JRjr33, Inc. (Form: 10-K, Received: 06/28/2016 07:11:53)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K



ý	Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended December 31, 2015
or
¨	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: 001-36755

JRjr33, Inc.

(Exact name of registrant as specified in its charter)



Florida (State or other jurisdiction of incorporation or organization)	98-0534701 (I.R.S Employer Identification No.)
2950 North Harwood Street, 22nd Floor, Dallas, Texas (Address of principal executive offices)	75201 (Zip Code)

(469) 913-4115

(Registrant’s telephone number, including area code)

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



Title of each class	Name of each exchange on which registered
Common Stock, $0.0001 par value per share	NYSE MKT, LLC

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

None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No ý

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý

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 past 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 ¨ No ý

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every interactive data file required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨ No ý

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) 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. ý

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



Large accelerated filer o	Accelerated filer o	Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ¨ No ý

As of June 30, 2015, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the voting and non-voting common equity held by non-affiliates was approximately $16,083,849 , based on $1.20, the closing price of the Registrant's common stock reported by the NYSE MKT, LLC on that date.

The number of shares outstanding of common stock as of June 27, 2016 was 36,085,324 shares.

Documents incorporate by reference: None

Jrjr33, Inc.

Table of Contents



PART I
Item 1.	Business	4
Item 1A.	Risk Factors	16
Item 1B.	Unresolved Staff Comments	33
Item 2.	Properties	34
Item 3.	Legal Proceedings	34
Item 4.	Mine Safety Disclosure	35

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	36
Item 6.	Selected Financial Data	38
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	39
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk	47
Item 8.	Financial Statements and Supplementary Data	48
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	84
Item 9A.	Controls and Procedures	84
Item 9B.	Other Information	86

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	87
Item 11.	Executive Compensation	91
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	95
Item 13.	Certain Relationships and Related Transactions, and Director Independence	98
Item 14.	Principal Accountant Fees and Services	101
PART IV
Item 15.	Exhibits and Financial Statement Schedules	102
SIGNATURES		108
Index to Exhibits

PART I

Special Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K (this "Annual Report") contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that involve substantial risks and uncertainties. The forward-looking statement are contained principally in Part I, Item 1. “Business,” Part I, Item 1A, “Risk Factors,” and Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations, “ but are also contained elsewhere in this Annual Report. In some cases you can identify forward-looking statements by terminology such as “may,” “should,” “potential,” “continue,” “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” and similar expressions. These statements are based on our current beliefs, expectations, and assumptions and are subject to a number of risks and uncertainties, many of which are difficult to predict and generally beyond our control, that could cause actual results to differ materially from those expressed, projected or implied in or by the forward-looking statements. Such risks and uncertainties include the risks noted under “Item 1A Risk Factors.” We do not undertake any obligation to update any forward-looking statements.

You should refer to Item 1A. “Risk Factors” of this Annual Report for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that forward-looking statements in this Annual Report will prove to be accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracies may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that will achieve our objectives and plans in any specified time frame, or at all. We do not undertake any obligation to update any forward-looking statements.

Unless the context requires otherwise, references to “we,” “us,” “our,” “JRJR,” and "JRJR Networks" refer to JRjr33, Inc. and its subsidiaries.

Item 1. Business

Business Overview

Our strategy is to be a growing, global platform of multiple direct-to-consumer brands, a place where independent sales representatives in markets around the world can pursue earning opportunities at their own pace, using company-provided IT systems, including back office tools and "business in a box," with e-commerce tools to enhance their ability to serve customers.

Our team has many years of experience in the direct-to-consumer sector and use our expertise to strengthen the companies we acquire and to identify targets for potential acquisition.

We have one “product,” which is opportunity for the independent sellers in our sales forces. They earn money for their families and have the freedom to decide for themselves how much time and effort to put into their business. Our platform of multiple brands supports that opportunity. We do not consider our strategy to be a “roll-up.” Each of our companies keeps its own distinct brand identity, its own sales force, its own compensation plan and its own product line. Behind the scenes, in operational areas such as finance, accounting, treasury, technology and supply chain, we find synergies and achieve efficiencies by eliminating duplication of efforts and costs.

We place particular emphasis on serving and supporting the independent sales forces of our companies. We are keenly aware that our ultimate success is based upon the energy and activity of our companies’ sales forces. Therefore, we focus on giving them the leadership, motivation, support, tools, incentives and encouragement that they need to grow their own businesses, benefit their families and achieve their dreams. We work to enhance the performance of the companies we acquire and to help each of them achieve positive free cash flow.

During the fourth quarter, and throughout 2015, our management team continued our concentration on strengthening the companies within our existing portfolio. One of the most important aspects of this continued to be cost control, finding and eliminating duplicative and excessive SG&A costs in all areas of our portfolio companies.

Our strategy is to be diversified, thereby reducing risk. We believe that JRJR is a diversified direct-to-consumer company in the sector. Our diversification takes many forms, including multiple product lines, both male and female sales forces, multiple

geographic markets, different types of companies including both new and established companies, varying compensation plans, and so on.

We have grown at a rapid pace as a result of our acquisitions. Two of the largest companies in our portfolio, Kleeneze and Betterware Ltd., were acquired during 2015; these two acquisitions roughly doubled the revenue of JRJR, on a pro forma basis. Refer to Note (3) , Acquisitions, Dispositions and Other Transactions to our consolidated financial statements included in this report for the pro forma impacts of the Kleeneze and Betterware acquisitions.

There are now ten companies in the JRJR portfolio, as we completed our acquisition of Betterware in the fourth quarter of 2015. With each acquisition, we have expanded our product base and our base of independent sales representatives and potential customers. This convergence of personal relationships, social media and relationship-based commerce is what we believe gives us our unique blend of attributes for growth. As we scale up through additional acquisitions and organic growth, we expect that these attributes will be amplified. This sector has unique characteristics which are quite unlike those of the traditional retail sector. Companies in this sector must be managed accordingly, by persons who understand this channel’s uniqueness.

As interesting acquisition opportunities arise, we conduct a thorough evaluation of them. We intend to continue to be opportunistic about acquisitions. We also will consider opportunities to extend our brands into additional markets wherever possible.

It should also be noted that, as JRJR assimilates the companies we have already acquired and grows increasingly more efficient, the corporate overhead required to make our initial acquisitions is expected to continue to decline, as a percentage of revenue.

That being said, our primary focus currently is to be as effective as possible in managing and improving our existing businesses and generating free cash flow.

On a consolidated basis, the operating companies within JRJR continue to improve performance, particularly when one considers that many of them were troubled or under-performing turnarounds when we acquired them. Taking an under-performing company, identifying unnecessary costs, integrating its operations, identifying weaknesses and effecting a turnaround obviously requires time to accomplish. We believe we have made very satisfactory progress in these turnaround tasks, recognizing that each JRJR company brings its own unique needs, strengths, weaknesses and opportunities. That is why the JRJR story is an ongoing story of finding efficiencies, reducing costs, spotting opportunities for top line growth, creating increasing predictability of revenue and reducing risk over time through portfolio diversification.

Having multiple direct-to-consumer companies, selling multiple brands and multiple product categories, in markets around the world, through multiple sales forces paid through multiple compensation plans creates what we believe is an ever-wider base and an ever-greater diversification of risk.

Our results can be impacted by economic, political, demographic and business trends and conditions in the United States as well as globally. A rise or fall in economic conditions, including such factors as inflation, economic confidence, recession and disposable income can affect the direct selling industry, as the independent sales representatives who comprise the sales forces of our various companies make decisions based, at times, on those economic factors. A weak or uncertain economy historically has been favorable to micro-enterprise/direct-to-consumer companies, because in times of economic distress, increasing numbers of individuals look for ways to supplement or replace their income and becoming an independent sales representative can provide this supplemental income. Similarly, when jobs are lost, many are forced to seek independent means of earning a living or supplementing family income. However, economic distress can reduce customers' disposable income, making it more difficult to convince a customer to buy a non-essential product or service from a direct-to-consumer company and therefore negatively impacting our revenue.

As expected, conditions affecting each individual company have posed challenges to our company as a whole. However, we expect our operating and net losses to continue to decrease over time as we have implemented certain operating and administrative efficiencies.

We are confident that our strategy is working and we believe that fourth quarter results, as well as results for the full year of 2015, show that we are making continuing progress in executing our strategy.

In particular, we believe that significantly increasing the size of the JRJR portfolio during the course of 2015 and building a broader base will have the result of reducing the volatility of our projections and financial results. We believe that our increasing diversification is already having the effect of reducing variance and providing more predictability of our results.

Current JRJR Portfolio

Our disciplined acquisition strategy is derived from the industry knowledge and operating expertise of our management team, which we believe allows us to identify, evaluate and integrate direct-to-consumer companies that can benefit from our company’s resources, while contributing to our overall growth strategy. We have grown at a rapid pace as a result of our recent acquisitions and intend to continue to opportunistically pursue additional acquisitions while improving the fundamental strength of our existing business. As of the date of this filing, our platform brands is comprised of the following businesses:



Business	Date of Acquisition	Number of Countries with Sales Presence	Products Categories
Happenings Communications	September 25, 2012	1	Publishing and Printing
The Longaberger Company	March 18, 2013	2	Home Décor
Your Inspiration at Home	August 22, 2013	4	Gourmet Foods and Spices
Tomboy Tools	October 1, 2013	2	Home Improvement and Home Security
Agel	October 22, 2013	51	Nutritional Supplements and Skin Care
My Secret Kitchen	December 20, 2013	2	Gourmet Foods and Spices
Paperly	December 31, 2013	1	Personalized Stationery
Uppercase Living	March 13, 2014	2	Home Décor
Kleeneze	March 24, 2015	2	Home Décor and Cleaning
Betterware	October 15, 2015	2	Home Décor and Cleaning

Through a series of ten acquisitions that offer a diverse product mix, we have expanded our product offerings as well as our base of sales representatives and customers. In 2012, we acquired Happenings Communications Group ("HCG"). We completed the acquisition of the assets or stock of the following seven companies in 2013 and 2014: The Longaberger Company (“TLC”) (a direct-to-consumer brand selling premium hand-crafted baskets and a line of products for the home), Your Inspiration at Home, Ltd. (“YIAH”) (a direct-to-consumer brand selling hand-crafted spices from around the world), Tomboy Tools, Inc. ("TBT") (a direct-to-consumer brand selling a line of tools designed for women as well as home security monitoring services), Agel Enterprises, LLC (“Agel”) (a direct-to-consumer brand selling nutritional supplements and skin care products), My Secret Kitchen Limited (“MSK”) (a direct-to-consumer brand selling a unique line of gourmet food products), Paperly, LLC (“Paperly”) (a direct-to-consumer brand selling custom stationery and paper products), and Uppercase Living, LLC (“UAI”) (a direct-to-consumer brand selling customizable vinyl expressions for display on walls).

During the first quarter of 2015, we completed the acquisition of our eighth direct-to-consumer company, Kleeneze Limited (“Kleeneze”), which is based in the United Kingdom. In October 2015, we acquired our ninth direct-to-consumer company by purchasing Stanley House Distribution Limited, which owns 100% of Betterware Ltd. ("Betterware"). With this acquisition, we have added to our already large presence in the United Kingdom market. Founded in 1928, Betterware has grown into a community of more than 7,000 independent distributors, offering a wide variety of several thousand cleaning, health, beauty, home, outdoor and other products to customers across the U.K. and Ireland. We believe there are strong opportunities for synergies with other companies in our portfolio, especially those in the U.K. market such as Kleeneze.

Overview of Operating Companies

Gourmet Food Segment

The gourmet food category remained our fastest growing segment during 2015. Globally, sales and recruiting continued their robust growth.

We believe that the robust growth will continue as more recently opened markets for products in this segment, such as New Zealand, Canada, the U.K. and the U.S., gain traction and achieve increased scale in the segment in places like Australia. There are many new geographies that we believe are well-suited for our gourmet food products, or represent markets where we already have resources and sales infrastructure to support growth, and will look to continue to opportunistically expand this category globally. The vigorous and imaginative leadership of YIAH’s founder and CEO has been a driving force in the growth thus far of this part of our portfolio.

The gourmet food segment tends to have higher gross margins than companies in some of our other categories like home décor. We believe the consumable nature of these products also makes this a key category for JRJR.

The following companies offer products in the gourmet food segment:

Your Inspiration At Home

In August 2013, we formed Your Inspiration At Home, Pty. Ltd., an Australian corporation which acquired substantially all of the assets of YIAH. YIAH is an innovative and award-winning direct-to-consumer company which sells hand-crafted spices from around the world. YIAH originated in Australia and has expanded its operations to the United States, Canada and New Zealand. We acquired substantially all the assets of YIAH in exchange for total consideration of 225,649 shares of our common stock.

My Secret Kitchen

In December 2013, we formed CVSL A.G., a Switzerland company, which acquired a 90% controlling interest of MSK, an award-winning United Kingdom-based direct-to-consumer company which sells a unique line of food products. We acquired substantially all of the stock of MSK in exchange for total consideration of 15,891 shares of our common stock and payment of an earn-out of 5% of MSK's EBITDA from 2014 to 2016. To-date no payments have been made on the earn out, and no accruals for such earn out have been recorded.

During 2015, we identified ways by which My Secret Kitchen could benefit from the leadership of Your Inspiration At Home in the U.K. market, and we found synergies between the two brands, including warehouse and distribution and marketing support. We believe these synergies between our two gourmet food companies in the U.K. market is highly beneficial to both companies.

Home Décor Segment

The home décor segment remains our largest segment and will likely continue to be so, with the acquisition of Kleeneze in March 2015 and Betterware in October 2015. Both of these companies give us a presence in the U.K. and Ireland within the home décor segment, and we are focused on ways to reduce overlapping warehouse and other operational costs and believe that with the acquisition of Betterware, there are important synergies and efficiencies to be gained.

We believe that improved product sourcing, progress in supply chain, product delivery times and efficiencies within distribution have the opportunity to make our gross margins within the home décor segment more attractive as those synergies continue to be implemented in the future.

At Kleeneze, improvement was achieved during 2015 in sales, recruiting and retention. During the second half of 2015, Kleeneze took additional steps to enhance e-commerce activity within its sales network, by using social media groups and pages to post product information and to support it with payment and shipping tools including a distributor linked interactive catalogue, in order to stimulate new avenues for sales and recruiting.

We have re-affirmed for our sales network and employees our respect for their brand and given confidence that their company is in the hands of ownership which understands their channel. Such confidence, in our view, will help our home décor, and all of our companies, realize their potential over the coming years as we seek operational efficiencies and growth opportunities. During the fourth quarter, JRJR’s vice chairman, John Rochon Jr., made an intense effort to reach out to Kleeneze sales network members to hear their views and strengthen the ties between sales network and company.

The home décor segment within JRJR has in the past had higher discounts and promotional costs relative to some of our other segments. We emphasized during 2015 a reduction in discounting and indiscriminate free shipping to improve gross margins and escape the brand damage done by excessive discounting of these high quality products.

Within the home décor segment, The Longaberger Company emphasizes hands-on leadership in the sales field. Longaberger’s senior management, most notably Longaberger's chairman and president, John Rochon Jr., who was named to that position at mid-year, traveled extensively during 2015, meeting with Longaberger sales leaders and home consultants in their home communities, receiving their suggestions and re-connecting the company with those who sell its products. In July, Longaberger’s annual convention returned to the Ohio community where it had begun 20 years earlier, further reinforcing the essence of the Longaberger brand.

The fourth quarter at Longaberger, which is historically the strongest quarter due to holiday purchases, showed encouraging strength, reinforcing our view that Longaberger has finally stabilized after so many years of significant annual revenue decline. During 2015, Longaberger started showing EBITDA more consistently. During the year, Longaberger had four periods of positive

EBITDA compared to only two periods the prior year. This positive trend in earnings is a result of improved discounting practices, along with significantly improved procurement and treasury controls.

The following companies offer products in the home décor segment:

Kleeneze

In March 2015, we completed the acquisition of Kleeneze Limited (“Kleeneze”), a direct-to-consumer business based in the United Kingdom. Pursuant to the terms of a Share Purchase Agreement (the “SPA”) with Findel PLC (“Findel”), we purchased 100% of the shares of Kleeneze from Findel for total consideration of $5.1 million. The consideration included $3.0 million of senior secured debt provided by HSBC Bank PLC, which debt has a term of two years and an interest rate per annum of 0.60% over the Bank of England Base Rate as published from time to time (an interest rate of 1.1% at the time of the purchase). The remaining $2.1 million of consideration consisted of cash. Approximately $1.9 million in cash remained with Kleeneze at closing.

Betterware

In October 2015, we acquired 100% of Stanley House Distribution Limited, which owned 100% of Betterware Limited, through one of our Swiss subsidiaries, Trillium Pond AG. Betterware was founded in 1928, and sells a variety of household products in the United Kingdom and Ireland through a team of approximately 7,900 distributors at acquisition. Pursuant to the SPA, Trillium Pond purchased and acquired all 99,980 issued and outstanding shares of Stanley House common stock in exchange for payment to the sellers of: (i) an aggregate cash payment of $1.5 million, the cash payments being funded from a portion of the cash acquired in the acquisition; (ii) convertible notes in the aggregate principal amount of $5.8 million; and (iii) 976,184 shares of our common stock. The convertible notes mature after three years and bear interest at a rate of two percent (2%) per annum, compounded annually and payable monthly. In addition, the convertible notes provide for payments in the aggregate amount of approximately $1.6 million at the our election, in cash or shares of our common stock, on each of the twelve, twenty four and thirty six month anniversaries of the issuance date of the convertible notes.

The Longaberger Company

In March 2013, we acquired a 51.7% controlling interest in TLC. TLC is a direct-to-consumer business based in Newark, Ohio which sells premium hand-crafted baskets and a line of products for the home, including pottery and other home décor products, through a nationwide network of independent sales representatives. TLC also has a retail destination in Frazeysburg, OH, referred to as The Longaberger Homestead. As consideration for the acquisition, we issued to a trust of which Tamala Longaberger is the trustee (the "Trust"), a Convertible Subordinated Unsecured Promissory Note, dated March 15, 2013, in the original principal amount of $6.5 million (the "TLC Convertible Note"), and, to TLC, we issued a ten year, $4.0 million unsecured promissory note, dated March 14, 2013, payable in monthly installments. On June 14, 2013, the TLC Convertible Note was converted into 1,625,000 shares of our common stock.

Uppercase Living

In March 2014, we formed Uppercase Acquisition, Inc., a Delaware corporation which acquired substantially all the assets of Uppercase Living LLC, a direct-to-consumer company which sells customizable vinyl expressions for display on walls. Consideration consisted of 28,920 shares of our common stock and payment of an earn out equal to 10% of the EBITDA of the subsidiary that acquired the assets for the years ended December 31, 2014, 2015 and 2016, payable in cash or shares of our common stock at our discretion. The shares of common stock for this acquisition were issued in April and June 2014. To-date no payments have been made on the earn out, and no accruals for such earn out have been recorded.

Nutritional and Wellness Segment

The following company offers products in the nutritional and wellness segment:

Agel Enterprises

In October 2013, we formed Agel Enterprises, Inc., a Delaware corporation which acquired substantially all of the assets of Agel Enterprises, LLC. Agel is a direct-to-consumer business based in Utah that sells nutritional supplements and skin care products through a worldwide network of independent sales representatives. Agel's products are sold in over 50 countries. Agel acquired substantially all the assets of Agel Enterprises, LLC in exchange for total consideration of 372,330 shares of our common stock (of which 28,628 shares were issued in January 2014), and the delivery of a purchase money note, dated the closing date, in the

original principal amount of $1.7 million.

Nutrition and wellness is a significant part of the direct-to-consumer marketplace. Agel brings to our portfolio a unique and appealing line of nutritional products in gel form, which are more easily absorbed by the body than nutritionals in pill form, as well as a newly-launched, revolutionary skin care line. Our nutritional and wellness segment has the most global footprint of our five segments, selling into more than 50 countries around the world. We believe that this global presence can help other of our segments and brands over time to reduce the costs of entry into international markets in which we already have a presence.

Agel introduced a new skin care product , Caspi™, and a new probiotic product , Agel BIO™ , at the company’s annual convention in Lyon, France in September 2015. Our Vice Chairman, John Rochon Jr., attended and addressed the convention.

We believe that Caspi is one of the most innovative breakthroughs the skin care category has seen in decades. Caspi was developed by a team of cosmetic chemists and it uses stem cell extract from Siberian Sturgeon caviar, combined with 24 karat gold, and is designed to give skin a healthier, more youthful appearance. We are very excited about Caspi's future within our portfolio and its prospects for growth within our nutritional and wellness segment. We anticipate that growth of this product will also contribute to potential gross margin expansion within the segment as a whole.

Agel BIO™ is designed to deliver the benefits of a probiotic to the body in a suspension gel, to allow for better absorption in the intestine. When Agel introduced it in September 2015, the reaction among the sales force was very enthusiastic and this much-anticipated product is expected to be a source of revenue growth in this segment.

Publishing and Printing Segment

The following companies offer products in the publishing and printing segment:

Happenings Communications Group

On September 25, 2012, we acquired 100% of HCG as part of the Share Exchange Agreement ("Share Exchange Agreement".) HCG publishes a monthly magazine, Happenings Magazine, that highlights events and attractions, entertainment and recreation, and people and community in Northeast Pennsylvania. HCG also provides marketing and creative services to various companies, and can provide such services to direct-to-consumer businesses. Services HCG provides may include creating brochures, sales materials, websites and other communications for independent sales representatives and ultimate customers.

Paperly

In December 2013, we formed Paperly, Inc., a Delaware corporation, which acquired substantially all of the assets of Paperly, a direct-to-consumer company that allows its independent sales representatives to work with customers to design and create custom stationery through home parties, events and individual appointments. We acquired substantially all the assets of Paperly in exchange for total consideration of 7,797 shares of our common stock and payment of an earn out of 10% of earnings before interest, taxes, depreciation and amortization ("EBITDA") from 2014 to 2016. The shares of our common stock for this acquisition were issued in 2014. We assumed liabilities of $110,022 in connection with the acquisition. To-date no payments have been made on the earn out, and no accruals for such earn out have been recorded.

Other Segments

The following company offers products in other segments:

Tomboy Tools

In October 2013, we formed CVSL TBT LLC, a Texas limited liability company, which acquired substantially all of the assets of Tomboy Tools, Inc., a direct-to-consumer company, which sells a line of tools designed for women as well as home security systems. We acquired substantially all the assets of Tomboy Tools, Inc. in exchange for total consideration of 88,349 shares of our common stock and the assumption of liabilities of $471,477 in connection with the acquisition. For a period of time TBT used the name "Project Home," but has returned to the use of the name "Tomboy Tools," as we believe it is a stronger brand name.

Our History

We were incorporated under the laws of Delaware in April 2007 under the name Cardio Vascular Medical Device Corporation. In June 2011, we converted to a Florida corporation and changed our name to Computer Vision Systems Laboratories, Corp. On May 27, 2013, we changed our name to CVSL Inc. ("CVSL"). On September 25, 2012, we completed an initial share exchange whereby we acquired 100% of the issued and outstanding capital stock of Happenings Communications Group, Inc. ("HCG"), a magazine publisher, in exchange for 21,904,302 shares of our common stock representing approximately 90.0% of our issued and outstanding capital stock at such time. At that time, we announced our strategy to create a platform for the acquisition of multiple companies within the direct-to-consumer sector. In December 2012, we decided to terminate our medical device line of business. On October 16, 2014, we effected a 1-for-20 reverse stock split of our authorized and our issued and outstanding common stock.

On March 7, 2016 we changed our name to JRjr33, Inc. and began doing business as JRJR Networks. We also changed our stock symbol to JRJR in January 2016 in connection with the name change.

Other Recent Financial Developments

Convertible Note Financing

On November 20, 2015, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with an institutional investor (the “Purchaser”), pursuant to which we issued to the Purchaser for an aggregate subscription amount of $4,000,000: (i) a Senior Secured Convertible Note (the “Senior Convertible Note”); and (ii) 375,000 shares of our common stock. In connection with our obligations under the Senior Convertible Note, we and our direct and indirect domestic subsidiaries (the “U.S. Subsidiaries”) entered into a Security and Pledge Agreement with the Purchaser, as collateral agent (the “Security Agreement”), pursuant to which we and the U.S. Subsidiaries granted a lien on all of our assets, subject to existing security interests (the “Collateral”), for the benefit of the Purchaser, to secure our obligations under the Senior Convertible Note. In connection with the delays in filing this Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 we have issued 450,000 shares of our common stock in 2016 to the purchaser due to such failure to timely file and the purchaser has agreed that the failure to timely file would not constitute an event of default provided we issue the purchaser 50,000 shares of our common stock for each additional ten business days that the filing is late.

Underwritten Offering

On March 4, 2015, we closed a firm commitment underwritten public offering (the “Offering”) with Aegis Capital Corp. (“Aegis”), as representative of the several underwriters named therein (the “Underwriters”) of 6,667,000 shares of our common stock and warrants (the “Warrants”) to purchase up to an aggregate of 6,667,000 shares of our common stock at a combined offering price of $3.00 per share and Warrant. Pursuant to the Underwriting Agreement that we entered into with Aegis, as the representative of the Underwriters, we granted the Underwriters an option for a period of 45 days to purchase up to 1,000,050 additional shares of common stock and/or 1,000,050 additional Warrants, in each case, solely to cover over-allotments, if any. The Underwriters partially exercised their over-allotment option to purchase additional Warrants to purchase 113,200 shares of common stock at a per Warrant price of $.0001. The gross proceeds from the Offering were $20.0 million and the net proceeds were approximately $17.8 million, after deducting underwriting discounts and commissions and offering expenses payable by us, assuming no exercise by the Underwriters of their option to purchase additional shares of common stock and/or Warrants. We used approximately $0.2 million ($2.1 million gross less $1.9 million of cash acquired) of the net proceeds from the Offering to acquire Kleeneze. The remaining net proceeds are being used for general working capital purposes, including ongoing operations, expansion of the business and further research and development

At-the-Market Issuance Sales Agreement

On December 3, 2014, we entered into an “At-the-Market Issuance Sales Agreement” with MLV & Co. LLC (“MLV”) pursuant to which we may offer and sell shares of our common stock having an aggregate offering price of up to $25,000,000 from time to time through MLV, acting as agent. Sale of shares under this agreement were sold pursuant to our shelf registration statement on Form S-3 (File No. 333-200712), which became effective on January 15, 2015. During 2015 , we sold 101,083 shares under the agreement and received aggregate net proceeds of $684,000 .

Strengths and Competitive Advantages

We believe that the following sets us apart from our competitors:

Our experienced management team and board of directors. Our management team and the Board are comprised of highly experienced industry leaders, including John P. Rochon, our Chairman of the Board and Chief Executive Officer. Mr. Rochon has

40 years of experience in capital markets, finance, operations, mergers and acquisitions, business planning, technology, sales and brand building, including an ownership position and prior senior management experience as the Chairman and Chief Executive Officer of Mary Kay Inc., a company he led through global expansion to 37 countries, a major investment in technology and a successful management-led leveraged buyout. John Rochon Jr., our Vice Chairman, has spent most of his life in the direct-to-consumer industry and has a deep understanding of how to provide active, charismatic, hands-on leadership to the independent sales networks of our various operating companies. He travels the world mobilizing and supporting the sales networks and providing the direct link between them and the company itself. Other members of the senior management team and the Board have also had significant experience in the direct selling industry and other industries, including Russell Mack (Mary Kay, American and United Airlines, the White House), William Randall (Mary Kay, BeautiControl) and Julie Rasmussen (Mary Kay, Hertz Russia, with clients including RJR Nabisco, Johnson and Johnson). In addition, our management team also includes other employees and consultants with significant experience in the direct selling industry such as Thomas Reynolds, Ph.D. (Wirthlin Reynolds, clients including Coca Cola, Federal Express, Procter and Gamble).

Our diverse product offerings and large distributor and customer base. Each company that we acquire adds to our diverse product offerings portfolio as well as to our large representative and customer base. We currently offer products in the following categories: home décor, gourmet foods and spices, nutritional supplements, personalized stationery, skin care, home improvement and home security. We intend to grow our business into additional product and service categories. This diversification, in our view, leads to less risk and more predictability of financial performance, as JRJR is less and less dependent upon any one operating company or segment.

A differentiated shopping experience integrating social media and other state of the art technologies. We provide a differentiated shopping experience for our customers through our energized sales force and our innovative use of social media and other technologies for the sale of products, which provides a multi-channel presence.

For example, each of our independent sales representatives may use their own personalized web page, which allows them to offer a convenient shopping experience and to establish a loyal customer base. In 2015 we continued our investment in improved IT resources, such as our own virtual server infrastructure, corporate network and software tailored to our distinct needs.

The internal side of the upgrade, the enterprise resource system, gives us improved ability to manage all aspects of its operations and finance, including financial planning, regular reporting of daily financial metrics to management, ordering of components for manufacturing and vendor-sourced products, accounting, and similar aspects of monitoring the business in order to make better-informed business decisions. The external side of the upgrade is the IT platform on which sales force members monitor their own businesses. It provides them with the information they need to track sales, their progress toward achievement and reward levels and their downline recruits. The IT platform also includes a customer-facing side of their IT platform, which includes the individual web sites on which customers can shop and place orders.

Our ability to benefit from the brand recognition and loyal customers of each company we acquire. We strive to acquire target companies with well established brands and loyal customers. We believe this approach allows us to maximizes sales opportunities by increasing the chances that our customers will buy multiple products and services from our JRJR family of companies. We intend that each company that we bring into the JRJR community will maintain its own brand identity, independent sales representatives, key product lines and key leaders.

Our scalable business model. JRJR provides each company it acquires with a common corporate infrastructure that provides operating efficiencies in sourcing, manufacturing, IT, distribution and administration.

As an example, YIAH’s manufacturing facility in Australia has commenced production of certain products to be sold by My Secret Kitchen in the United Kingdom, allowing both companies to benefit from economies of scale and best practices in manufacturing. In addition, the distribution operations of Agel U.S. now takes place in the Ohio distribution facility with the other companies in the portfolio, thus achieving cost efficiencies and leveraging the expertise and experience of the internal leaders. We anticipate further integration over time of back-office functions by all our companies, resulting in what we expect to be additional cost synergies. “Shared services” continue to be developed in areas such as marketing support, travel, distribution, customer care and legal support.

JRJR also provides operational expertise and cross-pollination of business ideas across companies. Our role in managing our companies varies according to the needs and circumstances of each company. Our intention is that all of our companies will be able to operate in a relatively self-sufficient manner on a day-to-day basis, drawing upon our management as needed to set strategy, improve operations or solve problems, such as identifying suitable strategic business opportunities or other partnerships.

Our Strategy

Our goal is to combine the power of micro-enterprise with the power of personal networks, linking millions of interpersonal relationships in a virtual “community.” We are engaged in a long-term growth strategy to develop a large, diverse global company in the micro-enterprise sector. A core component is our ongoing acquisition strategy, which we expect will result in additional revenue being added as more companies are acquired. We intend to “build out” the JRJR family of companies across multiple dimensions by expanding in each of the following areas:

Product and Service Categories: We seek to acquire micro-enterprise companies with diverse product and service offerings, which will allow us to gain a foothold in a fundamental category of products or services that has significant potential to grow over time. The size of a target company is not as important to us as gaining entry into a desirable new product or service category. We also believe that we will be able to grow each of our portfolio companies organically by leveraging our operational infrastructure, as well as shared best practices in operations, sales and sales field recruiting. As described under “Strengths and Competitive Advantages-Our Scalable Business Model,” we are already leveraging our operational infrastructure to support our current companies. For example, YIAH, Agel and Tomboy Tools use distribution space at our facilities in Ohio and the shared services events and marketing teams have helped multiple companies that previously used outside third parties with new catalogues and event planning. In addition to the shared operational resources currently being leveraged by the various companies, we have plans to continue to integrate the back office and leverage our operational resources.

Geography: We seek to acquire companies in new geographic markets. During 2015, we significantly expanded our markets outside of the United States to the U.K. and Ireland. Our major markets outside the United States currently include the U.K., Ireland, Australia, Italy, Russia, Ukraine and Thailand. Each time we acquire a company in a new geographic market, we gain a foothold in that country which represents additional growth potential. Each new geographic market we are able to penetrate becomes an established platform in which our other portfolio companies may conduct commerce, saving the investment of time and expense that would otherwise be necessary for each company to open new markets individually.

Consumer Information: Every micro-enterprise company we acquire brings with it names and contacts that represent personal relationships with current sellers, former sellers, current customers and former customers. We intend to use social media as one method to reach and connect all of these people. There are numerous connections already within the JRJR family of companies and we intend to continue to add many more connections through organic growth and acquisitions. The “consumer cloud” refers to a data base with a list of connections, including names of current and former sellers in our independent sales force, current and former customers, in some cases current and former hosts or hostesses (for party plan companies), and employees. The number of such connections varies according to the size of the company. The connections include such information as names, addresses, email addresses, phone numbers and past selling or purchasing history.

Every time any JRJR company adds another seller or customer, it obtains an additional connection from that person (organic growth), and each time JRJR acquires another company, it adds to its database the total number of connections which that acquired company has already accumulated. These connections represent personal relationships-between family members, friends, neighbors, co-workers, etc. When a consumer recommends a product to a friend, family member or neighbor, that recommendation carries more credibility than even the most effective advertising.

Gender Demographics: The sales forces of our companies, as well as their customers, represent both gender demographics, although the gender breakdown varies from one company to another. We seek to acquire companies that will appeal to both gender demographics. In general, the micro-enterprise/direct selling sector globally tends to be more female than male. According to a study by the Direct Selling Association, 78% of direct selling entrepreneurs were female. However, both genders are represented in varying proportions, depending on the nature of the product or service.

The Direct Selling Industry

Direct selling is a well-established sales channel where products are marketed directly to customers, eliminating the need for middlemen, wholesalers, advertisers and retailers. The global direct selling market is a growing $183 billion industry. The U.S. portion of the industry alone exceeds $34 billion in annual sales. Worldwide, more than 100 million people are estimated to participate in direct selling. According to the World Federation of Direct Selling Associations, the four largest direct selling markets are the United States, Japan, China and Brazil, but the direct selling industry has a strong presence in every region of the world. Our management team believes that there are numerous companies in the micro-enterprise sector with annual revenues of $50 to $300 million.

Marketing, Manufacturing and Distribution

We presently have sales operations in over 50 countries and serve our customers through independent sales representatives. For the year ended December 31, 2015 , approximately 71.0% of our revenue was derived from sales outside the United States and for the year ended December 31, 2014 , approximately 41.4% of our revenue was derived from sales outside the United States. The independent sales representatives utilize marketing materials and websites to advertise products offered by our companies. Nearly all independent sales representatives have their own personalized website for customers to use for ordering products, which allows the sales representatives to run their business more efficiently and improves our order-processing accuracy. Representatives earn commissions by selling products to their customers, the ultimate consumer. We generally have no arrangements with end-users of our products beyond the representatives. No single representative accounts for more than 1% of our revenues.

Orders are placed using the Internet, mail, telephone, fax and directly with our representatives at events that they host, and payments are processed, often via credit card, when orders are taken. Once the order is processed, products are gathered at a distribution center and delivered to the customer through a combination of local and national delivery companies. We do not believe we are materially dependent on any single supplier for raw materials or finished goods. We purchase raw materials from numerous domestic and international suppliers. Sufficient raw materials were available during the year ended December 31, 2015 , and we believe they will continue to be.

We believe alternative suppliers of raw materials are readily available if our current suppliers were to become unavailable. In some markets, we utilize retail locations to serve representatives and customers. We utilize third party manufacturers for some of our products and manufacture certain products ourselves, such as food products sold in Australia and baskets sold by TLC. We utilize the production capabilities of a 600,000 square foot manufacturing facility in Sherman, Texas, owned by Michael Bishop, a member of our Board of Directors, to produce products for YIAH that are being sold in the United States, as well as for their distribution.

In addition, we conducted production runs of certain Agel products, including of our new skin care line Caspi, in this facility in 2015 and expect to continue to utilize this facility to meet some of Agel’s production needs in the future. To achieve certain economies of scale, best pricing and uniform quality, we rely primarily on a few principal delivery companies for the delivery of our goods. We believe that there are several alternative delivery companies that could replace the current delivery companies, and there are several alternative manufacturers that could replace our current manufacturers.

The independent sales representatives are independent contractors compensated based on sales of products achieved by them, the representatives they recruit, known as their down-line representatives, and their customers. Representatives do not receive a fee for recruiting down-line representatives. The recruiting and training of new representatives are the responsibilities of the existing representatives, who are supported by in-house marketing staff. Because representatives are compensated not only on their own sales but on sales made by other representatives who they recruit, each representative has an incentive to recruit additional representatives in order to increase their total sales and potential sales commissions. The primary method of adding to our independent sales representatives and customer base has been the acquisitions of other companies with such bases and personal contacts.

Intellectual Property

We have acquired numerous registered trademarks in our business relating to the acquisitions that we have consummated and intend to maintain the trademarks of companies we acquire. We own trademarks that are registered with the U.S. Patent and Trademark Office and in foreign jurisdictions. Registration of a trademark enables the registered owner of the mark to bar the unauthorized use of the registered trademark in connection with a similar product in the same channels of trade by any third-party in the respective country of registration, regardless of whether the registered owner has ever used the trademark in the area where the unauthorized use occurs.

We also claim ownership and protection of certain product names, unregistered trademarks, and service marks under common law. Common law trademark rights do not provide the same level of protection that is afforded by the registration of a trademark. In addition, common law trademark rights are limited to the geographic area in which the trademark is actually used. We believe these trademarks, whether registered or claimed under common law, constitute valuable assets, adding to recognition of our brands and the effective marketing of our products. We intend to maintain and keep current our trademark registrations and to pay all applicable renewal fees as they become due that are necessary for the continued use in the business. The right of a trademark owner to use its trademarks, however, is based on a number of factors, including their first use in commerce, and trademark owners can lose trademark rights despite trademark registration and payment of renewal fees. We therefore believe that these proprietary rights have been and will continue to be important in enabling us to compete, and if for any reason we were unable to maintain our trademarks, our sales of the related products bearing such trademarks could be materially and negatively affected. See “Risk Factors.”

We own certain intellectual property, including trade secrets that we seek to protect, in part, through confidentiality agreements with employees and other parties. Most of our products are not protected by patents, and therefore, such agreements are often our only form of protection. Even where these agreements exist, there can be no assurance that these agreements will not be breached, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known to or independently developed by competitors. Our proprietary product formulations are generally considered trade secrets, but are not otherwise protected under intellectual property laws.

We intend to protect our legal rights concerning intellectual property by all appropriate legal action. Consequently, we may become involved from time to time in litigation to determine the enforceability, scope, and validity of any of the foregoing proprietary rights. Any patent litigation could result in substantial cost and divert the efforts of management and technical personnel.

