and Restated Employment Agreement, dated as of May 6, 2010, by and between Castle Brands Inc. and T. Kelley Spillane (incorporated herein by reference to Exhibit 10.1 to our current report on Form 8-K filed with the SEC on May 7, 2010)# 10.18 Reaffirmation Agreement, dated as of September 22, 2014, by and among the Company, Castle Brands (USA) Corp., the officers signatory thereto, certain term loan participants and certain junior lenders to the Company (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed with the SEC on September 24, 2014) 10.19 Castle Brands Inc. 2003 Stock Incentive Plan, as amended (Exhibit 10.29)(1)# 10.20 Amendment to Castle Brands Inc. 2003 Stock Incentive Plan (Exhibit 10.30)(1)# 10.21 Amendment No. 2 to Castle Brands Inc. 2003 Stock Incentive Plan (incorporated by reference to Exhibit 10.24 to our annual report on Form 10-K for the fiscal year ended March 30, 2009 filed with the SEC on June 29, 2009)# 10.22 Amended and Restated Warrant Agreement, dated September 27, 2005, by and between Castle Brands Inc. and Keltic Financial Partners, LP (Exhibit 10.52)(1) 10.23 Form of Restricted Stock Agreement (incorporated by reference to Exhibit 10.5 to our quarterly report on Form 10-Q filed with the SEC on February 17, 2009)# 10.24 Amendment No. 2 to Bottling and Services Agreement, dated as of July 23, 2009, by and between Terra Limited and Castle Brands Spirits Company Limited (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on July 29, 2009)(2) 10.25 Employment Agreement, made as of January 24, 2008, by and between Castle Brands Inc. and John S. Glover (incorporated by reference to Exhibit 10.28 to Amendment No. 1 to our annual report on Form 10-K filed with the SEC on July 29, 2009)# 10.26 Form of Validity and Support Agreement, dated as of August 19, 2011, among Keltic Financial Partners II, LP, the Company, Castle Brands (USA) Corp. and the officer signatory thereto (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed with the SEC on August 25, 2011) 10.27 Fee Letter, dated as of March 11, 2013, among the Company, Castle Brands (USA) Corp. and the junior participants party thereto (incorporated by reference to exhibit 10.2 to our current report on Form 8-K filed with the SEC on March 14, 2013) 59  10.28 Amendment to Employment Agreement, made as of July 26, 2011, by and between Castle Brands Inc. and John S. Glover (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed with the SEC on July 27, 2011).# 10.29 Employment Letter, dated July 29, 2011, by and between Castle Brands USA Corp. and Maria Alejandra Pena (incorporated by reference to Exhibit 10.3 to our quarterly report on Form 10-Q filed with the SEC on November 14, 2011) # 10.30 Amendment to Amended and Restated Employment Agreement, dated as of May 11, 2012, by and between Castle Brands Inc. and T. Kelley Spillane (incorporated herein by reference to Exhibit 10.1 to our current report on Form 8-K filed on May 17, 2012)# 10.31 Amendment to Amended and Restated Employment Agreement, dated as of May 11, 2012, between Castle Brands Inc. and Alfred J. Small (incorporated herein by reference to Exhibit 10.2 to our current report on Form 8-K filed on May 17, 2012)# 10.32 Amendment to the Third Amended and Restated Employment Agreement, effective as of May 11, 2012, by and between Castle Brands Inc. and Mark Andrews (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K filed on May 17, 2012)# 10.33 Castle Brands Inc. 2013 Stock Incentive Plan (incorporated by reference to Exhibit A to our definitive proxy statement on Schedule 14A for the 2012 annual meeting of shareholders, filed with the SEC on September 11, 2012)# 10.34 Amendment to Fourth Amended and Restated Employment Agreement, dated as of January 24, 2014, by and between Castle Brands Inc. and Mark Andrews (incorporated by reference to Exhibit 10.1 to our current report on Form 8-K filed on January 27, 2014)# 10.35 Amendment to Amended and Restated Employment Agreement, dated as of January 24, 2014, by and between Castle Brands Inc. and John Glover (incorporated by reference to Exhibit 10.2 to our current report on Form 8-K filed on January 27, 2014)# 10.36 Amendment to Amended and Restated Employment Agreement, dated as of January 24, 2014, by and between Castle Brands Inc. and T. Kelley Spillane (incorporated by reference to Exhibit 10.3 to our current report on Form 8-K filed on January 27, 2014)# 10.37 Amendment to Amended and Restated Employment Agreement, dated as of January 24, 2014, by and between Castle Brands Inc. and Alfred J. Small (incorporated by reference to Exhibit 10.4 to our current report on Form 8-K filed on January 27, 2014)# 21.1 List of Subsidiaries* 23.1 Consent of EisnerAmper LLP* 31.1 Certification of CEO Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 31.2 Certification of CFO Pursuant to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002* 32.1 Certification of CEO and CFO Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002* 101.INS* XBRL Instance Document. 101.SCH* XBRL Taxonomy Extension Schema Document. 101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document. 