(2) Acquisitions, Dispositions and Other Transactions

Uppercase Living

On March 14, 2014, UAI, a wholly-owned subsidiary of the Company, acquired substantially all the assets of Uppercase Living, LLC, a direct seller of an extensive line of customizable vinyl expressions for display on walls. We assumed $512,195 of seller's liabilities that existed prior to the transaction and agreed to issue 12,725 shares of our common stock, par value $0.0001 ("Common Stock") to the seller at a fair value of $96,706 on the acquisition date. We also delivered 16,195 shares of our common stock at a fair value of $123,081 to escrow accounts for up to 24 months that will be issued to the seller upon remediation of certain closing conditions. We also agreed to pay the seller three subsequent contingent payments equal to 10% of Earnings before Interest, Taxes, Depreciation and Amortization ("EBITDA") for each of the years ending 2014 to 2016. We have not recorded any contingent earn-out as of September 30, 2014. Goodwill arising from the transaction totaled $469,065. We recognized goodwill in the acquisition as the business had management in place, established distribution methods, an established consultant base and brand recognition. In addition to these factors, goodwill was recognized in this transaction because of the expected synergies that we anticipate and the overall benefits of bringing additional consultants into our network.

Opening balance sheet for Uppercase Living acquisition on March 14, 2014

The following summary represents the fair value of UAI as of the acquisition date and is subject to change following management's final evaluation of the fair value assumptions.

	UAI
Assets
Current assets:
Cash and cash equivalents	$	2,000
Accounts receivable		1,742
Inventory		96,497

Total current assets		100,239
Property, plant and equipment		23,230
Goodwill		469,065
Other assets		16,366

Total assets	$	608,900


Liabilities and stockholders' equity
Current liabilities:
Accounts payable—trade	$	267,337
Accrued commissions		79,003
Deferred revenue		28,399
Other current liabilities		96,706

Total current liabilities		471,445
Other long-term liabilities		137,455

Total liabilities		608,900
Stockholders' equity		—

Total stockholders' equity		—
Total liabilities and stockholders' equity	$	608,900

Dispositions

On July 31, 2014, our subsidiary TLC and CFI NNN Raiders, LLC. ("CFI"), entered into a Sale Leaseback Agreement (the "Sale Leaseback Agreement") pursuant to which TLC agreed to sell to CFI certain real estate owned by TLC and used by TLC in its manufacturing, distribution and showroom activities. The real estate described in the Sale Leaseback Agreement was purchased by CFI, for an aggregate purchase price of $15.8 million. As shown in the table below, a gain on sale of approximately $2.5 million was recorded associated with the sale.

Sales Price (fair value)	$	15,800,000
Transaction Fees		(956,417	)

		14,843,583
Book Value at July 31, 2014	$	12,320,715

Gain on Sale	$	2,522,868

Because the transaction was part of a Sale Leaseback agreement that is being accounted for as a capital lease, the gain has been deferred and will be recognized over the fifteen (15) year life of the Leaseback Agreement. For more details regarding the accounting for this transaction see Note 6 Long term debt and other financing arrangements.

During the quarter ended September 30, 2014, TLC sold four other properties in Ohio for gross proceeds of $657,360 for a gain on sale of $338,610. The gain on sale is included in the consolidated statement of operations.

During the quarter ended March 31, 2014, TLC sold an industrial building in Ohio for gross proceeds of $1,333,857 for a gain on sale of $271,970. During the quarter ended June 30, 2014, TLC sold three properties in Ohio for gross proceeds of $497,458 for a gain on sale of $35,309. We also had a net gain on sales of other assets of $99,633 for the six months ended June 30, 2014. The gain on sale is included in consolidated statements of operations.

The Longaberger Company

On March 18, 2013, the Company acquired a controlling interest in TLC, a direct-selling business based in Newark, Ohio. The transaction resulted in us acquiring 64.6% of the voting stock and 51.7% of all the stock in TLC in return for a $6.5 million convertible note and a $4.0 million promissory note. The acquisition was accounted for under the purchase method of accounting and TLC is now our consolidated subsidiary .

Convertible Note Settlement

On June 14, 2013, in accordance with the mandatory conversion provisions of the Convertible Subordinated Unsecured Promissory Note in the principal amount of $6.5 million (the "Note") that we issued to the Tamala L. Longaberger Trust (the "Trust") as part of the consideration of the acquisition of TLC, we issued the Trust 1,625,000 shares of Common Stock upon conversion of the Note.

Equity Contribution

On June 18, 2013, we entered into an Equity Contribution Agreement with Rochon Capital Partners, Ltd. pursuant to which Rochon Capital Partners, Ltd. contributed to us for no consideration 1,625,000 shares of Common Stock to offset the shares issued to the Trust. As a result, our issued and outstanding shares of Common Stock remained at 24,385,617. The returned shares were cancelled and are not being held as treasury shares.