Governmental Regulation

The direct selling industry is subject to a number of federal and state regulations administered by the FTC and various state agencies in the United States, as well as regulations regarding direct selling activities in foreign markets. Laws specifically applicable to direct selling companies generally are directed at preventing deceptive or misleading marketing and sales practices, and include laws often referred to as “pyramid” or “chain sales” scheme laws. These “anti-pyramid” laws are focused on ensuring that product sales ultimately are made to end consumers and that advancement within a sales organization is based on sales of products and services rather than investments in the organization, recruiting other participants, or other non-retail sales-related criteria. The regulatory requirements concerning direct selling programs involve a high level of subjectivity and are subject to judicial interpretation. We and our subsidiaries are subject to the risk that these laws or regulations or the enforcement or interpretation of these laws and regulations by governmental agencies or courts can change. Any direct selling company that we own or that we acquire in the future, could be found not to be in compliance with current or newly adopted laws or regulations in one or more markets, which could prevent us from conducting our business in these markets and harm our prospects, business activities, cash flow, financial condition, results of operations and stock price. We are aware of pending judicial actions and investigations against other companies in the direct selling industry. Adverse decisions in these cases could impact our business if direct selling laws or anti-pyramid laws are interpreted more narrowly or in a manner that results in additional burdens or restrictions on direct selling. The implementation of such regulations may be influenced by public attention directed toward a direct selling company, its products or its direct selling program, such that extensive adverse publicity could result in increased regulatory scrutiny. If any government were to ban or restrict our business mode, our prospects business activities, cash flows, financial condition and results of operations may be materially adversely affected.

Our products and related promotional and marketing activities are subject to extensive governmental regulation by numerous governmental agencies and authorities, including the FDA, FTC, the Consumer Product Safety Commission, the Department of Agriculture, State Attorneys General and other state regulatory agencies in the United States, and the Ministry of Health, Labor and Welfare in Japan and similar government agencies in each market in which we operate. Government authorities regulate advertising and product claims regarding the efficacy and benefits of our products. These regulatory authorities typically require adequate and reliable scientific substantiation to support any marketing claims. What constitutes such reliable scientific substantiation can vary widely from market to market and there is no assurance that the research and development efforts that we undertake to support our claims will be deemed adequate for any particular product or claim. If we are unable to show adequate and reliable scientific substantiation for our product claims, or our marketing materials or the marketing materials of our sales force make claims that exceed the scope of allowed claims for nutritional supplements, spices or skin care products that we offer, the FDA or other regulatory authorities could take enforcement action requiring us to revise our marketing materials, amend our claims or stop selling certain products, which could harm our business.

For example, the FDA has in the past issued warning letters to several cosmetic companies alleging improper structure/function claims regarding their cosmetic products, including, for example, product claims regarding gene activity, cellular rejuvenation, and rebuilding collagen. There is a degree of subjectivity in determining whether a claim is an improper structure/function claim. Given this subjectivity, there is a risk that we could receive a warning letter, be required to modify our product claims or take other actions to satisfy the FDA if the FDA determines any of our marketing materials include improper structure/function claims for our cosmetic products. In addition, plaintiffs’ lawyers have filed class action lawsuits against some of our competitors after our competitors received these FDA warning letters. There can be no assurance that we will not be subject to governmental actions or class action lawsuits, which could harm our business.

As previously stated, our spices, nutritional supplements and skin cares are subject to rigorous FDA and related legal regimens limiting the types of therapeutic claims that can be made about our products. The treatment or cure of disease, for example, is not a permitted claim for these products. While we train our independent sales representatives and attempt to monitor our sales

representative’s marketing materials, we cannot ensure that all such materials comply with applicable regulations, including bans on therapeutic claims. If our independent sales representatives fail to comply with these restrictions, then we and our independent sales representatives could be subjected to claims, financial penalties, mandatory product recalls or relabeling requirements, which could harm our financial condition and operating results. Although we expect that our responsibility for the actions of our independent sales representatives in such an instance would be dependent on a determination that we either controlled or condoned a noncompliant advertising practice, there can be no assurance that we could not be held vicariously liable for the actions of our independent sales representatives.

In the United States, FDA regulations on Good Manufacturing Practices and Adverse Event Reporting requirements for the nutritional supplement industry require us and our vendors to maintain good manufacturing processes, including stringent vendor qualifications, ingredient identification, manufacturing controls and record keeping. We are also required to report serious adverse events associated with consumer use of our products. Our operations could be harmed if regulatory authorities make determinations that we, or our vendors, are not in compliance with these regulations or public reporting of adverse events harms our reputation for quality and safety. A finding of noncompliance may result in administrative warnings, penalties or actions impacting our ability to continue selling certain products. In addition, compliance with these regulations has increased and may further increase the cost of manufacturing certain of our products as we work with our vendors to assure they are qualified and in compliance.

There are an increasing number of laws and regulations being promulgated by the U.S. government, governments of individual states and governments overseas that pertain to the Internet and doing business online. In addition, a number of legislative and regulatory proposals are under consideration by federal, state, local, and foreign governments and agencies.

As a U.S. entity operating through subsidiaries in foreign jurisdictions, we are subject to foreign exchange control, transfer pricing and customs laws that regulate the flow of funds between us and our subsidiaries and for product purchases, management services and contractual obligations, such as the payment of sales commissions.

Like companies that operate in our product categories, from time to time we receive inquiries from government regulatory authorities regarding the nature of our business and other issues, such as compliance with local direct selling, transfer pricing, customs, taxation, foreign exchange control, securities and other laws.

Competition

The business of direct selling is competitive. Not only do we compete for customers but also for independent sales representatives. We face competition from products sold to customers by other direct selling companies and through the Internet, and products sold through the mass market and traditional retail channels.

Many direct selling segment competitors such as Avon Products Inc., Tupperware Brands Corp. and others have longer operating histories, greater financial, technical, product development, marketing and sales resources, greater name recognition, larger customer bases and better-developed distribution channels.

Seasonality

Although we are not significantly affected by seasonality, certain of our companies, such as Longaberger, do experience increases in sales activity in the fourth quarter around Christmas.

Employees

As of December 31, 2015 and 2014 , we had worldwide approximately 582 and 401 employees (including employees of our subsidiaries), respectively, as measured by full-time equivalency. These numbers do not include our independent sales representatives, who are independent contractors and are not considered employees. Our employees are not represented by a union or other collective bargaining group. We believe that we have a good relationship with our employees.

Independent Sales Representatives

As of December 31, 2015 , we had approximately 63,000 independent sales representatives across our direct selling companies. Our independent sales representatives are not salaried and earn commissions by selling products to their customers, the ultimate consumer. They also earn revenue from the sales of products by representatives whom they recruit, train and motivate. One of the largest general and administrative expenses is commissions paid to our independent sales representatives. For the years ended

December 31, 2015 and 2014 , we paid $34.1 million and $25.0 million , respectively, in commissions to our independent sales representatives.

Available Information

Our Annual Reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are available free of charge through the Investor Relations section of our Internet website, http://www.jrjrnetworks.com, as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC. Except as otherwise stated in these reports, the information contained on our website or available by hyperlink from our website is not incorporated into this Annual Report on Form 10-K or other documents we file with, or furnish to, the SEC, and is not intended to be an active link to our website. The following Corporate Governance documents are also posted on our website: Code of Business Conduct and Ethics and the Charters for the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee of the Board of Directors. Our phone number is (469) 913-4115 and our facsimile number is (469) 913-4041.

Item 1A. Risk Factors

You should carefully consider the following risks in evaluating our business. The risks described below are the risks that we currently believe are material to our business. However, additional risks not presently known to us, or risks that we currently believe are not material, may also impair our business operations. You should also refer to the other information set forth in this Annual Report on Form 10-K, including the information set forth in “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” as well as our consolidated financial statements and the related notes. Our business prospects, financial condition or results of operations could be adversely affected by any of the following risks. If we are adversely affected by such risks, then the market price of our common stock could decline.

Risks Relating To Our Business

We have suffered operating losses since inception and we may not be able to achieve profitability.

We had an accumulated deficit of $(45.3) million as of December 31, 2015 and $(32.2) million as of December 31, 2014 . Net losses attributable to JRjr33 totaled $(13.1) million for the the year ended December 31, 2015 and $(19.1) million for the year ended December 31, 2014 . We expect to continue to incur increasing expenses in the foreseeable future related to our long-term growth strategy to develop a large, diverse global company in the micro-enterprise sector. As a result, we are sustaining operating and net losses, and it is possible that we will never be able to achieve or sustain the revenue levels necessary to attain profitability.

Because we have recently acquired a large number of businesses, it is difficult to predict if we will continue to generate our current level of revenue.

Prior to March 2013, our primary business was publishing a monthly magazine, Happenings Magazine, and prior to September 2012, we were engaged in the development and commercialization of medical devices. Between March of 2013 and the date of this filing, we completed nine business acquisitions, changing our business focus away from that of the publishing business and medical devices business towards the direct-to-consumer business. It is too early to predict whether consumers will accept, and continue to use, on a regular basis, the products generated by the companies we acquired in these recent acquisitions or the direct-to-consumer companies we hope to acquire in the future. We have had a very limited operating history as a combined entity and the impact of our recent acquisitions is difficult to assess. Therefore, our ability to sustain our current revenue is uncertain and there can be no assurance that we will continue to be able to generate significant revenue or be profitable.

We rely upon our existing cash balances and cash flow from operations to fund our business and if our cash flow from operations is inadequate, we will need to continue to raise capital through a debt or equity financing, if available, or curtail operations.

The adequacy of our cash resources to continue to meet our future operational needs depends, in large part, on our ability to increase product sales and/or reduce operating costs. If we are unsuccessful in generating positive cash flow from operations, we could exhaust our available cash resources and be required to secure additional funding through a debt or equity financing. Any such additional funding may not be available or may only be available on unfavorable terms. As a result, we may find it necessary to significantly scale back our operations and/or discontinue many of our activities, which could negatively affect our business and prospects. In addition, our failure to timely file this Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the

quarter ended March 31, 2016, precludes us from being able to register our securities on a registration statement on Form S-3 for a one year period from the filing due date of the Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, which will make it more difficult and expensive for us to register our common stock and attract additional capital. Therefore, without S-3 eligibility it will be unlikely that any warrant holders from our recent offering will pay cash if they effectuate their exercise within the next year.

Any failure to meet our debt service obligations, or to refinance or repay our outstanding indebtedness as it matures, could materially adversely impact our business, prospects, financial condition, liquidity, results of operations and cash flows.

Our ability to satisfy our debt obligations and repay or refinance our maturing indebtedness will depend principally upon our future operating performance. We are required to make monthly payments under our promissory notes that mature on October 22, 2018 and February 14, 2023 that have principal balances of $1.0 million and $3.0 million , respectively as of December 31, 2015 . We also are required to make monthly interest payments on senior secured debt owed to HSBC Bank PLC as part of our acquisition of Kleeneze. We are also required to make monthly payments on our notes that mature May 19, 2017. The debt owed to HSBC had a balance of $3.0 million as of December 31, 2015 and is fully secured by cash shown on our consolidated balance sheet under the restricted cash line as part of non-current assets. As a result, prevailing economic conditions and financial, business, legislative, regulatory and other factors, many of which are beyond our control, will affect our ability to make payments on and to refinance our debt. If we do not generate sufficient cash flow from operations to satisfy our debt service obligations, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, incurring additional debt, issuing equity or convertible securities, reducing discretionary expenditures and selling certain assets (or combinations thereof). Our ability to execute such alternative financing plans will depend on the capital markets and our financial condition at such time. In addition, our ability to execute such alternative financing plans may be subject to certain restrictions under our existing indebtedness. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants compared to those associated with any debt that is being refinanced, which could further restrict our business operations. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or our inability to refinance our debt obligations on commercially reasonable terms or at all, would have a material adverse effect on our business, prospects, financial condition, liquidity, results of operations and cash flows.

Our inability to file timely and accurate periodic reports may cause us to incur significant additional costs and may continue to affect our stock price.

As a public company, we are required to file annual and quarterly periodic reports containing our financial statements with the SEC within prescribed time periods. As part of the NYSE MKT stock exchange listing requirements, we are also required to provide our periodic reports, or make them available, to our stockholders within prescribed time periods. We have not been able to, and may continue to be unable to, produce timely financial statements or file these financial statements as part of a periodic report in a timely manner with the SEC or in compliance with the NYSE MKT stock exchange listing requirements.

Until we complete these remaining filings, we expect to continue to face many of the risks and challenges we have experienced during our extended filing delay period, including:


•	continued concern on the part of customers, partners, investors, and employees about our financial condition and extended filing delay status, including potential loss of business opportunities;


•	additional significant time and expense required to complete our remaining filings and the process of maintaining the listing of our common stock on NYSE MKT beyond the significant time and expense we have already incurred in connection with our accounting review to date;


•	continued distraction of our senior management team and our board of directors as we work to complete our remaining filings;


•	limitations on our ability to raise capital and make acquisitions; and


•	general reputational harm as a result of the foregoing.

We have been notified by the NYSE MKT stock exchange that our common stock listing on the NYSE MKT stock exchange could be suspended or terminated on or after October 17, 2016 if we have not filed all of our outstanding periodic reports with SEC by that date. If our common stock listing on the NYSE MKT stock exchange is suspended or terminated, or if our stock is removed as a component of certain stock market indices, our stock price could materially suffer. In addition, we or members of our management could be subject to investigation and sanction by the SEC and other regulatory authorities. Any or all of the foregoing could also result in the commencement of stockholder lawsuits against us. Any such litigation, as well as any proceedings that could in the future arise as a result of our filing delay and the circumstances which gave rise to it, may be time consuming and expensive, may divert management attention from the conduct of our business, could have a material adverse

effect on our business, financial condition, and results of operations, and may expose us to costly indemnification obligations to current or former officers, directors, or other personnel, regardless of the outcome of such matter, which may not be adequately covered by insurance.

The failure to comply with the terms of our outstanding senior secured convertible notes could result in a default under the terms of the notes and, if uncured, it could potentially result in action against our pledged assets.

We issued $4,000,000 of senior secured convertible notes to an accredited investor in November 2015 that is secured by substantially all of our assets and those of our subsidiaries. We also issued convertible notes in the principal amount of £3,748,000 ($5,753,000 at the date of issuance) in connection with our October acquisition of Betterware. The $4,000,000 senior secured note matures on May 19, 2017 and the £3,748,000 in convertible notes issued mature in October 2018. The senior secured notes require us, among other things, to maintain the security interest, make monthly installment payments, and meet various negative and affirmative covenants. If we fail to comply with the terms of the senior secured convertible note and/or the related agreements, the senior note holder could declare a note default and if the default were to remain uncured, the secured creditor would have the right to proceed against any or all of the collateral securing their note. In addition, in the event we fail to comply with the terms of the £3,748,000 in convertible notes, the note holders also could declare a note default and if the default were to remain uncured, as a creditor they would have the right to proceed against our assets subject to the first priority of our secured creditors. Any action by our secured or unsecured creditors to proceed against our assets would likely have a serious disruptive effect on our business operations.

Our failure to file this Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 is an event of default under our senior secured note. The lender has agreed to waive the event of default provided that we issue the lender 50,000 shares of our common stock for each ten business days that the filing is late. If we should fail to issue the common stock to the lender required beyond the date of filing of the Form 10-K and our Quarterly Report on Form 10-Q as the waiver requires, the loan would be in default and the lender could call the notes making them immediately payable. To date, we have issued 450,000 shares of common stock to the lender for such failure to timely file.

Our investments in marketable securities are subject to market risks, which may result in losses.

As of December 31, 2015 and December 31, 2014 , we had approximately $5.3 million and $1.0 million in marketable securities, respectively, invested primarily in a diversified portfolio of liquid bonds. At neither December 31, 2015 nor December 31, 2014 did we have any investments in equity securities. However, we have from time to time and may in the future invest in equity securities. During the year ended December 31, 2015 , we realized a gain on marketable securities of $0.2 million . These investments are subject to general credit, liquidity, market and interest rate risks that could have a negative impact on our results of operations.

We may be unsuccessful in integrating the business operations of our recently acquired subsidiaries Kleeneze and Betterware with ours, which, if it were to occur, would negatively impact our growth strategy.

There can be no assurance that we will be able to successfully complete the integration of Kleeneze and Betterware's business operations following our recent acquisitions; the failure of which could have an adverse affect on our prospects, business activities, cash flow, financial condition, results of operations and stock price. Our primary growth strategy is based on increasing our acquisitions of, or entering into strategic transactions with direct selling companies, and potentially companies engaged in other direct selling related businesses. The integration of the Kleeneze and Betterware transactions may include the following challenges:


•	assimilating Kleeneze and Betterware's business operations, products and personnel with our existing operations, products and personnel;


•	estimating the capital, personnel and equipment required for Kleeneze and Betterware's business based on the historical experience of management;


•	minimizing potential adverse effects on existing business relationships with other suppliers and customers;


•	successfully developing and marketing Kleeneze and Betterware's products and services;


•	entering a market in which we have limited prior experience; and


•	coordinating our efforts throughout various distant localities and time zones, such as the United Kingdom where Kleeneze and Betterware are based.

Our growth strategy, as well as our recently acquired subsidiaries, will be subject to many of the risks common to new enterprises, including the ability to implement a business plan, market acceptance of proposed products and services, under-capitalization, cash shortages, limitations with respect to personnel, financing and other resources, competition from better funded and experienced companies, and the ability to generate profits. In light of the stage of our development, no assurance can be given that we will be

able to consummate our business strategy and plans, that our activities will be successful or that financial, technological, market, or other limitations will not force us to modify, alter, significantly delay, or significantly impede the implementation of our plans.

Our business is difficult to evaluate because we have recently expanded, and intend to continue to expand, our product offerings and customer base.

Although our business has grown rapidly, we are still in the early stages of the implementation of our primary growth strategy, which is to increase our acquisitions of, and our number of strategic transactions with, other direct-to-consumer companies, such as the recent Kleeneze and Betterware acquisitions, and potentially companies engaged in other direct-to-consumer related businesses. As such, it may be difficult for investors to analyze our results of operations, to identify historical trends or even to make quarter-to-quarter comparisons because we have operated many of these newly-acquired businesses for a relatively limited time and intend to continue to expand our product offerings. Our growth strategy, as well as each business we acquire, is subject to many of the risks common to new enterprises, including the ability to implement a business plan, market acceptance of proposed products and services, under-capitalization, cash shortages, limitations with respect to personnel, financing and other resources, competition from better funded and experienced companies, and the ability to generate profits. In light of the stage of our development, no assurance can be given that we will be able to consummate our business strategy and plans, as described herein, that our activities will be successful or that financial, technological, market, or other limitations will not force us to modify, alter, significantly delay, or significantly impede the implementation of our plans.

We may be unsuccessful in identifying suitable acquisition candidates which may negatively impact our growth strategy.

There can be no assurance that we will be able to identify additional suitable acquisition candidates or consummate future acquisitions or strategic transactions on acceptable terms. Our failure to successfully identify suitable acquisition candidates or consummate future acquisitions or strategic transactions on acceptable terms could have an adverse effect on our prospects, business activities, cash flow, financial condition, results of operations and stock price as our primary growth strategy is based on increasing our acquisitions of, or entering into strategic transactions with direct selling companies, and potentially companies engaged in other direct-to-consumer related businesses. We are continually evaluating acquisition opportunities available to us that we believe will fit our acquisition strategy, namely companies that can increase the size and geographic scope of our operations or otherwise offer us growth and operating efficiency opportunities.

We may seek to finance acquisitions or develop strategic relationships which may dilute the interests of our shareholders.

The financing for future acquisitions could dilute the interests of our shareholders, result in an increase in our indebtedness, or both. The issuance of our common stock in the offering completed in March 2015 (the "Offering") resulted in dilution to existing shareholders and the issuance of additional shares of common stock and/or Warrants pursuant to the Underwriter’s over-allotment option as well as the exercise of any Warrants issued in the Offering will result in additional dilution to current shareholders. In addition, an acquisition, financing or other strategic transaction could adversely impact our cash flows and/or operating results, and dilute shareholder interests, for a number of reasons. For example, the financing of the Betterware transaction and the senior secured convertible note that we issued in November 2015 each allow for the payment of certain obligations under such convertible note with shares of common stock which may dilute existing stockholders. Other reasons may include:


•	interest costs and debt service requirements for any debt incurred in connection with an acquisition or new business venture; and


•	any issuance of securities in connection with an acquisition or other strategic transaction which dilutes the current holders of our common stock.

We may be unable to successfully integrate the businesses we have recently acquired and may acquire in the future with our current management and structure.

Our failure to successfully complete the integration of the businesses we acquire could have an adverse effect on our prospects, business activities, cash flow, financial condition, results of operations and stock price. The larger the business we acquire, the larger we believe our integration challenge will be. Integration challenges may include the following:


•	assimilating the acquired business’ operations products and personnel with our existing operations, products and personnel;


•	estimating the capital, personnel and equipment required for the acquired businesses based on the historical experience of management with the businesses they are familiar with;


•	minimizing potential adverse effects on existing business relationships with other suppliers and customers;


•	successfully developing and marketing the new products and services;


•	entering markets in which we have limited or no prior experience; and


•	coordinating our efforts throughout various distant localities and time zones, such as Italy, the United Kingdom and Australia, currently.

The diversion of management’s attention and costs associated with acquisitions may have a negative impact on our business.

If management’s attention is diverted from the management of our existing businesses as a result of its efforts in evaluating and negotiating new acquisitions and strategic transactions, the prospects, business activities, cash flow, financial condition and results of operations of our existing businesses may suffer. We also may incur unanticipated costs in connection with pursuing acquisitions and strategic transactions.

Acquisitions may subject us to additional unknown risks which may affect our customer retention and cause a reduction in our revenues.

In completing prior acquisitions and any future acquisitions, including our recently acquired subsidiaries Kleeneze and Betterware, we have and will rely upon the representations and warranties and indemnities made by the sellers with respect to each such acquisition as well as our own due diligence investigation. We cannot assure you that such representations and warranties will be true and correct or that our due diligence will uncover all materially adverse facts relating to the operations and financial condition of the acquired companies or their customers. To the extent that we are required to pay the debt obligations of an acquired company, or if material misrepresentations exist, we may not realize the expected benefit from such acquisition and we will have overpaid in cash and/or stock for the value received in that acquisition.

We may have difficulty managing future growth.

Since we commenced operations in the direct-to-consumer business, our business has grown significantly. This growth has placed substantial strain on our management, operational, financial and other resources. There can be no assurance that conflicts of interest will not arise with respect to John P. Rochon’s and John Rochon, Jr.’s ownership and control of our company or that any conflicts will be resolved in a manner favorable to the other shareholders of our company. On December 1, 2014, the Amended Share Exchange Agreement became effective, which limits Rochon Capital’s right to be issued the Second Tranche Stock solely upon the occurrence of certain stock acquisitions by third parties or the announcement of certain tender or exchange offers of our common stock.

Furthermore, the issuance of the Second Tranche Stock in accordance with the terms of the Amended Share Exchange Agreement would have a further dilutive effect.

Assuming the issuance of the Second Tranche Stock occurs, the number of outstanding shares of our common stock would increase to in excess of 60,000,000, with approximately 190,000,000 shares of our common stock available for issuance and John P. Rochon, together with John Rochon, Jr., would beneficially own approximately 75.9% of our outstanding shares of common stock. In the event the Second Tranche Stock becomes issuable, 25,240,676 additional shares of common stock will be issued. The perception that such further dilution could occur may cause the market price of our common stock to decline.

We depend heavily on John P. Rochon and John Rochon, Jr., and we may be unable to find a suitable replacement for either of them if we were to lose their services.

We are heavily dependent upon John P. Rochon, our Chief Executive Officer and Chairman of our Board and John Rochon, Jr., our Vice Chairman of our Board. The loss or unavailability of either of them could have a material adverse effect on our prospects, business activities, cash flow, financial condition, results from operations and stock price.

We are dependent upon affiliated parties for the provisions of a substantial portion of our administrative services as we do not have the internal capabilities to provide such services, and many of our employees are also employees of such affiliated entities.

We utilize the services of Richmont Holdings, Inc. (“Richmont Holdings”), a private investment and business management company owned 100% by John P. Rochon, under a reimbursement of services agreement pursuant to which Richmont Holdings provides transactions and administrative services. JRJR has entered into an agreement with Richmont Holdings to reimburse Richmont Holdings for certain expenses incurred by us in connection with our access to certain of its personnel, financial analysis personnel, strategy assistance, marketing advice and assorted other services related to our day-to-day operations and our efforts to acquire direct-to-consumer companies. We continue to rely upon Richmont Holdings for advice and assistance in areas related to identification, analysis, financing, due diligence, negotiations and other strategic planning, accounting, tax and legal matters

associated with potential acquisitions. Richmont Holdings and its affiliates have experience in the above areas. There can be no assurance that we can successfully develop the necessary expertise and infrastructure on our own without the assistance of these affiliated entities.

Certain of our subsidiaries are dependent on their key personnel.

The loss of the key executive officers of certain of our subsidiaries would have a significant adverse effect on the operations of the affected subsidiary and its prospects, business activities, cash flow, financial condition and results of operations. Although major decision making policies are handled by JRJR’s senior management, certain subsidiaries are primarily dependent upon their founder and/or Chief Executive Officer for their leadership roles with the respective sales forces. For instance, YIAH is particularly dependent upon its Colleen Walters, its Chief Executive Officer and founder, who represents the YIAH brand to her sales force. The loss of this individual could have a negative impact on sales field recruiting and sales, which ultimately would impact our revenue. We believe it is critical to retain key leaders of certain of the businesses we acquire, however there can be no assurance that any business or company acquired by us will be successful in attracting and retaining its key personnel.

We experience a high level of competition for qualified representatives in the direct selling industry and the loss of key high-level independent sales representatives could negatively impact our growth and our revenue.

The independent sales leaders are important in maintaining and growing our revenue. As a result, the loss of a high-level independent sales representative or a group of leading representatives could negatively impact our growth and our revenue.

In the direct-to-consumer industry, sales are made to the ultimate consumer principally through independent sales representatives. Generally, there can be a high rate of turnover among a direct-to-consumer company’s independent sales representatives. Our independent sales representatives may terminate their service at any time.

Our ability to remain competitive and maintain and expand our business depends, in significant part, on the success of our subsidiaries in recruiting, retaining, and incentivizing their independent sales representatives through an appropriate compensation plan, the maintenance of an attractive product portfolio and other incentives, and innovating the direct-to-consumer model. We cannot ensure that our strategies for soliciting and retaining the representatives of our subsidiaries or any direct-to-consumer company we acquire in the future will be successful, and if they are not, our prospects, business activities, cash flow, financial condition, results of operations and stock price could be harmed.

Several factors affect our ability to attract and retain independent sales representatives, including:


•	on-going motivation of our independent sales representatives;


•	general economic conditions;


•	significant changes in the amount of commissions paid;


•	public perception and acceptance of the industry, our business and our products;


•	our ability to provide proprietary quality-driven products that the market demands; and


•	competition in recruiting and retaining independent sales representatives.

Changes to our compensation arrangements could be viewed negatively by some independent sales representatives and could cause failure to achieve desired long-term results and increases in commissions paid could have a negative impact on profitability.

The payment of commissions and incentives, including bonuses and prizes, is one of our most significant expenses. We closely monitor the amount of the commissions and incentives we pay as a percentage of net revenues, and may periodically adjust our compensation plan to better manage these costs.

We modify components of our compensation plans from time to time in an attempt to remain competitive and attractive to existing and potential independent sales representatives including modifications to:


•	address changing market dynamics;


•	provide incentives to independent sales representatives that are intended to help grow our business;


•	conform to local regulations; and


•	address other business needs.

Because of the size of our sales force and the complexity of our compensation plans, it is difficult to predict how independent sales representatives will view such changes and whether such changes will achieve their desired results. Furthermore, any downward

adjustments to commissions and incentives may make it difficult to attract and retain our independent sales representatives or cause us to lose some of our existing independent sales representatives. There can be no assurance that changes to our compensation plans will be successful in achieving target levels of commissions and incentives as a percentage of net revenues and preventing these costs from having a significant adverse effect on our earnings.

Our business operates in an industry with intense competition.

Our business operates in an industry with numerous manufacturers, distributors and retailers of consumer goods. The market for our products is intensely competitive. Many of our competitors, such as Avon Products Inc., Tupperware Brands Corp. and others are significantly larger, have greater financial resources, and have better name recognition than we do. We also rely on our independent sales representatives to market and sell our products through direct marketing techniques. Our ability to compete with other direct marketing companies depends greatly on our ability to attract and retain qualified independent sales representatives. In addition, we currently do not have significant patent or other proprietary protection, and our competitors may introduce products with the same or similar ingredients that we use in our products. As a result, we may have difficulty differentiating our products from our competitors’ products and other competing products that enter the market. There can be no assurance that our future operations would not be harmed as a result of changing market conditions and future competition.

We and our subsidiaries generally conduct business in one channel.

Our principal business is conducted worldwide in one channel, the direct-to-consumer channel. Products and services of direct-to-consumer companies are sold to retail consumers. Spending by retail consumers is affected by a number of factors, including general economic conditions, inflation, interest rates, energy costs, gasoline prices, labor strikes and consumer confidence, all of which are beyond our control. Our subsidiaries may face economic challenges because customers may continue to have less money for discretionary purchases as a result of job losses, foreclosures, bankruptcies, reduced access to credit and falling home prices, among other things.

Changes in consumer purchasing habits, including reducing purchases of a direct-to-consumer company’s products, or reducing purchases from representatives or buying products in channels other than direct-to-consumer, such as retail, could reduce our sales, impact our ability to execute our business strategy or have a material adverse effect on our prospects, business activities, cash flow, financial condition, and results of operations.

Direct selling companies are subject to numerous laws.

The direct-to-consumer industry is subject to a number of federal and state regulations administered by the Federal Trade Commission (the “FTC”) and various state agencies in the United States, as well as regulations regarding direct-to-consumer activities in foreign markets. Laws specifically applicable to direct-to-consumer companies generally are directed at preventing deceptive or misleading marketing and sales practices, and include laws often referred to as “pyramid” or “chain sales” scheme laws. These “anti-pyramid” laws are focused on ensuring that product sales ultimately are made to end consumers and that advancement within a sales organization is based on sales of products and services rather than investments in the organization, recruiting other participants, or other non-retail sales-related criteria. The regulatory requirements concerning direct-to-consumer programs involve a high level of subjectivity and are subject to judicial interpretation. We and our subsidiaries are subject to the risk that these laws or regulations or the enforcement or interpretation of these laws and regulations by governmental agencies or courts can change. Any direct-to-consumer company that we own or we acquire in the future, could be found not to be in compliance with current or newly adopted laws or regulations in one or more markets, which could prevent us from conducting our business in these markets and harm our prospects, business activities, cash flow, financial condition, results of operations and stock price. We are aware of pending judicial actions and investigations against other companies in the direct-to-consumer industry. Adverse decisions in these cases could impact our business if direct-to-consumer laws or anti-pyramid laws are interpreted more narrowly or in a manner that results in additional burdens or restrictions on direct selling. The implementation of such regulations may be influenced by public attention directed toward a direct-to-consumer company, its products or its direct-to-consumer program, such that extensive adverse publicity could result in increased regulatory scrutiny. If any government were to ban or restrict our business model, our prospects, business activities, cash flows, financial condition and results of operations may be materially adversely affected.

We are subject to numerous government regulations.

States, and similar government agencies in each market in which we operate. Government authorities regulate advertising and product claims regarding the efficacy and benefits of our products. These regulatory authorities typically require adequate and reliable scientific substantiation to support any marketing claims. What constitutes such reliable scientific substantiation can vary widely from market to market and there is no assurance that the research and development efforts that we undertake to support our claims will be deemed adequate for any particular product or claim. If we are unable to show adequate and reliable scientific substantiation for our product claims, or our marketing materials or the marketing materials of our sales force make claims that exceed the scope of allowed claims for spices, dietary supplements or skin care products that we offer, the FDA or other regulatory authorities could take enforcement action requiring us to revise our marketing materials, amend our claims or stop selling certain products, which could harm our business.

For example, the FDA recently issued warning letters to several cosmetic companies alleging improper structure/function claims regarding their cosmetic products, including, for example, product claims regarding gene activity, cellular rejuvenation, and rebuilding collagen. There is a degree of subjectivity in determining whether a claim is an improper structure/function claim. Given this subjectivity and our research and development focus on skin care products and dietary supplements, there is a risk that we could receive a warning letter, be required to modify our product claims or take other actions to satisfy the FDA if the FDA determines any of our marketing materials include improper structure/function claims for our cosmetic products. In addition, plaintiffs’ lawyers have filed class action lawsuits against some of our competitors after our competitors received these FDA warning letters. There can be no assurance that we will not be subject to governmental actions or class action lawsuits, which could harm our business.

The failure of the representatives of our subsidiaries to comply with laws, regulations and court decisions creates potential exposure for regulatory action or lawsuits against us.

Because the representatives that market and sell our products and services are independent contractors, and not employees, we and our subsidiaries have limited control over their actions. In the United States, the direct-to-consumer industry and regulatory authorities have generally relied on the implementation of a company’s rules and policies governing its direct-to-consumer sales field, designed to promote retail sales, protect consumers, prevent inappropriate activities and distinguish between legitimate direct-to-consumer plans and unlawful pyramid schemes, to compel compliance with applicable laws. We maintain formal compliance measures to identify specific complaints against our representatives and to remedy any violations through appropriate sanctions, including warnings, suspensions and, when necessary, terminations. Because of the significant number of representatives our subsidiaries have, it is not feasible for our subsidiaries to monitor the representatives’ day-to-day business activities. We and our subsidiaries must maintain the “independent contractor” status of our representatives and, therefore, have limited control over their business activities. As a result, we cannot insure that our representatives will comply with all applicable rules and regulations, domestically or globally. Violations by our representatives of applicable laws or of our policies and procedures in dealing with customers could reflect negatively on our prospects, business activities, cash flow, financial condition and results of operations, including our business reputation, and could subject us to fines and penalties. In addition, it is possible that a court could hold us civilly or criminally accountable based on vicarious liability because of the actions of our representatives.

Although the physical labeling of our products is not within the control of our representatives, our representatives must nevertheless advertise our products in compliance with the extensive regulations that exist in certain jurisdictions, such as the United States, which considers product advertising to be labeling for regulatory purposes.

Our foods, nutritional supplements and skin care products are subject to rigorous FDA and related legal regimens limiting the types of therapeutic claims that can be made about our products. The treatment or cure of disease, for example, is not a permitted claim for these products. While we train our independent sales representatives and attempt to monitor our sales representatives’ marketing materials, we cannot ensure that all such materials comply with applicable regulations, including bans on therapeutic claims. If our independent sales representatives fail to comply with these restrictions, then we and our independent sales representatives could be subjected to claims, financial penalties, mandatory product recalls or relabeling requirements, which could harm our financial condition and operating results. Although we expect that our responsibility for the actions of our independent sales representatives in such an instance would be dependent on a determination that we either controlled or condoned a non-

compliant advertising practice, there can be no assurance that we could not be held vicariously liable for the actions of our independent sales representatives.

Our operations could be harmed if we are found not to be in compliance with Good Manufacturing Practices.

In the United States, FDA regulations on Good Manufacturing Practices and Adverse Event Reporting requirements for the nutritional supplement industry require us and our vendors to maintain good manufacturing processes, including stringent vendor qualifications, ingredient identification, manufacturing controls and record keeping. The ingredient identification requirement, which requires us to confirm the levels, identity and potency of ingredients listed on our product labels within a narrow range, is particularly burdensome and difficult for us with respect to our cosmetic products which contains many different ingredients. We are also required to report serious adverse events associated with consumer use of our products. Our operations could be harmed if regulatory authorities make determinations that we, or our vendors, are not in compliance with these regulations or public reporting of adverse events harms our reputation for quality and safety. A finding of noncompliance may result in administrative warnings, penalties or actions impacting our ability to continue selling certain products. In addition, compliance with these regulations has increased and may further increase the cost of manufacturing certain of our products as we work with our vendors to assure they are qualified and in compliance.

Adverse publicity associated with our products, ingredients or network marketing program, or those of similar companies could harm our prospects, business activities, cash flow, financial condition and results of operations.

Our number of representatives and the results of our operations may be affected significantly by the public’s perception of our subsidiaries and of similar companies. This perception is dependent upon opinions concerning:


•	the safety and quality of our products, components and ingredients, as applicable;


•	the safety and quality of similar products, components and ingredients, as applicable, distributed by other companies’ representatives;


•	our marketing program; and


•	the business of direct-to-consumer companies generally.

Adverse publicity concerning any actual or purported failure of our subsidiaries or of their representatives to comply with applicable laws and regulations regarding product claims and advertising, good manufacturing practices, the regulation of our marketing program, the licensing of our products for sale in our target markets or other aspects of our business, whether or not resulting in enforcement actions or the imposition of penalties, could have an adverse effect on our goodwill and could negatively affect the ability to attract, motivate and retain representatives, which would negatively impact our ability to generate revenue.

If we are unable to develop and introduce new products that gain acceptance from our customers and representatives, our business could be harmed.

Our continued success depends on our ability to anticipate, evaluate, and react in a timely and effective manner to changes in consumer spending patterns and preferences. We must continually work to discover and market new products, maintain and enhance the recognition of our brands, achieve a favorable mix of products, and refine our approach as to how and where we market and sell our products. A critical component of our business is our ability to develop new products that create enthusiasm among our independent sales representatives and ultimate customers. If we are unable to introduce new products, our independent sales representatives’ productivity could be harmed. In addition, if any new products fail to gain market acceptance, are restricted by regulatory requirements or have quality problems, this would harm our results of operations. Factors that could affect our ability to continue to introduce new products include, among others, government regulations, the inability to attract and retain qualified research and development staff, the termination of third-party research and collaborative arrangements, proprietary protections of competitors that may limit our ability to offer comparable products, and the difficulties in anticipating changes in consumer tastes and buying preferences.

A general economic downturn, a recession globally or in one or more of our geographic regions or other challenges may adversely affect our business and our access to liquidity and capital.

A downturn in the economies in which we sell our products, including any recession in one or more of our geographic regions, or the current global macro-economic pressures, could adversely affect our business and our access to liquidity and capital. We could experience a decline in revenues, profitability and cash flow due to reduced orders, payment delays, supply chain disruptions or other factors caused by economic or operational challenges. Any or all of these factors could potentially have a material adverse

effect on our liquidity and capital resources, including our ability to raise additional capital and maintain credit lines and offshore cash balances.

Consumer spending is also generally affected by a number of factors, including general economic conditions, inflation, interest rates, energy costs, gasoline prices and consumer confidence generally, all of which are beyond our control. Consumer purchases of discretionary items, such as beauty and related products, tend to decline during recessionary periods, when disposable income is lower, and may impact sales of our products. We could face continued economic challenges in the current fiscal year if customers continue to have less money for discretionary purchases as a result of job losses, foreclosures, bankruptcies, reduced access to credit or sharply falling home prices, among other things.

Nutritional supplement products may be supported by only limited availability of conclusive clinical studies.

Some of the nutritional supplements we offer are made from vitamins, minerals, herbs, and other substances for which there is a long history of human consumption. Other nutritional supplements we offer contain innovative ingredients. Although we believe that all of our products are safe when taken as directed, there is little long-term experience with human consumption of certain of these ingredients or combinations of ingredients in concentrated form. We conduct research and test the formulation and production of our products, but we have not performed or sponsored any clinical studies. Furthermore, because we are highly dependent on consumers’ perception of the efficacy, safety, and quality of our products, as well as similar products distributed by other companies, we could be adversely affected in the event that these products prove or are asserted to be ineffective or harmful to consumers or in the event of adverse publicity associated with any illness or other adverse effects resulting from consumers’ use or misuse of our products or similar products of our competitors.

