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&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (&amp;#8220;GAAP&amp;#8221;) on a basis consistent with that used in the Annual Report on Form&amp;#160;10-K filed by CVSL Inc. (&amp;#8220;CVSL,&amp;#8221; and together with its consolidated subsidiaries, the &amp;#8220;Company&amp;#8221;), formerly Computer Vision Systems Laboratories,&amp;#160;Corp.&amp;#160;with the Securities and Exchange Commission (&amp;#8220;SEC&amp;#8221; or &amp;#8220;the Commission&amp;#8221;) for the year ended December&amp;#160;31, 2012, and include all normal recurring adjustments necessary to present fairly the consolidated balance sheets, statements of income and cash flows for the periods indicated. Certain amounts for the prior year have been reclassified to conform to the 2013 presentation. These notes should be read in conjunction with the audited consolidated financial statements and notes included in the Annual Report on Form&amp;#160;10-K for the year ended December&amp;#160;31, 2012. The results of operations for the three and six month periods are not necessarily indicative of the results to be expected for the full year.&lt;/font&gt;&lt;/p&gt;
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&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;b&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold;" size="2"&gt;Use of Estimates&lt;/font&gt;&lt;/b&gt;&lt;/p&gt;
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&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;The financial statements have been prepared on a GAAP basis. The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses. Actual results could differ from those estimates made by management.&lt;/font&gt;&lt;/p&gt;
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&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;b&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold;" size="2"&gt;Accounting and Disclosure Changes&lt;/font&gt;&lt;/b&gt;&lt;/p&gt;
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&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;The Company has not made any significant accounting and disclosure changes for the three and six months ended June&amp;#160;30, 2013.&lt;/font&gt;&lt;/p&gt;
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&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;b&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt; FONT-WEIGHT: bold;" size="2"&gt;Business Overview and Current Plans&lt;/font&gt;&lt;/b&gt;&lt;/p&gt;
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&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;CVSL seeks to acquire companies primarily in the direct-selling business and companies potentially engaging in businesses related to direct-selling.&amp;#160; The Company owns a controlling interest in The Longaberger Company (&amp;#8220;TLC&amp;#8221;).&amp;#160; TLC is a direct-selling business based in Newark, Ohio that sells premium hand-crafted baskets and a line of products for the home, including pottery, cookware, wrought iron and other home d&amp;#233;cor products, through a nationwide network of independent sales representatives.&amp;#160; TLC also has showrooms in various states, which offer merchandise and serve as sales force support centers.&amp;#160; TLC also owns a premier golf course near its corporate headquarters and manufacturing and distribution campus.&lt;/font&gt;&lt;/p&gt;
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&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;The Company owns 100% of Happenings Communications Group,&amp;#160;Inc. (&amp;#8220;HCG&amp;#8221;).&amp;#160; HCG publishes a monthly magazine, Happenings Magazine that references events and attractions, entertainment and recreation, and people and community in Northeast Pennsylvania.&amp;#160; HCG also provides marketing and creative services to various companies, and can provide such services to direct-selling businesses. Services may include creating brochures, sales materials, websites and other communications for independent sales representatives and ultimate customers. As a result, HCG is available to serve as a valuable &amp;#8220;in-house&amp;#8221; resource for providing marketing and creative services to the direct-selling companies that we expect to acquire.&lt;/font&gt;&lt;/p&gt;
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&lt;p style="MARGIN: 0in 0in 0pt;"&gt;&lt;font style="FONT-FAMILY: Times New Roman; FONT-SIZE: 10pt;" size="2"&gt;In considering appropriate acquisition targets, we anticipate that we will evaluate companies of varying sizes, generally in the range of $100&amp;#160;million or more in annual revenue. We do not plan to limit our acquisition opportunities to companies of this size, as we will periodically evaluate smaller companies in our targeted space, particularly companies that management believes are accretive or otherwise add value to one or more of our businesses. We generally plan to consider companies that are currently profitable and looking to enhance their growth, as well as companies that have experienced financial and operational difficulties and can, in our opinion, be strengthened by improved strategic and tactical guidance. We generally will focus on companies that have product lines for the home, for health and wellness, and for beauty.&lt;/font&gt;&lt;/p&gt;
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