Possible Issuance of Additional Common Stock under Share Exchange Agreement

On August 24, 2012 we entered into a Share Exchange Agreement (the "Share Exchange Agreement") with HCG and Rochon Capital Partners, Ltd. ("Rochon Capital"). Under the Share Exchange Agreement, in exchange for all of the capital stock of HCG, we issued 21,904,302 shares of our restricted Common Stock to Rochon Capital (the "Initial Share Exchange"). The shares of our Common Stock received by Rochon Capital totaled approximately 90% of our issued and outstanding stock at the time of issuance. The Initial Share Exchange was completed on September 25, 2012 and resulted in a change in control and HCG becoming our wholly-owned subsidiary.

Under the Share Exchange Agreement, Rochon Capital also purchased and has the right to an additional 25,240,676 shares of Common Stock (the "Additional Shares"). The second closing of the transactions and the issuance of the Additional Shares contemplated by the Share Exchange Agreement (the "Second Tranche Closing") was to occur on the date that was the later of: (i) the 20th calendar day following the date on which we first mailed an Information Statement to our shareholders; (ii) the date the Financial Industry Regulatory Authority ("FINRA") approved the Amendment; or (iii) the first business day following the satisfaction or waiver of all other conditions and obligations of the parties to consummate the transactions contemplated by the Share Exchange Agreement, or on such other date and at such other time as the parties may mutually determine.

On April 12, 2013, we filed Articles of Amendment to our Articles of Incorporation with the Florida Secretary of State to effect: (i) an increase in the number of authorized shares of our common stock from 490,000,000 to 5,000,000,000 shares (the "Increase" prior to our 1-for-20 reverse stock split effected on October 16, 2014 as further described in Note 15 Subsequent Events) and (ii) a change in the name of the Corporation to CVSL Inc. (the "Name Change") which was effectuated on May 27, 2013. Shareholders holding a majority of the outstanding shares of common stock approved the Increase and the Name Change and the Articles of Amendment (the "Amendment") effecting such transactions.

However, at the time of the filing of the Amendment, Rochon Capital and the Company each determined that it was not in the best interests of the Company to consummate the Second Tranche Closing and the issuance of the Additional Shares at that time. As a result, the Share Exchange Agreement was amended on April 10, 2013 to provide that, among other things, the Second Tranche Closing will occur on the date specified in a written notice provided by Rochon Capital, which date shall not be prior to the 20 th calendar day following the date on which we first mailed our Information Statement to our shareholders and the date the FINRA approves the Amendment.

The amendment to the Share Exchange Agreement also (a) clarifies and redefines the number of shares that are to be issued at the Second Tranche Closing as 25,240,676 shares of our Common Stock, or any portion thereof provided for in the notice from Rochon Capital and (b) modifies the date tied to certain restrictions set forth in Section 7.08 of the Share Exchange Agreement, since the Second Tranche Closing Date cannot be determined at this time. We have the ability to issue the Additional Shares to Rochon Capital, as agreed to in the Share Exchange Agreement, as amended, upon its receipt of written notice from Rochon Capital.

Please see Note 15, Subsequent Events for a description of actions taken on October 10, 2014 with respect to the shares issuable at Second Tranche Closing.

Sale Leaseback Agreement

As mentioned above in Dispositions, on July 31, 2014, our subsidiary TLC and CFI entered into the Sale Leaseback Agreement pursuant to which TLC agreed to sell to CFI certain real estate owned by TLC and used by TLC in its manufacturing, distribution and showroom activities. The real estate described in the Sale Leaseback Agreement was purchased by CFI, for an aggregate purchase price of $15.8 million ($4.4 million of which represents a security deposit shown in other assets which will be released to TLC over time as certain targets are met).

Concurrently with entering into the Sale Leaseback, the Company entered into a Master Lease Agreement (the "Master Lease Agreement") with CFI. The Master Lease Agreement provides for a 15-year lease term and specifies the base quarterly payment for the real estate. The base quarterly payment in the first year is $551,772 and increases 3% annually each year thereafter. During the lease term, all of the costs, expenses and liabilities associated with the real estate are to be borne by the Company, and the Company is entitled to unlimited use of the real estate. The Master Lease Agreement includes customary events of default, including non-payment by the Company of the quarterly payment or other charges due under any The Master Lease Agreement. The Company utilized the proceeds from the sale of the real estate to pay off outstanding bank debt and for working capital purposes. See Note 6 Long term debt and other financing arrangements for more information regarding the accounting treatment of this transaction.