We frequently rely on outside suppliers and manufacturers, and if those suppliers and manufactures fail to supply products in sufficient quantities and in a timely fashion, our business could suffer.

We depend on outside suppliers for raw materials and finished goods. We also may use outside manufacturers to make all or part of our products. Our profit margins and timely product delivery may be dependent upon the ability of our outside suppliers and manufacturers to supply us with products in a timely and cost-efficient manner. Our contract manufacturers acquire all of the raw materials for manufacturing our products from third-party suppliers. We do not believe we are materially dependent on any single supplier for raw materials or finished goods. However, in the event we were to lose multiple suppliers and experience delays in identifying or transitioning to alternative suppliers, we could experience product shortages or product back orders, which could harm our business. There can be no assurance that suppliers will be able to provide our contract manufacturers the raw materials or finished goods in the quantities and at the appropriate level of quality that we request or at a price that we are willing to pay. We are also subject to delays caused by any interruption in the production of these materials including weather, crop conditions, climate change, transportation interruptions and natural disasters or other catastrophic events. Our ability to enter new markets and sustain satisfactory levels of sales in each market may depend on the ability of our outside suppliers and manufacturers to provide required levels of ingredients and products and to comply with all applicable regulations.

We are dependent upon the uninterrupted and efficient operation of our manufacturers and suppliers of products. Those operations are subject to power failures, the breakdown, failure, or substandard performance of equipment, the improper installation or operation of equipment, natural or other disasters, and the need to comply with the requirements or directives of government agencies, including the FDA. There can be no assurance that the occurrence of these or any other operational problems at our facilities would not have a material adverse effect on our business, financial condition, or results of operations.

Disruptions to transportation channels that we use to distribute our products to international warehouses may adversely affect our margins and profitability in those markets.

We may experience disruptions to the transportation channels used to distribute our products, including increased airport and shipping port congestion, a lack of transportation capacity, increased fuel expenses, and a shortage of manpower. Disruptions in our container shipments may result in increased costs, including the additional use of airfreight to meet demand. Although we have not recently experienced significant shipping disruptions, we continue to watch for signs of upcoming congestion. Congestion to ports can affect previously negotiated contracts with shipping companies, resulting in unexpected increases in shipping costs and reduction in our profitability.

A failure of our information technology systems would harm our business.

Our IT systems are vulnerable to a variety of potential risks, including damage or interruption resulting from natural disasters, telecommunication failures, and human error or intentional acts of sabotage, vandalism, break-ins and similar acts. Although we

have adopted and implemented a business continuity and disaster recovery plan, which includes routine back-up, off-site archiving and storage, and certain redundancies, the occurrence of any of these events could result in costly interruptions or failures adversely affecting our business and the results of our operations.

Our business is subject to online security risks, including security breaches.

Our businesses involve the storage and transmission of users’ proprietary information, and security breaches could expose us to a risk of loss or misuse of this information, litigation, and potential liability. An increasing number of websites, including those of several large companies, have recently disclosed breaches of their security, some of which have involved sophisticated and highly targeted attacks on portions of their sites. Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems, change frequently and often are not recognized until launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. A party that is able to circumvent our security measures could misappropriate our or our customers’ proprietary information, cause interruption in our operations, damage our computers or those of our customers, or otherwise damage our reputation and business. Any compromise of our security could result in a violation of applicable privacy and other laws, significant legal and financial exposure, damage to our reputation, and a loss of confidence in our security measures, which could harm our business.

Our servers are also vulnerable to computer viruses, physical or electronic break-ins, “denial-of-service” type attacks and similar disruptions that could, in certain instances, make all or portions of our websites unavailable for periods of time. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches. These issues are likely to become more difficult as we expand the number of places where we operate. Security breaches, including any breach by us or by parties with which we have commercial relationships that result in the unauthorized release of our users’ personal information, could damage our reputation and expose us to a risk of loss or litigation and possible liability. Our insurance policies carry coverage limits, which may not be adequate to reimburse us for losses caused by security breaches.

Our web customers, as well as those of other prominent companies, may be targeted by parties using fraudulent “spoof” and “phishing” emails to misappropriate passwords, credit card numbers, or other personal information or to introduce viruses or other malware through “trojan horse” programs to our customers’ computers. These emails appear to be legitimate emails sent by us, but they may direct recipients to fake websites operated by the sender of the email or request that the recipient send a password or other confidential information via email or download a program. Despite our efforts to mitigate “spoof” and “phishing” emails through product improvements and user education, “spoof” and “phishing” emails remain a serious problem that may damage our brands, discourage use of our websites, and increase our costs.

Our ability to conduct business in international markets may be affected by political, legal, tax and regulatory risks.

Our ability to capitalize on growth in new international markets and to maintain the current level of operations in our existing international markets is exposed to risks associated with our international operations, including:


•	the possibility that a foreign government might ban or severely restrict our business method of direct selling, or that local civil unrest, political instability or changes in diplomatic or trade relationships might disrupt our operations in an international market;


•	the lack of well-established or reliable legal systems in certain areas where we operate;


•	the presence of high inflation in the economies of international markets in which we operate;


•	the possibility that a government authority might impose legal, tax or other financial burdens on us or our sales force, due, for example, to the structure of our operations in various markets;


•	the possibility that a government authority might challenge the status of our sales force as independent contractors or impose employment or social taxes on our sales force; and


•	the possibility that governments may impose currency remittance restrictions limiting our ability to repatriate cash.

Currency exchange rate fluctuations could reduce our overall profits.

In 2015 , 71.0% of our revenues were derived from markets outside of the United States. In 2014 , 41.4% of our revenues were derived from markets outside of the United States. In preparing our consolidated financial statements, certain financial information is required to be translated from foreign currencies to the United States dollar using either the spot rate or the weighted-average exchange rate. If the United States dollar changes relative to applicable local currencies, there is a risk our reported sales, operating expenses, and net income could significantly fluctuate. We are not able to predict the degree of exchange rate fluctuations, nor can we estimate the effect any future fluctuations may have upon our future operations. To date, we have not entered into any hedging contracts or participated in any hedging or derivative activities.

Taxation and transfer pricing affect our operations and we could be subjected to additional taxes, duties, interest, and penalties in material amounts, which could harm our business.

As a multinational corporation, in many countries, including the United States, we are subject to transfer pricing and other tax regulations designed to ensure that our intercompany transactions are consummated at prices that have not been manipulated to produce a desired tax result, that appropriate levels of income are reported as earned by the local entities, and that we are taxed appropriately on such transactions. Regulators closely monitor our corporate structure, intercompany transactions, and how we effectuate intercompany fund transfers. If regulators challenge our corporate structure, transfer pricing methodologies or intercompany transfers, our operations may be harmed and our effective tax rate may increase.

A change in applicable tax laws or regulations or their interpretation could result in a higher effective tax rate on our worldwide earnings and such change could be significant to our financial results. In the event any audit or assessments are concluded adversely to us, these matters could have a material impact on our financial condition.

Non-compliance with anti-corruption laws could harm our business.

Our international operations are subject to anti-corruption laws, including the Foreign Corrupt Practices Act (the “FCPA”). Any allegations that we are not in compliance with anti-corruption laws may require us to dedicate time and resources to an internal investigation of the allegations or may result in a government investigation. Any determination that our operations or activities are not in compliance with existing anti-corruption laws or regulations could result in the imposition of substantial fines, and other penalties. Although we have implemented anti-corruption policies, controls and training globally to protect against violation of these laws, we cannot be certain that these efforts will be effective. We are aware that one of our competitors is under investigation in the United States for allegations that its employees violated the FCPA in China and other markets. If this investigation causes adverse publicity or increased scrutiny of our industry, our business could be harmed.

We may own, obtain or license intellectual property material to our business, and our ability to compete may be adversely affected by the loss of rights to use that intellectual property.

The market for our products may depend significantly upon the value associated with product innovations and our brand equity. Many direct sellers own, obtain or license material patents and trademarks used in connection with the marketing and distribution of their products. Those companies must expend time and resources in developing their intellectual property and pursuing any infringement of that intellectual property. The laws of certain foreign countries may not protect a company’s intellectual property rights to the same extent as the laws of the United States. The costs required to protect a company’s patents and trademarks may be substantial.

Challenges by private parties to the direct selling system could harm our business.

Direct-to-consumer companies have historically been subject to legal challenges regarding their method of operation or other elements of their business by private parties, including their own representatives, in individual lawsuits and through class actions, including lawsuits claiming the operation of illegal pyramid schemes that reward recruiting over sales. We can provide no assurance that we would not be harmed if any such actions were brought against any of our current subsidiaries or any other direct selling company we may acquire in the future.

As a direct selling company, we may face product liability claims and could incur damages and expenses, which could affect our prospects, business activities, cash flow, financial condition and results of operations.

As a direct-to-consumer company we may face financial liability from product liability claims if the use of our products results in significant loss or injury. A substantial product liability claim could exceed the amount of our insurance coverage or could be excluded under the terms of our existing insurance policy, which could adversely affect our prospects, business activities, cash flow, financial condition and results of operations.

Selling products for human consumption such as nutritional supplements and spices as well as the sale of skin care products involve a number of risks. We may need to recall some of our products if they become contaminated, are tampered with or are mislabeled. A widespread product recall could result in adverse publicity, damage to our reputation, and a loss of consumer confidence in our products, which could have a material adverse effect on our business results and the value of our brands. Even if a product liability or consumer fraud claim is unsuccessful or without merit, the negative publicity surrounding such assertions regarding our products could adversely affect our reputation and brand image.

If we fail to protect our trademarks and tradenames, then our ability to compete could be negatively affected, which would harm our financial condition and operating results.

The market for our products depends upon the goodwill associated with our trademarks and tradenames. We own, or have licenses to use, the material trademark and trade name rights used in connection with the packaging, marketing and distribution of our products in the majority of the markets where those products are sold. Therefore, trademark and trade name protection is important to our business. Although most of our trademarks are registered in the United States and in certain foreign countries in which we operate, we may not be successful in asserting trademark or trade name protection. In addition, the laws of certain foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. The loss or infringement of our trademarks or tradenames could impair the goodwill associated with our brands and harm our reputation, which would harm our financial condition and operating results.

We permit the limited use of our trademarks by our representatives to assist them in the marketing of our products. It is possible that doing so may increase the risk of unauthorized use or misuse of our trademarks in markets where their registration status differs from that asserted by our independent sales representatives, or they may be used in association with claims or products in a manner not permitted under applicable laws and regulations. Were this to occur, it is possible that this could diminish the value of these marks or otherwise impair our further use of these marks.

Our business is subject to intellectual property risks.

Many of our products are not protected by patents. Restrictive regulations governing the precise labeling of ingredients and percentages for nutritional supplements, the large number of manufacturers that produce products with many active ingredients in common and the rapid change and frequent reformulation of products make patent protection impractical. As a result, we enter into confidentiality agreements with certain of our employees in our research and development activities, our independent sales representatives, suppliers, directors, officers and consultants to help protect our intellectual property, investment in research and development activities and trade secrets. There can be no assurance that our efforts to protect our intellectual property and trademarks will be successful, nor can there be any assurance that third parties will not assert claims against us for infringement of intellectual property rights, which could result in our business being required to obtain licenses for such rights, to pay royalties or to terminate our manufacturing of infringing products, all of which could have a material negative impact on our financial position, results of operations or cash flows.

We have identified material weaknesses in our internal controls, and we cannot provide assurances that these weaknesses will be effectively remediated or that additional material weaknesses will not occur in the future. If our internal control over financial reporting or our disclosure controls and procedures are not effective, we may not be able to accurately report our financial results, prevent fraud, or file our periodic reports in a timely manner, which may cause investors to lose confidence in our reported financial information and may lead to a decline in our stock price.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Our stated growth strategy is to acquire companies, some of which may not have invested in adequate systems or staffing to meet public company financial reporting standards. We review the financial reporting and other systems that each company has. However, in many cases, especially in the case of private companies we acquire, the financial systems that are in place may not be as robust as needed. We have identified many material weaknesses in our overall control environment. Our extensive material weaknesses identified caused us to miss our reporting requirements.

We will need to thoroughly reevaluate our control environment and implement the appropriate remediation actions to have an effective control environment:


•	We will need to evaluate our existing accounting personnel and evaluate their abilities so we can hire the appropriate accounting personnel with the experience commensurate with maintaining an effective control environment require for a publicly traded company with international operations.


•	We need to perform a risk assessment to identify all of our risks and address these risks with the appropriate processes and controls necessary to maintain an effective control environment.


•	We need to implement processes and controls over our consolidation process.


•	We need to implement reconciliation and review and approval processes over all material accounts in our financial statements.


•	We need to implement processes and controls to ensure all inventory received is appropriately accounted for in the financial statements.


•	We need to implement a reconciliation, review and approval process for all adjusting journal entries made to the Company’s financial statements.


•	We need to ensure we have the appropriate accounting personnel to identify and resolve complex accounting issues.


•	We need to ensure we develop processes and control activities that maintain the appropriate segregation of duties.


•	We need to develop controls to ensure our ERP system conversions are appropriately converted and all data is included in the new ERP system.


•	We need to develop the right processes, hire the right personnel, and implement the right control activities to ensure we are maintaining an effective control environment.

We may be held responsible for certain taxes or assessments relating to the activities of our independent sales representatives, which could harm our financial condition and operating results.

Our independent sales representatives are subject to taxation and, in some instances, legislation or governmental agencies impose an obligation on us to collect taxes, such as value added taxes, and to maintain appropriate tax records. In addition, we are subject to the risk in some jurisdictions of being responsible for social security and similar taxes with respect to our representatives. In the event that local laws and regulations require us to treat our independent sales representatives as employees, or if our representatives are deemed by local regulatory authorities to be our employees, rather than independent contractors, we may be held responsible for social security and related taxes in those jurisdictions, plus any related assessments and penalties, which could harm our financial condition and operating results.

A majority of our directors are not "independent" and several of our directors and officers have other business interests.

As a “smaller reporting company,” we qualify for certain exemptions to the NYSE MKT listing requirements, including the requirement that a majority of our directors be independent. Currently five of our ten directors are not “independent” under the NYSE MKT independence standards; however all members of our audit, compensation and nominating and corporate governance committee are independent directors. This lack of “independence” may interfere with our directors’ judgment in carrying out their responsibilities as directors

Several of our directors have other business interests, including Mr. Rochon, who controls Richmont Holdings. Those other interests may come into conflict with our interests and the interests of our shareholders. Mr. Rochon and several of our other directors serve on the boards of directors of several other companies and, as a result of their business experience, may be asked to serve on the boards of other companies. We may compete with these other business interests for such directors’ time and efforts.

JRJR officers may also work for Richmont Holdings or its affiliated entities. These employees have discretion to decide what time they devote to our activities, which may result in a lack of availability when needed due to their other responsibilities.

Impairment of goodwill and intangible assets is possible, depending upon future operating results and the value of our common stock.

We tested our goodwill and intangible assets for impairment during the fourth quarter of the current fiscal year and will do so in future fiscal years, and on an interim basis, if indicators of impairment exist. Factors which influence the evaluation of impairment of our goodwill and intangible assets include the price of our common stock and expected future operating results. If the carrying value of a reporting unit or an intangible asset is no longer deemed to be recoverable, we potentially could incur material impairment charges. For the year ended December 31, 2014 , we have included an impairment charge of $489,000 as a result of this testing. For the year ended December 31, 2015 , we recognized an impairment charge of $192,000 . Although we believe these charges are non-cash in nature and do not affect our operations or cash flow, these charges reduce shareholders’ equity and reported results of operations in the period charged.

There currently is a limited liquid trading market for our common stock and we cannot assure investors that a robust trading market will ever develop or be sustained.

To date there has been a limited trading market for our common stock on the NYSE MKT. We cannot predict how liquid the market for our common stock may become. We believe the listing of our common stock on the NYSE MKT is beneficial to us and our shareholders. However, while we believe that the NYSE MKT listing has improved the liquidity of our common stock, reduced trading volume and increased volatility may affect our share price. A lack of an active market may impair investors’ ability to sell their shares at the time they wish to sell them or at a price they consider reasonable. The lack of an active trading market may impair our ability to raise capital by selling shares of capital stock and may impair our ability to acquire other companies by using our common stock as consideration.

Our common stock may not always be considered a “covered security”.

The National Securities Markets Improvement Act of 1996, which is a federal statute, prevents or preempts the states from regulating the sale of certain securities, which are referred to as “covered securities.” Because our common stock is listed on the NYSE MKT, our common stock is a covered security. Although the states are preempted from regulating the sale of covered securities, the federal statute does allow the states to investigate companies if there is a suspicion of fraud, and, if there is a finding of fraudulent activity, then the states can regulate or bar the sale of covered securities in a particular case.

Our failure to meet the continued listing requirements of the NYSE MKT could result in a de-listing of our common stock.

Our shares of common stock are currently listed on the NYSE MKT. If we fail to satisfy the continued listing requirements of the NYSE MKT, such as the corporate governance requirements or the minimum stockholder’s equity requirement, the NYSE MKT may take steps to de-list our common stock. Such a de-listing would likely have a negative effect on the price of our common stock and would impair our shareholders’ ability to sell or purchase our common stock when they wish to do so. In the event of a de-listing, we would take actions to restore our compliance with the NYSE MKT’s listing requirements, but we can provide no assurance that any action taken by us would result in our common stock becoming listed again, or that any such action would stabilize the market price or improve the liquidity of our common stock. We have been notified by the NYSE MKT Stock Exchange that our common stock listing on the NYSE MKT Stock Exchange could be suspended or terminated if we have not filed all outstanding periodic reports with the SEC by October 17, 2016.

The limited trading volume of our common stock may cause volatility in our share price.

Our stock has in the past been thinly traded due to the limited number of shares available for trading on the NYSE MKT thus causing potential large swings in price. As such, investors and potential investors may find it difficult to resell their securities at or near the original purchase price or at any price. If our stock experiences volatility, investors may not be able to sell their common stock at or above the price they paid per share. Sales of substantial amounts of our common stock, or the perception that such sales might occur, could adversely affect prevailing market prices of our common stock and our stock price may decline substantially in a short period of time. As a result, our shareholders could suffer losses or be unable to liquidate their holdings.

Market prices for our common stock will be influenced by a number of factors, including:


•	the issuance of new equity securities, including issuances of preferred stock;


•	the introduction of new products or services by us or our competitors;


•	the acquisition of new direct selling businesses;


•	changes in interest rates;


•	significant dilution caused by the anti-dilutive clauses in our financial agreements;


•	competitive developments, including announcements by competitors of new products or services or significant contracts, acquisitions, strategic partnerships, joint ventures or capital commitments;


•	variations in quarterly operating results;


•	change in financial estimates by securities analysts;


•	a limited amount of news and analyst coverage for our company;


•	the depth and liquidity of the market for our shares of common stock;


•	sales of large blocks of our common stock, including sales by Rochon Capital, any executive officers or directors appointed in the future, or by other significant shareholders;


•	investor perceptions of our company and the direct selling segment generally; and


•	general economic and other national and international conditions.

Market price fluctuations may negatively affect the ability of investors to sell our shares at consistent prices.

Sales of our common stock under Rule 144 could impact the price of our common stock.

In general, under Rule 144 (“Rule 144”), as promulgated under the Securities Act, persons holding restricted securities in an SEC reporting company, including affiliates, must hold their shares for a period of at least six months, may not sell more than 1% of the total issued and outstanding shares in any 90-day period and must resell the shares in an unsolicited brokerage transaction at the market price. Whenever a substantial number of shares of our common stock become available for resale under Rule 144, the market price for our common stock will likely be impacted.

Reports published by securities or industry analysts, including projections in those reports that exceed our actual results, could adversely affect our common stock price and trading volume.

Securities research analysts, including those affiliated with our underwriters, establish and publish their own periodic projections for our business. These projections may vary widely from one another and may not accurately predict the results we actually achieve. Our stock price may decline if our actual results do not match securities research analysts’ projections. Similarly, if one or more of the analysts who writes reports on us downgrades our stock or publishes inaccurate or unfavorable research about our business or if one or more of these analysts ceases coverage of our company or fails to publish reports on us regularly, our stock price or trading volume could decline. While we expect securities research analyst coverage, if no securities or industry analysts begin to cover us, the trading price for our stock and the trading volume could be adversely affected.

Class action litigation due to stock price volatility or other factors could cause us to incur substantial costs and divert our management’s attention and resources.

It is not uncommon for securities class action litigation to be brought against a company following periods of volatility in the market price of such company’s securities. Companies in certain industries are particularly vulnerable to this kind of litigation due to the high volatility of their stock prices. Our common stock has experienced substantial price volatility in the past. This may be a result of, among other things, variations in our results of operations and announcements by us and our competitors, as well as general economic conditions. Our stock price may continue to experience substantial volatility. Accordingly, we may in the future be the target of securities litigation. Any securities litigation could result in substantial costs and could divert the attention and resources of our management.

We may issue additional securities in the future, which will reduce investors’ ownership percentage in our outstanding securities and will dilute our share value.

If future operations or acquisitions are financed through issuing equity securities, shareholders could experience significant dilution. The issuance of our common stock in the public offering that was consummated in March 2015 resulted in dilution to existing shareholders and the issuance of additional shares of common stock and/or Warrants pursuant to the Underwriters’ over-allotment option as well as the exercise of any Warrants issued in the March 2015 offering will result in additional dilution to current shareholders. In addition, the conversion of the convertible notes issued in the Betterware transaction in October 2015 and our debt financing that was consummated in November 2015, will result in additional dilution to shareholders. The securities issued in the November 2015 debt financing have rights and preferences that are senior to rights of our common stock and we may in the future issue securities in connection with future financing activities or potential acquisitions that may have rights and preferences senior to the rights and preferences of our common stock. The issuance of shares of our common stock upon the exercise of options, which we may grant in the future, may result in dilution to our shareholders. In addition, the issuance of shares of our common stock pursuant to the terms of the At-the-Market Issuance Sales Agreement, may result in dilution to our shareholders. Our articles of incorporation currently authorize us to issue 250,000,000 shares of common stock. Assuming the issuance of the Second Tranche Stock (which shares may only be issued under certain limited circumstances, as described above), the number of outstanding shares of our common stock would increase to in excess of 60,000,000 with approximately 190,000,000 shares of our common stock available for issuance. The future issuance of our common stock may result in substantial dilution in the percentage of our common stock held by our then existing shareholders. We may issue common stock in the future, including for services or acquisitions or other corporate actions that may have the effect of diluting the value of the shares held by our shareholders, and might have an adverse effect on any trading market for our common stock.

We have not paid and do not anticipate paying any dividends on our common stock.

We have not paid any dividends on our common stock to date and it is not anticipated that any dividends will be paid to holders of our common stock in the foreseeable future. While our future dividend policy will be based on the operating results and capital needs of our businesses, it is currently anticipated that any earnings will be retained to finance our future expansion and for the implementation of our business strategy. Our shareholders will not realize a return on their investment in us unless and until they sell shares after the trading price of our common stock appreciates from the price at which a shareholder purchased shares of our common stock. As an investor, you should consider that a lack of a dividend can further affect the market value of our common stock and could significantly affect the value of any investment in our company.

Complying with federal securities laws as a publicly traded company is expensive. Any deficiencies in our financial reporting or internal controls could adversely affect our financial condition, ability to issue our shares in acquisitions and the trading price of our common stock.

Companies listed on the NYSE MKT, such as our company, must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports under Section 13 of the Exchange Act, in order to maintain the listing on NYSE MKT. The Exchange Act requires that reporting issuers, such as our company, file quarterly and annual reports containing our financial statements with the SEC. This Annual Report on Form 10-K was not timely filed and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 was not timely filed. We may, from time to time, again experience difficulties in meeting the SEC’s reporting requirements. Our recent failure and any future failure by us to timely file our periodic reports with the SEC could harm our reputation, negatively impact our financial condition, the trading price of our common stock and our ability to issue our shares in acquisitions. A failure to timely file our periodic reports with the SEC is a default under our senior secured convertible note issued to Dominion Capital LLC, from which we received a waiver related to this Form 10-K filing and our Quarterly Report on Form 10-Q provided that we continue to issue 50,000 shares of our common stock to the lender. For example, our failure to timely file this Annual Report on Form 10-K and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016 has resulted in our inability to remain S-3 eligible resulting, among other things, in our failure to meet the conditions that would require a cash exercise of the Warrants issued in our recent Offering. We will incur significant legal, accounting and other expenses related to compliance with applicable securities laws. Failure to comply with our responsibilities thereunder could cause sanctions or other actions to be taken by the SEC against us.

Our articles of incorporation, bylaws and Florida law have anti-takeover provisions that could discourage, delay or prevent a change in control, which may cause our stock price to decline.

Our articles of incorporation, bylaws and Florida law contain provisions which could make it more difficult for a third party to acquire us, even if closing such a transaction would be beneficial to our shareholders. We are authorized to issue up to 500,000 shares of preferred stock. This preferred stock may be issued in one or more series, the terms of which may be determined at the time of issuance by our Board without further action by shareholders. The terms of any series of preferred stock may include preferential voting rights (including the right to vote as a series on particular matters), preferences as to dividend, liquidation, conversion and redemption rights and sinking fund provisions. The issuance of any preferred stock could materially adversely affect the rights of the holders of our common stock, and therefore, reduce the value of our common stock. In particular, specific rights granted to future holders of preferred stock could be used to restrict our ability to merge with, or sell our assets to, a third party and thereby preserve control by the present management.

Provisions of our articles of incorporation, bylaws and Florida law also could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a shareholder might consider favorable. Such provisions may also prevent or frustrate attempts by our shareholders to replace or remove our management. In particular, the articles of incorporation, bylaws and Florida law, as applicable, among other things, provide the Board with the ability to alter the bylaws without shareholder approval, and provide that vacancies on the Board may be filled by a majority of directors in office, although less than a quorum.

In addition, the Amended Share Exchange Agreement provides for the issuance of the Second Tranche Stock to Rochon Capital solely upon the occurrence of certain stock acquisitions by third parties or the announcement of certain tender or exchange offers of our common stock. The Second Tranche Stock, which possess no rights other than voting rights, may serve as a further deterrent to third parties looking to acquire us. See the section entitled “Certain Relationships and Related Transactions, and Director Independence”.

Resales of our common stock in the public market by our stockholders may cause the market price of our common stock to fall.

This issuance of shares of common stock in any offering, including the March 2015 offering, could result in resales of our common stock by our current stockholders concerned about the potential dilution of their holdings. In turn, these resales could have the effect of depressing the market price for our common stock.

There is no public market for the Warrants to purchase shares of our common stock that were sold in the March 2015 offering.

There is no established public trading market for the Warrants that were sold in the March 2015 offering, and we do not expect a market to develop. In addition, we do not intend to apply to list the Warrants on any national securities exchange or other nationally recognized trading system, including the NYSE MKT. Without an active market, the liquidity of the Warrants will be limited.

Due to the speculative nature of warrants, there is no guarantee that it will ever be profitable for holders of the Warrants to exercise the Warrants.

The Warrants that were issued in the March 2015 offering do not confer any rights of share ownership on their holders, such as voting rights or the right to receive dividends, but rather merely represent the right to acquire our common stock at a fixed price for a limited period of time. Holders of Warrants may exercise their right to acquire the common stock underlying the Warrants at any time after the date of issuance by paying an exercise price of $3.75 per share, prior to their expiration on the date that is five years from the date of issuance, after which date any unexercised warrants will expire and have no further value. If an effective registration statement is not available at the time a Warrantholder exercises a Warrant, the Warrantholder will be entitled to exercise the Warrant on a cashless basis, depriving us of receipt of cash proceeds upon the exercise. There can be no assurance that the market price of our common stock will ever equal or exceed the exercise price of the Warrants, and, consequently, whether it will ever be profitable for investors to exercise their Warrants.

1B. Unresolved Staff Comments

Because we are a smaller reporting company, we are not required to provide the information required by this Item.

Item 2. Properties

The following table sets forth the location and approximate square footage of our major manufacturing, distribution and office facilities:

Entity

Location

Approximate

Square Footage

of Facilities

Land in

Acres

Description of Property

Own/

Lease

JRJR

Dallas, Texas

9,446

JRJR corporate headquarters (effective November 2015)

Lease

JRJR

Luzern, Switzerland

350

European headquarters

Lease

TLC

Newark, Ohio

180,000

Longaberger headquarters

Own

TLC

Frazeysburg, Ohio

1,170,113

200

Manufacturing and distribution facilities

Lease

TLC

Frazeysburg, Ohio

121,300

Longaberger Homestead (retail, restaurants and historic structures)

Lease

Agel

Pleasant Grove, UT

10,656

Agel corporate headquarters

Lease

Agel

Moscow, Russia

4,166

Agel Moscow warehouse and distribution center

Lease

Agel

St Petersburg, Russia

487

Agel St. Petersburg warehouse and distribution center

Lease

Agel

Milan, Italy

1,399

Agel Italy warehouse and distribution center

Lease

Agel

Kazakhstan

1,086

Agel Kazakhstan warehouse and distribution center

Lease

Agel

Kiev, Ukraine

1,873

Agel Ukraine warehouse and distribution center

Lease

Agel

Kiev, Ukraine

1,737

Agel Ukraine office

Lease

Agel

Bangkok, Thailand

861

Agel Bangkok office

Lease

Agel

Bangkok, Thailand

560

Agel Bangkok warehouse

Lease

YIAH

Gold Coast, Australia

22,066

YIAH office and manufacturing

Lease

HCG

Clark's Summit, Pennsylvannia

2,080

Happenings Communications Group headquarters

Lease

Kleeneze

Accrington, United Kingdom

10,000

Kleeneze office

Lease

Betterware

Birmingham, United Kingdom

58,355

Betterware office, warehouse and distribution center

Lease

Effective November 23, 2015, our corporate headquarters are located in Dallas, Texas where we rent 9,446 square feet of office space for annual rent that will average $322,000 per year over the lease term. Prior to November 2015, our corporate headquarters were located in Plano, Texas where we rented 14,139 square feet of office space for annual rent of $351,492. TLC owns a 180,000 square foot facility that serves as its corporate headquarters, and leases a 1,170,113 square foot manufacturing and distribution facility and a 121,300 square foot facility that houses retail stores and restaurants, all located in Ohio, for aggregate annual lease payments of $2.9 million . Agel's corporate headquarters is located in Pleasant Grove, Utah where Agel rents 10,656 square feet of space for annual rent of approximately $189,000 . In addition, Agel rents warehousing, distribution and office space in Russia, Ukraine, Thailand, Italy and Kazakhstan for annual rent of $181,000 in the aggregate. YIAH rents warehousing, distribution and office space in Australia for annual rent of approximately $150,000 and the HCG corporate headquarters in Pennsylvania are leased for an annual rent of approximately $21,000 . JRJR leases 350 square feet for an annual rent of approximately $36,000 in Luzern, Switzerland which serves as our European Headquarters. Kleeneze rents 10,000 square feet of office space from Express Gifts, Ltd. under a right to occupancy agreement under which we recognize approximately $283,000 in rent expense per year. Betterware rents 58,355 square feet of office, warehouse and distribution space for an approximate annual rent expense of $460,000 .

Item 3. Legal Proceedings

Longaberger on August 12, 2015 filed an action in Franklin County Common Pleas Court of Columbus, Ohio (“State Court Action”) seeking re-payment of the notes. However, it is JRJR’s position that her claims are inextricably tied to the broader issues related to her terminated employment and the claims asserted against her by JRJR and The Longaberger Company, including breach of fiduciary duty, fraud, negligence, conversion, misappropriation of company funds, civil theft, breach of contract, and misappropriation of trade secrets, in an arbitration action in Columbus Ohio. Therefore, on October 12, 2015, JRJR filed a motion to compel arbitration and dismiss claims in the State Court Action. The trial is currently set for August 10, 2016, even though the motion to dismiss and compel is pending.

As first disclosed in our Annual Report on Form 10-K for the year ended December 31, 2014 , we are disputing a tax and penalty assessment by the Spanish Taxing Authorities relating to Agel. Prior to AEI’s acquisition of the assets of Agel Enterprises LLC, Agel was assessed withholding taxes and income taxes along with penalties by the Spanish Tax Authorities, which asserted that Agel had maintained permanent establishment in Spain for the years 2008 to 2010. As part of the acquisition, AEI agreed to assume this liability. Agel, and now AEI, has vigorously disputed these claims on the basis that Agel believes they did not have permanent establishment, and therefore, any compensation paid to independent representatives should not have been subject to withholding taxes.

AEI filed an appeal in Tribunal Económico-Administrativo Regional de Cataluña. The ultimate resolution of the dispute cannot be determined at this time. Agel paid the income tax due and AEI has paid approximately $260,000 in good faith towards the disputed withholding tax liability to preserve the appeal process.

During the second quarter of 2014, AEI paid $420,000 to the Spanish Taxing Authorities toward its outstanding tax assessment. We did not make any payments in the third or fourth quarters of 2014. Although we have appealed this assessment by the Spanish Taxing Authorities and are rigorously defending our position, this payment was made to prevent the Spanish Taxing Authorities from beginning certain legal proceedings that would have negatively affected AEI’s European operations. Additionally, AEI has been assessed amounts owed for late interest on the withholding and income tax of €10,819 and €1,282, respectively ($11,799 and $1,398, respectively). The amount remains due if the appeal is unsuccessful, otherwise the payments made to date will be refunded to us. As of December 31, 2015 AEI maintained a liability of $0.5 million in accrued liabilities for this disputed amount, which is reflected in our 2015 consolidated financial statements.

From time to time we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. Other than the above, we are not aware of any material, active, pending or threatened proceeding against us, nor are we involved as a plaintiff in any material proceeding or pending litigation.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Market Information

Since March 2016, our common stock has been quoted on the NYSE MKT under the symbol “JRJR.” From December 2014 to March of 2016, our common stock was quoted on the NYSE MKT under the symbol “CVSL.” From February 2014 to December 2014, our common stock was quoted on the OTC Markets OTCQX under the symbol “CVSL.” From February 2008 until February 2014, our common stock was quoted on the OTC Bulletin Board and the OTC Markets OTCQB under the symbol “CVSL.” The last reported sale price of our common stock on the NYSE MKT on June 27, 2016 was $1.08 .

The following table sets forth, for the periods indicated, the high and low per share closing bid price quotations for our common stock. The quotes represent inter-dealer prices, without adjustment for retail mark-up, markdown or commission and may not represent actual transactions.



	High		Low
Quarterly Periods for the Year 2016
Ended March 31	$	1.90	$	0.67

Quarterly Periods for the Year 2015
Ended March 31	$	9.40	$	2.22
Ended June 30	$	2.33	$	1.13
Ended September 30	$	2.79	$	1.03
Ended December 31	$	1.83	$	0.99

Quarterly Periods for the Year 2014
Ended March 31	$	10.80	$	7.06
Ended June 30	$	14.00	$	7.08
Ended September 30	$	22.40	$	15.00
Ended December 31	$	18.90	$	8.51

Holders

As of June 27, 2016 , we had 36,085,324 shares of common stock outstanding held by approximately 1,946 shareholders, including approximately 115 holders of record. This amount excludes 25,240,676 shares issuable to Rochon Capital under certain limited circumstances, as described in Amended Share Exchange Agreement.

Dividends

We have never declared or paid a cash dividend. Any future decisions regarding dividends will be made by our Board of Directors. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the near future. Our Board of Directors has complete discretion on whether to pay dividends. Even if our Board of Directors decides to pay dividends, the form, frequency and amount of any dividends will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our Board of Directors may deem relevant.

Equity Compensation Plan Information

We currently have two equity compensation plans for employees. See Item 12 under the heading "Equity Compensation Plan Information" of the Annual Report on Form 10-K for equity compensation plan information.

Unregistered Sales of Equity Securities and Use of Proceeds

All sales of unregistered securities during the year ended December 31, 2015 have been previously reported in our prior quarterly reports on Form 10-Q. See Item 12 under the heading "Equity Compensation Plan Information" of this Annual Report on Form 10-K for equity compensation plan information.

Issuer Purchases of Equity Securities

There were no issuer purchases of equity securities during the fiscal year ended December 31, 2015.

Item 6. Selected Financial Data

Because we are a smaller reporting company, we are not required to provide the information required by this Item.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K. This discussion contains forward-looking statements (“forward-looking statements”) that involve risks and uncertainties. For this purpose, any statements contained in this Annual Report that are not statements of historical fact may be deemed to be forward-looking statements. When used in this Annual Report and in documents incorporated by reference herein, forward-looking statements include, without limitation, statements regarding our expectations, beliefs, or intentions that are signified by terminology such as “subject to,” “believes,” “anticipates,” “plans,” “expects,” “intends,” “estimates,” “may,” “will,” “should,” “can,” the negatives thereof, variations thereon and similar expressions. Such forward-looking statements reflect our current views with respect to future events, based on what we believe are reasonable assumptions; however, such statements are subject to certain risks and uncertainties. Our actual results may differ materially from those anticipated in any forward-looking statements due to known and unknown risks, uncertainties and other factors and risks, including but not limited to those set forth under “Risk Factors” in Part I, Item 1A of this Annual Report on Form 10-K. We disclaim any intention or obligation to update or review any forward-looking statements or information, whether as a result of new information, future events or otherwise. We undertake no obligation to comment on analyses, expectations or statements made by third-parties in respect of us or our operations and operating results.

Recent Financial Developments

Convertible Note Financing

On November 20, 2015, we entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”) with an institutional investor (the “Purchaser”), pursuant to which we issued to the Purchaser for an aggregate subscription amount of $4,000,000: (i) a Senior Secured Convertible Note (the “Senior Convertible Note”); and (ii) 375,000 shares of our common stock. In connection with our obligations under the Senior Convertible Note, we and our direct and indirect domestic subsidiaries (the “U.S. Subsidiaries”) entered into a Security and Pledge Agreement with the Purchaser, as collateral agent (the “Security Agreement”), pursuant to which we and the U.S. Subsidiaries granted a lien on all of our assets, subject to existing security interests (the “Collateral”), for the benefit of the Purchaser, to secure our obligations under the Senior Convertible Note. In connection with the delays in filing this Annual Report on Form 10-K and our Quarterly Report on form 10-Q for the quarter ended March 31, 2016 we have issued 450,000 shares of our common stock to the purchaser in 2016 due to such failure to timely file and the purchaser has agreed that the failure to timely file would not constitute an event of default provided we issue the purchaser 50,000 shares of our common stock for each additional ten business days that the filing is late.