101.DEF* XBRL Taxonomy Extension Definition Linkbase Document. 101.LAB* XBRL Taxonomy Extension Label Linkbase Document. 101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document. * Filed herewith # Management Compensation Contract (1) Previously filed as an exhibit to our Registration Statement on Form S-1 (File No. 333-128676), which was declared effective on April 5, 2006, and incorporated by reference herein. (2) Confidential portions of this document are omitted pursuant to a request for confidential treatment that has been granted by the Commission, and have been filed separately with the Commission. 60  SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on June 15, 2015. POWER OF ATTORNEY Each individual whose signature appears below constitutes and appoints each of Richard J. Lampen and Alfred J. Small, such person’s true and lawful attorney-in-fact and agent with full power of substitution and resubstitution, for such person and in such person’s name, place and stead, in any and all capacities, to sign any and all amendments to this report on Form 10-K, and to file the same, with all exhibits thereto, and all documents in connection therewith, with the Securities and Exchange Commission, granting unto each said attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as such person might or could do in person, hereby ratifying and confirming all that any said attorney-in-fact and agent, or any substitute or substitutes of any of them, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. CASTLE BRANDS INC. By: /s/ ALFRED J. SMALL Alfred J. Small Senior Vice President, Chief Financial Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer) Signature Title Date /s/ RICHARD J. LAMPEN President and Chief Executive Officer and Director June 15, 2015 Richard J. Lampen (Principal Executive Officer) /s/ ALFRED J. SMALL Senior Vice President, Chief Financial June 15, 2015 Alfred J. Small Officer, Secretary and Treasurer (Principal Financial Officer and Principal Accounting Officer) /s/ MARK ANDREWS Director June 15, 2015 Mark Andrews /s/ JOHN F. BEAUDETTE Director June 15, 2015 John F. Beaudette /s/ HENRY C. BEINSTEIN Director June 15, 2015 Henry C. Beinstein /s/ PHILLIP FROST, M.D. Director June 15, 2015 Phillip Frost, M.D. /s/ GLENN L. HALPRYN Director June 15, 2015 Glenn L. Halpryn /s/ DR. RICHARD M. KRASNO Director June 15, 2015 Dr. Richard M. Krasno /s/ STEVEN D. RUBIN Director June 15, 2015 Steven D. Rubin /s/ MARK ZEITCHICK Director June 15, 2015 Mark Zeitchick 61  EXHIBIT 21.1 Castle Brands Inc. Subsidiaries Name State/Country of Incorporation Castle Brands (USA) Corp. Delaware, USA Gosling-Castle Partners Inc. Delaware, USA Castle Brands Spirits Group Limited Ireland Castle Brands Spirits Company Limited Ireland Castle Brands Spirits Marketing and Sales Company Limited Ireland Castle Brands Spirits Company (GB) Limited United Kingdom  EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM We consent to the incorporation by reference in the Registration Statements of Castle Brands Inc. on Form S-3 (Nos. 333-198414, 333-176005 and 333-143422) and Form S-8 (Nos. 333-133567, 333-160380 and 333-189750) of our reports dated June 15, 2015, on our audits of the consolidated financial statements as of March 31, 2015 and 2014 and for each of the years in the two year period ended March 31, 2015, and the effectiveness of Castle Brands Inc.’s internal control over financial reporting as of March 31, 2015, which reports are included in this Annual Report on Form 10-K. /s/ EisnerAmper LLP New York, New York June 15, 2015  EXHIBIT 31.1 SECTION 302 CERTIFICATION I, Richard J. Lampen, certify that: 1. I have reviewed this annual report on Form 10-K of Castle Brands Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: June 15, 2015 /s/ Richard J. Lampen Richard J. Lampen Chief Executive Officer (Principal Executive Officer)  EXHIBIT 31.2 SECTION 302 CERTIFICATION I, Alfred J. Small, certify that: 1. I have reviewed this annual report on Form 10-K of Castle Brands Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. 5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: June 15, 2015 /s/ Alfred J. Small Alfred J. Small Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)  EXHIBIT 32.1 CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 In accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Richard J. Lampen, the President and Chief Executive Officer of Castle Brands Inc. (the “Registrant”) and Alfred J. Small, Chief Financial Officer of the Registrant, each hereby certifies that: 1. The Registrant’s Annual Report on Form 10-K for the period ended March 31, 2015 (the “Periodic Report”) fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and 2. The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Date: June 15, 2015 /s/ Richard J. Lampen /s/ Alfred J. Small Richard J. Lampen Alfred J. Small Chief Executive Officer Chief Financial Officer (Principal Executive Officer) (Principal Financial Officer and Principal Accounting Officer) 

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