NOTE 5. NONCONTROLLING INTERESTS

On July 2, 2013, the Company, through a subsidiary (the "EA USC Subsidiary"), invested $6.0 million in US Cosmeceutechs, LLC ("USC"), a skin care company that develops and sells skin care products into the professional dermatology and spa channels. The investment, which is in the form of a collateralized convertible note (the "Convertible Note") that bears interest at 1.5%, was convertible into 50% of the fully diluted equity interest of USC at any time at the option of the EA USC Subsidiary and also converted automatically upon the satisfaction of certain conditions.

On July 11, 2013, the EA USC Subsidiary purchased a 30% equity interest in USC from the sole equity member (the "Member") for $3.6 million under the terms of a put-call agreement with the USC Member. Under the terms of the put-call agreement, the EA USC Subsidiary has an option to purchase the Member's remaining equity interest in USC at specified prices under certain circumstances based on USC's performance, and similarly the Member has the ability to put its interest in USC to the Company at specified prices under certain circumstances based on USC's performance. Based on the terms of the put-call agreement, it is likely that the EA USC Subsidiary would exercise its call option prior to the Member exercising his put option. In accordance with Topic 480, Distinguishing Liabilities from Equity, the Company is required to classify the noncontrolling interest in USC as a "redeemable noncontrolling interest" in the mezzanine section of the Company's consolidated balance sheet.

In December 2014, the EA USC Subsidiary invested an additional $2.0 million in USC and an existing $1.0 million demand loan to USC was incorporated as part of the Convertible Note. As a result of these transactions, the Convertible Note was amended and restated to reflect (i) an aggregate principal amount of $9 million (including the previously outstanding demand loan), and (ii) that once converted, the Convertible Note will result in the Company owning 85.45% of the fully diluted equity interests in USC (inclusive of EA USC's current equity interest). The other terms of the Convertible Note remained unchanged. As a result of the December 2014 transactions, the Member's remaining equity interest in USC that is subject to the put and call option is now 14.55%. As of March 31, 2015, the Convertible Note had not been converted.

Under the terms of the operating agreement of USC, the EA USC Subsidiary has control of the board of managers of USC and the power to direct activities that could have a substantial impact on the economic performance of USC, including those that could result in the obligation to absorb losses or the right to receive benefits that could potentially be significant to USC. Based on the investment in USC and the EA USC Subsidiary's controlling rights under the operating agreement, the Company has determined that USC is a variable interest entity, or VIE, of which the Company is the primary beneficiary, requiring consolidation of USC's financial statements in accordance with Topic 810, Consolidation.

The following provides an analysis of the change in the redeemable noncontrolling interest liability for the nine months ended March 31, 2015:


*(Amounts in thousands)*		Amount
Beginning as of June 30, 2014	$	5,553
Net loss attributable to noncontrolling interests		(1,414	)
Balance at March 31, 2015	$	4,139

Effective January 4, 2015, the Company, through a subsidiary, entered into a joint venture in the United Arab Emirates (the "joint venture") with an unrelated third party. Based on the capitalization of the joint venture, the Company's subsidiary has a 60% ownership interest and the third party has a 40% ownership interest. The joint venture will be responsible for the sale, promotion and distribution of the Company's fragrance, skincare and cosmetics products in eleven Middle Eastern countries. Under the terms of the joint venture agreement, the Company's subsidiary has the option to purchase a 15% ownership interest from the third party after 15 years at a specified price based on the performance of the joint venture and also has the option to purchase the entire ownership interest of the third party upon the termination or expiration of the joint venture agreement at a specified price based on the performance of the joint venture.

Based on the terms of the joint venture agreement, the Company's subsidiary has control of the board of managers and the power to direct activities that could have a substantial impact on the economic performance of the joint venture, including those that could result in the obligation to absorb losses or the right to receive benefits that could potentially be significant to the joint venture. Based on the Company's subsidiary's equity interest in the joint venture and the Company's subsidiary's controlling rights under the operating agreement, the Company has determined that the joint venture is a VIE, requiring consolidation of the joint venture's financial statements in accordance with Topic 810, Consolidation. The unrelated third party's interest in the joint venture is classified as a "noncontrolling interest" in the shareholders' equity section of the Company's consolidated balance sheet.