Underwritten Offering

On March 4, 2015, we closed a firm commitment underwritten public offering (the “Offering”) with Aegis Capital Corp. (“Aegis”), as representative of the several underwriters named therein (the “Underwriters”) of 6,667,000 shares of our common stock and warrants (the “Warrants”) to purchase up to an aggregate of 6,667,000 shares of our common stock at a combined offering price of $3.00 per share and Warrant. Pursuant to the Underwriting Agreement that we entered into with Aegis, as the representative of the Underwriters, we granted the Underwriters an option for a period of 45 days to purchase up to 1,000,050 additional shares of common stock and/or 1,000,050 additional Warrants, in each case, solely to cover over-allotments, if any. The Underwriters partially exercised their over-allotment option to purchase additional Warrants to purchase 113,200 shares of common stock at a per Warrant price of $.0001. The gross proceeds from the Offering were $20.0 million and the net proceeds were approximately $17.8 million, after deducting underwriting discounts and commissions and estimated Offering expenses payable by us, assuming no exercise by the Underwriters of their option to purchase additional shares of common stock and/or Warrants. We used approximately $2.1 million of the net proceeds from the Offering to acquire Kleeneze. The remaining net proceeds are being used for general working capital purposes, including ongoing operations, expansion of the business and further research and development.

Overview of Operating Segments

JRJR has five operating segments, three of which are reportable segments, as a direct-to-consumer company that sells a wide range of products primarily through independent sales forces across many countries around the world. We have grouped our products into the following five operating segments: Gourmet Food, Nutritional and Wellness, Home Décor, Publishing and Printing, and Other. Of these five operating segments, gourmet food, home décor, and nutritional and wellness qualify as reportable segments. Our long-lived assets are concentrated in the United States, even after the acquisitions of Kleeneze and Betterware.

Each of the three identified reportable segments engage in business activities - producing revenue and incurring expenses. The operating results of these segments are regularly reviewed by chief decision makers and there is discrete financial information

available for each unit. Also, the reported revenue of each reportable segment, both external and intercompany, is 10% or more of the combined revenue of all of the operating segments. In prior periods we had identified and presented one reportable segment, with revenue broken down into five categories within our segment discussion. However, with the addition of Kleeneze and Betterware, the continued growth of Your Inspiration at Home and anticipated future growth, both organically and through acquisitions, we now view the Company as having five operating segments, three of which are reportable segments as discussed above. As revenues are concentrated within these three reportable segments, our chief operating decision makers ("CODM") now view these segments as appropriate for decision making purposes because they each represent a significant part of our business. The following is a brief description of our three reportable segments.

Gourmet Food - Segment consists of operations related to the production and sale of hand-crafted spices, oils and other food products from around the world. These operations have a presence in many of our markets both in the U.S. and internationally such as in Australia, New Zealand, Canada, and the United Kingdom. The JRJR subsidiaries involved in this line of business are Your Inspiration at Home and My Secret Kitchen.

Home Décor - Segment consists of operations related to the production and sale of premium hand-crafted baskets and the selling of products for the home, including pottery, cleaning, health, beauty, home, outdoor and customizable vinyl expressions for display. These operations are primarily located within the United States and the United Kingdom. The primary JRJR subsidiaries involved in this line of business are Kleeneze, Betterware, TLC and Uppercase Living.

Nutritionals and Wellness - Segment consists of operations related to the selling of nutritional supplements and skin care products. These operations have a presence in many foreign markets and over 50 countries such as Italy, Russia, Spain, and Israel. The JRJR subsidiary primarily involved in this type of products is Agel.

We note that these three segments exceed 75% of the Company's consolidated revenue. Therefore, no further aggregation or disclosures are required for the remaining operating segments.

Although they do not qualify as reportable segments, we have included our publishing and printing and other operating segments within the tables below to provide easier reconciliation to our results found on the consolidated statements of operations and further transparency. The publishing and printing segment consists of HCG and Paperly. The other segment consists of Tomboy Tools.

In the tables below we present revenues and gross profit by operating segment. Our CODM evaluates performance on a segment basis from the standpoint of gross profit because many of our operating expenses are part of our shared services group at the corporate level, providing services to all of our operating segments, which is consistent with our post-acquisition integration strategies. In addition, there are numerous intercompany allocations and expenses that are most appropriately viewed on a consolidated basis for the Company as a whole. We do not have intersegment revenues.

Results of Operations

Our consolidated results of operations for the years ended December 31, 2015 and 2014 were (in thousands):



	Year Ended December 31,
	2015			2014

Revenue	$	138,352		$	108,811
Program costs and discounts	(24,362		)	(27,443		)
Net revenue	113,990			81,368
Costs of sales	42,194			28,082
Gross profit	71,796			53,286
Commissions and incentives	34,130			24,981
Gain on sale of assets	(657		)	(886		)
Selling, general and administrative	52,460			46,263
Depreciation and amortization	2,214			1,781
Share based compensation expense (gain)	(116		)	792
Impairment of assets held for sale	3,329			—
Impairment of goodwill	192			489
Operating loss	(19,756		)	(20,134		)
(Gain) loss on marketable securities	(189		)	845
Gain on acquisition of business	(3,625		)	—
Interest expense, net	2,588			1,857
Loss from operations before income tax	(18,530		)	(22,836		)
Income tax provision	349			829
Net loss	(18,879		)	(23,665		)
Net loss attributable to non-controlling interest	5,783			4,592
Net loss attributed to JRjr33, Inc.	$	(13,096	)	$	(19,073	)

For the years ended December 31, 2015 and December 31, 2014 , respectively approximately $98.2 million or 71.0% and $45.1 million or 41.4% of our revenues were generated in international markets. Segment information, which includes all operating segments, for the years ended December 31, 2015 and December 31, 2014 are shown in the tables below (in thousands):

Revenue (in thousands):



	Year Ended December 31, 2015				Year Ended December 31, 2014
	Revenue		Percent of Total		Revenue		Percent of Total
Gourmet food	$	18,243	13.2	%	$	8,554	7.9	%
Home décor	88,047		63.6	%	59,810		55.0	%
Nutritionals and wellness	30,629		22.1	%	38,337		35.1	%
Publishing and printing	977		0.7	%	1,265		1.2	%
Other	456		0.4	%	845		0.8	%
Revenue	$	138,352	100.0	%	$	108,811	100.0	%

Gross profit (in thousands):



	Year Ended December 31, 2015				Year Ended December 31, 2014
	Gross Profit		Percent of Total		Gross Profit		Percent of Total
Gourmet food	$	7,467	10.5	%	$	3,863	7.2	%
Home décor	39,333		54.8	%	16,382		30.7	%
Nutritionals and wellness	24,086		33.4	%	31,712		59.6	%
Publishing and printing	634		0.9	%	813		1.5	%
Other	276		0.4	%	516		1.0	%
Gross profit	$	71,796	100.0	%	$	53,286	100.0	%

Revenue

Total revenue for 2015 increased by $ 29.5 million , or approximately 27.1% compared with 2014 , primarily due to the impact of our acquisitions in the Home Décor segment of Betterware in October 2015 and Kleeneze in March 2015. Results for the year ended December 31, 2015 were also impacted in the Nutritionals and Wellness segment as well as by turnaround actions taken at TLC such as narrowing product lines, focusing on quality products, closing the company’s discount outlet stores and reducing the emphasis on overall program discounts. We anticipated a short-term negative revenue impact from these steps but believe that it will lead to growth and strength in the fundamental business over the long-term. The increase in revenues due to the inclusion of Betterware and Kleeneze in our results, beginning with their acquisition dates, was offset partially by the decline in revenue at TLC. For the year December 31, 2015 , the net impact of the decrease in TLC revenues against the increase in revenues from Betterware and Kleeneze was an increase in revenue of $25.7 million.

Gross Profit

For the year ended December 31, 2015 , gross profit increased by $ 19 million compared with 2014 . For the year ended December 31, 2015 , gross profit margins increased to 51.9% from 49.0% for the year ended December 31, 2014 . The expansion in gross profit margins was primarily a result of less discounting at TLC in the Home Décor segment that reduced program costs and discounts as a percentage of revenue and increased gross margins. The increase in gross margins as a result of less discounting was offset partially by an increase in cost of goods sold as a percentage of revenue to 30.5% from 25.8% for the years ended December 31, 2015 and 2014 , respectively. This increase was primarily attributable to a cost of goods sold increase at Kleeneze in the Home Décor segment due to higher distribution and warehousing costs related to the service agreement entered into with Express Gifts Limited (a subsidiary of Findel Plc) at the acquisition of Kleeneze in March 2015.

Operating Losses

For the year ended December 31, 2015 operating losses decreased by $ 0.4 million compared with 2014 . These results are in line with our expectations at this stage in the execution of our strategy and represent a positive trend toward positive operating margins as we continue to improve the portfolio businesses and gain additional cost efficiencies from eliminating redundant overhead. In the last two years we have purchased nine direct-to-consumer companies, up-listed to the NYSE MKT and executed a $20.0 million equity raise, which had $17.8 million of net proceeds. We believe we are poised for the next stage of our growth having built our current platform. We believe our strategy will continue to have benefits from scale and will continue to aggressively pursue accretive acquisition targets to improve our operating results.

Operating Expenses

Commissions and Incentives

Total commissions and incentives as a percentage of revenue increased to 24.7% from 23.0% for the year ended December 31, 2015 compared to 2014 . However, program costs and discounts as a percent of revenue decreased to 17.6% from 25.2% for the year ended December 31, 2015 compared to 2014 , primarily as a result of less discounting at TLC. To evaluate the distributor costs, we believe it is useful to compare both commissions and incentives along with program costs and discounts together as a percentage of revenue. Together, these two items represented 42.3% and 48.2% of revenue for the years ended December 31, 2015 and 2014 , respectively.

Selling, General and Administrative

Selling, general and administrative expenses ("SG&A") incurred during the year ended December 31, 2015 increased 13.4% to $ 52.5 million compared to $46.3 million for 2014 . However, selling, general and administrative expenses as a percentage of revenue decreased from 42.5% in 2014 to 37.9% in 2015 as a result of cost reductions at JRJR's subsidiaries, as well as fewer legal and advisory fees associated with acquisitions due to increasing internal efficiencies in our deal process. We expect that these costs will decrease as a percentage of revenue as we continue to find and implement cost efficiencies and as we continue to grow, as many of our SG&A expenses will not increase as we continue to scale up our business through organic and acquisition-based growth.

Gain/Loss on Marketable Securities

At December 31, 2015 and December 31, 2014 , the fair value of the fixed income securities totaled approximately $5.3 million and $1.0 million , respectively. The net cost of marketable securities purchases during the year ended December 31, 2015 totaled $25.2 million . The net proceeds from the sales of our marketable securities totaled $20.9 million for the year ended December 31, 2015 .

Our realized gains (losses) from the sale of our marketable securities totaled $189,000 and $(845,000) for the years ended December 31, 2015 and 2014 , respectively. These securities are Level 1 securities estimated based on quoted prices in active markets.

Gain on Acquisition

During the year ended December 31, 2015 , we recognized a $3.6 million gain in connection with our acquisition of Kleeneze. The transaction resulted in a gain primarily due to the significantly low purchase price, which is a result of the continual declines in revenues and operating profits Kleeneze had seen prior to the acquisition.

Impairment of Assets Held for Sale

During the year ended December 31, 2015 , we recognized a $3.3 million loss when several excess assets at Longaberger were marked to fair value. In accordance to ASC 360, the assets were marked to fair market value after being classified as held for sale.

Interest Expense, net

For the year ended December 31, 2015 , interest expense increased by $ 731,000 compared with 2014 , as the combined result of debt issued and assumed in connection with the Betterware and Kleeneze acquisitions, and the issuance of convertible debt during 2015 . The interest accrued related to the RCP V convertible note was converted to common stock during the fourth quarter of 2014 .

Income Tax Provision

For the year ended December 31, 2015 the income tax provision of $349,000 decreased by $ 480,000 compared with the 2014 income tax provision of $829,000 . The decrease is a result of less current income tax in foreign jurisdictions in which the Company operates.

Non-Controlling Interest

Non-controlling interest losses were approximately $ 5.8 million and $ 4.6 million for the years ended December 31, 2015 and 2014 , respectively. The decrease in the current year was primarily due to the improvement of TLC's earnings and the re-classification of sale-leaseback expenses from JRJR corporate to TLC during 2014 to more accurately represent TLC's primary use of the leased facilities for its operations.

Additional Performance Indicators - EBITDA Metrics

We believe that having a reliable measure of our financial health is invaluable both to us and to potential business partners. We believe that Earnings before Interest, Taxes, Depreciation and Amortization (“EBITDA”), Adjusted EBITDA, and Adjusted Operating EBITDA can be useful performance indicators over time.

We have included EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA in this Annual Report on Form 10-K because they are key metrics used by our management and board of directors to measure operating performance and trends in our business. In particular, the exclusion of certain specific expenses in calculating Adjusted EBITDA facilitates operating performance comparisons on a period-to-period basis. Adjusted Operating EBITDA excludes expenses related to our M&A and capital markets infrastructure and activities. We believe this metric is particularly useful for determining the performance of our subsidiary business and ongoing corporate expenses absent costs associated with the ongoing acquisition component of our strategy.

These measures are not defined by GAAP and the discussion of EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA is not intended to conflict with or change any of the GAAP disclosures described above. Management considers these measures in addition to operating income to be important to estimate the enterprise and stockholder values of the Company, and for making strategic and operating decisions. In addition, analysts, investors and creditors use these measures when analyzing our operating performance, financial condition and cash generating ability. Neither EBITDA, Adjusted EBITDA nor Adjusted Operating EBITDA should be construed as a substitute for net income (loss) (as determined in accordance with GAAP) for the purpose of analyzing our operating performance of financial position, as EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA are not defined by GAAP.

The following table presents a reconciliation of Net Loss to EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA for each of the periods presented:

Net Loss to Adjusted Operating EBITDA Reconciliation (in thousands)



	Year Ended December 31,
	2015			2014
Net loss	$	(18,879	)	$	(23,665	)
Interest, net	2,588			1,857
Income tax expense	349			829
Depreciation and amortization	2,214			2,241
EBITDA	(13,728		)	(18,738		)
Specific capital market event expense	720			979
Specific M&A deal/diligence expense	290			948
Stock compensation expense (gain)	(116		)	792
Inventory write-off	2,355			894
Adjusted EBITDA	(10,479		)	(15,125		)
M&A infrastructure expense	2,681			3,236
Adjusted Operating EBITDA	$	(7,798	)	$	(11,889	)

Specific Capital Market Event Expense

Specific Capital Market Event Expense would include expenses related to certain activities such as listing or other exchange fees, road show and other expenses related to equity offerings, and fees associated with filings like our S-3 expensed in a given period.

Specific M&A Deal/Diligence Expense

These are specific expenses related to certain legal and due diligence costs for potential and actual acquisition targets.

M&A Infrastructure Expense

These are expenses related to our M&A infrastructure, such as our M&A team and costs associated with supporting their efforts, as well as expenses related to our Reimbursement of Services Agreement with Richmont Holdings. We expect these costs to continue as we look for opportunistic acquisition targets and participate in other deal-related activities.

Our use of EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:


•	EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;


•	EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA do not reflect changes in, or cash requirements for, our working capital needs;


•	EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA do not consider the potentially dilutive impact of share-based compensation;


•	Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA do not reflect cash capital expenditure requirements for such replacements or for new capital expenditure requirements;


•	EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA do not reflect acquisition-related costs; and


•	Other companies, including companies in our own industry, may calculate EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, you should consider EBITDA, Adjusted EBITDA and Adjusted Operating EBITDA alongside other financial performance measures, including various cash flow metrics, net loss and our other GAAP results.

Balance Sheet Changes

During the 2015 year, the Company had major changes to the balance sheet as a result of the acquisition of Kleeneze and Betterware. The 2015 acquisitions resulted in an increase in accounts receivable of £ 3.1 million ( $4.6 million ), inventory of £ 6.4 million ( $9.5 million ), property, plant and equipment of £ 1.1 million ( $1.7 million ), intangibles of £ 3.6 million ( $5.4 million ), accounts payable of £ 2.8 million ( $4.3 million ), accrued liabilities of £ 1.9 million ($ 2.9 million ), taxes payable of £ 1.8 million ($ 2.6 million ) and retained earnings of £ 8.3 million ( $12.3 million )

Liquidity and Capital Resources

During 2015 , our consolidated balance sheet was impacted most significantly by the acquisitions of Kleeneze and Betterware, a public stock offering, and the issuance of convertible debt.

Our principal sources of liquidity are our cash and cash equivalents, marketable securities, cash generated from sales, and debt and equity issuances. Cash and cash equivalents and marketable securities consist primarily of cash on deposit with banks, investments in short-duration fixed income mutual funds, which may include investments in U.S. government securities, U.S. government agency securities, and corporate debt securities. Cash and cash equivalents and marketable securities were $11.8 million as of December 31, 2015 , an increase of $8.2 million from December 31, 2014 , primarily due to our March 2015 public offering, an issuance of convertible debt in November 2015, and cash acquired in our acquisition of Kleeneze, offset by cash used for the acquisition of Kleeneze, paying down accounts payable balances at TLC and other uses of cash for operating expenses.

We also continued our disposal of buildings and land that are not used by our operating companies or core to our go-forward business strategy. Land and building sales of this kind in 2015 totaled in excess of $0.9 million , which was a contribution of cash to ongoing working capital needs. While the majority of our excess buildings and land has been sold, we believe there is still an opportunity to generate incremental cash from future disposals of this kind.

Currently we do not have a revolving credit facility or other working capital facility at JRJR. Although we believe we have sufficient cash and cash equivalents, as well as marketable securities, to fund our business currently, we recognize that there may be additional needs for working capital as we invest in our current businesses and as we look for accretive future acquisitions. We are constantly evaluating the most efficient capital available for these purposes.

Cash Flows

Cash used in operating activities for the year ended December 31, 2015 was $(8.4) million , as compared to net cash used in operating activities of $(15.2) million for the year ended December 31, 2014 . Our principal uses of cash have included the cost of buying inventory; commissions and incentives; labor and benefits costs; and the cost of due diligence and acquisitions.

Net cash used in investing activities for the year ended December 31, 2015 was $(10.9) million , as compared to a net cash provided by investing activities of $22.9 million for the year ended December 31, 2014 . The Company used $(25.2) million to buy marketable securities and had proceeds of $20.9 million from the sale of marketable securities, and $(2.1) million was used for capital expenditure, primarily to upgrade IT infrastructure and corporate facilities, for the year ended December 31, 2015 . We also used $2.5 million , net of cash acquired, for the acquisitions of Kleeneze and Betterware.

Net cash provided by financing activities was $23.8 million for the year ended December 31, 2015 compared to net cash used of $(9.8) million for the year ended December 31, 2014 . Through the issuance of common stock and warrants in a public offering consummated in March 2015, we raised net proceeds of approximately $17.8 million. An additional $3.4 million was provided by the issuance of convertible debt (net of issuance costs) and another $3.1 million raised from bank financing. The cash inflows were offset by $2.9 million held in collateral as restricted cash on our combined consolidated balance sheet for new bank debt and payment of debt of $1.1 million .

Public Offerings

See Note (15) , Stockholder's Equity and Noncontrolling Interest to our consolidated financial statements included in this report, for the details on the March 4, 2015 equity raise and warrant issuances.

Contractual Obligations

Because we are a smaller reporting company, we are not required to provide information on contractual obligations.

Critical Accounting Policies and Estimates

In preparing our consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and pursuant to the rules and regulations promulgated by the Securities and Exchange Commission (“SEC”), we make assumptions, judgments and estimates that can have a significant impact on our net income (loss) and affect the reported amounts of certain assets, liabilities, revenue and expenses, and related disclosures. We base our assumptions, judgments and estimates on historical experience and various other factors that we believe to be reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. On a regular basis, we evaluate our assumptions, judgments and estimates. We also discuss our critical accounting policies and estimates with the Audit Committee of our Board of Directors. We believe that the assumptions, judgments and estimates involved in the accounting for revenue recognition, business combinations, income taxes, and long-lived assets, have the greatest impact on our consolidated financial statements, so we consider these to be our critical accounting policies. Historically, our assumptions, judgments and estimates relative to our critical accounting policies have not differed materially from actual results.

Significant judgments and estimates used in the preparation of the consolidated financial statements apply to the following critical accounting policies:

Revenue Recognition and Deferred Revenue

We receive payment, primarily via credit card, for the sale of products at the time customers place orders. Sales and related fees such as shipping and handling, net of applicable sales discounts, are recorded as revenue when the product is shipped and when title and the risk of ownership passes to the customer. Payments received for undelivered products are recorded as deferred revenue and are included in other current liabilities. Certain incentives offered on the sale of our products, including sales discounts, are classified as a reduction of revenue. A provision for product returns and allowances is recorded and is based on historical experience.

Business Combinations

Business combinations are accounted for using the acquisition method of accounting as of the acquisition date, which is the date on which control of the acquired company is transferred to JRJR. Control is assessed by considering the legal transfer of voting rights that are currently exercisable and managerial control of the entity. Goodwill is measured at the acquisition date as the fair value of the consideration transferred less the net fair value of identifiable assets acquired and liabilities assumed. Any contingent consideration is measured at fair value at the acquisition date. Transaction costs, other than those associated with the issuance of debt or equity securities, related to a business combination are expensed as incurred.

Income Taxes

We and our U.S. subsidiaries excluding TLC file a consolidated Federal income tax return. Deferred income taxes are provided for temporary differences between accrual basis and tax bases of asset and liabilities. The principal differences are described in Note (10) , Income Taxes, to our consolidated financial statements included in this report. Benefits from tax credits are reflected currently in earnings. We record income tax positions based on a more likely than not threshold that the tax positions will be sustained on examination by the taxing authorities having full knowledge of all relevant information. Our international operations

are generally taxed based on local pretax profits for the individual subsidiaries, without offset for pretax losses of other subsidiaries. We permanently reinvest earnings in our foreign subsidiaries.

Impairment of Long-Lived Assets

We review long-lived assets, including property, plant and equipment and other intangibles with definite lives for impairment or whenever events or changes in circumstances indicated that the carrying amount of such an asset might not be recoverable. When indicators are present, management determines whether there has been an impairment of long-lived assets held for use in the business by comparing anticipated undiscounted future cash flow from the use and eventual disposition of the asset or asset group to the carrying value of the asset. The amount of any resulting impairment is calculated by comparing the carrying value to the fair value. Long-lived assets that meet the definition of held for sale, when present, are valued at the lower of carrying amount or net realizable value. Assets or asset groups are determined at the lowest level possible for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Goodwill and Other Intangibles

We perform our goodwill and other indefinite-lived intangible impairment test annually or when changes in circumstances indicate an impairment event may have occurred by estimating the fair value of each reporting unit compared to its carrying value. The last annual impairment analysis was preformed as of November 30, 2015. Our reporting units represent an operating segment or a reporting level below an operating segment.

Additionally, the reporting units are aggregated based on similar economic characteristics, nature of products and services, nature of production processes, type of customers and distribution methods. We use a discounted cash flow model or a market approach to calculate the fair value of reporting units. The model includes a number of significant assumptions and estimates regarding future cash flows and these estimates could be materially impacted by adverse changes in market conditions.

Recent Accounting Pronouncements

See Note (2) , Summary of Significant Accounting Policies, to our consolidated financial statements included in this report.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

Commitments and Contingencies

The Company is occasionally involved in lawsuits and disputes arising in the normal course of business. In the opinion of management, based upon advice of counsel, the likelihood of an adverse outcome against the Company is not subject to reasonable estimation. However, management believes that the ultimate outcome of these lawsuits will not have a material impact on the Company's financial position or results of operations.

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Because we are a smaller reporting company, we are not required to provide the information required by this Item.

Item 8. Financial Statements and Supplementary Data

Index to Financial Statements



Report of Independent Registered Public Accounting Firm	49
Report of Independent Registered Public Accounting Firm	50
Consolidated Balance Sheets as of December 31, 2015 and 2014	51
Consolidated Statements of Operations for the Years Ended December 31, 2015 and 2014	52
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2015 and 2014	53
Consolidated Statements of Cash Flows for the Years Ended December 31, 2015 and 2014	54
Consolidated Statements of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2015 and 2014	56
Notes to the Consolidated Financial Statements	57

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of JRjr33, Inc.:

We have audited the accompanying consolidated balance sheet of JRjr33, Inc. as of December 31, 2015 , and the related consolidated statements of operations, comprehensive loss, stockholders' equity (deficit), and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements 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 the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of JRjr33, Inc. as of December 31, 2015 , and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

/s/ BDO USA LLP

BDO USA LLP

Dallas, Texas

June 27,2016

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of JRjr33, Inc.:

We have audited the accompanying consolidated balance sheets of JRjr33, Inc. (formerly CVSL Inc.) as of December 31, 2014 , and the related consolidated statements of operations, comprehensive loss, stockholders' equity (deficit), and cash flows for the year then ended. These consolidated 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.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of CVSL Inc. as of December 31, 2014, and the results of their operations and their cash flows for the year then ended, in conformity with U.S. generally accepted accounting principles.

We have also 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 December 31, 2014 , based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 16, 2013 expressed an opinion that CVSL Inc. had not maintained effective internal control over financial reporting as of December 31, 2014 ., based on criteria established in Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission.

/s/ PMB Helin Donovan LLP

PMB Helin Donovan, LLP

Dallas, Texas

March 16, 2015

JRjr33, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)



	December 31, 2015			December 31, 2014
Assets
Current assets:
Cash and cash equivalents	$	6,482		$	2,606
Marketable securities	5,306			991
Accounts receivable, net	4,828			450
Inventory, net	20,799			14,759
Other current assets	2,303			2,482
Total current assets	39,718			21,288
Assets held for sale	1,111			—
Restricted cash	2,857			—
Sale leaseback security deposit	4,414			4,414
Property, plant and equipment, net	5,387			8,191
Property under capital leases, net	14,654			15,361
Goodwill	5,427			4,095
Intangibles, net	8,801			3,558
Other assets	135			400
Total assets	$	82,504		$	57,307
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	15,937		$	8,541
Related party payables	1,605			152
Accrued commissions	3,033			3,319
Accrued liabilities	7,303			4,612
Deferred revenue	2,307			2,982
Current portion of long-term debt	3,048			941
Accrued taxes payable	4,830			2,693
Other current liabilities	777			1,412
Total current liabilities	38,840			24,652
Deferred tax liability	744			167
Long-term debt, less current portion	12,784			4,316
Capital lease obligation, less current portion	16,332			15,774
Other long-term liabilities	2,864			3,415
Total liabilities	71,564			48,324
Commitments and contingencies
Stockholders’ equity:
Preferred stock, par value $0.001 per share, 500,000 authorized-0-issued and outstanding	—			—
Common stock, par value $0.0001 per share, 250,000,000 shares authorized; 35,718,279 and 27,599,012 shares issued and outstanding, at December 31, 2015 and at December 31, 2014 respectively	4			3
Additional paid-in capital	58,837			37,097
Accumulated other comprehensive income (loss)	(586		)	321
Accumulated deficit	(45,255		)	(32,159		)
Total stockholders’ equity attributable to JRjr33, Inc.	13,000			5,262
Stockholders’ equity attributable to noncontrolling interest	(2,060		)	3,721
Total stockholders’ equity	10,940			8,983
Total liabilities and stockholders’ equity	$	82,504		$	57,307

See notes to consolidated financial statements.

JRjr33, Inc.

Consolidated Statements of Operations

(in thousands, except share and per share data)



	Year Ended December 31,
	2015			2014
Revenue	$	138,352		$	108,811
Program costs and discounts	(24,362		)	(27,443		)
Net revenues	113,990			81,368
Costs of sales	42,194			28,082
Gross profit	71,796			53,286
Commissions and incentives	34,130			24,981
Gain on sale of assets, net	(657		)	(886		)
Selling, general and administrative	52,460			46,263
Depreciation and amortization	2,214			1,781
Share based compensation expense	(116		)	792
Impairment of assets held for sale	3,329			—
Impairment of goodwill	192			489
Operating loss	(19,756		)	(20,134		)
(Gain) loss on marketable securities	(189		)	845
Gain on acquisition of a business	(3,625		)	—
Interest expense, net	2,588			1,857
Loss before income tax provision	(18,530		)	(22,836		)
Income tax provision	349			829
Net loss	(18,879		)	(23,665		)
Net loss attributable to non-controlling interest	5,783			4,592
Net loss attributable to JRjr33, Inc.	$	(13,096	)	$	(19,073	)
Basic and diluted loss per share:
Weighted average common shares outstanding	33,478,601			47,688,157
Loss per common share attributable to JRjr33, Inc., basic and diluted	$	(0.39	)	$	(0.40	)
Unaudited Pro-forma weighted average common shares outstanding (see Note (2))				24,550,871
Unaudited Pro-forma loss per common share attributable to common stockholders, basic and diluted (see Note (2))				$	(0.78	)

See notes to consolidated financial statements.

JRjr33, Inc.

Consolidated Statements of Comprehensive Loss

(in thousands)



	Year Ended December 31,
	2015			2014
Net loss before allocation to noncontrolling interests	$	(18,879	)	$	(23,665	)
Other comprehensive loss (gain):
Foreign currency translation adjustment loss (gain)	(706		)	275
Unrealized loss (gain) on marketable securities
Unrealized holding loss (gain) arising during the period	—			(15		)
Reclassification of loss (gain) included in net income	(199		)	844
Other comprehensive income (loss), before tax	(905		)	1,104
Tax provision (benefit) on other comprehensive loss (income)	—			—
Other comprehensive income (loss) before allocation to noncontrolling interests	(905		)	1,104

Comprehensive loss before allocation to noncontrolling interests	$	(19,784	)	$	(22,561	)
Less: Comprehensive income (loss) attributable to noncontrolling interests	5,783			4,592
Comprehensive loss attributable to JRjr33, Inc.	$	(14,001	)	$	(17,969	)

See notes to the consolidated financial statements.

JRjr33, Inc.

Consolidated Statements of Cash Flows

(in thousands)



	Year Ended December 31,
	2015			2014
Operating activities:
Net loss	$	(18,879	)	$	(23,665	)
Adjustments to reconcile net loss to net cash used in operating activities, net of effect
of business acquisitions:
Depreciation and amortization	2,778			2,476
(Gain)/loss on marketable securities	(189		)	845
Convertible interest	—			744
Share-based compensation	(116		)	1,241
Non-cash compensation	410			—
Provision for doubtful accounts	1,001			457
Provision for obsolete inventory	2,355			893
Gain on sale of assets, net	(657		)	(886		)
Deferred income tax	468			224
Goodwill impairment	192			489
Gain on acquisition	(3,625		)	—
Impairment of assets held for sale	3,329			—
Amortization of debt discount	77			—
Deferred rent amortization	135			—
Changes in certain assets and liabilities:
Accounts receivable	(324		)	(126		)
Inventory	960			3,189
Other current assets	1,670			339
Accounts payable	1,761			(605		)
Related party payables	1,453			(1,100		)
Accrued commissions	(282		)	(422		)
Accrued liabilities	(659		)	(843		)
Deferred revenue	2			1,362
Taxes payable	(308		)	1,439
Other liabilities	91			(1,278		)
Net cash used in operating activities	(8,357		)	(15,227		)
Investing activities:
Capital expenditures	(2,147		)	(683		)
Proceeds from the sale of property, plant and equipment	936			16,911
Deposit on leased asset	—			(4,414		)
Purchase of marketable securities	(25,236		)	(5,769		)
Sales of marketable securities	20,913			16,876
Proceeds from note receivable	68			—
Restricted cash	(2,951		)	—
Acquisitions, net of cash purchased	(2,494		)	2
Net cash (used in) provided by investing activities	(10,911		)	22,923
Financing activities:
Borrowings on long-term debt	7,065			—
Payments on debt including net revolving credit facility in 2014	(1,109		)	(10,778		)
Stock issuances	18,360			—
Proceeds from short-term debt issuance	—			1,000
Debt issuance costs	(515		)	—
Net cash (used in) provided by financing activities	23,801			(9,778		)



Effect of exchange rate changes on cash	(657		)	811

Increase (decrease) in cash	3,876			(1,271		)
Cash and cash equivalents at beginning of year	2,606			3,877
Cash and cash equivalents at end of year	$	6,482		$	2,606

Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest	$	2,499		$	1,094
Income taxes	72			493
Non-cash transactions:
Convertible notes plus accrued interest converted to stock	—			21,626
Convertible note issued related to acquisition	5,547			—
Stock issued related to acquisition	1,719			696
Stock issued related to debt acquisition	578			—
Assets acquired in sale leaseback	—			15,800

See notes to the consolidated financial statements.

JRjr33, Inc.

Consolidated Statements of Stockholders’ Equity (Deficit)

(in thousands)



	Common Stock
	Shares		Amount	Additional Paid-In Capital	Accumulated Other Comprehensive Income (Loss)		Accumulated Deficit		Noncontrolling Interest		Total Stockholders' Equity (Deficit)
Balance at December 31, 2013	24,357		2	14,409	(767	)	(13,086	)	8,297		8,855
Net loss			—	—	—		(19,073	)	(4,592	)	(23,665	)
Comprehensive income (loss)			—	—	1,088		—		16		1,104
Issuance of warrants for consulting services			—	116	—		—		—		116
Issuance of stock for convertible note	3,200		1	21,626	—		—		—		21,627
Issuance of stock to Directors	13		—	250	—		—		—		250
Issuance of stock for acquisition of subsidiaries	81		—	696	—		—		—		696
Contribution of stock with no consideration, net of shares issued for no consideration due to reverse split rounding	(52	)	—	—	—		—		—		—
Balance at December 31, 2014	27,599		3	37,097	321		(32,159	)	3,721		8,983
Net loss			—	—			(13,096	)	(5,783	)	(18,879	)
Other comprehensive income (loss)			—	—	(907	)	—		2		(905	)
Issuance of warrants for consulting services			—	1,068	—		—		—		1,068
Stock compensation expense	—		—	15	—		—		—		15
Issuance of stock and warrants in public offering, net of issuance costs	6,768		1	18,360			—		—		18,361
Issuance of stock for debt raise	375		—	578	—		—		—		578
Issuance of stock for acquisition of subsidiaries	976		—	1,719	—						1,719
Balance at December 31, 2015	35,718		4	58,837	(586	)	(45,255	)	(2,060	)	10,940

See notes to consolidated financial statements.

JRjr33, Inc.

Notes to Consolidated Financial Statements

(1) General

JRjr33, Inc. ("JRJR" or "the Company", and together with the Company's consolidated subsidiaries, "we", "us" and "our") was incorporated under the laws of Delaware in April 2007 under the name Cardio Vascular Medical Device Corporation. In June 2011, we converted to a Florida corporation and changed our name to Computer Vision Systems Laboratories, Corp. On May 27, 2013, we changed our name to CVSL Inc. On September 25, 2012, we completed an initial share exchange whereby we acquired 100% of the issued and outstanding capital stock of HCG, a magazine publisher, in exchange for 21,904,302 shares of our common stock representing approximately 90% of our issued and outstanding capital stock at such time. In December 2012, we decided to terminate our medical device line of business. On October 16, 2014, we effected a 1 -for-20 reverse stock split of our authorized and our issued and outstanding common stock. As discussed in Note (18) , we changed our name to JRjr33, Inc. in January 2016.

Current JRJR Direct-to-Consumer Portfolio

We have grown as a result of acquisitions and intend to continue to pursue additional acquisitions that improve our fundamental strength of our existing business. Our platform of direct-to-consumer brands is currently comprised of the following nine businesses in order of acquisition: The Longaberger Company, Your Inspiration at Home, Tomboy Tools, Agel, My Secret Kitchen, Paperly, Uppercase Living, Kleeneze and Betterware. In addition, Happenings Communications Group provides involvement in magazine publishing provides our portfolio further diversification.

Fourth Quarter Adjustments

During the fourth quarter of 2015, several adjustments were recorded that relate primarily to revenue recognition, inventory reserves, commissions recognition, the loss on marking held for sale assets to fair market value and the gain recognized earlier in the year on the Kleeneze acquisition. The net impact of these adjustments was a decrease of approximately $7.7 million in net income for the year.

(2) Summary of Significant Accounting Policies

Consolidation

JRJR consolidates all entities in which it owns or controls more than 50% of the voting shares, including any investments where we have determined to have control. The portion of the entity not owned by us is reflected as a non-controlling interest within the equity section of the consolidated balance sheets. As of December 31, 2015 , the non-controlling interest consisted of minority shareholder interests in TLC, certain international subsidiaries of AEI and MSK. All inter-company balances and transactions have been eliminated in consolidation.

Reverse Stock Split

On October 16, 2014 we effected a 1 -for-20 reverse stock split of our authorized, issued and outstanding common stock. All share amounts shown herein have been stated to retroactively reflect the reverse stock split.

Reclassifications

Certain amounts in the prior year's consolidated financial statements have been reclassified to conform to the current year presentation.

During 2015 , we identified three reportable segments, and have revised the 2014 segment disclosures to a consistent basis of reporting. In the statement of operations, multiple items previously classified as selling, general and administrative expenses have been separately broken out. The expansion of operating expenses include share based compensation and depreciation and amortization. The sale leaseback security deposit was previously included in other assets on the consolidated balance sheet. Additionally, accrued taxes payable and accrued liabilities have been separated in current liabilities; both were previously classified as other current liabilities. A related party loan that has been reclassified from current liabilities to related party payables in addition the current portion of the capital leases have been reclassified from current portion of long-term debt to other current liabilities.

Use of Estimates

The preparation of financial statements in accordance with generally accepted accounting principles in the United States (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. Significant estimates and assumptions in these Consolidated Financial Statements require the exercise of judgment and are used for, but not limited to, the allowance for doubtful accounts, inventory valuation and obsolescence, estimates of future cash flows and other assumptions associated with goodwill and long-lived asset impairment tests, allocation of purchase price to the fair value of net assets acquired, useful lives for depreciation and amortization, revenue recognition, income taxes and deferred tax valuation allowances, lease classification and contingencies. These estimates are based on information available as of the date of the consolidated financial statements. Actual results could differ significantly from those estimates.

Cash and Cash Equivalents

Cash equivalents are short-term, highly-liquid instruments with original maturities of 90 days or less. We maintain our cash primarily with multinational banks. The amounts held in interest bearing accounts periodically exceed the Federal Deposit Insurance Corporation insured limit of $250,000 . The amounts held in banks that are FDIC insured total $340,000 and $823,000 at the end of December 31, 2015 and December 31, 2014 , respectively. Of the total, as of December 31, 2015 and December 31, 2014 $0 and $400,000 , respectively exceeded the insured limit of $250,000 . We have not incurred any losses related to these deposits.

Marketable Securities

Investments in marketable securities may include equity securities, debt instruments and mutual funds. Securities classified as available for sale are those securities that the Company intends to hold for an indefinite period of time but not necessarily to maturity. Management determines the appropriate classification at the time of purchase and re-evaluates such designation as of each balance sheet date. The investments are recorded at fair value with unrealized gains and losses included in accumulated other comprehensive income and realized gains and losses reported separately on the statement of operations.

Accounts Receivable

The carrying value of our accounts receivable, net of allowance for doubtful accounts, represents their estimated net realizable value. We estimate the allowance for doubtful accounts based on type of customer, age of outstanding receivable, historical collection trends, and existing economic conditions. If events or changes in circumstances indicate that a specific receivable balance may be unrealizable, further consideration is given to the collectability of those balances, and the allowance is adjusted accordingly. Receivable balances deemed not collectible are written off against the allowance. We have recorded an allowance for doubtful accounts of approximately $1,028,000 and $170,000 at December 31, 2015 and 2014 , respectively.

Inventory

Inventories are valued at the lower of cost or market. Cost is determined by the first-in, first-out method. The Company records provisions for obsolete, excess and unmarketable inventory in cost of goods sold.

Assets Held for Sale

The Company classifies assets as held for sale when management approves and commits to a formal plan of sale with the expectation that the sale will be completed within one year. The net assets of the business held for sale are then recorded at the lower of their current carrying value or the fair market value, less costs to sell. See additional discussion regarding the Company’s assets held for sale in Note (6) .

Property, Plant and Equipment

Property, plant and equipment are recorded at cost and depreciated on a straight-line basis over the estimated useful lives of the assets. Provisions for amortization of leasehold improvements are made at annual rates based upon the lesser of the estimated useful lives of the assets or terms of the leases. Expenditures for maintenance and repairs are expensed as incurred.

At December 31, 2015 , the useful lives used for depreciation and amortization were as follows:



Buildings	7 to 40 years
Land improvements	3 to 25 years
Leasehold improvements	3 to 15 years
Equipment	3 to 25 years

Leases

Leases are contractual agreements between lessees and lessors in which lessees get the right to use leased assets for a specified period in exchange for regular payments. Capital leases resemble asset purchases because there is an implied transfer of the benefits and risks of ownership from lessor to lessee, and the lessee is responsible for repairs and maintenance. We treat asset leases as capital leases if the life of the lease exceeds 75 percent of the asset's useful life, there is an ownership transfer to the lessee at the end of the lease, there is a "bargain" purchase option at the end of the lease or the discounted present value of the lease payments exceeds 90 percent of the fair-market value of the asset at the beginning of the lease term. Capital lease obligations, and the related assets, are recorded at the commencement of the lease based on the present value of the minimum lease payments. Property under capital leases is amortized on a straight-line basis over the useful life.

Impairment of Long-Lived Assets

JRJR management reviews long-lived assets, including property, plant and equipment and other intangible assets with definite lives for impairment in accordance with accounting guidance. Management determines whether there has been an impairment of long-lived assets held for use in the business by comparing anticipated undiscounted future cash flow from the use and eventual disposition of the asset or asset group to the carrying value of the asset. The amount of any resulting impairment is calculated by comparing the carrying value to the fair value. Long-lived assets that meet the definition of held for sale, when present, are valued at the lower of carrying amount or fair value, less costs to sell. Assets or asset groups are determined at the lowest level possible for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities.

Business Combinations

Goodwill and Other Intangibles

Goodwill, if any, arising from business combinations, represents the excess of the purchase prices over the value assigned to the net acquired assets and other specifically identified intangibles. Specifically identified intangibles generally include trade names, trademarks, and other intellectual property.

JRJR management performs its goodwill and other indefinite-lived intangible impairment test annually or when changes in circumstances indicate an impairment event may have occurred by estimating the fair value of each reporting unit compared to its carrying value. The last annual impairment analysis was preformed as of November 30, 2015. Our reporting units represent an operating segment or a reporting level below an operating segment.

Additionally, the reporting units are aggregated based on similar economic characteristics, nature of products and services, nature of production processes, type of customers and distribution methods. We use a discounted cash flow model and a market approach to calculate the fair value of our reporting units. The model includes a number of significant assumptions and estimates regarding future cash flows and these estimates could be materially impacted by adverse changes in market conditions.

Goodwill is measured for impairment by comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is less than the carrying value, a second step is performed to determine the implied fair value of goodwill. If the implied fair value of goodwill is lower than its carrying value, an impairment charge equal to the difference is recorded.

Indefinite-lived assets are measured for impairment by comparing the fair value of the indefinite-lived intangible asset to its carrying value. If the fair value of the indefinite-lived intangible asset is lower than its carrying value, an impairment charge equal to the difference is recorded.

Income Taxes

The provision for income taxes consists primarily of income taxes in foreign jurisdictions in which we conduct business, withholding taxes, federal and state income taxes in the United States, and amortization of our deferred tax charges.

Deferred income taxes are provided for temporary differences between financial statement and tax bases of asset and liabilities. We maintain a full valuation allowance for domestic and foreign deferred tax assets, including net operating loss carryforwards and tax credits. We record income tax positions, including those that are uncertain, based on a more likely than not threshold that the tax positions will be sustained on examination by the taxing authorities having full knowledge of all relevant information.

Translation of Foreign Currencies

The functional currency of our foreign subsidiaries is the local currency of their country of domicile. Assets and liabilities of the foreign subsidiaries are translated into U.S. dollar amounts at period-end exchange rates. Revenue and expense accounts are translated at the weighted-average rates for the quarterly accounting period to which they relate. Equity accounts are translated at historical rates. Foreign currency translation adjustments are accumulated as a component of other comprehensive income.

Management has determined the functional currency of each primary operating subsidiary by evaluating indicators such as cash flows, sales prices, sales markets, expenses, financing, and intra-entity transactions and arrangements. We have listed below our primary operating subsidiaries for each of our companies and their functional and reporting currencies.



Subsidiary	Functional Currency	Reporting Currency
The Longaberger Company	USD	USD
Uppercase Acquisition, Inc.	USD	USD
CVSL TBT LLC	USD	USD
My Secret Kitchen, Ltd.	GBP	USD
Your Inspiration At Home Pty Ltd.	AUD	USD
Paperly, Inc.	USD	USD
Happenings Communications Group, Inc.	USD	USD
Agel Enterprises Inc.	USD	USD
Kleeneze Ltd.	GBP	USD
Betterware Ltd.	GBP	USD

Fair Value

We established a fair value hierarchy which prioritizes the inputs to the valuation techniques used to measure fair value into three levels. These levels are determined based on the lowest level input that is significant to the fair value measurement. Level 1 represents unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 represents quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable, either directly or indirectly. Level 3 represents valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

Comprehensive Income (Loss)

We report comprehensive income (loss) in our consolidated statements of comprehensive income (loss). Comprehensive income (loss) consists of net earnings (loss) plus gains and losses affecting stockholders’ equity that, under generally accepted accounting principles, are excluded from net earnings (loss), such as gains and losses related to available for sale marketable securities and the translation effect of foreign currency assets and liabilities.

Revenue Recognition and Deferred Revenue

In the ordinary course of business we receive payments, primarily via credit card, for the sale of products at the time customers place orders. Sales and related fees such as shipping and handling, net of applicable sales discounts, are recorded as revenue when

the product is shipped and when title and the risk of ownership passes to the customer. The Company presents revenue net of any taxes collected from customers which are remitted to governmental authorities. Payments received for undelivered products are recorded as deferred revenue and are included in current liabilities on the Company’s consolidated balance sheets. Certain incentives offered on the sale of our products, including sales discounts, described in the paragraph below, are classified as program costs and discounts. A provision for product returns and allowances is recorded and is founded on historical experience and is classified as a reduction of revenues. At December 31, 2015 and 2014 , our allowance for sales returns totaled approximately $808,000 and $257,000 , respectively.

Program costs and discounts

Program costs and discounts represent the various methods of promoting our products. We offer benefits such as discounts on starter kits for new consultants, promotional pricing for the host of a home show, which vary depending on the value of the orders placed, and general discounts on our products.

Cost of Sales

Cost of sales includes the cost of raw materials, finished goods, shipping expenses, and the direct and indirect costs associated with the personnel, resources and property, plant and equipment related to the manufacturing, warehousing, inventory management and order fulfillment functions.

Commissions and Incentives

Commissions and incentives include all forms of commissions, overrides and incentives related to the sales force. We accrue expenses for incentive trips over qualification periods as they are earned. The Company analyzes incentive trip accruals based on historical and current sales trends as well as contractual obligations when evaluating the adequacy of the incentive trip accrual. Actual results could result in liabilities being more or less than the amounts recorded.

Selling, General and Administrative

Selling, general and administrative expenses include wages and related benefits associated with various administrative departments, including human resources, legal, information technology, finance and executive, as well as professional fees and administrative facility costs associated with leased buildings, depreciation related to owned buildings, office equipment and supplies.

Share-based Compensation

The Company's share-based compensation plans include cash-settled plans, stock options, and stock warrants. Cash settled plans are treated as liability awards, with payments determined based on changes in the trading prices of the Company's common stock. Stock options and warrants are generally evaluated using a Black-Scholes model, with expense recorded on a straight-line basis over the required period of service.

Basic and Diluted Loss Per Share

The computation of basic earnings (loss) per common share is based upon the weighted average number of shares outstanding in accordance with current accounting guidance.

Outstanding stock options and warrants, and convertible notes, are not included in the computation of dilutive loss per common share because we have experienced operating losses in all periods presented and, therefore, the effect would be anti-dilutive. The Second Tranche shares potentially issuable to Rochon Capital if certain conditions have been met are included in the December 31, 2014 weighted average shares outstanding number used in the basic and diluted share calculation up to December 1, 2014, when the Amended Share Exchange Agreement took effect, which limits Rochon Capital’s right to be issued the Second Tranche Stock solely upon the occurrence of certain stock acquisitions by third parties or the announcement of certain tender or exchange offers of our common stock. See Note (15) for further detail.

Recent Accounting Pronouncements

On May 28, 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers , which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU No. 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new

standard will be effective for the Company in the first quarter of 2018. Early application is permitted, but is not permitted earlier than the original effective date. The Company is currently evaluating the impact of ASU No. 2014-09.

On August 27, 2014, the FASB issued ASU No. 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, which is intended to define management’s responsibility to evaluate whether there is substantial doubt about the Company’s ability to continue as a going concern and to provide related footnote disclosures. This standard will be effective for the Company for the year ending on December 31, 2016. Early application is permitted. The Company is currently evaluating the impact of ASU No. 2014-15.

In February 2015 the FASB issued Accounting Standards Update 2015-02 (ASU 2015-02), Amendments to the Consolidation Analysis . The ASU is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2015. Early adoption is permitted. The new consolidation standard changes the criteria a reporting enterprise uses to evaluate if certain legal entities, such as limited partnerships and similar entities, should be consolidated. We are in the process of assessing the effects of the application of the new guidance on our financial statements.

In April 2015 the FASB issued Accounting Standards Update 2015-03 (ASU 2015-03), Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs . The ASU is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2015. Early adoption is permitted. The new standard requires debt issuance costs to be classified as reductions to the face value of the related debt. We adopted ASU 2015-03 during 2015, and the only significant impact related to the convertible note we issued during 2015 (see Note (11) ).

In July 2015, the FASB issued Accounting Standards Update 2015-11 (ASU 2015-11) to simplify the subsequent measurement of inventory. The new standard requires that inventory be measured at the lower of cost or net realizable value. This amendment applies to inventory that is measured using any method other than last-in, first-out ("LIFO") or the retail inventory method. The ASU is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2016. Early application is permitted as of the beginning of an interim or annual reporting period. We are in the process of assessing the effects of the application of the new guidance on our financial statements.

In August 2015, the FASB issued Accounting Standards Update 2015-15 (ASU 2015-15), Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements. This new standard codifies an SEC staff announcement that entities are permitted to defer and present debt issuance costs related to line-of-credit arrangements as assets. The ASU clarifies that the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The ASU is effective immediately for both public business entities and non-public entities. Although this ASU is effective immediately, we do not expect it to materially affect our financial position until we enter into a line-of-credit arrangement.

In November 2015, the FASB issued Accounting Standards Update 2015-17 (ASU 2015-17), Income Taxes. This new standard is intended to reduce complexity in accounting standards, and requires that all deferred income tax assets and liabilities be classified noncurrent in a classified statement of financial position. The ASU is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2016. Early application is permitted as of the beginning of an interim or annual reporting period. We do not expect this ASU to materially affect our financial position.

In January 2016, the FASB issued Accounting Standards Update 2016-01 (ASU 2016-01), Financial Instruments - Overall. This new standard is intended to enhance the reporting model for financial instruments, and (1) requires that equity investments be measured at fair value, with changes in fair value recognized in net income, and (2) simplifies the impairment assessment for certain equity investments, and (3) revises a number of disclosures. The ASU is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2017. Early application is permitted as of the beginning of an interim or annual reporting period. We do not expect this ASU to materially affect our financial position unless we make any equity investments.

In February 2016, the FASB issued Accounting Standards Update 2016-02 (ASU 2016-02), Leases. This new standard is intended to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for annual reporting periods, including interim reporting periods within those periods, beginning after December 15, 2018. Early application is permitted as of the beginning of an interim or annual reporting period. We are in the process of assessing the effects of the application of the new guidance on our financial statements.

A variety of proposed or otherwise potential accounting standards are currently under study by standard setting organizations and various regulatory agencies. Due to the tentative and preliminary nature of those proposed standards, management has not determined whether implementation of such proposed standards would be material to the consolidated financial statements.

(3) Acquisitions, Dispositions and Other Transactions

Betterware

On October 15, 2015, Trillium Pond AG, a corporation organized in Switzerland (“Trillium Pond”), wholly owned by a Swiss subsidiary (CVSL AG) of the Company, entered into and consummated a Share Purchase Agreement (the “SPA”) with Robert Way and Andrew Lynton Cohen (“Sellers”) pursuant to which Trillium Pond purchased from the Sellers all of the issued and outstanding share capital of Stanley House Distribution Limited (“Stanley House”), a company incorporated in England. Stanley House has one wholly owned subsidiary, Betterware Limited (“Betterware”).

Betterware was founded in 1928, and sells a variety of household products in the United Kingdom and Ireland through a team of independent distributors.

Pursuant to the SPA, Trillium Pond purchased and acquired all 99,980 issued and outstanding shares of Stanley House common stock in exchange for payment to the Sellers of: (i) an aggregate cash payment of £ 1.0 million ( $1.5 million ) , the cash payments being funded from a portion of the cash acquired in the acquisition; (ii) Convertible Notes (the “Notes”) in the aggregate principal amount of £ 3.7 million ( $5.8 million ); and (iii) 976,184 shares of the Company’s common stock (the “Common Stock”) having a value on the date of issuance of $1.7 million . The shares of Common Stock issued to Mr. Way and Mr. Cohen under the SPA and issuable upon conversion of the Notes are subject to certain leak-out provisions, as set forth in a Lock-Up Agreement, that restrict sales of stock under certain circumstances based upon the number of shares being sold and the trading volume of the Company’s Common Stock.

The Notes mature after three ( 3 ) years and bear interest at a rate of two percent ( 2% ) per annum, compounded annually and payable monthly. The Notes provide for aggregate cash payments of approximately (i) £ 10,222 ( $16,000 ) on the 14th day of each of months 1-6 after issuance; and (ii) £ 20,444 ( $32,000 ) on the 14th day on each of months 7-36 after issuance; provided, however that if certain milestones are not met part or all of the payment may be made at the option of the Company by the issuance of shares of the Company’s Common Stock instead of cash. In addition, the Notes provide for the payments in the aggregate amount of £ 1.0 million ( $1.6 million ) at the Company’s election, in cash or shares of the Company’s Common Stock on each of the twelve, twenty four and thirty six month anniversary of the issuance date of the Notes. The Seller has the right upon a stock payment to cancel the portion of the Note subject to the stock issuance and forfeit such payment. The Notes may be prepaid in cash at any time.

The Betterware acquisition was accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed by the Company were recognized at their fair value at the acquisition date. The Company incurred approximately $90,000 , of acquisition-related costs, all of which were expensed and included in general and administrative expenses on the consolidated statements of operations.

The following summary represents the fair value of Betterware as of the acquisition date, October 15, 2015.



	(in thousands)
Consideration	$	9,066
Amounts recognized for assets acquired and liabilities assumed:
Cash	640
Other current assets, including $1,624 of accounts receivable and $3,415 of inventory	6,933
Other long-term assets	1,129
Identifiable intangible assets	3,251
Current liabilities	(3,704		)
Other long-term liabilities	(618		)
Net assets acquired	7,631
Goodwill	$	1,435

The goodwill arising from the Betterware acquisition is included in the Home Décor segment and is nondeductible for tax purposes. It includes the value of the assembled workforce and synergies that are expected to be realized through integration with Kleeneze and the rest of our portfolio .

As part of the purchase price allocation, the Company has determined that the identifiable intangible assets are the trade name and distributor agreements. The Company valued these intangible assets using the Discounted Cash Flow Method. The trade name has an indefinite useful life and is not subject to amortization. The distributor agreements are being amortized over four ( 4 ) years in accordance with historical turnover of distributors at approximately 25% attrition per year.

Kleeneze

On March 24, 2015, the Company completed the acquisition of Kleeneze Limited (“Kleeneze”), a direct-to-consumer business based in the United Kingdom. Kleeneze offers a wide variety of cleaning, health, beauty, home, outdoor and other products to customers across the United Kingdom and Ireland.

Pursuant to the terms of a Share Purchase Agreement with Findel Plc (“Findel”), the Company purchased 100% of the shares of Kleeneze from Findel for total consideration of $5.1 million . The consideration included $3.0 million of senior secured debt provided by HSBC Bank PLC, which has a term of 2.0 years and an interest rate per annum of 0.60% over the Bank of England Base Rate as published from time to time (an interest rate of approximately 1.1% at the time of the purchase). The remaining $2.1 million of consideration consisted of cash. Approximately $1.9 million in cash was acquired by the Company as part of the transaction at closing.

The fair value of the identifiable assets acquired and liabilities assumed of approximately $8.7 million exceeded the fair value of the purchase price of the business of approximately $5.1 million. As a result, we reassessed the recognition and measurement of identifiable assets acquired and liabilities assumed and concluded that the valuation procedures and resulting measures were appropriate. Accordingly, the acquisition has been accounted for as a bargain purchase and, as a result, we recognized a gain of approximately $3.6 million associated with the acquisition. The gain is included in the line item gain on acquisition of a business in the consolidated statement of operations for the period ended December 31, 2015 .

The Kleeneze acquisition was accounted for under the acquisition method of accounting. The assets acquired and liabilities assumed by the Company were recognized at their fair value at the acquisition date. The Company incurred approximately, $113,000 of acquisition-related costs, all of which were expensed and included in general and administrative expenses on the consolidated statements of operations.

The following summary represents the fair value of Kleeneze as of the acquisition date, March 24, 2015. As a result of the purchase price allocation, we have recognized a bargain purchase gain of approximately $3.6 million .



	(in thousands)
Consideration	$	5,100
Amounts recognized for assets acquired and liabilities assumed:
Cash	1,965
Other current assets, including $2,986 of accounts receivable and $6,282 of inventory	10,243
Other long-term assets	764
Identifiable intangible assets	2,239
Current liabilities	(6,495		)
Other long-term liabilities	—
Net assets acquired	8,716
Gain on acquisition of Kleeneze	$	(3,616	)

As part of the purchase price allocation, the Company has determined that the identifiable intangible assets are trade name and distributor agreements. The Company valued these intangible assets using the Discounted Cash Flow Method. The trade name has an indefinite useful life and not subject to amortization. The distributor agreements are being amortized over five ( 5 ) years in accordance with historical turnover of distributors at approximately 20% attrition per year.

As can be seen in the above table, the Company realized a $3.6 million gain on the acquisition of Kleeneze, which was recorded to "Gain on acquisition of a business" in the Consolidated Statement of Operations. The transaction resulted in a gain primarily due to the significantly low purchase price, which is a result of the continual declines in revenues and operating profits Kleeneze had seen prior to the acquisition.

Commencing with their acquisition dates, Kleeneze and Betterware contributed the following amounts to operations for 2015 (in thousands, except per share data):



Revenues	$	51,043
Net loss	2,939
Net loss attributable to JRjr33, Inc.	2,939
Loss per common share attributable to JRjr33, Inc., basic and diluted	$	0.09

Pro-forma Results (Unaudited)

The following unaudited pro-forma financial information presents the Company's consolidated financial results for the years ended December 31, 2015 and 2014 as if the Betterware and Kleeneze acquisitions had occurred as of January 1, 2014 (in thousands, except per share data):



	Year Ended December 31,
	2015			2014
Operations
Revenues	$	184,303		$	221,839
Net loss	(19,047		)	(16,899		)
Net loss attributable to JRjr33, Inc.	(13,264		)	(12,307		)
Loss per common share attributable to JRjr33, Inc., basic and diluted	$	(0.40	)	$	(0.26	)

Notes to Pro-forma Results:

These pro-forma results have been prepared for comparative purposes only and are not necessarily indicative of the results of operations that actually would have resulted had the acquisitions been effective at the beginning of the respective periods and are not necessarily representative of future results. The pro-forma results include the following adjustments:


•	Losses were incurred by Kleeneze as a result of the write down of intercompany receivables in the amount of $33.1 million that were forgiven prior to and in accordance with the transaction. As these losses were direct and one-time events related specifically to the acquisition, we have excluded these items from the pro-forma results above;


•	The pro-forma results above exclude $203,000 in transaction costs, all of which were expensed during the year ended December 31, 2015 , and are included in selling, general and administrative expense in the consolidated statement of operations.

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-to-consumer-provider 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 December 31, 2015 as we don't expect any payment to be earned during the term of the payout. 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.

Dispositions

In 2015 and 2014 , JRJR disposed of various property at TLC. These property sales resulted in dispositions of property for $1.1 million and $2.4 million , respectively, and gains on sale of assets of approximately $489,000 and $600,000 , respectively.

On July 31, 2014, JRJR and 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 . A gain on sale of approximately $2.5 million was realized associated with the sale. 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 Sale Leaseback Agreement.

(4) Marketable Securities

Our marketable securities as of December 31, 2015 include fixed income investments classified as available for sale. At December 31, 2015 and December 31, 2014 , the fair value of the fixed income securities totaled approximately $5.3 million and $1.0 million , respectively. Purchases of marketable securities during the years ended December 31, 2015 and December 31, 2014 totaled $25.2 million and $5.8 million , respectively. The proceeds from the sales of our marketable securities during the years ended December 31, 2015 and 2014 totaled $20.9 million and $16.9 million , respectively. Our realized gains (losses) from the sale of our marketable securities totaled $189,000 and $(845,000) for the years ended December 31, 2015 and 2014 , respectively. Unrealized holding gains (losses) on the investments included in consolidated statements of other comprehensive income were $0 and $(15,000) for the years ended December 31, 2015 and 2014 , respectively.

The following is a summary of cash equivalents and available-for-sale securities as of the end of the periods presented (in thousands):



	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Estimated Fair Value
Balance at December 31, 2015
Mutual Funds	$	5,312	$	—	$	(6	)	$	5,306

Balance at December 31, 2014
Mutual Funds	$	798	$	193	$	—		$	991

As of December 31, 2015 our marketable securities investments had an effective maturity of 1.0 years and an average effective duration of 0.14 years. The majority of our marketable securities are invested in investment-grade corporate bonds via mutual funds.

(5) Inventory

Inventories are stated at lower of cost or market. Cost is determined using the first-in, first-out (FIFO) method, including labor and overhead for certain subsidiaries. Inventory consisted of the following (in thousands):



	December 31, 2015			December 31, 2014
Raw material and supplies	$	3,165		$	3,052
Work in process	221			931
Finished goods	20,774			14,852
	24,160			18,835
Inventory reserve	(3,361		)	(4,076		)
Inventory, net	$	20,799		$	14,759

(6) Assets Held for Sale

In the fiscal year 2015 , the Company began actively marketing several of Longaberger's excess facilities. Through this process, the Company identified the equipment, land and buildings to be sold and the assets that will be retained by the Company. The Company determined the carrying value of the assets held for sale more likely than not exceeded its fair value, less costs to sell. The fair value of the net assets to be sold was determined utilizing a market participant bid. An impairment charge of $3.3 million was recorded for the assets held for sale. This impairment is recorded on the Company’s Consolidated Statements of Operations on the line item “Impairment of assets held for sale.” The excess facilities are reported within the home décor segment. At December 31, 2015 , the assets held for sale totaled 1.1 million .

(7) Property, Plant and Equipment

Property, plant and equipment consisted of the following (in thousands):



	December 31, 2015			December 31, 2014
Land and improvements	$	109		$	699
Buildings and improvements	2,472			6,351
Equipment	5,069			2,978
Construction in progress	—			10
	7,651			10,038
Less accumulated depreciation	(2,264		)	(1,847		)
	$	5,387		$	8,191

Depreciation and amortization expense related to property, plant and equipment depreciation - excluding capital leased assets - was approximately $1.5 million and $2.1 million for years ended December 31, 2015 and 2014 , respectively. For the years ended ended December 31, 2015 and 2014 , approximately $0 and $460,000 of depreciation expense was included in costs of sales.

Capital Leased Assets

In addition to owned property, the Company also has $14.7 million in leased assets, which is net of accumulated depreciation of approximately $1.6 million as of December 31, 2015 . At December 31, 2014 leased assets totaled $15.4 million which is net of accumulated depreciation of approximately $439,000 . Depreciation and amortization expense related to leased assets was approximately $0.6 million and $204,000 for years ended December 31, 2015 and 2014 , respectively.

(8) Goodwill and Other Assets

Goodwill

JRJR management performs its goodwill and other indefinite-lived intangible impairment tests annually as of November 30, 2015 or when changes in circumstances indicate an impairment event may have occurred by estimating the fair value of each reporting unit compared to its carrying value. The Company is aggregated into five operating segments presented herein ( Note (17) ) based on similar economic characteristics, nature of products and services, nature of production processes, type of customers and distribution methods. Our five operating segments consist of: 1) gourmet food, 2) home décor, 3) nutritionals and wellness, 4) publishing and printing and 5) other.

We use a discounted cash flow model and a market approach to calculate the fair value of our reporting units. The models include a number of significant assumptions and estimates regarding future cash flows and these estimates could be materially impacted by adverse changes in market conditions. Goodwill is measured for impairment by comparing the fair value of the reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit is less than the carrying value, a second step is performed to determine the implied fair value of goodwill. If the implied fair value of goodwill is lower than its carrying value, an impairment charge equal to the difference is recorded.

After the Share Exchange Agreement in 2012, we determined that the goodwill associated with the acquisition of CVSL Inc. was impaired. We measured goodwill associated with each of our subsidiaries for impairment at year end 2014, and determined that the goodwill previously recorded for our acquisitions of Paperly and MSK were fully impaired and that goodwill associated with Tomboy Tools was partially impaired. Although our annual assessment for 2015 identified no impairments, our quarterly evaluation for the second quarter of the year indicated that our Tomboy Tools reporting was further impaired. Goodwill for Tomboy Tools at December 31, 2015 was approximately $191,000 , net of accumulated impairment. Accumulated impairment of goodwill since the acquisition in October 2013 is approximately $375,000 . Impairment charges totaled approximately $192,000 and $489,000 for the years ending December 31, 2015 and 2014 , respectively.

The following table provides the components of and changes in the carrying amount of Goodwill (in thousands):



	Acquired Goodwill		Accumulated Impairment			Other			Net Carrying Amount
Balance December 31, 2013	$	6,592	$	(2,489	)	$	—		$	4,103
Additions ^(a)	481								481
Impairment ^(b)			(489		)				(489		)
Balance December 31, 2014	$	7,073	$	(2,978	)	$	—		$	4,095
Additions ^(a)	1,655								1,655
Impairment ^(b)			(192		)				(192		)
Other ^(c)	—					(131		)	(131		)
Balance December 31, 2015	$	8,728	$	(3,170	)	$	(131	)	$	5,427
^(a) Related to the acquisition of Uppercase Living in 2014 and Betterware in 2015.
^(b) Related to the impairment of My Secret Kitchen, Paperly and Tomboy Tools in 2014 and Tomboy Tools in 2015.
^(c) Primarily reflects the impact of foreign exchange.

Identifiable Intangible Assets

The following tables provide the components of identifiable intangible assets (in thousands, except amortization period):



Identifiable Intangible Assets	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount as of December 31, 2015		Weighted Average Amortization Period (in Years)
Indefinite-lived intangible assets:
Trade name and trademarks ^(d)	$	5,614	$	—		$	5,614	—
Finite-lived intangible assets:
Trade name and trademarks	3		(3		)	—		—
Other intangibles	3,534		(347		)	3,187		4
	$	9,151	$	(350	)	$	8,801	4
^(d) This amount differs from the intangible asset amounts shown in Note (3) regarding the Kleeneze and Betterware acquisitions due to foreign exchange rate effects.



	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount as of December 31, 2014		Weighted Average Amortization Period (in Years)
Indefinite-lived intangible assets:
Trade name and trademarks	$	3,231	$	—		$	3,231	—
Finite-lived intangible assets:
Trade name and trademarks	3		(3		)	—		—
Other intangibles	363		(36		)	327		9
	$	3,597	$	(39	)	$	3,558	9

Amortization

Amortization expense related to intangible assets is included in depreciation and amortization in the accompanying consolidated statements of operations. Total amortization expense for finite-lived intangible assets was $145,000 and $206,000 for the years ended December 31, 2015 and 2014 , respectively.

As of December 31, 2015 , the estimated future amortization expense associated with our intangible assets for each of the five succeeding years ending December 31, is as follows (in thousands):



	Amortization of Intangible Assets
2016	$	763
2017	763
2018	763
2019	763
2020	38
Thereafter	$	97

(9) Related Party Transactions

During the fourth quarter of 2013 , we renewed a Reimbursement of Services Agreement for a minimum of one year with Richmont Holdings. JRJR has begun to establish an infrastructure of personnel and resources necessary to identify, analyze, negotiate and conduct due diligence on direct-to-consumer acquisition candidates. However, we continue to need advice and assistance in areas related to identification, analysis, financing, due diligence, negotiations and other strategic planning, accounting, tax and legal matters associated with such potential acquisitions. Richmont Holdings and its affiliates have experience in these areas and we wish to draw upon such experience. In addition, Richmont Holdings had already developed a strategy of acquisitions in the direct-to-consumer industry and has assigned and transferred to us the opportunities it has previously analyzed and pursued. JRJR has agreed to pay Richmont Holdings a reimbursement fee (the “Reimbursement Fee”) each month and we agreed to reimburse or pay the substantial due diligence, financial analysis, legal, travel and other costs Richmont Holdings incurred in identifying, analyzing, performing due diligence, structuring and negotiating potential transactions. During the years ended December 31, 2015 and 2014 , we recorded $2.2 million and $1.9 million of expenses that relate to the Reimbursement Fee, respectively, that are included in selling, general and administrative expense in the consolidated statements of operations. The board of directors approved an additional management fee of $232,000 over the base agreement in 2015. As of December 31, 2015 , there was a related party payable balance of approximately $580,000 which is included as an offset to our related party payables shown on our balance sheet.

On September 25, 2012, upon acquisition of HCG, JRJR inherited a related party shareholder payable of $25,000 related to a loan made by HCG’s former shareholder, Rochon Capital, to HCG for working capital. This amount is included in related-party payables within current liabilities. The loan does not currently have a set maturity date.

On February 26, 2015 we received a loan from Richmont Capital Partners V (“RCP V”) in the amount of $425,000 . This amount is included in related-party payables within current liabilities. The loan does not currently bear interest and has no set maturity date.

On June 27, 2014, Tamala L. Longaberger lent TLC $42,000 and in connection therewith TLC issued a promissory note in the principal amount of $42,000 to her. The note bears interest at the rate of 10.0% per annum and matured on June 27, 2015 .

On July 1, 2014, Tamala L. Longaberger lent AEI $158,000 and in connection therewith AEI issued a promissory note in the principal amount of $158,000 to her. The note bears interest at the rate of 10.0% per annum and matured on July 1, 2015 and is guaranteed by us.

On July 11, 2014, Tamala L. Longaberger lent AEI $800,000 and in connection therewith AEI issued a promissory note in the principal amount of $800,000 to her. The note bears interest at the rate of 10.0% per annum and matured July 11, 2015 and is guaranteed by us.

The Company has yet to service the loans related to Tamala L. Longaberger. As a result, in connection with these notes, Ms. Longaberger on August 12, 2015 filed an action in Franklin County Common Pleas Court of Columbus, Ohio (“State Court Action”) seeking re-payment of the notes. However, it is JRJR’s position that her claims are inextricably tied to the broader issues related to her terminated employment and the claims asserted against her by JRJR and The Longaberger Company, including breach of fiduciary duty, fraud, negligence, conversion, misappropriation of company funds, civil theft, breach of contract, and misappropriation of trade secrets, in an arbitration action in Columbus Ohio. Therefore, on October 12, 2015 , JRJR filed a motion to compel arbitration and dismiss claims in the State Court Action.

We utilize third party manufacturers for some of our products and manufacture certain products ourselves, such as food products sold in Australia and baskets sold by TLC. We utilize the production capabilities of Actitech, a 600,000 square foot manufacturing facility in Sherman, Texas, which is owned by Michael Bishop, a member of our Board of Directors, to produce products for Agel that are being sold globally. We paid Actitech for product purchased during 2015 and 2014 totaling approximately $1.4 million and $286,000 , respectively.

(10) Income Taxes

The following table presents the components of income (loss) before income taxes (in thousands):



	2015			2014
United States	$	(20,183	)	$	(21,404	)
Foreign	1,653			(1,432		)
Total	$	(18,530	)	$	(22,836	)

The Company records no current income tax expense related to its domestic activities due to historical or current net operating losses. The current tax is based on the Company’s activities in certain foreign jurisdictions which are currently profitable and no loss carryover is available to offset the income.

The income tax expense from continuing operations for the years ended December 31, 2015 and December 31, 2014 differs from the U.S statutory rate of 34.0% primarily due to changes in the Company's valuation allowance and foreign tax expense incurred in addition to U.S. tax in certain jurisdictions. The Company's income tax expense for 2015 and 2014 of $349,000 and $829,000 , respectively, reflects current year tax expense in foreign jurisdictions. In addition, the expense for 2015 and 2014 includes $100,000 and $100,000 , respectively, related to amortization of indefinite-lived intangibles for tax purposes that result in a deferred tax liability which, because the reversal cannot be determined, are excluded from the net asset covered by the Company's valuation allowance.

The income tax provision consists of the following (in thousands):



	2015		2014
Current
U.S.	$	—	$	—
State	—		—
Foreign	212		684
Deferred
U.S.	105		145
State	—		—
Foreign	32		—
Total	$	349	$	829

A reconciliation of the expected U.S. tax expense/(benefit) to the income tax provision is as follows (in thousands):



	2015			2014
Expected tax expense at U.S. statutory rate	$	(6,271	)	$	(6,267	)
Permanent adjustments	(303		)	37
Foreign income tax	244			631
Increase in valuation allowance	7,467			6,948
Other	(130		)	(428		)
Rate difference—U.S. to foreign	(658		)	(92		)
Total	$	349		$	829

As of December 31, 2015 , the Company did not have a history of earnings that would allow it to record any of its net deferred tax assets without a corresponding valuation allowance. Therefore, no net deferred tax asset is reflected as of December 31, 2015 .

Additionally, due to some of its historical acquisitions which included intangibles with an indefinite life that are amortized for tax purposes, the Company continues to accumulate a deferred tax liability which is recorded outside the net deferred tax asset and valuation allowance. A deferred tax liability is recorded within non-current liabilities in the amount of $744,000 in our consolidated balance sheet as of December 31, 2015 .

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Components of the Company's deferred income taxes as of December 31, 2015 and 2014 are as follows (in thousands):



	2015			2014
Deferred Tax Assets
Fixed assets	$	—		$	9,800
Intangibles	1,268			—
Accrued expenses	1,168			1,110
Net operating losses—U.S.	16,618			9,342
Net operating losses—foreign	512			477
Foreign tax credit	692			693

Deferred Tax Liabilities
Intangibles	(370		)	(232		)
Fixed assets	(3,810		)	—
Prepaid expenses	(50		)	(212		)
Valuation allowance	(16,772		)	(21,145		)
Net deferred tax asset (liability)	$	(744	)	$	(167	)

The Company has U.S. net operating loss carry-forwards of approximately $48.9 million which begin to expire in 2032. The Company has net operating losses of approximately $4.8 million in several foreign countries which will begin to expire at various times.

The Company has foreign tax credits of approximately $692,000 which will begin to expire in 2023.

Unrecognized tax benefits as of December 31, 2015 and 2014 are as follows (in thousands):



	2015			2014
Unrecognized Tax Benefits
Unrecognized tax benefits, beginning of year	$	168		$	168
Gross increases—tax positions in prior period	—			—
Gross decreases—tax positions in prior period	(107		)	—
Gross increases—current period tax positions	—			—
Interest accrual	1			—
Lapse of statute of limitations	—			—
Unrecognized tax benefits, end of year	$	62		$	168

The Unrecognized Tax Benefits shown here relate to an ongoing audit in Spain of one entity acquired by the Company during 2013. This audit is ongoing and is in dispute. It is reasonable that the Company's existing liability for Unrecognized Tax Benefits may increase or decrease within the next twelve months primarily due to resolution of this audit. The Company cannot reasonably estimate a range of potential changes in such benefits due to the unresolved nature of the Spanish audit.

As of December 31, 2015 , we had approximately $3.5 million of undistributed earnings in foreign subsidiaries. We expect to permanently reinvest these earnings outside of the United States to fund future foreign operations. We project that we will have sufficient cash flow in the United States and will not need to repatriate the foreign earnings to finance our domestic operations. If we were to distribute these earnings to the United States, we would be subject to U.S. income taxes, an adjustment for foreign tax credits, and foreign withholding taxes. We have not recorded a deferred tax liability on any portion of our undistributed earnings

in foreign subsidiaries. If we were to repatriate these earnings to the United States, any associated income tax liability would be insignificant.

We file U.S. federal income tax returns as well as income tax returns in various states and foreign jurisdictions and, as such, are subject to examination in various jurisdictions. The material jurisdictions that are subject to examination by tax authorities primarily include the United States, Italy, Netherlands, Russia, Spain and the United Kingdom, covering tax years 2010 through 2014 .

(11) Long-Term Debt and Other Financing Arrangements

The Company’s long-term borrowings consisted of the following (in thousands, except for interest rates):



Description	Interest rate		December 31, 2015			December 31, 2014
Convertible note—Dominion Capital	9.75	%	$	4,000		$	—
Unamortized debt discount, costs and fees of issuance—Dominion Capital			(1,016		)	—
Convertible notes—payable to former shareholders of Stanley House	2.00	%	5,502			—
Senior secured debt—HSBC Bank PLC	1.10	%	2,984			—
Promissory note—payable to former shareholder of TLC	2.63	%	3,003			3,374
Promissory note—Lega Enterprises, LLC (formerly Agel Enterprises, LLC)	5.00	%	1,043			1,367
Other miscellaneous notes	4.00	%	316			516
Total debt			15,832			5,257
Less current maturities			(3,048		)	(941		)
Long-term debt			$	12,784		$	4,316

The schedule of maturities of the Company’s long-term debt are as follows (in thousands):



2016	$	3,048
2017	8,451
2018	2,504
2019	412
2020	423
Thereafter	994
Total long-term debt including current maturities	$	15,832

Convertible Note—Dominion Capital

On November 20, 2015, we entered into a Securities Purchase Agreement with Dominion Capital ("Dominion"), pursuant to which we issued a $4.0 million senior secured note. The note bears interest at 9.75% per annum, payable monthly. The note's principal is payable in monthly installments of $50,000 starting in March 2016, increasing to $325,000 in November 2016, with a final payment of $1.7 million due in May 2017. The note is convertible at the option of Dominion into shares of our common stock at a conversion price of $3.00 per share and is secured by the assets of the Company and its subsidiaries, subject to existing senior security interests of other lenders. The Company has evaluated the conversion feature and determined that it does not need to bifurcated from the note and accounted for separately, since it is eligible for the derivative scope exception under ASC 815-10. We also determined that there is no beneficial conversion feature since the effective conversion price was higher than the market price of the underlying common stock as the commitment date.

In connection with this financing, 375,000 shares of our common stock valued at $510,000 were issued and other costs and fees totaling $583,000 were paid. These amounts have been treated as reductions of the proceeds received or issuance costs, and are being amortized over the term of the note using the effective interest method.

The unamortized balance of the debt discount, fees and issuance costs have been offset against the principal amount of the related debt in the consolidated balance sheet.

The Dominion senior secured note contained certain covenants including the covenant requirement for the timely filing of the 1934 Exchange Act filings with the SEC. The Company has missed the timely filing requirement with the SEC and received a waiver from Dominion until April 25, 2016. After April 25, 2016, the Company must issue 50,000 shares each 10 business days until it is in compliance with its 1934 Exchange Act filings. A second waiver from Dominion was received on May 17, 2016. The waiver will stay active provided that the Company issues to Dominion 50,000 shares of the Company’s Common Stock for each such ten (10) day period required beyond May 23, 2016 which is the due date of the Quarterly Report (without regard to whether the Company requires the full ten (10) Business Day period for any given extension). In connection with the delays in filing our Annual Report on Form 10-K for the year ended December 31, 2015 and our Quarterly Report on form 10-Q for the quarter ended March 31, 2016 we have issued 450,000 shares of our common stock in 2016 to the purchaser due to such failure to timely file. The purchaser has agreed that the failure to timely file would not constitute an event of default provided we issue the purchaser 50,000 shares of our common stock for each additional ten business days that the filing is late. Upon the filing of the Quarterly Report with the SEC during the Waiver Period (as it may be extended), the related Event of Default shall be cured as of the original SEC filing due date of the Quarterly Report.

Convertible Notes—Payable to Former Shareholders of Stanley House

On October 15, 2015, the Company issued two unsecured convertible notes totaling $5.8 million at that time in connection with the acquisition of Betterware, maturing after three years. The notes are denominated in pounds sterling (GBP) and bear interest at 2% per annum, payable at the time of principal payments. The notes' principal is payable in monthly installments totaling $16,000 for the first six months, followed by monthly installments totaling $32,000 for the next 30 months, with additional payments of $1.6 million due at the end of each annual period following the notes' issuance. The notes may be converted into the Company's common stock at our election based on the value of our shares at the time of payment. The valuation of the notes was considered in connection with the Betterware acquisition, and were determined to have been issued at fair value on the acquisition date. Refer to Note (3) .

Senior Secured Debt—HSBC Bank PLC

On March 24, 2015, the Company secured $3.0 million in senior secured debt at that time from HSBC Bank PLC, with a term of two (2) years and an annual interest rate of 0.60% over the Bank of England Base Rate as published from time to time. The loan is denominated in pounds sterling (GBP) and secured by approximately $2.9 million in cash shown as "restricted cash" on our consolidated balance sheets and there are no other covenants related to the debt. The cash collateral is held in a GBP denominated account.

Promissory Note—Payable to Former Shareholder of TLC

On March 14, 2013, the Company issued a $4.0 million unsecured promissory note in connection with the Purchase Agreement with TLC. The Promissory Note bears interest at 2.63% per annum, has a ten-year maturity, and is payable in equal monthly installments of outstanding principal and interest.

Promissory Note—Lega Enterprises, LLC

On October 22, 2013, we issued a $1.7 million Promissory Note to Lega Enterprises, LLC (formerly Agel Enterprises, LLC) in connection with our acquisition of assets from Agel Enterprises, LLC. The promissory note bears interest at 5% per annum, and is payable in equal monthly installments of outstanding principal and interest and matures on October 22, 2018. The note is secured by a lien on the assets of Agel, which lien is subordinate to the lien to Dominion.

Promissory Note—Other Miscellaneous

On December 4, 2014, we issued a $500,000 unsecured promissory note, maturing in May 2017, in connection with a settlement agreement. The promissory note bears interest at 4.0% per annum, and is payable in equal monthly installments of outstanding principal and interest.

(12) Commitments and Contingencies

Minimum lease commitments for non-cancelable operating leases for the years ended December 31, are as follows (in thousands):



2016	$	1,459
2017	1,545
2018	1,556
2019	1,553
2020	1,226
Thereafter	8,798
	$	16,137

The leases for certain of the Company's facilities include rent escalation provisions, which are accounted for on a straight-line basis over the lease terms for purposes of determining rental expense. Total operating lease payments were $2.1 million and $1.5 million for the years ended 2015 and 2014 , respectively.

Capital Leases

On July 31, 2014, TLC entered into the Sale Leaseback Agreement with CFI NNN Raiders. The lease was deemed to qualify as a capital lease and the transaction is being accounted for as a sale leaseback arrangement. The gain arising from the sale of the three buildings and related property has been deferred and is being recognized using the full accrual method over the term of the lease. The lease has been classified as a capital lease since the condition was met whereby the term of the lease is greater than 75% of the estimated economic life of the property. TLC has recorded the sale and removed the properties sold and related liabilities from the balance sheet. Since the lease is a capital lease, a leased asset has been recorded and depreciated over fifteen ( 15 ) years using the straight-line method.

The payments under the lease are accounted for as interest and principal payments under the capital lease using a fifteen (15) year amortization. Interest expense recognized for the years ended December 31, 2015 and 2014 was $2.2 million and $1.1 million , respectively. Amortization expense of $1.1 million and $439,000 was recorded in the years ended December 31, 2015 and 2014 respectively. The gain on sales of real estate amortized over the life of the lease was $168,000 for the year ended December 31, 2015 and $56,000 for the year ended December 31, 2014 , and is included in gain on sale of assets in the accompanying consolidated statements of operations. On December 31, 2015 and December 31, 2014 the current portion of the lease totaled $73,000 and $26,000 , respectively.

In addition to the sale leaseback agreement, the Company has various other capital leases. The leases cover software, hardware, and office equipment. Multiple new leases have been recognized during 2015 in part due to the acquisition of Betterware. Amortization expense related to these additional capital leases totaled $(462,000) and $(235,000) in the years ended December 31, 2015 and 2014 respectively. On December 31, 2015 and December 31, 2014 the current portion of the other leases totaled $239,000 and $89,000 , respectively. The current portion of capital leases is included in 'Other current liabilities.'

Minimum lease commitments for our capital leases for the years ended December 31, are as follows (in thousands):



2016	$	2,607
2017	2,584
2018	2,630
2019	2,664
2020	2,636
Thereafter	25,689
Total minimum lease payments	38,810
Less amount representing interest	(22,281		)
Present value of minimum lease payments	$	16,529

Contingencies

During 2014 , Tamala L. Longaberger loaned a total of $1,000,000 to the Company, bearing interest at 10% and maturing in 2015. The Company has yet to service loans payable to Tamala L. Longaberger. As a result, in connection with these notes, Ms. Longaberger on August 12, 2015 filed an action in Franklin County Common Pleas Court of Columbus, Ohio (“State Court Action”) seeking re-payment of the notes. However, it is JRJR’s position that her claims are inextricably tied to the broader issues related

to her terminated employment and the claims asserted against her by JRJR and The Longaberger Company, including breach of fiduciary duty, fraud, negligence, conversion, misappropriation of company funds, civil theft, breach of contract, and misappropriation of trade secrets, in an arbitration action in Columbus Ohio. Therefore, on October 12, 2015, JRJR filed a motion to compel arbitration and dismiss claims in the State Court Action. The trial is currently set for August 10, 2016, even though the motion to dismiss and compel is pending.

We are disputing a tax and penalty assessment by the Spanish Taxing Authorities relating to Agel. Prior to AEI’s acquisition of the assets of Agel Enterprises LLC, Agel was assessed withholding taxes and income taxes along with penalties by the Spanish Tax Authorities, which asserted that Agel had maintained permanent establishment in Spain for the years 2008 to 2010. As part of the acquisition, AEI agreed to assume this liability. Agel, and now AEI, has vigorously disputed these claims on the basis that Agel believes they did not have permanent establishment, and therefore, any compensation paid to independent representatives should not have been subject to withholding taxes.

AEI filed an appeal in Tribunal Económico-Administrativo Regional de Cataluña. The ultimate resolution of the dispute cannot be determined at this time. Agel paid the income tax due and AEI has paid approximately $269,000 in good faith towards the disputed withholding tax liability to preserve the appeal process.

During the second quarter of 2014 , AEI paid $420,000 to the Spanish Taxing Authorities toward its outstanding tax assessment. We did not make any payments in the third or fourth quarters of 2014 . Although we have appealed this assessment by the Spanish Taxing Authorities and are rigorously defending our position, this payment was made to prevent the Spanish Taxing Authorities from beginning certain legal proceedings that would have negatively affected AEI’s European operations. Additionally, AEI has been assessed amounts owed for late interest on the withholding and income tax of €10,819 and €1,282 , respectively ( $11,799 and $1,398 , respectively). The amount remains due if the appeal is unsuccessful, otherwise the payments made to date will be refunded to us. As of December 31, 2015 AEI maintained a liability of $0.5 million in accrued liabilities for this disputed amount, which is reflected in our 2015 consolidated financial statements.

The Company is occasionally involved in other lawsuits and disputes arising in the normal course of business. In the opinion of management, based upon advice of counsel, the likelihood of an adverse outcome against the Company is not subject to reasonable estimation. However, management believes that the ultimate outcome of any lawsuits will not have a material impact on the Company’s financial position or results of operations.

Worker’s Compensation Liability

Certain of the Company’s employees were covered under a self-insured worker’s compensation plan which was replaced by a fully insured plan in December 2014 . The Company estimates its remaining self-insured worker’s compensation liability based on past claims experience, and has an accrued liability to cover estimated future costs. At December 31, 2015 , the accrued liability was approximately $1.1 million compared to $1.0 million at December 31, 2014 . There can be no assurance that actual results will not materially differ from the Company's estimates.

(13) Fair Value

Level 1—Unadjusted quoted prices in active markets for identical assets and liabilities;

Level 2—Quoted prices for similar assets and liabilities in active markets (other than those included in Level 1) which are observable, either directly or indirectly; and

Level 3—Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable.

The carrying values of cash and cash equivalents, accounts receivable, restricted cash, accounts payable trade, related party payables and accrued liabilities are considered to be representative of their respective fair values due to the immediate or short-term nature or maturity. Our available for sale securities (Level 1) was $5.3 million and (Level 2) $0 at December 31, 2015 and (Level 1) was $129,000 and (Level 2) was $862,000 on December 31, 2014 .

In accordance with the provisions of ASC 820, the Company measures certain non-financial assets and liabilities at fair value that are recognized or disclosed on a nonrecurring basis (e.g. impaired goodwill and property, plant and equipment classified as held for sale). During the fourth quarter of fiscal year 2015 , a $3.3 million impairment charge was recorded for the Longaberger facilities held for sale. The facilities held for sale are the corporate headquarters, day care center and handle manufacturing building. The fair value of the net assets to be sold was determined using Level 3 inputs utilizing a market participant bid. See additional discussion regarding the Company’s assets held for sale in Note (6) . During the year ended December 31, 2015 and 2014 the Company recorded goodwill impairment charge of $192,000 and $489,000 , respectively. The nonrecurring fair value measurement for goodwill was developed using significant unobservable inputs (Level 3) utilizing a discounted cash flow model.

We have estimated the fair value of our debt and capital lease obligations using Level 3 inputs utilizing a discounted cash flow model, and they are summarized as follows as of December 31, 2015 (in thousands):



	Recorded Amount		Fair Value
Long-term debt, including current portion	$	15,832	$	14,024
Capital leases, including current portion	16,528		10,040
Total	$	32,360	24,064

(14) Share-Based Compensation Plans

We have two cash-settled, share-based compensation plans, the 2013 Director Smart Bonus Unit Plan and 2013 Smart Bonus Unit Award Plan. These plans provide for the issuance of a cash bonus for stock appreciation. A Committee comprised of members of the Board of Directors approves all awards that are granted under our share-based compensation plan. We classify the awards as a liability as the value of the award will be settled in cash, notes, or stock. The Company awarded 154,000 equivalent shares of stock appreciation rights (“SARs”) in 2015 that are remeasured each reporting period and are recognized pro-rata over the contractual term. The SARs vest over a period of three years and have a contractual term of five years . The liability related to these awards is included in other long-term liabilities on our consolidated balance sheets. Share-based compensation expense for the years ended December 31, 2015 and 2014 was $(1.2) million and $1.2 million , respectively. As of December 31, 2015 , total unrecognized compensation cost related to unvested share-based compensation was $73,000 , which is expected to be recognized over a three -year period.

On May 22, 2015, the Company’s Board of Directors approved the 2015 Stock Incentive Plan (the “2015 Stock Plan”), which was subsequently approved by the Company’s stockholders on June 23, 2015. The 2015 Stock Plan allows for the issuance of up to 1,500,000 shares of common stock to be granted through incentive stock options, non-qualified stock options, stock appreciation rights, restricted stock, and other stock-based awards to officers, other employees, directors and consultants of the Company and its subsidiaries. The exercise price of stock options under the 2015 Stock Plan is determined by the compensation committee of the Board of Directors, and may be equal to or greater than the fair market value of the Company’s common stock on the date the option is granted. The total number of shares of stock with respect to which stock options and stock appreciation rights may be granted to any one employee of the Company or a subsidiary during any one -year period under the 2015 plan shall not exceed 500,000 . Options become exercisable over various periods from the date of grant, and generally expire 10 years after the grant date. As of December 31, 2015 , there were approximately 1,100,000 options issued and outstanding under the 2015 Stock Plan.

On June 23, 2015, 50,000 options were granted to each of two executive officers of the Company. These options were issued at an exercise price of $1.23 , and they vest in equal quarterly installments over the next three years beginning July 1, 2015. In accordance with ASC 718, these options are recognized as equity and expensed over the vesting period of three years.

On July 30, 2015, the Company entered into separate consulting agreements with two individuals pursuant to which each would provide certain business and financial advisory services to the Company. In connection with the consulting agreements, each consultant was granted options exercisable for 500,000 shares of the Company’s common stock, par value $0.0001 per share under the Company’s 2015 Stock Incentive Plan (for an aggregate of 1,000,000 shares). The warrants had an exercise price of $1.27 ,

were exercisable on July 30, 2020, and were fully vested on the date of the grant. These warrants were accounted for in equity and are recorded to additional paid in capital on our consolidated balance sheets.

The fair value of the options is approximately $1.2 million ( $1.06 per share), and share-based compensation expense for the year ended December 31, 2015 was $1.1 million . As of December 31, 2015 , total unrecognized compensation expense related to unvested share-based compensation was $72,000 , which is expected to be recognized over a three -year period.

The company determines the expense related to the SARs, employee stock options and warrants under the guidance of ASC 718, and estimates the fair value using the Black-Scholes valuation model. For non-employee awards, the awards are accounted for under the guidance of ASC 505-50, with fair value estimated using the Black-Scholes valuation model.

The grant date fair value of each option award and warrant is calculated using a Black-Scholes valuation model, which incorporates the following weighted average assumptions:



	2015			2014
Stock Options
Weighted average expected volatility	92		%
Weighted Average Term (in years)	5
Risk-free interest rate	2		%
Weighted average fair value at date of grant	$	1.27

Warrants
Weighted average expected volatility	69		%	137		%
Weighted Average Term (in years)	2			1
Risk-free interest rate	2		%	3		%
Weighted average fair value at date of grant	$	1.24		$	7.87

The following table summarizes stock option activity:



		Weighted Average
	Number	Exercise Price Per Share
Outstanding as of December 31, 2014	—	$	—
Granted	1,100,000	1.23
Expired	—	—
Vested/exercised	—	—
Outstanding as of December 31, 2015	1,100,000	1.23
Options exercisable as of December 31, 2015	16,667	1.23
Remaining unvested options outstanding and expected to vest	1,083,333	$	1.23

(15) Stockholders Equity and Noncontrolling Interest

Public Offering

On March 4, 2015 the Company raised proceeds of $20 million though the sale of 6,667,000 shares of its common stock and warrants to purchase up to an aggregate of 6,667,000 shares of its common stock at a combined offering price of $3.00 in an underwritten public offering (“Offering”). The warrants have a per share exercise price of $3.75 , are exercisable immediately and will expire five years from the date of issuance. The Company granted the underwriters a 45 -day option to purchase up to an additional 1,000,050 shares of common stock and/or warrants to purchase up to an aggregate of 1,000,050 shares of common stock to cover additional over-allotments, if any. On March 4, 2015, the underwriters exercised a portion of their over-allotment option with respect to 113,200 warrants. In addition, 166,675 warrants were issued to the underwriters. The over-allotment option has expired as of the date of this filing.

The gross proceeds to the Company, including the underwriters' partial exercise of their over-allotment option, were approximately $20 million before deducting underwriting discounts and commissions and other estimated offering expenses payable by the Company. The net proceeds from the Offering were approximately $17.8 million . Assuming the exercise of all 6,667,000 warrants at the exercise price of $3.75 each, and assuming the Company maintains the conditions necessary for a cash exercise, the total additional gross aggregate proceeds to JRJR would be $25 million . However, there can be no assurance that any warrants will be exercised or that the Company will maintain conditions necessary for a cash exercise.

The exercise price of the warrants are subject to anti-dilutive adjustments (such as stock splits, stock dividends, recapitalizations or other similar events). There are no cash settlement alternatives associated with the warrant agreements that would require the Company to pay a holder of such warrant cash at exercise or at any other event. The fair value of the warrants is approximately $9.0 million as calculated using the Black Scholes model. In accordance with U.S. GAAP, the Company has accounted for the warrants as equity instruments.

The Warrants will be exercisable at any time a registration statement registering the issuance of the shares of Common Stock underlying the Warrants under the Securities Act is effective and available for the issuance of such shares, or an exemption from registration under the Securities Act is available for the issuance of such shares, by payment in full in immediately available funds for the number of shares of Common Stock purchased upon such exercise. If a registration statement registering the issuance of the shares of Common Stock underlying the warrants under the Securities Act is not effective or available and an exemption from registration under the Securities Act is not available for the issuance of such shares, the holder may, in its sole discretion, elect to exercise the Warrant through a cashless exercise, in which case the holder would receive upon such exercise the net number of shares of Common Stock determined according to the formula set forth in the Warrant.

A holder of Warrants will not have the right to exercise any portion of the Warrant if such exercise would result in the holder (together with its affiliates) beneficially owning in excess of 4.99% of the number of shares of Common Stock outstanding immediately after giving effect to the exercise, unless the holder provides at least 61 days' prior notice to the company. In no event may the Warrant holder's ownership exceed 9.99%

At-the-Market Issuance Sales Agreement

Possible Issuance of Additional Common Stock under Share Exchange Agreement

Rochon Capital Partners, Ltd. ("Rochon Capital") is controlled by John P. Rochon and beneficially owns approximately 40% of the Company's outstanding common stock.

Under a certain Share Exchange Agreement with Rochon Capital, which was amended during the fourth quarter of 2014 (the "Amended Share Exchange Agreement") Rochon Capital has rights to be issued the 25,240,676 shares of our common stock (the "Second Tranche Parent Stock") upon the public announcement that a person or group of affiliated or associated persons has become an Acquiring Person (as defined below), or upon the commencement or announcement of a tender or exchange offer which would result in any person or group becoming an Acquiring Person. In such event, the Second Tranche Parent Stock will be issued to Rochon Capital, or a Permitted Transferee to whom the right has been transferred, within ten ( 10 ) days of its written request, which request shall be in its sole discretion. A person or group of affiliated or associated persons becomes an "Acquiring Person," thus triggering the issuance of the Second Tranche Parent Stock to Rochon Capital, or a Permitted Transferee to whom the right has been transferred, upon acquiring, subsequent to the date of the Amended Share Exchange Agreement, beneficial ownership of 15% or more of the shares of our common stock then outstanding. The term "Acquiring Person" shall not include (1) any person who acquires 15% or more of our shares of common stock in a transaction approved by John P. Rochon, (2) any affiliates of John P. Rochon or (3) any family members of John P. Rochon.

These shares were considered issued and outstanding for purposes of earnings per share computations until the amendment in the fourth quarter of 2014 . The Company has presented pro forma earnings per share for the year ended December 31, 2014 which has the Second Tranche Parent Stock removed from the issued and outstanding shares. This pro forma earnings per share reflects comparable common shares issued and outstanding for the year ended December 31, 2015 .

Other Outstanding Warrants

On May 6, 2014, the Company issued warrants to purchase up to 12,500 and 6,250 shares of its Common Stock in connection with exclusivity agreements. The warrants were exercisable commencing 75 days after their date of issuance, in whole or in part, until one year from the date of issuance for cash and/or on a cashless exercise basis at an exercise price of $11.00 per share, representing the average closing price of our common stock for the ten days preceding the issuance. The fair value of the warrants on the date of issuance approximated $116,000 . The warrants expired in May 2015 and were not exercised.

On July 2, 2014, the Company issued a warrant exercisable for 50,000 shares of our common stock at an exercise price of $12.80 per share in consideration of a two -year consulting agreement with an individual with direct selling industry experience. The warrant is exercisable for a ten day period commencing 720 days after issuance. In addition, the warrant provides for piggyback registration rights upon request, in certain cases. The exercise price and number of shares issuable upon exercise of the warrants was subject to adjustment in the event of a stock dividend or our recapitalization, reorganization, merger or consolidation. On July 30, 2015 we executed an extension on the consulting agreement through July of 2017 in exchange for cancellation of the original warrant for 50,000 shares and the issuance of a new warrant exercisable for 50,000 shares of our common stock at an exercise price of $1.16 per share. The new warrant is also exercisable for a ten day period commencing 720 days after issuance. An expense of $7,000 has been recognized for the year ended December 31, 2015 .

On July 30, 2015, the Company entered into separate consulting agreements with two individuals pursuant to which each will provide certain business and financial advisory services to the Company. See Note (14) , Share-based Compensation Plans, for the details on the warrants.

Accumulated Other Comprehensive Income

Accumulated other comprehensive loss ("AOCI") is comprised of the following (in thousands):



	Foreign Currency Translation			Unrealized Gain (Loss) on Available-for- Sale Securities			Total Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2013	$	(131	)	$	(636	)	$	(767	)
Other comprehensive income (loss) before reclassifications	275			(15		)	260
Amounts reclassified from accumulated other comprehensive income	—			844			844
Transactions with noncontrolling interests	(16		)	—			(16		)
Balance at December 31, 2014	128			193			321
Other comprehensive income (loss) before reclassifications	(706		)	—			(706		)
Amounts reclassified from accumulated other comprehensive income	—			(199		)	(199		)
Transactions with noncontrolling interests	(2		)	—			(2		)
Net other comprehensive income (loss) at December 31, 2015	$	(580	)	$	(6	)	$	(586	)



	Amounts reclassified from AOCI
Components of AOCI	December 31, 2015		December 31, 2014
Realized gain (loss) on sale of marketable securities	$	199	$	(844	)
Income tax (expense) benefit	—		—
Net of income taxes	$	199	$	(844	)

(16) Loss Per Share Attributable to JRJR

In calculating loss per share, there were no adjustments to net loss for any periods presented. Shares underlying the outstanding warrants, outstanding options, convertible notes and shares potentially issuable to Rochon Capital in the event of an announced tender or exchange offer, were excluded from the fully diluted loss per share because their inclusion in the loss per share computations would be anti-dilutive.

The excluded instruments are summarized as follows (additional shares subject to issuance):



	2015	2014
Stock options	1,100,000	—
Warrants	50,000	50,000
Warrants issued in public offering	6,946,875	—
Convertible notes	375,000	—
Shares potentially issuable to Rochon Capital ⁽¹⁾	25,240,676	25,240,676
Total	33,712,551	25,290,676

⁽¹⁾ As discussed in Note (1), these shares were included in the December 31, 2014 weighted average shares outstanding number up to December 1, 2014.

(17) Segment Information

JRJR operates five operating segments, three of which are reportable segments, as a direct selling company that sells a wide range of products sold primarily by independent sales force across many countries around the world. For the years ended December 31, 2015 and December 31, 2014 , respectively, approximately $98.2 million or 71.0% and $45.1 million or 41.4% of our revenues were generated in international markets. As of December 31, 2015 and December 31, 2014 , respectively, approximately $12.3 million or 29.5% and $1.5 million or 4.1% of our long-lived assets were located in international markets. As of December 31, 2015 and December 31, 2014 , the carrying values of total assets by geographic area are shown in the table below (in thousands):



	2015		2014
United States	$	44,837	$	48,650
United Kingdom	28,740		50
Europe	6,292		1,846
Australia and New Zealand	1,968		5,680
Other countries	667		1,081
Consolidated total assets	$	82,504	$	57,307

We have grouped our products into the following five operating segments: gourmet food, nutritional and wellness, home décor, publishing and printing, and other. Of these five operating segments, gourmet food, home décor, nutritional and wellness qualify as reportable segments in line with the specifications established in ASC 280-10-50.

We have identified three reportable segments as each segment engages in business activities, incurring expenses and producing revenues. The operating results of these segments are regularly reviewed by chief decision makers and there is discrete financial information available for each unit. Also, the reported revenue of each reportable segment, both external and intercompany, is 10% or more of the combined revenue of all of the operating segments. In prior periods we had identified and presented one reportable segment, with revenue broken down into five categories within our segment discussion. However, with the addition of Kleeneze, the continued growth of Your Inspiration at Home and anticipated future growth, both organically and through acquisitions, we now view the Company as having five operating segments, three of which are reportable segments as discussed above. As revenues have concentrated within these three reportable segments, our chief operating decision makers ("CODM") now view these segments as appropriate for decision making purposes because they each represent a significant part of our business. The following is a brief description of our three reportable segments.

such as in Australia, New Zealand, Canada, and the United Kingdom. The JRJR subsidiaries involved in this line of business are Your Inspiration at Home and My Secret Kitchen.

Nutritionals and Wellness - Segment consists of operations related to the selling of nutritional supplements and skin care products. These operations have a presence in many foreign markets and over 50 countries such as Italy, Russia, Spain, and Thailand. The JRJR subsidiary primarily involved in this type of products is Agel.

We note that these three segments exceed 75.0% of the Company's consolidated revenue. Therefore, no further aggregation or disclosures are required for the remaining operating segments.

Segment information, which includes all operating segments, for the years ended December 31, 2015 and December 31, 2014 are shown in the tables below (in thousands):



	Gourmet Food		Home Décor		Nutritionals and Wellness		Publishing and Printing		Other		Consolidated
2015
Revenue	$	18,243	$	88,047	$	30,629	$	977	$	456	$	138,352
Gross profit	7,467		39,333		24,086		634		276		71,796
Operating expenses											91,552
Gain on marketable securities											(189		)
Gain on acquisition											(3,625		)
Interest expense											2,588
Loss from operations before income tax provision											$	(18,530	)

2014
Revenue	$	8,554	$	59,810	$	38,337	$	1,265	$	845	$	108,811
Gross profit	3,863		16,382		31,712		813		516		53,286
Operating expenses											73,420
Loss on marketable securities											845
Gain on acquisition											—
Interest expense											1,857
Loss from operations before income tax provision											$	(22,836	)

The following table shows the total assets for each reportable segment as of December 31, 2015 and 2014 , which have been reconciled to the consolidated total assets (dollars in thousands):



	2015		2014
Gourmet food	$	197	$	1,142
Home décor	60,895		28,184
Nutritionals and wellness	7,092		11,693
All other segments	14,320		16,288
Consolidated total assets	$	82,504	$	57,307

The following table summarizes goodwill for each reportable segment that is included in the asset amounts shown above (dollars in thousands):



	2015		2014
Gourmet food	$	1,161	$	1,294
Home décor	2,137		481
Nutritionals and wellness	1,938		1,938
All other segments	191		382
Consolidated goodwill	$	5,427	$	4,095

(18) Subsequent Events

The company changed its name to JRjr33, Inc. on March 7, 2016 and began doing business as JRjr33, Inc., using the stock symbol JRJR in January 2016.

The Company has made the decision to dispose of its facility in Newark, Ohio and, starting in the second quarter of 2016 has begun to relocate staff from that building to another Company facility. At this time, we are not able to assess our ability to sell the facility or what the sales price might be. Ultimately, any sale would require the consent of any lien holders prior to closing. We believe that there are a number of benefits to this move both in terms of cost savings as well as efficiency in centrally locating all of our Ohio personnel.

On February 19, 2016, certain executive officers of the Company were granted options to purchase a total of 120,000 shares of common stock at an exercise price of $1.04 per share, vesting on the one year anniversary of the date of grant.

On March 25, 2016, certain executive officers of the Company were granted options to purchase a total of 480,000 shares of common stock at an exercise price of $1.12 per share, vesting as to 25% of the grant on the two , three , four and five year anniversary of the grant. The options will be forfeited and null and void if an increase in the number of shares available for grant under the Company's 2015 Stock Incentive Plan is not approved at the Company's 2016 Annual Meeting of Shareholders.

In connection with the delay in the filing of its Annual Report on Form 10-K for the year ended December 31, 2015 with the Securities and Exchange Commission (the “SEC”) described below, JRjr33, Inc. obtained from the holder (the “Holder”) of its 9.75% senior secured convertible note issued on November 20, 2015 (the “Note”) an irrevocable waiver dated April 15, 2016 (the “Waiver”) that the Company’s failure to timely file the Form 10-K with the SEC would not constitute an event of default under the Note, and that any further notice to the Holder under the Note in respect of the same would not be required, with such waiver to be effective until April 25, 2016 (the “Waiver Period”) unless extended. The Holder agreed to extend the Waiver Period beyond April 25, 2016 for successive periods, each consisting of ten (10) business days, until the date the Form 10-K is filed with the SEC, provided that the Company issues to the Holder 50,000 shares of the Company’s common stock for each extension period required beyond April 25, 2016 (without regard to whether the Company requires the full ten (10) business day period for any given extension).

On April 14, 2016, the Company notified the NYSE MKT LLC (the “NYSE”) that it did not expect to timely file its Form 10-K with the SEC. On April 19, 2016, the Company issued a press release announcing that it received a letter from the NYSE on April 15, 2016 notifying the Company that it is not in compliance with Section 802.01E of the NYSE Listed Company Manual as a result of its failure to timely file its Form 10-K with the SEC. The Company submitted a plan to the NYSE on May 16, 2016 advising of actions it has taken or will take to regain compliance with the continued listed standards by October 17, 2016. The Company has regained compliance with the NYSE by filing the Form 10-K by the NYSE’s compliance deadline. The letter from the NYSE also notes that the NYSE may nevertheless commence delisting proceedings at any time if it deems that the circumstances warrant such proceedings.

On May 23, 2016, the Company received a letter from the NYSE notifying the Company that it is not in compliance with Section 802.01E of the NYSE Listed Company Manual as a result of its failure to timely file its Form 10-Q with the SEC.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

Not applicable.

Item 9A. Controls and Procedures

The term “disclosure controls and procedures” is defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. This term refers to the controls and procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files under the Exchange Act is recorded, processed, summarized and reported within required time periods, including controls and disclosures designed to ensure that this information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. Our Chief Executive Officer and our Chief Financial Officer have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this period covered by this Annual Report on Form 10-K, and they have concluded that based upon such evaluation, our disclosure controls and procedures were not effective because of the material weaknesses in our internal controls over financial reporting described below.

Management’s Annual Report on Internal Control over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control over financial reporting is defined in in Rules 13a-15(f) and 15d-15(f) of the Exchange Act as 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 in the United States.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2015 based on the framework in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission 2013 (COSO). A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company's annual or interim financial statements will not be prevented or detected on a timely basis.

Management has identified material weaknesses in the internal control over financial reporting relating to the following:


•	Overall Control Environment

The Company has not maintained an effective control environment to provide reasonable assurance regarding achievement of relating to operations, reporting and compliance. The Company has not complied with the requirement of the 2013 COSO Framework.


•	Sufficient Accounting Personnel

The Company has not maintained sufficient accounting personnel with the appropriate level of knowledge, experience and training commensurate with maintaining an effective control environment to meet the financial reporting requirements of a publicly traded company with international operations. The result of the lack of sufficient accounting personnel has led to the following issues related to internal control over financial reporting:


◦	Management estimates were not performed with the structure and rigor necessary to result in quality estimate that need for fairly presented financial information.


◦	Management missed a required Form 8-K/A filing requirement related to the acquisition of Kleeneze. Subsequently, the filing was made 8 months later.


◦	Management has made significant adjustments for material errors resulting from the review of the quarterly financial statements.


◦	Management has made significant adjustments for material errors resulting from the audit of the annual financial statements.


◦	Management has made significant disclosure remediation and adjustments to the financial statements resulting from the quarterly review and annual audits.


◦	The Company has incurred substantial delays in completing its audit.


◦	The Company has incurred breaches to covenants to its debt agreements due to the delays in missing its filing requirements.


•	Consolidation Process

The Company does not have an effective controls to ensure the consolidation of all its subsidiaries is performed correctly. The consolidation is performed and reviewed by one employee. There are no controls to ensure all financial data of the

subsidiaries are being compiled correctly, no review to ensure the employee is consolidating correctly and no controls to ensure all accounts being appropriately converted and consolidated in the financial statements.


•	Account Reconciliation

The Company did not maintain effective controls over the reconciliation of many of its accounts and the timely preparation and review of the financial statements or information. The has resulted in a significant amount of reconciliations being performed as part of the audit process. These reconciliations have resulted in significant audit adjustments. Additionally, there is no formal review and approval of reconciliations performed by the accounting personnel.


•	Deferred Revenue and Revenue

The Company did not maintain control over its recording of deferred revenue and revenue in its sales process. This has resulted in significant adjustments to the financial statements.


•	Inventory Management

Certain companies within the Company accepts its inventory upon the shipment of products (FOB Shipping Point). However, the Company does not account for the receipt of inventory until it has been received. Accordingly, the Company does not maintain appropriate controls around its inventory management system.


•	Journal Entry Support

The Company did not maintain effective controls over the approval, recording and retention of journal entries and their supporting detail. The Company did not maintain effective monitoring controls to ensure that journal entries were being properly prepared with sufficient supporting documentation or were reviewed and approved to ensure accuracy and completeness of the journal entries.


•	Complex Accounting Issues

The Company did not design an effective control environment to address complex accounting issues. The lack of qualified accounting personnel led to deficiencies in identifying complex accounting issues and resulting in material adjustments to the financial statement in both the quarterly and year-end filings.


•	Segregation of Duties

The Company has not maintained appropriate segregation of duties throughout the internal control over financial reporting process. The Company has numerous instances where review an approval is performed by the same employee negating any monitoring or approval controls.


•	IT System Conversion Controls

The Company did not develop a process to appropriately control the ERP system conversion at one of its subsidiaries.


•	IT Control Environment

The Company does not maintain the appropriate level of controls over the ability to access its ERP systems. The lack of control could result in the in inappropriate approval of journal entries, inappropriate approval of expenditures, and inappropriate access to the general ledger.

Management’s Remediation Initiatives

Management emphasizes that our stated growth strategy is to acquire companies. In some cases, the companies we acquire may not have invested in adequate systems or staffing to meet public company financial reporting standards. We review the financial reporting and other systems that each company has and, in many cases, especially in the case of private companies, the financial systems that are in place may not be as robust as needed. In addition, the rapid pace of our acquisitions means we have acquired companies that currently operate on a variety of systems, which makes standardization more difficult. Because of this, we purchased and plan the implementation of a a common enterprise resource planning system across all our companies. We believe this will allow for a common set of processes and controls to enable accurate financial information, easier comparison across companies and quicker consolidations. The transition for the first company to the new platform took place during 2015.

In addition, our objective is to centralize accounting and treasury, rather than having such activities performed at each subsidiary. This will provide a current and long-term benefit of having the required internal controls performed in a centralized controlled location, so that review and remediation can occur quickly. We continued to make progress in this area in 2015. For example, all proposed purchases or disbursements are now submitted to, reviewed and approved by headquarters personnel prior to disbursement

occurring. This effort means that we must continue to hire sufficient accounting personnel to properly process and control transactions and timely prepare our financial statements.

Finally, we seek to build out a more traditional financial and accounting hierarchy which will be key to the centralization and streamlining of accounting and treasury functions. Having a strong Chief Financial Officer will be key to this initiative. We believe we have found that strong leader with the recent hiring of Chris Brooks. Utilizing his network, he has brought in numerous individuals that have further strengthened our financial and accounting department. We expect to continue to build a strong foundation in this area that when combined with the other initiatives, should result in a robust control environment in financial reporting, a financial reporting process that is capable of providing management with timely and accurate information and in-turn be able to comply timely with SEC filing requirements.

Limitations of the Effectiveness

Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect that our disclosure controls or internal controls over financial reporting will prevent all errors or all instances of fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and any design may not succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. Because of the inherent limitation of a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

This Annual Report on Form 10-K does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to rules of the Securities Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.

Changes in Internal Controls over Financial Reporting

No other changes in our internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) occurred during our quarter ended December 31, 2015 that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

PART III.

Item 10. Directors, Executive Officers and Corporate Governance

Our business and affairs are organized under the direction of our Board, which currently consists of ten members. The primary responsibilities of our board are to provide oversight, strategic guidance, counseling and direction to our management. Our Board meets on a regular basis and additionally as necessary.

The following table sets forth the name, age and position of each of our directors and executive officers:



Name	Age	Current Title & Position	Served as an Officer or Director Since
John P. Rochon	64	Chief Executive Officer, President and Chairman of the Board	2012
John Rochon, Jr.	39	Vice Chairman, former Chief Financial Officer, former Treasurer and Director	2012
Christopher L. Brooks	49	Chief Financial Officer	2016
Russell R. Mack	64	Executive Vice President and Director	2012
Matt J. Howe	27	Chief Investment Officer	2015
Julie Rasmussen	51	Director	2013
Michael Bishop	67	Director	2012
William H. Randall (1)(2)	70	Director	2012
Kay Bailey Hutchison (3)	72	Director	2014
Bernard Ivaldi (1)	67	Director	2014
Roy G.C. Damary (2)(3)	72	Director	2014
John W. Bickel (1)(2)(3)	67	Director	2014



		(1) Audit Committee
		(2) Compensation Committee
		(3) Nominating Committee

Our directors and officers serve until their successor is elected and qualified, or until their earlier resignation or removal.

The business experience for the past five years (and in some instances for prior years) of each of our executive officers and directors is as follows:

John P. Rochon, Chief Executive Officer, President and Chairman of the Board

John P. Rochon has had four decades of wide-ranging success in finance, operations, business planning, sales, brand-building and marketing. He is an accomplished investor and business strategist. By the time he was 40 years old, Mr. Rochon was chairman and CEO of a Fortune 500 global consumer goods company, serving in that role for nearly a decade. Mr. Rochon is founder and chairman of Richmont Holdings, a private investment and business holding company based in Dallas, Texas. His career has included hundreds of business transactions across multiple industries. His team has achieved an impressive investment track record in its category over three decades. Richmont uses its own patented diagnostic system to build the top line of a company. Mr. Rochon was the leader in bringing the power of the Internet to consumer sales. With Mr. Rochon as its General Partner, Richmont Capital Partners led an investment group that became the largest shareholder in, and appointed two members to the Board of Directors of, Avon Products Inc., which subsequently experienced tremendous growth. From 1989-1992, Mr. Rochon and his team created a detailed strategy for Avon to grow, including recommendations (many of which were adopted by Avon) relating to revitalizing the corporate entrepreneurial culture through a re-focus on the needs of the sales force; enhancing career opportunities for the sales force; improved training for the sales force; more effective internal communication; improving product delivery and product rationalization; strengthening price/quality equity; enhanced long range planning to increase repeat purchases and reduce sales force turnover; and tying management compensation more closely to shareholder returns. During the 1987-1997 period, Avon’s revenue increased by 100% from $2.5 billion to $5 billion, earnings per share increased by 43% and market cap increased from

approximately $1.5 billion at the beginning of 1987 to approximately $8.0 billion at the end of 1997. Neither John Rochon nor Richmont Capital Partners I or II currently has an equity interest in Avon Products, Inc.

As chairman and CEO of Mary Kay Inc., he led that company to global growth and pioneered the use of Internet technology in the micro-enterprise/direct selling sector. He also managed the growth of a portfolio of Richmont companies, in financial services, marketing, international trading, food services and other sectors. Major investments included Armor Holdings, Royal Appliance/Dirt Devil, The Dial Corp., Harvey’s Casinos, Black and Decker, RealPage Inc. and Maybelline. Mr. Rochon also served as a director of Younegvity International, Inc. In addition to JRJR, Mr. Rochon’s companies today include a nationwide network of supplies and services to businesses and a line of gourmet products. He has founded several investment funds, including a hedge fund, a fund of funds and a debt investment fund. Mr. Rochon holds a Bachelor of Science and a Master of Business Administration from the University of Toronto and began his career as a chemist before moving on to management positions in manufacturing, operations, marketing and finance. We selected Mr. Rochon to serve on our Board due to his substantial experience in finance, operations, business planning, and his years of leadership in the direct selling industry.

John Rochon, Jr., Vice Chairman, former Chief Financial Officer, former Treasurer and Director

John Rochon, Jr. became a director on December 3, 2012, our Vice Chairman on May 1, 2014, and served as our Chief Financial Officer from March 16, 2015 until March 24, 2016. He also became the Chief Executive Officer of TLC on May 27, 2015. Since 2006, he has served as the Vice Chairman and CEO of Richmont Holdings. He has expertise in capital markets and is experienced in financial analysis, mergers and acquisitions, technology and the review, structuring and management of new business opportunities. After receiving his degree in Business Administration from Southern Methodist University, he worked at JP Morgan Chase in New York before returning to Dallas, where for more than a decade he has run the Rochon’s family office. He now oversees Richmont Holdings’ financial analysis of potential business transactions and plays a leading role in guiding strategic planning for Richmont Holdings. We selected Mr. Rochon to serve on our Board due to his experience in financial analysis, mergers and acquisitions, technology and structuring and management of new business opportunities. Mr. Rochon is the son of John P. Rochon, our Chairman and CEO.

Christopher L. Brooks, Chief Financial Officer

Mr. Brooks was appointed as our Chief Financial Officer on March 24, 2016. From January 2014 until September 2015, Mr. Brooks served as the Vice President and Corporate Controller of Transplace, a logistics provider. From March 2013 until January 2014, he served as the Corporate Controller of Heartland Automotive Services, Inc., an operator of 600 franchised Jiffy Lube locations. From 2011 until 2013, he served as a consultant to various companies and from September 2008 until September 2010, he served as the Chief Financial Officer of ASSA Abloy Hospitality. Mr. Brooks is a certified public accountant and has an MBA focused on Information Systems & Finance from the University of Houston and a BBA in accounting from the University of Texas at Austin.

Russell Mack, Executive Vice President and Director

Russell R. Mack was appointed as our Executive Vice President on November 20, 2012, and as a director effective December 3, 2012. Mr. Mack has been the Executive Vice President and Chief Marketing Officer at Richmont Holdings for more than 15 years. Mr. Mack is a former member of President Ronald Reagan’s White House staff and possesses 40 years of experience in the field of communications and marketing. He has served as a senior executive in companies such as Mary Kay Inc., American Airlines, and United Airlines and as a legislative assistant and press secretary in the U.S. Senate and the U.S. House of Representatives. His career also included positions in the U.S. Department of Health and Human Services, the U.S. Department of Education and Temerlin McClain Advertising. He received a Juris Doctor degree from George Washington University Law School and a Bachelor of Arts from American University. We selected Mr. Mack to serve on our Board due to his experience in the field of communications and marketing. Russell R. Mack is the father of Ryan Mack, our Deputy Chief Financial Officer from March 15, 2015 until April 1, 2016.

Matt J. Howe, Chief Investment Officer

Matt Howe was appointed as Chief Investment Officer of the Company on March 16, 2015. Since 2012, Mr. Howe has been serving as Managing Director and Co-Head of Investments at Richmont, helping to manage Richmont’s acquisition strategy and helping the financial analysis team at both Richmont and the Company. Prior to joining Richmont in 2012, he served as an analyst in the investment banking division of JP Morgan. He holds a bachelor’s degree in Business Administration - Finance (summa cum laude) from Texas A&M University.

Julie Rasmussen, Director

Julie Rasmussen became a director on February 8, 2013 and our Chief Operating Officer in July, 2014. During the past five years, she has been the majority owner of Hertz Russia and CEO of Dagmar Associates, a consulting and real estate holding company. From 1992 to 2002, she worked at Mary Kay Cosmetics, serving as the President of Mary Kay Europe and prior thereto as the President of Mary Kay Russia. She has advised companies on doing business in Russia, including RJR Nabisco, Kodak, Johnson & Johnson and Chevron, and has served on the board of the American Chamber of Commerce in Russia as well as president of the Russian Federation of Direct Selling Companies. She has received numerous awards and honors for her international business achievements. She received her Bachelor of Arts from the University of Virginia and her Master of International Affairs from Columbia University, where she was editor of the Journal of International Affairs. We selected Ms. Rasmussen to serve on our Board due to her prior experience with direct selling companies.

Michael Bishop, Director

Michael Bishop became a director on December 3, 2012. Since 2011, he has served as the President of Actiprime, a personal care and healthy lifestyle product development and marketing company and president of ActiTech, L.P. a full service third party manufacturer of items such as creams, hair products, OTC drugs, certified NOP Organic food and personal care products, energizing and relaxing drinks and owner of a decontamination process for herbs and other products. ActiTech owns a state-of-the-art, 600,000 square foot manufacturing and warehouse facility, serving customers such as Unilever, TIGI and Estee Lauder. He co-founded Actifirm, a marketer of anti-aging skin care sold in physicians’ offices and medi-spas. He founded Active Organics, a leading natural ingredient supplier to the personal care industry, serving as president from 1981 to 2011 before the company was sold to Berkshire Hathaway’s Lubrizol Corporation. A chemist holding nine patents, he held development roles with Max Factor, Redken Laboratories, Life Laboratories and Rachel Perry cosmetics. He received his Bachelor of Science and Bachelor of Arts degrees from the University of California at Irvine. We selected Mr. Bishop to serve on our Board due to his manufacturing and product development experience.

William H. Randall, Director

William Randall became a director on December 3, 2012. He currently serves as the lead director and is the Chairman of the Audit Committee and Chairman of the Compensation Committee. He is a 35-year veteran of the direct selling industry who has served in sales, marketing and other senior executive positions in companies such as Mary Kay Inc., BeautiControl Cosmetics and start-up enterprises funded by Sur la Table and Ross Simons. He is a past board member of the Direct Selling Association and is founder and chairman of Hatch Holdings LLC which, since 1990, has provided strategic planning and tactical support to senior management of direct selling companies. He received his Master of Business Administration from Harvard Business School. We selected Mr. Randall to serve on our Board due to his prior direct selling experience.

The Honorable Kay Bailey Hutchison, Director

The Honorable Kay Bailey Hutchison became a director on February 18, 2014. Senator Hutchison served for two decades as a U.S. Senator from Texas, from 1993 to 2013. She is the only woman ever elected to represent the state in the U.S. Senate. She served on the Appropriations Committee and was ranking Republican on the Commerce, Science and Transportation Committee. Before being elected to the Senate, she served in the Texas House of Representatives from 1972 to 1976 and served on the National Transportation Safety Board from 1976 to 1978. After holding positions as a bank executive and general counsel, and as a small business owner, she served as Texas State Treasurer from 1990 to 1993. Since 2013, Ms. Hutchison has been a member of the Board of Directors of Cobalt International Energy, Inc. (NYSE:CIE). She holds a degree from the University of Texas at Austin and a law degree from the School of Law at the University of Texas. We selected Ms. Hutchison to serve on our Board due to her strong understanding of corporate governance.

Bernard Ivaldi, Director

Bernard Ivaldi became a director on July 9, 2014. He currently serves as a member of the board of directors of two subsidiaries of JRJR. For the past twenty years, he has been consulting extensively with multinational companies and educational institutions in Europe, USA, South America and Australia. Since 2002, he has been the Managing Director of BI Conseil & Associates, a consulting company that he owns based in Vaud, Switzerland. From 1997 to 2002, he served as the CEO of Neuromedia SA of Liege, Belgium. Prior thereto, he served as an administrator at Lalive & Partners, Attorneys at Law, Geneva, a Director of Webster University, Geneva, Switzerland and a Director General of The International School of Geneva. Bernard Ivaldi has obtained diplomas from American and French Universities including a Ph.D. (doctorate 1983) from Columbia Pacific University, Ph.D. (ABD) New York University. He was a Doctoral Fellow in Bilingual Education at New-York University N.Y. (1977). He was

awarded a Maîtrise de Linguistique Générale (Honors), University of Nice, France (1971). He has been a Member of la Conférence de l’Instruction Publique du Département de l’Instruction Publique, Genève. Bernard Ivaldi is former Chairman of the International Schools Association and currently a board member. ISA is an international NGO with consultative status to UNESCO and ECOSOC. He is currently Vice-Président du Conseil de Fondation de l’Institut Supérieur des Affaires et du Management (INSAM), Geneva. We selected Mr. Ivaldi to serve on our Board due to his knowledge of Swiss and French corporate laws and his experience in the field of administration, management of finances and of personnel, and in-service training.

Roy G.C. Damary, Director

Roy G.C. Damary became a director on July 9, 2014. Mr. Damary currently serves as a member of the board of directors of two subsidiaries of JRJR. He is the President of the INSAM Foundation in Geneva, Head of Business Studies at Robert Kennedy College (RKC), Switzerland, where he has taught for the last 13 years, and Honorary Professor at the Ural State Forest Engineering University, Ekaterinburg (Russia). He owns, and since 1994 has provided consulting services through, Technomic Consultants SA, which provided industrial marketing consultancy services for nearly 25 years before its reorientation to management services for foreign-owned Swiss companies. From 1998 through 2013, Mr. Damary also individually provided services to Bridport and Co., a financial services company in Switzerland, as an outside consultant. He began his professional career in 1966 as a research engineer and later as a techno-economic specialist at the Battelle Institue in Geneva, Switzerland. He holds an M.A. in Engineering Science with First Class Honours from Oxford University (1966), an M.B.A. with High Distinction (Baker Scholar) from Harvard Business School (1974) and a Ph.D. from Lausanne University (2000). We selected Mr. Damary to serve on our Board due to his international management prior experience as well as his knowledge of Swiss corporate law and practice and his international experience as a marketing consultant.

John W. Bickel, Director

Mr. Bickel became a director on September 16, 2014. Mr. Bickel co-founded the Dallas and New York-based national law firm Bickel & Brewer, where he served as an equity partner for over 30 years, withdrawing only recently from the firm to pursue other interests. He currently heads the firm of Bickel PLLC. Mr. Bickel received his Bachelor of Science degree from the United States Military Academy at West Point, New York in 1970, received infantry and parachute training, and served three years as an officer in an infantry battalion and aide-de-camp to a general officer of the United States Army. Mr. Bickel received his law degree from Southern Methodist University Dedman School of Law in 1976. Following law school, Mr. Bickel completed his West Point obligation as a trial attorney in the Judge Advocate General’s Corps, in three years trying to verdict over 80 jury cases while serving on separate occasions as Chief Trial Counsel and Chief Defense Counsel at Ft. Lewis, Washington. As a business litigator, Mr. Bickel was selected by his peers as a Top 100 Lawyer in the State of Texas. Mr. Bickel has been a member of the Executive Committee of the Southern Methodist University Dedman School of Law and has served terms as a trustee of the West Point Association of Graduates. Mr. Bickel is a Fellow of both the American Bar Foundation and the Texas Bar Foundation, a Sustaining Life Fellow in the Dallas Bar Foundation, a member of the Citizens for a Qualified Judiciary, an alumni member of the former Markey-Wigmore Chapter of the Inns of Court, and is licensed to practice in both Texas and New York. We selected Mr. Bickel to serve on our Board because of his decades of accomplishment, experience, and good judgment as a preeminent commercial litigation attorney; his broad and deep experience in corporate law, governance, and dispute resolution; and his analytical skills and leadership abilities.

Leadership Structure

Our Chief Executive Officer also serves as our Chairman of the Board. In March 2016, our Board appointed William Randall to serve as our lead independent director. Although we do not have a formal policy addressing this topic, we believe that when the Chairman is not independent, it is important to have a separate lead director, who is an independent director. We believe that the combination of Mr. John P. Rochon as our Chairman of the Board and Mr. William Randall as our lead director is an effective structure for our company. The division of duties and the additional avenues of communication between the Board and our management associated with this structure provides the basis for the proper functioning of our Board and its oversight of management.

Director Independence

We have determined that as of December 31, 2015 William Randall, Kay Bailey Hutchison, Bernard Ivaldi, Roy Damary and John W. Bickel are “independent” directors under the definition set forth in the listing standards of the NYSE MKT. We qualify as a "smaller reporting company" and as such we qualify for certain exemptions to the NYSE MKT listing requirements, including the requirement that a majority of our directors be independent. Currently we have an equal number of independent and non-independent directors.

Audit Committee

The Audit Committee of our Board is currently composed of three directors, each of whom satisfy the independence and other standards for Audit Committee members under the rules of the NYSE MKT. The Audit Committee is composed of Mr. Randall, Mr. Ivaldi and Mr. Bickel and we have determined that Mr. Randall is a “Financial Expert,” as that term is defined under Section 407 of Regulation S-K.

The Audit Committee operates under a written Audit Committee Charter, which is available to shareholders on our website at http://jrjrnetworks.com/Charters.

Compensation Committee

The Compensation Committee of our Board currently consists of Mr. Randall, Mr. Damary and Mr. Bickel.

The Compensation Committee operates under a written Compensation Committee Charter, which is available to shareholders on our website at http://jrjrnetworks.com/Charters.

Nominating and Corporate Governance Committee

The Nominating and Corporate Governance Committee of our Board currently consists of Senator Hutchison, Mr. Bickel and Mr. Damary.

The Nominating and Corporate Governance Committee operates under a written Nominating and Corporate Governance Committee Charter, which is available to shareholders on our website at http://jrjrnetworks.com/Charters.

Family Relationships

Paula Mackarey, the President, Publisher and a member of the Board of Directors of HCG, is the sister of our Chief Executive Officer, President and Chairman of the Board, Mr. Rochon.

John Rochon Jr. is the son of Mr. Rochon. Heidi Rochon Hafer, our Secretary, is the daughter of Mr. Rochon.

Mr. Ryan Mack, son of our Executive Vice President and Director, Russell Mack, was employed by us from March 16, 2015 until April 1, 2016 as our Deputy Chief Financial Officer.

There are no other family relationships between any of our directors or officers.

Code of Ethics

We adopted a Code of Ethics. Our Code of Ethics obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in conflict-of-interest transactions without our consent. Our Code of Ethics is included in our Investor Relations section of our Internet website, http://www.jrjrnetworks.com.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers, directors and persons who beneficially own more than 10 percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of our common stock. Such officers, directors and persons are required by SEC regulation to furnish us with copies of all Section 16(a) forms that they file with the SEC.

Based solely on a review of the copies of such forms that were received by us, or written representations from certain reporting persons that no Forms 5 were required for those persons, we are not aware of any failures to file reports or report transactions in a timely manner during the year ended December 31, 2015 .

Item 11. Executive Compensation

Summary Compensation Table

The following Summary Compensation Table sets forth information concerning the compensation paid to or earned by:

(1) our principal executive officer;

(2) each of our two most highly compensated executive officers who were serving as executive officers at the end of the fiscal years ended December 31, 2015 and 2014 ; and

(3) up to two additional individuals for whom disclosure would have been provided under (2) but for the fact that the individual was not serving as our executive officer at the end of the fiscal year ended December 31, 2015 , whom we will collectively refer to as the named executive officers of our company, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year.



Name and Principal Position	Year	Salary ($)		Bonus ($)		Stock Awards ($)		Option Awards (5) ($)		Incentive Plan Compensation ($)		Deferred Compensation Earnings ($)		All Other Compensation ($)		Total ($)
John P. Rochon(1)	2015	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Chief Executive Officer, President and Chairman of our Board of Directors	2014	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
John Rochon, Jr.	2015	$	271,250	$	—	$	—	$	—	$	—	$	—	$	—	$	271,250
Vice Chairman, Former Chief Financial Officer and Treasurer(2)	2014	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Russell R. Mack(3)(4)	2015	$	193,043	$	—	$	—	$	—	$	—	$	—	$	13,000	$	206,043
Executive Vice President and Director	2014	$	150,138	$	—	$	—	$	—	$	—	$	—	$	50,000	$	200,138
Matt J. Howe	2015	$	125,295	$	—	$	—	$	43,749	$	—	$	—	$	—	$	169,044
Chief Investment Officer	2014	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Ryan C. Mack	2015	$	125,438					$	43,749							$	169,187
Former Deputy Chief Financial Officer(6)	2014	$	—	$	—	$	—	$	—	$	—	$	—	$	—	$	—
Kelly L. Kittrell(7)	2015	$	45,400	$	—	$	—	$	—	$	—	$	—	$	—	$	45,400
Former Chief Financial Officer, Treasurer and Director	2014	$	200,000	$	—	$	—	$	—	$	—	$	—	$	—	$	200,000




(1)		Mr. Rochon was appointed as our Chief Executive Officer and President immediately after the consummation of the Initial Share Exchange on September 25, 2012. Mr. Rochon currently is not receiving, and has not received, compensation for service as our Chief Executive Officer.
(2)		John Rochon, Jr. resigned as Chief Financial Officer on March 24, 2016.
(3)		Mr. Mack was appointed as our Executive Vice President on November 20, 2012. Mr. Mack began receiving compensation for his services as Executive Vice President in 2013.
(4)		Other compensation for Mr. Mack relates to consulting fees received from a subsidiary. Mr. Mack stopped receiving consulting fees in March 2015.
(5)		Amount reflects the grant date fair value of the named executive officers' stock options, calculated in accordance with FASB ASC Topic 718. For a discussion of the assumptions used in calculating these values, see Note (14) to our Consolidated Financial Statements.The Black-Scholes Option Pricing Model was used to value the option awards at the time of issuance.
(6)		Ryan Mack resigned as Deputy Chief Financial Officer on April 1, 2016.
(7)		Kelly L. Kittrell resigned as Chief Financial Officer, Treasurer and Director on March 16, 2015.

On March 24, 2016, we entered into an employment agreement with Christopher L. Brooks (the “Employment Agreement”), to serve as our Chief Financial Officer. The Employment Agreement provides that Mr. Brooks will be entitled to an annual base salary of $180,000. In addition, Mr. Brooks will be eligible to receive an annual performance bonus of up to twenty five percent (25%) of his base salary, at the discretion of the Board. The annual bonus will be based upon the Board’s assessment of Mr. Brooks’ performance. In the event his employment is terminated for any reason other than Cause, which is defined in the

Employment Agreement as any violation of our policies, gross negligence, willful neglect and fraud, Mr. Brooks is entitled to receive a severance pay equal to two weeks salary plus one additional week’s salary for each full year of service. The Employment Agreement also provides for the issuance of options exercisable for 50,000 shares of our common stock.

Outstanding Equity Awards at Fiscal Year-End (December 31, 2015)

The following table sets forth information regarding option awards and restricted stock awards held as of December 31, 2015 by each of our named executive officers.



	Option Awards					Stock Awards
	Number of Securities Underlying Unexercised Options		Option Exercise Price ($)		Option Expiration Date	Shares or Units of Stock That Have Not Vested
Name and Principal Position	Exercisable (#)	Unexercisable (#)				Number (#)	Market Value ($)
John P. Rochon(1)	—	—	—		—	—	—
Chief Executive Officer, President and Chairman of our Board of Directors
John Rochon, Jr.	—	—	—		—	—	—
Vice Chairman, Former Chief Financial Officer and Treasurer(2)
Russell R. Mack(3)(4)	—	—	—		—	—	—
Executive Vice President and Director
Matt J. Howe	8,334 ⁽¹⁾	41,666	$	1.23	6/23/2020	—	—
Chief Investment Officer
Ryan C. Mack	8,334 ⁽²⁾	41,666	$	1.23	6/23/2020	—	—
Former Deputy Chief Financial Officer
Kelly L. Kittrell(6)	—	—	—		—	—	—
Former Chief Financial Officer, Treasurer and Director

⁽¹⁾ These options were granted to Matt Howe on June 23, 2015 and vest in equal quarterly installments over three (3) years beginning July 1, 2015.
⁽²⁾ These options were granted to Ryan Mack on June 23, 2015 and vest in equal quarterly installments over three (3) years beginning July 1, 2015. Mr. Mack resigned as Deputy Chief Financial Officer on March 16, 2016.

On February 19, 2016, certain executive officers of the Company were granted options to purchase shares of Common Stock as follows: John Rochon, Jr. was granted options to purchase 70,000 shares of Common Stock; Russell Mack was granted options to purchase 40,000 shares of Common Stock; Ryan Mack was granted options to purchase 10,000 shares of Common Stock; and Matt Howe was granted options to purchase 10,000 shares of Common Stock. The stock options granted to the executive officers expire after ten years and have an exercise price of $1.04 per share and vest on the one year anniversary of the date of grant. Mr. Ryan Mack forfeited these options upon his departure from the Company effective April 1, 2016.

On March 25, 2016, certain executive officers of the Company were granted options to purchase shares of Common Stock as follows: John Rochon, Jr. was granted options to purchase 280,000 shares of Common Stock; Russell Mack was granted options to purchase 160,000 shares of Common Stock; and Matt Howe was granted options to purchase 40,000 shares of Common Stock. These stock options granted to the executive officers expire after ten years and have an exercise price of $1.12 per share and vest as to 25% of the grant on the two, three, four and five year anniversary of the date of grant. The options will be forfeited and null and void if an increase in the number of shares available for grant under the Company’s 2015 Stock Incentive Plan is not approved at the Company’s 2016 Annual Meeting of Shareholders.

Aggregated Options Exercises in Last Fiscal Year

No stock options were exercised by any of our officers or directors during the fiscal year ended December 31, 2015 and 2014 or, as of the date of this Annual Report, during the current fiscal year.

Long-Term Incentive Plans and Awards

None of our executive officers are a participant in any long-term incentive plans.

DIRECTOR COMPENSATION

The following table provides information on compensation awarded or paid to the directors listed below for the year ended December 31, 2015.



Name	Fees Earned or Paid in Cash (1)		Stock Awards (2)		All Other Compensation (3)		Total
Michael Bishop	$	—	$	100,000	$	—	$	100,000
William Randall	50,040		49,960		—		100,000
Julie Rasmussen	50,040		49,960		50,040		150,040
Kay Bailey Hutchison	50,016		—		—		50,016
Roy G.C. Damary	50,040		49,960		—		100,000
Bernard Ivaldi	50,040		49,960		—		100,000
John W. Bickel	50,020		49,980		—		100,000


(1)	Represents monthly fees paid for Board service during 2015.


(2)	Amount reflects the issuance date value of the named directors' stock awards, which were based on the current market value of the shares granted in 2016.


(3)	Consulting fees paid to Ms. Ramussen for her operating and international consulting to various JRJR subsidiaries.

During 2015, the compensation of non-employee members of the Board remained at $100,000 per year, of which $50,000 is typically paid in cash (unless a Board member requests a portion of the cash be paid in equity) and the remaining $50,000 is paid in equity. Board members do not receive extra compensation for service on committees. On February 19, 2016, the Board of the Company granted under the 2015 Stock Plan an aggregate of 940,702 shares of common stock to the members of the Board. The number of shares of common stock granted to each member of the Board represents 50% of the annual fees (other than Mr. Bishop, who elected to receive 100% of such fees in shares of common stock) previously earned for service as directors and is based on their term of service. The number of shares issued to the members of the Board were as follows: Michael Bishop was granted 304,268 shares; William Randall was granted 152,134 shares; Julie Rasmussen was granted 143,309 shares; Roy Damary was granted 90,411 shares; Bernard Ivaldi was granted 90,411 shares; and John Bickel was granted 66,254 shares. On March 3, 2016, the Board ("the Board") of Directors appointed William Randall to serve as the Board’s Lead Independent Director. For his service as Lead Independent Director, Mr. Randall received an award of common stock valued at $10,000 (9,616 shares of common stock), which is an additional 20% of the annual equity grant, for services as Lead Independent Director during the upcoming year. On May 12, 2016, Kay Bailey Hutchison rescinded her 93,915 shares granted on February 19, 2016.

Long-Term Incentive Plans and Awards

The 2013 Director Smart Bonus Unit Plan provides for the issuance of a cash bonus tied to stock price appreciation for non-employee directors. The Compensation Committee of the Board of Directors approves all awards that are granted under the plan. During 2013, we awarded a total of 25,000 equivalent stock appreciation rights (“SARs”) among all eligible directors that are remeasured each reporting period and are recognized ratably over the contractual term. During 2014 and 2015, no additional SARs were awarded to eligible directors. We recognized approximately ($12,000) in compensation expense/(income) in 2015 related to this Plan.

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The table below sets forth information as of June 27, 2016 regarding the beneficial ownership of our common stock. Beneficial ownership generally includes voting or investment power with respect to securities. The table reflects ownership by:


•	each person or entity who owns beneficially 5% or greater of the shares of our outstanding common stock;


•	each of our executive officers and directors; and


•	our executive officers and directors as a group.

The percentages below are calculated based on 36,085,324 shares of our common stock being issued and outstanding as of June 27, 2016 . We have determined beneficial ownership in accordance with the rules of the SEC. These rules generally attribute

beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities. The table below does not include certain shares of common stock that may be issued at some time in the future, subject to the terms and conditions of that certain Amended Share Exchange Agreement. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.



Name of Beneficial Owner	Positions	Number of Shares of Common Stock Beneficially Owned or Right to Direct Vote	Percent of Common Stock Beneficially Owned or Right to Direct Vote
Directors and Named Executive Officers
John P. Rochon (1)	Chief Executive Officer, President and Chairman of the Board	14,162,500	39.6	%
John Rochon, Jr. (2)	Vice Chairman, Former Chief Financial Officer and Director	5,763,322	16.1	%
Christopher L. Brooks (3)	Chief Financial Officer	—	*
Julie Rasmussen	Director	145,309	*
Russell Mack	Executive Vice President and Director	150,000	*
Ryan Mack	Former Deputy Chief Financial Officer	—	*
Matt Howe	Chief Investment Officer	100	*
Michael Bishop	Director	304,268	*
Kelly Kittrell	Former Chief Financial Officer and Treasurer and Former Director	150,000	*
William Randall	Director	188,750	*
Kay Bailey Hutchison	Director	5,316	*
Bernard Ivaldi	Director	93,043	*
Roy G.C. Damary	Director	93,043	*
John W. Bickel	Director	68,859	*
All directors and executive officers as a group (14)		21,124,510	59.0	%
5% Shareholders
Rochon Capital Partners, Ltd. (4)		14,162,500	39.6	%
John Rochon Management, Inc. (5)		14,162,500	39.6	%
Richmont Street, LLC (6)		3,200,000	8.9	%
Richmont Capital Partners V LP (7)		3,200,000	8.9	%



		*Less than 1%



(1)		Includes 37,500 shares of common stock issued directly to John Rochon Management, Inc. (“JRMI”) and 12,500,000 shares issued to Rochon Capital. The limited partnership interests of Rochon Capital are owned 79% by Mr. Rochon, 20% by his wife and 1% by the general partner, JRMI. JRMI has control over the voting and disposition of the shares held by Rochon Capital, and as the owner of all of the equity of JRMI, Mr. Rochon has control over the decision making of JRMI. As such, Mr. Rochon may be considered to have control over the voting and disposition of the shares registered in the name of Rochon Capital, and therefore, such shares are also included in the shares listed as held by Mr. Rochon. Also includes an additional 1,625,000 shares of common stock issued to a trust of which Ms. Longaberger is the trustee, which shares are subject to a voting agreement entered into between the trust and Rochon Capital. Excludes an additional 25,240,676 shares of common stock which may be issued in the future upon the occurrence of certain stock acquisitions (the “Second Tranche Stock”) by third parties or the announcement of certain tender or exchange offers of our common stock, pursuant to the Amended Share Exchange Agreement. In the event the Second Tranche Stock is issued to Rochon Capital, Mr. Rochon’s beneficial ownership percentage would increase to 64.7.%. See the section entitled “Certain Relationships and Related Party Transactions.”
(2)		Includes 1,210,760 shares held directly by John Rochon, Jr. and 1,237,500 shares of common stock held by The William John Philip Rochon 2010 Dynasty Trust, of which John Rochon, Jr. is the sole trustee. Includes 3,200,000 shares of common stock issued to Richmont Capital Partners V LP (“RCP V”), which has Richmont Street, LLC as its Managing General Partner, an entity controlled by John Rochon, Jr. Also includes 115,062 shares held by trusts for the benefit of John Rochon, Jr.’s children, of which John Rochon, Jr. is the sole trustee. Does not include options exercisable for 70,000 shares of common stock that vest on February 17, 2017 and options exercisable of 280,000 shares of common stock that vest 25% a year starting on March 23, 2018.
(3)		Does not include options exercisable for of 50,000 shares of common stock that vest 25% a year starting on March 23, 2018.
(4)		Includes 12,500,000 shares of common stock issued directly to Rochon Capital. The limited partnership interests of Rochon Capital are owned 79% by Mr. Rochon, 20% by his wife and 1% by the general partner, JRMI. JRMI has control over the voting and disposition of the shares held by Rochon Capital and as the owner of all of the equity of the JRMI. Mr. Rochon has control over the decision making of JRMI. Inasmuch as Mr. Rochon, Rochon Capital and JRMI may be deemed a group due to certain actions taken by them in connection with the Share Exchange Agreement the beneficial ownership number for Rochon Capital also includes an additional 37,500 shares issued directly to JRMI. Includes an additional 1,625,000 shares of common stock issued to a trust of which Ms. Longaberger is the trustee, which shares are subject to a voting agreement entered into between the trust and Rochon Capital. Excludes an additional 25,240,676 shares of common stock which may be issued in the future upon the occurrence of certain stock acquisitions by third parties or the announcement of certain tender or exchange offers of our common stock pursuant to the Amended Share Exchange Agreement. In the event the Second Tranche Stock is issued to Rochon Capital, Rochon Capital’s beneficial ownership percentage would increase to 64.7%. See the section entitled “Certain Relationships and Related Party Transactions.”
(5)		Includes 37,500 shares of common stock issued directly to JRMI and 12,500,000 shares issued to Rochon Capital. The limited partnership interests of Rochon Capital are owned 79% by Mr. Rochon, 20% by his wife and 1% by the general partner, JRMI. JRMI has control over the voting and disposition of the shares held by Rochon Capital and as the owner of all of the equity of JRMI, Mr. Rochon has control over the decision-making of JRMI. Include an additional 1,625,000 shares of common stock issued to a trust of which Ms. Longaberger is the trustee, which shares are subject to a voting agreement entered into between the trust and Rochon Capital. Excludes an additional 25,240,676 shares of common stock which may be issued in the future upon the occurrence of certain stock acquisitions by third parties or the announcement of certain tender or exchange offers of our common stock pursuant to the Amended Share Exchange Agreement, which became effective on December 1, 2014. In the event the Second Tranche Stock is issued to Rochon Capital, JRMI’s beneficial ownership percentage would increase to 64.7%. See the section entitled “Certain Relationships and Related Party Transactions.”
(6)		Includes 3,200,000 shares of common stock issued to RCP V upon conversion of the RCP V Note on November 26, 2014. Richmont Street is the sole general partner of RCP V and John Rochon Jr. has decision making power with respect to Richmont Street.

Equity Compensation Plan Information

Securities Authorized for Issuance Under Equity Compensation Plans

The following table contains information about our equity compensation plans as of December 31, 2015.



Plan Category	Number of securities to be issued upon exercise of outstanding instruments	Weighted-average exercise price of outstanding instruments		Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))
	(a)	(b)		(c)
Equity compensation plans approved by security holders
Director Stock Bonus Plan	—	—		—
2015 Stock Incentive Plan	1,100,000	$	1.27	400,000
Equity compensation plans not approved by security holders	—	—		—
Total	1,100,000	$	1.27	400,000

Item 13. Certain Relationships and Related Transactions, and Director Independence

Related-Party Transaction Policy

Other than compensation arrangements for named executive officers and directors, which are described in the section entitled “Executive Compensation” we describe below each transaction and series of similar transactions, during our last fiscal year, to which we were a party or will be a party, in which:

• the amounts involved exceeded or will exceed $120,000; and


•	any of our directors, executive officers or holders of more than 5% of our common stock, or any member of the immediate family of the foregoing persons, had or will have a direct or indirect material interest.

On August 24, 2012, we entered into a Share Exchange Agreement with HCG and 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 shares of our common stock received by Rochon Capital totaled approximately 90% of our issued and outstanding stock at the time of issuance. Under the Share Exchange Agreement, Rochon Capital also purchased and has the right to be issued an additional 25,240,676 shares of common stock upon its request, the timing of which is governed by an Amended Share Exchange Agreement which was entered into on October 10, 2014 and became effective on December 1, 2014, which limits Rochon Capital’s right or the right of a Permitted Transferree (as defined below) to be issued the 25,240,676 shares of the Company’s common stock it is currently entitled to receive under the Share Exchange Agreement, as amended (the “Second Tranche Parent Stock”) solely upon the public announcement that a person or group of affiliated or associated persons has become an Acquiring Person (as defined below), or upon the commencement or announcement of a tender or exchange offer which would result in any person or group becoming an Acquiring Person. In such event, the Second Tranche Parent Stock will be issued to Rochon Capital, or a Permitted Transferee to whom the right has been transferred, within ten (10) days of its written request, which request shall be in its sole discretion. A person or group of affiliated or associated persons becomes an “Acquiring Person,” thus triggering the issuance of the Second Tranche Parent Stock to Rochon Capital, or a Permitted Transferee to whom the right has been transferred, upon acquiring, subsequent to the date of the Amended Share Exchange Agreement, beneficial ownership of 15% or more of the shares of our common stock then outstanding. The term “Acquiring Person” shall not include (1) any person who acquires 15% or more of the Company’s shares of common stock in a transaction approved by John P. Rochon, (2) any affiliates of John P. Rochon or (3) any family members of John P. Rochon.

In addition, Rochon Capital has agreed to irrevocably waive its right to, and has agreed that it will not (i) sell, pledge, convey or otherwise transfer all or any part of the Second Tranche Parent Stock or the right to receive the Second Tranche Parent Stock to any person or entity other than to (x) John P. Rochon or his wife, or both, or John Rochon, Jr. (each a “Permitted Transferee”) or (y) the Company, as set forth below, and (ii) be entitled to receive any cash dividends or cash distributions of any kind with respect to the Second Tranche Parent Stock, except as specifically provided below. Rochon Capital further agreed that the Second Tranche Parent Stock shall be redeemed by the Company upon receipt of a cash payment by Rochon Capital from the Company of One Million Dollars ($1,000,000) if any of the following events occur: (i) the Company’s liquidation or dissolution; (ii) the Company’s

merger with or into another entity where the holders of its common stock prior to the merger do not own a majority of its common stock immediately after the merger (while specifically excluding the Second Tranche Parent Stock from such calculation); (iii) the sale of all or substantially all of the Company’s assets; (iv) the death of John P. Rochon, in which case the redemption shall be limited to Second Tranche Parent Stock that has not been transferred by Rochon Capital; (v) a change of control of Rochon Capital such that a majority of the equity of Rochon Capital is not owned by John P. Rochon or immediate family members of John P. Rochon; and (vi) John P. Rochon having been found guilty or having pled guilty or nolo contendere to any act of embezzlement, fraud, larceny or theft on or from the Company. Rochon Capital has also agreed that the Second Tranche Parent Stock will be automatically redeemed by the Company for nominal consideration if any of the following events should occur: (i) the Company commences a voluntary case under Title 11 of the United States Code or the corresponding provisions of any successor laws; (ii) an involuntary case against the Company is commenced under Title 11 of the United States Code or the corresponding provisions of any successor laws and either (A) the case is not dismissed by midnight at the end of the 90th day after commencement or (B) the court before which the case is pending issues an order for relief or similar order approving the case; or (iii) a court of competent jurisdiction appoints, or the Company makes an assignment of all or substantially all of its assets to, a custodian (as that term is defined in Title 11 of the United States Code or the corresponding provisions of any successor laws) for the Company or all or substantially all of its assets.

Rochon Capital has agreed to irrevocably authorize and direct the Company’s transfer agent to place a permanent stop order on the Second Tranche Parent Stock and to add a corresponding restrictive legend on the certificate or certificates representing the Second Tranche Parent Stock.

We continue to utilize Richmont Holdings for acquisition opportunities and advice and assistance in areas related to identification, analysis, financing, due diligence, negotiations and other strategic planning, accounting, tax and legal matters associated with such potential acquisitions. Richmont Holdings and its affiliates have experience in the above areas and we wish to draw upon such experience. We agreed to pay Richmont Holdings a reimbursement fee (the “Reimbursement Fee”) each month equal to $160,000 and we agreed to reimburse or pay the substantial due diligence, financial analysis, legal, travel and other costs Richmont Holdings incurred in identifying, analyzing, performing due diligence, structuring and negotiating potential transactions, which costs have been expensed under selling, general and administrative expenses. During the years ended December 31, 2015 and December 31, 2014, we recorded $2.2 million and $1.9 million , respectively, in Reimbursement Fees incurred by Richmont Holdings on our behalf. The board of directors approved an additional management fee of $232,000 over the base agreement in 2015. Prior to Rochon Capital’s initial investment in us and during our initial acquisition phases, Richmont Holdings utilized its own funds to develop the acquisition strategy and the contacts of which we are now the beneficiary. In recognition of our relationship with Richmont Holdings and the substantial investment it made during our formation, we may advance funds to Richmont Holdings from time to time as it pursues acquisitions on our behalf. As of December 31, 2015 , there was a related party payable balance of approximately $580,000 which is included as an offset to our related party payables shown on our balance sheet.

On June 12, 2014, the RCP V Note was amended to extend the mandatory conversion date to within ten days of June 12, 2015 or such earlier date as may be mutually agreed by us and RCP V. On October 10, 2014, RCP V and we mutually agreed to provide for the automatic conversion of the RCP V Note into 3,200,000 shares of our common stock upon the closing of this offering. On November 26, 2014, we issued 3,200,000 shares of our common stock to RCP V, upon conversion of the RCP V Note. Michael Bishop, one of our directors, is a limited partner of RCP V.

Mr. Bishop is the controlling shareholder of ActiTech, L.P., which provides production services to certain JRJR subsidiaries. We paid $1.4 million to ActiTech, L.P. in 2015. Ms. Rasmussen was paid $50,040 in 2015 for consulting services to JRJR and certain of its subsidiaries regarding operations and international expansion.

At December 31, 2015, HCG had a related party shareholder payable of $25,000 related to a loan made by HCG’s former shareholder, Rochon Capital, to HCG for working capital. Two of the employees of HCG are siblings of Mr. Rochon, our Chief Executive Officer, Chairman of our Board, and the controlling person of Rochon Capital, our principal shareholder. Each of Paula Mackarey and John P. Rochon is a guarantor to HCG’s line of credit with Pennstar Bank.

Director Independence

We have determined that William Randall, Kay Bailey Hutchison, Bernard Ivaldi, Roy Damary and John W. Bickel are “independent” directors under the definition set forth in the listing standards of the NYSE MKT.

100

Item 14. Principal Accountant Fees and Services

Audit Committee Pre-Approval Policy

The Audit Committee has established a pre-approval policy and procedures for audit, audit-related and tax services that can be performed by the independent auditors without specific authorization from the Audit Committee subject to certain restrictions. The policy sets out the specific services pre-approved by the Audit Committee and the applicable limitations, while ensuring the independence of the independent auditors to audit the Company’s financial statements is not impaired. The pre-approval policy does not include a delegation to management of the Audit Committee’s responsibilities under the Exchange Act.

Service Fees Paid to the Independent Registered Public Accounting Firm

The Audit Committee of our Board has appointed BDO as the independent registered public accounting firm for the fiscal year ended December 31, 2015 . Fees billed by BDO to us for services during the fiscal year ended December 31, 2015 were:



	Year Ended December 31, 2015
Audit fees	$	1,459,000
Audit-related fees	20,000
Tax fees	60,000
All other fees	—
	$	1,539,000

“Audit Fees” were fees billed by BDO for professional services for the audit of our consolidated financial statements included in our Annual Report on Form 10-K and review of financial statements included in our second and third quarters of 2015 Quarterly Reports on Forms 10-Q, or for services that are normally provided by the accounting firm in connection with statutory and regulatory filings or engagements.

“Audit-Related Fees” were fees billed by BDO for assurance and related services that are reasonably related to the performance of the audit and review of our financial statements.

“Tax Fees” were fees primarily for tax compliance in connection with filing U.S. and state income tax returns.

101

PART IV.

Item 15. Exhibits and Financial Statement Schedules



			Description
1.1			At-the-Market Issuance Sales Agreement between CVSL Inc. and MLV & Co. LLC, dated December 3, 2014 (incorporated by reference to Exhibit 1.2 of our Registration Statement on Form S-3(File No. 333-200712) filed with the Commission on December 3, 2014)

1.2			Underwriting Agreement between CVSL Inc. and Aegis Capital Corp., dated February 26, 2015 (incorporated by reference to Exhibit 1.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on March 2, 2015)

2.1			Share Exchange Agreement, dated August 24, 2012, by and among Computer Vision Systems Laboratories, Corp., Happenings Communications Group, Inc. and Rochon Capital Partners, Ltd. (incorporated by reference to Exhibit 10.10 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on August 30, 2012)

3.1			Articles of Incorporation (incorporated by reference to Exhibit 3.1 of our Registration Statement on Form SB-2 (File Number 333-145738) filed with the Commission on August 28, 2007)

3.2			Bylaws of Cardio Vascular Medical Device (incorporated by reference to Exhibit 3.2 of our Registration Statement on Form SB-2 (File Number 333-145738) filed with the Commission on August 28, 2007)

3.3			Articles of Incorporation (incorporated by reference to Exhibit 3.3 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on June 28, 2011)

3.4			Bylaws of Computer Vision Systems Laboratories, Corp. (incorporated by reference to Exhibit 3.4 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on June 28, 2011)

3.5			Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on May 30, 2013)

3.6			Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.7 of our Current Report on Form 10-Q (File No. 000-52818) filed with the Commission on August 14, 2013)

3.7			Amendment to Bylaws of Computer Vision Systems Laboratories, Corp., effective as of September 28, 2012 (incorporated by reference to Exhibit 3.3 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on October 1, 2012)

3.8			Amendment to Bylaws effective July 9, 2014 (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on July 15, 2014)

3.9			Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on October 16, 2014)

3.1			Articles of Amendment to the Articles of Incorporation (incorporated by reference to Exhibit 3.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on March 7, 2016).

4.1			Registration Rights Agreement, dated September 25, 2012, by and between Computer Vision Systems Laboratories, Corp. and Rochon Capital Partners, Ltd. (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on October 1, 2012)

102



4.2			Convertible Subordinated Unsecured Promissory Note, dated December 12, 2012, in the original principal amount of $20,000,000, from Computer Vision Systems Laboratories, Corp., (as Maker), to Richmont Capital Partners V LP, (as Payee) (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on December 18, 2012)

4.3			Lockup Agreement between International Equities Group and Computer Vision Systems Laboratories dated February 15, 2013 (incorporated by reference to 99.10 to Schedule 13D/A (File No. 005-85515) filed with the Commission on February 19, 2013)

4.4			Convertible Subordinated Unsecured Promissory Note, dated March 15, 2013, in the original principal amount of $6,500,000, issued by Computer Vision Systems Laboratories, Corp. to The Longaberger Company (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on March 20, 2013)

4.5			Promissory Note, dated March 14, 2013, in the original principal amount of $4,000,000, issued by Computer Vision Systems Laboratories, Corp. to The Longaberger Company (incorporated by reference to Exhibit 10.4 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on March 20, 2013)

4.6			Amendment to Share Exchange Agreement to Defer Second Tranche Closing Indefinitely, dated April 10, 2013 (incorporated by reference to Exhibit 10.1 to Form 8-K (File No. 000-52818) filed April 12, 2013)

4.7			First Amendment to Convertible Subordinated Unsecured Promissory Note, dated as of June 17, 2013, between CVSL Inc. and Richmont Capital Partners V LP (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on June 21, 2013)

4.8			Irrevocable Proxy between Computer Vision Systems Laboratories and Rochon Capital Partners Ltd. (incorporated by reference to Exhibit 99.12 to Schedule 13-D/A (File No. 005-85515) filed with the Commission on June 27, 2013)

4.9			Director Smart Bonus Plan (incorporated by reference to Exhibit 10.1 to Form 8-K (File No. 000-52818) filed with the Commission on July 24, 2013)

4.10			Form of Warrant issued in May 2014 (incorporated by reference to Exhibit 4.10 of our Registration Statement on Form S-1 (File No. 333-196155) filed with the Commission on May 22, 2014)

4.11			Form of Warrant issued in July 2014 (incorporated by reference to Exhibit 4.11 of our Registration Statement on Form S-1 (File No. 333-196155) filed with the Commission on July 15, 2014)

4.12			Second Amendment to Convertible Subordinated Unsecured Promissory Note, dated as of June 12, 2014, between CVSL Inc. and Richmont Capital Partners V LP (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on June 16, 2014)

4.13			Promissory note dated July 11, 2014 between Agel Enterprises, Inc. and Tamala L. Longaberger (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on July 15, 2014)

4.14			Amendment to Share Exchange Agreement, dated as of October 10, 2014 (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on October 14, 2014)

4.15			Third Amendment to Share Exchange Agreement, dated as of December 1, 2014 (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on December 3, 2014)

103



4.16			Form of Warrant Issued to Investors (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on March 2, 2015)

4.17			Form of Representative’s Warrant Agreement (incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on March 2, 2015)

4.18			2015 Stock Incentive Plan (incorporated by reference to Appendix A of our Proxy Statement (File No. 001-36755) filed with the Commission on May 22, 2015)

4.19			Form of Warrant Issued to Consultant (incorporated by reference to Exhibit 4.1 of our Quarterly Report on Form 10-Q (File No. 001-36755) filed with the Commission on August 13, 2015)

4.20			Exchange Agreement for Warrant Issued to Consultant (incorporated by reference to Exhibit 4.2 of our Quarterly Report on Form 10-Q (File No. 001-36755) filed with the Commission on August 13, 2015)

4.21			Convertible Loan made by Trillium Pond incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on October 20, 2015)

4.22			Convertible Loan made by Trillium Pond incorporated by reference to Exhibit 4.2 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on October 20, 2015)

4.23			Senior Secured Convertible Note (incorporated by reference to Exhibit 4.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on November 23, 2015)

9.1			Voting Agreement by and among Tamala L. Longaberger Revocable Trust, Rochon Capital Partners Ltd, Computer Vision Systems Laboratories Corp. dated March 18, 2013 (incorporated by reference to Exhibit 99.11 to Schedule 13D/A (File No. 005-85515) filed with the Commission on June 27, 2013)

10.1			Indemnification Agreement entered into between Computer Vision Systems Laboratories, Corp. and John P. Rochon (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on October 1, 2012)

10.2			Convertible Subordinated Unsecured Note Purchase Agreement, dated December 12, 2012, by and between Computer Vision Systems Laboratories, Corp., and Richmont Capital Partners V LP (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on December 18, 2012)

10.3			Purchase Agreement, dated March 15, 2013, by and among Computer Vision Systems Laboratories, Corp., The Longaberger Company, TMRCL Holding Company, TMRCL Holding LLC, and The Longaberger Company Canada (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on March 20, 2013)

10.4			Subscription Agreement, dated March 14, 2013, by and between the Company and The Longaberger Company (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on March 20, 2013)

10.5			Guarantee Agreement, dated March 14, 2013, made by Computer Vision Systems Laboratories, Corp. (incorporated by reference to Exhibit 10.5 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on March 20, 2013)

10.6			Employment Agreement, dated March 18, 2013, by and between Computer Vision Systems Laboratories, Corp. and Tamala L. Longaberger (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on March 22, 2013)

104



10.7			Reimbursement of Services Agreement between Computer Vision Systems Laboratories Corp., a Florida corporation and Richmont Holdings, Inc., (incorporated by reference to Exhibit 10.11 of our Annual Report on Form 10-K (File No. 000-52818) filed with the Commission on March 29, 2013)

10.8			Amendment to Share Exchange Agreement to Defer Second Tranche Closing Indefinitely dated April 10, 2013 (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on April 12, 2013)

10.9			Equity Contribution Agreement, dated as of June 18, 2013, between Rochon Capital Partners, Ltd. and CVSL Inc. (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on June 21, 2013)

10.10			Asset Purchase Agreement, dated September 25, 2013, between Agel Enterprises, Inc. and Agel Enterprises, LLC. (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on October 1, 2013)

10.11			Purchase Money Note issued by Agel Enterprises, Inc. in the principal amount of $1,700,000 (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on October 1, 2013)

10.12			Equity Contribution Agreement, dated as of November 11, 2013, between Rochon Capital Partners, Ltd. and CVSL Inc. (incorporated by reference to Exhibit 13 to Schedule 13D/A (File No. 005-85515) filed with the Commission on April 1, 2014 by Rochon Capital Partners, Ltd.)

10.13			Satisfaction of Obligation dated December 3, 2013 between CVSL, Rochon Capital Partners Ltd. and International Equities Group, Inc. (incorporated by reference to Exhibit 14 to Schedule 13D/A (File No. 005-85515) filed with the Commission on April 1, 2014 by Rochon Capital Partners, Ltd.)

10.14			Equity Contribution Agreement, dated as of May 1, 2014, between Rochon Capital Partners, Ltd. and CVSL Inc. (incorporated by reference to Exhibit 99.13 to Schedule 13D/A (File No. 005-85515) filed with the Commission on May 7, 2014 by Rochon Capital Partners, Ltd.)

10.15			Credit and Security Agreement dated October 23, 2012 among Keybank National Association and The Longaberger Company (incorporated by reference to Exhibit 10.15 of our Current Report on Form 8-K (File No. 333-196155) filed with the Commission on May 22, 2014)

10.16			First Amendment Agreement to Credit and Security Agreement by and between Keybank National Association and The Longaberger Company (incorporated by reference to Exhibit 10.16 of our Current Report on Form 8-K (File No. 333-196155) filed with the Commission on May 22, 2014)

10.17			Second Amendment Agreement to Credit and Security Agreement by and between Keybank National Association and The Longaberger Company (incorporated by reference to Exhibit 10.17 of our Current Report on Form 8-K (File No. 333-196155) filed with the Commission on May 22, 2014)

10.18			Third Amendment Agreement to Credit and Security Agreement by and between Keybank National Association and The Longaberger Company (incorporated by reference to Exhibit 10.18 of our Current Report on Form 8-K (File No. 333-196155) filed with the Commission on May 22, 2014)

10.19			Fourth Amendment Agreement to Credit and Security Agreement by and between Keybank National Association and The Longaberger Company (incorporated by reference to Exhibit 10.19 of our Current Report on Form 8-K (File No. 333-196155) filed with the Commission on May 22, 2014)

10.20			Fifth Amendment Agreement to Credit and Security Agreement by and between Keybank National Association and The Longaberger Company (incorporated by reference to Exhibit 10.20 of our Current Report on Form 8-K (File No. 333-196155) filed with the Commission on May 22, 2014)

105




10.21			Restricted Stock Agreement between CVSL Inc. and Roy Damary dated July 9, 2014 (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on July 15, 2014)

10.22			Restricted Stock Agreement between CVSL Inc. and Bernard Ivaldi dated July 9, 2014 (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on July 15, 2014)

10.23			Agreement for Purchase and Sale dated as of July 31, 2014 between The Longaberger Company and CFI NNN Raiders, LLC (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on August 1, 2014).

10.24			Master Lease Agreement made as of July 31, 2014 by and between CFI NNN Raisers, LLC and CVSL Inc. (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on August 1, 2014).

10.22			Restricted Stock Agreement between CVSL Inc. and John W. Bickel dated September 16, 2014 (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 000-52818) filed with the Commission on September 18, 2014)

10.23			Share Purchase Agreement, dated February 6, 2015, between Trillium Pond AG and Findel plc. 2014 (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on February 6, 2015)

10.24			Service Level Agreement to be executed at closing between Kleeneze and Express Gifts, Ltd. (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on February 6, 2015)

10.25			Transition Services Agreement to be executed at closing between Kleeneze and Findel plc. (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on February 6, 2015)

10.26			Share Purchase Agreement between Trillium Pond AG and Robert Way and Andrew Lynton Cohen (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on October 20, 2015)

10.27			Service Agreement with Robert Way (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on October 20, 2015)

10.28			Lock-Up Agreement with Robert Way (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on October 20, 2015)

10.29			Securities Purchase Agreement between CVSL Inc. and Dominion Capital (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on November 23, 2015)

10.30			Security and Pledge Agreement, dated November 20, 2015, by and among CVSL Inc., each of the Company’s Domestic Subsidiaries named therein and Dominion Capital LLC (in its capacity as collateral agent) (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on November 23, 2015)

106



10.31			Guaranty, dated November 20, 2015, by and among each of CVSL Inc.’s Domestic Subsidiaries named therein and Dominion Capital LLC (in its capacity as collateral agent) (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on November 23, 2015)

10.32			Form of Stock Award Agreement under the 2015 Stock Incentive Plan (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on February 25, 2016)

10.33			Form of Incentive Stock Option Agreement under the 2015 Stock Incentive Plan (incorporated by reference to Exhibit 10.2 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on February 25, 2016)

10.34			Form of Nonqualified Stock Option Agreement under the 2015 Stock Incentive Plan (incorporated by reference to Exhibit 10.3 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on February 25, 2016)

10.35			Employment agreement with Christopher L. Brooks (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the Commission on March 30, 2016)

10.36			Office Lease as of September 5, 2014 between International Center Development XVIII, LLC and CVSL Inc.**

10.37			Waiver dated as of April 15, 2016 with Dominion Capital LLC (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the commission on April 20, 2016)

10.38			Waiver dated as of May 17, 2016 with Dominion Capital LLC (incorporated by reference to Exhibit 10.1 of our Current Report on Form 8-K (File No. 001-36755) filed with the commission on May 23, 2016)

21			List of Subsidiaries**

23.1			Consent of BDO, USA LLP**
23.2			Consent of PMB Helin Donovan, LLP**

31.1			Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.**
31.2			Certification pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.**
32.1			Certification pursuant to 18 U.S.C. Section 1350.**
32.2			Certification pursuant to 18 U.S.C. Section 1350.**
101.INS			Instance Document.**
101.SCH			XBRL Taxonomy Extension Schema Document.**
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.**
101.LAB			XBRL Taxonomy Extension Label Linkbase Document.**
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.**
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.**




	**	Filed herewith

107

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.



	JRjr33, Inc.
	By:	/s/ John P. Rochon

		John P. Rochon
		Chief Executive Officer, President and Chairman
		(Principal Executive Officer)
	Date:	June 27, 2016

	By:	/s/ Christopher L. Brooks

		Christopher L. Brooks
		Chief Financial Officer (Principal Financial and Principal Accounting Officer)
	Date:	June 27, 2016



Signature	Title	Date

/s/ John P. Rochon	Chief Executive Officer, President and Chairman of the Board	June 27, 2016
	(Principal Executive Officer)
John P. Rochon

/s/ John Rochon, Jr.	Vice Chairman and Director	June 27, 2016

John Rochon, Jr.

/s/ Russell Mack	Vice President and Director	June 27, 2016

Russell Mack

108



Signature	Title	Date

	Director	June 27, 2016

Michael Bishop

/s/ William Randall	Director	June 27, 2016

William Randall

/s/ Julie Rasmussen	Director	June 27, 2016

Julie Rasmussen

/s/ Kay Bailey Hutchison	Director	June 27, 2016

Kay Bailey Hutchison

/s/ Bernard Ivaldi	Director	June 27, 2016

Bernard Ivaldi

/s/ Roy Damary	Director	June 27, 2016

Roy Damary

/s/ John W. Bickel	Director	June 27, 2016

John W. Bickel

109

EXHIBIT 10.36

INTERNATIONAL CENTER

OFFICE LEASE

BY AND BETWEEN

INTERNATIONAL CENTER DEVELOPMENT XVIII, LLC

AS LANDLORD,

AND

CVSL INC.

AS TENANT

TABLE OF CONTENTS

Page

1. Definitions and Basic Lease Provisions. 1

2. Lease Grant 3

3. Term; Possession. 3

4. Rent. 4

5. Electrical Services. 9

6. Services by Landlord. 11

7. Assignment and Subletting. 13

8. Repairs and Alterations. 16

9. Use and Occupancy 18

10. Parking 18

11. Mechanic’s Liens 18

12. Liability of Landlord 18

13. Indemnification and Waiver of Claims. 19

14. Insurance. 19

15. Fire or Other Casualty. 20

16. Condemnation 21

17. Waiver of Subrogation 21

18. Taxes on Tenant’s Property 22

19. Rights Reserved by Landlord 22

20. Relocation. 23

21. Surrender of Premises; Holdover. 23

22. Events of Default 25

23. Landlord’s Remedies. 26

24. No Implied Waiver 28

25. Attorneys’ Fees 28

26. Subordination; Estoppel Certificate 28

27. Quiet Enjoyment 29

28. Notice 29

29. Hazardous Materials 29

30. Miscellaneous. 30

EXHIBITS:

Exhibit A: Land

Exhibit B: Floor Plan of the Premises

Exhibit C: Work Letter

Exhibit C-1: Base Building Guidelines

Exhibit C-2: Janitorial Specifications

Exhibit D: Building Rules and Regulations

Exhibit E: Parking

Exhibit F: Renewal Option

Exhibit G: Right of First Refusal for Additional Space

Exhibit H: Guaranty

OFFICE LEASE

This Office Lease (this “ Lease ”) is entered into as of September 5, 2014 (the “ Effective Date ”), by and between INTERNATIONAL CENTER DEVELOPMENT XVIII, LLC (“ Landlord ”), and CVSL INC. (“ Tenant ”).

1. Definitions and Basic Lease Provisions .

A. “Building” shall mean the building located at 2950 North Harwood, Dallas, Texas 75201, which is located on the land described on Exhibit A (the “ Land ”).

B. “Total Building Area” shall be approximately 167,922 Rentable Square Feet. below.

C. “Premises” shall mean 9,446 Rentable Square Feet located on the 22 ^nd floor of the Building. If the Premises contain one full floor in its entirety, all corridors and restrooms located on such full floor(s) shall be considered part of the Premises. The actual Rentable Square Feet of the Premises shall be measured and calculated by Landlord’s architect in accordance with the definition of “ Rentable Square Feet ” within thirty (30) days after the demising walls are in place and Landlord shall provide a copy of the detailed calculation to Tenant after receipt by Landlord. Thereafter, Tenant may measure the Premises and/or review the calculation with Tenant’s Architect (as defined in Exhibit C ) prior to the Commencement Date. If the calculation by Tenant’s Architect varies from that of the Landlord’s architect, the two architects shall endeavor to resolve the differences within fifteen (15) days following notice from Tenant to Landlord of the variance. If, despite using good faith efforts, the architects are unable to resolve the differences, the architects shall settle the dispute in accordance with the provisions of Section 10 of Exhibit C .

D. “Base Rent” (dates being subject to adjustment per subsections 1.E and 1.F below):



Rent Period	Total Months	Rate/Rentable Square Foot
07/01/15 - 02/28/16	8	$00.00 +E
03/01/16 - 06/30/16	4	$17.50 Net
07/01/16 - 06/30/17	12	$35.50 Net
07/01/17 - 06/30/18	12	$36.00 Net
07/01/18 - 06/30/19	12	$36.50 Net
07/01/19 - 06/30/20	12	$37.00 Net
07/01/20 - 06/30/21	12	$37.50 Net
07/01/21 - 06/30/22	12	$38.00 Net
07/01/22 - 06/30/23	12	$38.50 Net
07/01/23 - 06/30/24	12	$39.00 Net
07/01/24 - 06/30/25	12	$39.50 Net
07/01/25 - 09/30/26	15	$40.00 Net

E. “Commencement Date” : July 1, 2015 (subject to adjustment pursuant to Section 3.A) .

F. “Expiration Date” : September 30, 2026 (subject to adjustment pursuant to Section 3.A ).

G. “Term” : 135 Months.

H. “Base Year” : Not applicable. Tenant pays all Operating Costs as provided in Section 4.B .

I. “Tenant’s Share” : The percentage obtained by dividing the Rentable Square Feet of the Premises by the Rentable Square Feet of the Building, provided that the Rentable Square Feet of the Building for purposes of calculating Tenant’s Share shall not deviate by more than five percent (5%) of 167,922 Rentable Square Feet during the Term.

J. “Security Deposit” : Not applicable.

K. “Permitted Use” : General business office purposes only. No commercial banking or retail banking operations are permitted.

L. Intentionally Deleted.

M. Intentionally Deleted.

N. “Guarantor” : Richmont Holdings, as further defined in Exhibit H.

O. Addresses for Notices:

Tenant: On and after the Commencement Date, notices shall be sent to Tenant at the Premises, Attention: ____________________. Prior to the Commencement Date, notice shall be sent to Tenant at ____________________, Attention: ____________________.

Landlord: International Center Development XVIII, LLC, c/o Harwood International Incorporated, 2501 North Harwood, Suite 1400, Dallas, Texas 75201, Attention: Chief Financial Officer, with a copy to David Roehm, Harwood International, 2501 North Harwood, Suite 1400, Dallas, Texas 75201.

P. “Business Days” shall mean Monday through Friday of each week, other than Holidays. “ Holidays ” are New Year’s Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, and Christmas. Landlord may designate additional Holidays, provided that the additional Holidays are commonly recognized by other office buildings in the Dallas, Texas area.

Q. “Building Standard Hours” : Business Days from 7:00 a.m. to 6:00 p.m. Monday through Friday and 8:00 a.m. to 1:00 p.m. on Saturdays. Landlord may limit access to the Building at all times other than during Building Standard Hours, provided that Landlord maintains reasonable access to the Premises at all times for Tenant’s Permitted Use, except as otherwise provided in this Lease.

R. “Laws” means all applicable statutes, codes, ordinances, orders, rules and regulations of any municipal or governmental entity, now or hereafter adopted.

S. “Project” shall mean those portions of the multi-building office complex in Dallas, Texas commonly known as Harwood International Center, as the same exists from time to time, together with the land upon which the buildings are located and all appurtenances thereto.

T. “Rentable Square Feet” shall mean the rentable area of the applicable space as determined pursuant to Standard Method For Measuring Floor Area in Office Buildings (ANSI/BOMA Z65-2010).

U. “Property” shall mean the Land, the Building and the Building Garage, together with all other improvements and landscaping on the Land, commonly known as Frost Tower.

2. Lease Grant . Landlord hereby leases the Premises to Tenant and Tenant hereby leases the Premises from Landlord, subject to the terms of this Lease. Tenant is hereby granted a non-exclusive right to use any portions of the Property that are designated by Landlord for the common use of tenants and others, including without limitation, stairwells, elevator lobbies open to the public, first floor lobbies, and walkways (the “ Common Areas ”).

3. Term; Possession .

A. Initial Term and Commencement . The Term shall commence on (1) the later to occur of the Commencement Date set forth in Section 1.E of this Lease or (2)as set forth in Exhibit C , attached hereto, and, unless sooner terminated pursuant to the provisions of this Lease, shall terminate on the Expiration Date set forth in Section 1.F of this Lease, as such Expiration Date may be adjusted hereunder. In the event the Commencement Date is not the date set forth in Section 1.E of the Lease, the Expiration Date will instead be the last day of the Term as determined based upon the actual Commencement Date; provided, however, if such adjusted Expiration Date is a day other than the last day of a calendar month, the adjusted Expiration Date shall be further adjusted to the last day of such calendar month.

B. Delivery and Acceptance of Premises . Landlord shall use best efforts to deliver possession of the Premises to Tenant for commencement of the construction of Tenant’s Improvements by no later than March 1, 2015 for the 22 ^nd floor (the “ 22 ^nd Floor Delivery Date ”), subject to any applicable Tenant Delay or City Delay (as defined in Exhibit C ). If the 22nd Floor Delivery Date has not occurred by March 31, 2015 and there has been no Tenant Delay or City Delay, Tenant shall receive one (1) day of Rent abatement for every day of Landlord’s delay in delivering the 22nd floor.

Tenant’s occupancy of the Premises after the commencement of the Lease Term is conclusive evidence that, subject to the Punch List Items (as defined in Exhibit C hereto) and latent defects, Tenant: (a) acknowledges that Tenant’s Leasehold Improvements have been completed as required by Exhibit C and that there are no items needing additional repair or work; (b) accepts the Premises and the Building as being

in a good and satisfactory condition; (c) accepts the Premises as suitable for the purposes for which they are leased; and (d) waives any defects (other than latent defects) in the Premises, the Building’s first floor lobby, the Common Areas on any floor partially occupied by Tenant, restrooms on any floor partially occupied by Tenant, if any, elevator cabs and the Property. A “latent defect” is a defect in the condition of the Premises or the Building (including materials and equipment) caused by Landlord’s failure to construct the improvements in a good and workmanlike manner, or in accordance with the approved plans and specifications or Applicable Laws, which defect could not be observed during a walk through inspection.

C. Early Possession . If Tenant takes possession of the Premises before the Commencement Date, other than for the purposes described in the next sentence, such possession shall be subject to the terms and conditions of this Lease and Tenant shall pay Rent (defined in Section 4 ) to Landlord with the date of possession constituting the new Commencement Date. However, except for the cost of services requested by Tenant ( e.g ., electricity), Tenant shall not be required to pay Rent for any days of possession before the Commencement Date during which Tenant, with the approval of Landlord, is in possession for the sole purposes of constructing improvements or placing furniture and installing Tenant’s equipment, cable and wiring in the Premises and otherwise making ready for conduct of Tenant’s business, including as permitted under Section 6. C of Exhibit “C attached hereto.

4. Rent .

A. Payments . As consideration for this Lease, commencing on the date immediately following the Rent abatement period set forth in Section 1. D . (the “ Rent Commencement Date ”), Tenant shall pay Landlord, without any setoff or deduction, the total amount of Base Rent and Additional Rent due for the Term. Notwithstanding the foregoing, the Rent Commencement Date shall be adjusted pursuant to Section 3. A and Section 12 of the Work Letter attached hereto as Exhibit C . “ Additional Rent ” means all amounts (other than Base Rent) that Tenant is required to pay Landlord hereunder, including specifically, without limitation, Tenant’s Share of Operating Costs and Parking Charges (as specified in Exhibit E ). Base Rent and Additional Rent are sometimes collectively referred to as “ Rent ”. Tenant shall pay and be liable for all licenses, charges, and other fees of every kind and nature as and when they become due arising out of or in connection with Tenant’s use and occupancy of the Premises and the Property (including the parking garage), including but not limited to license fees, business license taxes, margin taxes and privilege, sales, excise, or other taxes (other than income) imposed upon Rent or upon services provided by Landlord or upon Landlord in an amount measured by Rent received by Landlord. Base Rent and recurring monthly charges of Additional Rent, i.e., 1/12 ^th of estimated Tenant’s Share of Operating Costs and Tenant’s Electrical Charges and Parking Charges, shall be due and payable in advance on the first day of each calendar month during the Term without notice or demand; provided that the first installment of Base Rent is payable by Tenant on the Rent Commencement Date. All other items of Rent shall be due and payable by Tenant on or before 10 days after billing by Landlord. If the Term commences on a day other than the first day of a calendar month or terminates on a day other than the last day of a calendar month, the monthly Base Rent, Tenant’s Share of Operating Costs and Tenant’s Electrical Charges for such partial calendar month shall be prorated on a per diem basis based upon 365 days. All Rent is payable by Tenant at the times and in the amounts specified in this Lease in legal tender of the United States of America to Landlord at the notice address for Landlord or to any other person or at any other address as Landlord may from time to time designate by notice to Tenant. Tenant’s obligation to pay Additional Rent with respect to all periods prior to the expiration or termination of the Lease shall survive the expiration or earlier termination of the Lease. Tenant’s obligation to pay Rent is independent of any obligation of Landlord under this Lease, subject to Tenant’s rights of setoff or abatement as expressly provided for in this Lease. If any item of Rent is not paid within ten (10) days following the due date, Tenant shall pay to Landlord a late charge in an amount equal to 5% of the delinquent Rent, provided that on the first occasion of a failure to pay when due in a calendar year, the late charge shall not apply unless

Tenant fails to pay in full such item of Rent within five (5) days after written notice from Landlord of the failure to pay when due (it being agreed that Landlord shall not be required to give written notice of delinquent Rent more than once in a calendar year). No endorsement or statement on a check or letter accompanying a check or payment shall be considered an accord and satisfaction, and either party may accept the check or payment without prejudice to that party’s right to recover the balance or pursue other available remedies.

B. Payment of Operating Costs . Tenant shall pay Tenant’s Share of Operating Costs to Landlord as Additional Rent. Except as specifically set forth in this Lease, all Rent shall be absolutely net to Landlord so that this Lease shall yield net to Landlord, the annual Base Rent amount on a monthly basis during the Term of this Lease. Notwithstanding the foregoing, for purposes of computing Tenant’s Share of Operating Costs, the Controllable Operating Costs (hereinafter defined) shall not increase by more than seven percent (7%) per calendar year (calculated on a non-cumulative basis) during the Term of this Lease over Controllable Operating Costs for the prior calendar year. “ Controllable Operating Costs ” shall mean all Operating Costs (as defined in Section 4. D), exclusive of the costs of insurance, utilities and taxes and other governmental levies.

C. Operating Costs Statement . No later than June 30 of each calendar year or as soon thereafter as is reasonably practicable, Landlord shall deliver to Tenant a statement setting out in reasonable detail the actual Operating Costs for the prior calendar year. If Landlord fails to deliver the statement for actual Operating Costs prior to the end of the succeeding calendar year, Landlord shall be deemed to have waived its right to collect any additional amount for Tenant’s Share of Operating Costs for such prior calendar year, except as to any items which are not readily ascertainable prior to close of the succeeding calendar year, e.g., taxes that are being contested. If Tenant’s payments of Tenant’s Share of estimated Operating Costs during the prior calendar year exceed Tenant’s Share of actual Operating Costs for that year, Landlord shall credit the difference against the next ensuing installments of Additional Rent payable by Tenant or after the expiration of this Lease, Landlord shall refund such overpayment to Tenant. If Tenant’s payments of Tenant’s Share of estimated Operating Costs during the prior calendar year are less than Tenant’s Share of the actual Operating Costs for that year, Tenant shall pay the amount of the difference to Landlord within 30 days after delivery of such statement. Landlord shall use a consistent methodology in computing each tenant’s pro rata share of operating costs (nor shall Landlord collect from all tenants in aggregate more than 100% of the actual costs of such operating costs)

D. Operating Costs Defined . “ Operating Costs ” means all costs and expenses incurred in each calendar year in connection with the management, operation, maintenance, repair, and security of the Property (but excluding Operating Expenses related to portions of the Project other than the Property), including but not limited to, the following:

(1) The cost of janitorial service; window cleaning; waste disposal; gas, water and sewer and other utility charges; and landscaping.

(2) The cost of operating, maintenance, repair and replacements of any part of the Property, including the mechanical, electrical, plumbing, HVAC, vertical transportation, fire prevention and security systems; material and supplies (such as Building standard light bulbs and ballasts); maintenance and repair of Common Areas including, without limitation, paint, carpet, stonework, wood, glass, metals, and the like; and the cost of equipment and tools.

(3) The cost of property damage, fire and extended coverage, commercial general liability coverage, rent loss, business interruption and other insurance coverages carried by Landlord in reasonable amounts and reasonable coverage, including reasonable deductibles and risk retention programs and an allocation of a portion of the cost of blanket insurance policies maintained by Landlord and/or its affiliates;

(4) Labor and employee benefit costs, including wages, salaries, health insurance costs, and fees of all personnel engaged in the management, operation, maintenance, repair, and security of the Property;

(5) All real estate taxes and other assessments on the Property, including, but not limited to, assessments for special improvement districts and building improvement districts, taxes and assessments levied in substitution or supplementation in whole or in part of any such taxes as a result of a change in the law after the effective date of this Lease; the Margin Tax (defined below); all personal property taxes for property that is owned by Landlord and used solely in connection with the operation, maintenance and repair of the Property; and all reasonable costs and fees incurred in connection with seeking reductions in any tax liabilities described above, including, without limitation, any costs incurred by Landlord for compliance, review and appeal of tax liabilities (collectively, “Taxes”). “Margin Tax” means taxes levied pursuant to House Bill 3 as signed into law on May 18, 2006, and any amendments or supplements thereto. The Tenant’s Share of Margin Tax, or any other taxes based on revenue or income of Landlord derived solely from the Property and levied in lieu of real estate taxes, shall not exceed Tenant’s proportionate share of such taxes determined by a percentage, the numerator of which is the aggregate amount of rent paid by Tenant to Landlord under this Lease, and the denominator of which is the gross revenue of Landlord from the Building. Without limitation, Taxes shall not include any federal or state tax imposed on or measured by the income of Landlord from the operation of the Property; capital levy, franchise, capital stock, gift, estate or inheritance tax; or personal property taxes of Landlord or other tenants (other than taxes levied for personal property that is owned by Landlord and used solely in connection with the operation, maintenance and repair of the Property). If an assessment is payable in installments, Taxes for the year shall include the amount of the installment for the current year. For all other real estate taxes, Taxes for that year shall, at Landlord’s election, include either the amount accrued, assessed or otherwise imposed for the year or the amount due and payable for that year, provided that Landlord’s election shall be applied consistently throughout the Term. For the purpose of calculating Operating Costs, (i) Taxes (including the Margin Tax) will be calculated based on a completely assessed and 95% occupied building; and (ii) Margin Taxes will be calculated based on a 95% occupied building assuming that the tenants in the building are paying then current market rental rates. Notwithstanding the foregoing to the contrary, Tenant shall not pay more than Tenant’s Share of actual Operating Expenses for the calendar year.

(6) Amortized costs of capital improvements which are: (A) performed primarily to reduce Operating Costs or otherwise improve the operating efficiency of the Building, or (B) required to comply with any Laws that are enacted or first interpreted to apply to the Property after the Commencement Date. The amortized cost of capital improvements may, at Landlord’s option, include interest at the rate equal to eight percent (8%) per annum. The costs shall be amortized over the useful life of the capital improvements and only the amortized portion applicable to each calendar year shall be included in the Operating Costs for such calendar year.

(7) Reasonable management fees not to exceed 4.5% of the gross revenue of the Build; consulting fees; legal fees; accounting fees, but only to the extent expended on matters that are relative to all tenants of the Building; and the fair market rental of the Building managers’ offices, together with payments or credits Landlord makes to any tenant or tenants in the Building in lieu of Landlord providing any of the services or paying for any of the costs.

In the calculation of the Operating Costs hereunder, no cost or expense shall be charged more than once. If the Building is less than 95% occupied during any calendar year or if Landlord is not supplying services to at least 95% of the Total Building Area during any calendar year, Operating Costs which vary based on occupancy levels for such calendar year shall be determined as if the Building had been 95% occupied and Landlord had been supplying services to 95% of the Total Building Area.

E. Exclusions from Operating Costs . Notwithstanding the foregoing, Operating Costs shall exclude (i) principal and interest payments; (ii) all expenses for which Landlord has received reimbursements (other than in the nature of additional Rent) or is not charged, e.g., by reason of a warranty; (iii) costs of alterations or improvements of the leased premises of any tenant in the Building; (iv) the cost of correcting defects in the original construction of the Building or to cause the Building to be in compliance with applicable codes and Laws in effect prior to the Commencement Date ; (v) penalties or fines imposed upon Landlord or the Building due to the violation of any Laws or failure to timely pay obligations; (vi) real estate broker’s commissions, advertising and promotional/marketing expenses, attorneys fees, space planning and design fees incurred in leasing or procuring Tenants for space in the Building; (vii) depreciation and interest payments of the Building or equipment and amortization except as otherwise provided above; (viii) bad debt loss or rent loss; (ix) expenses for repairs occasioned by casualty loss to the extent such expense was required to be covered by insurance required to be maintained by Landlord under this Lease (excluding reasonable deductibles); (x) capital expenditures except as permitted in Section 4.D.(6) ; (xi) except as specifically included in Operating Costs under Section 4.D.(6 ), costs of a capital nature, including, without limitation, capital improvements, capital repairs, and capital equipment or other costs required to be capitalized under generally accepted accounting principles; (xii) costs, including insurance premiums (but other than maintenance costs and rental charges), of any art work (such as sculptures, statues, or paintings) used to decorate the Property; (xiii) cost of any repair made by Landlord resulting solely and directly from the negligence or willful misconduct of Landlord, or its employees, contractors or agents; (xiv) expenses and costs associated with services provided to any tenant of the Building with separate charge or credit, to the extent not provided to Tenant or for which Tenant is separately charged; (xv) costs for electricity or other utility services for which any tenant directly contracts with the local public service company or for above building standard usage of electricity or other utility services by such other tenants, (xvi) costs incurred in connection with the sale, financing or refinancing of the Property; (xviii) organizational expenses associated with the creation and operation of the entity which constitutes Landlord; (xvii) labor and employee benefit costs for employees above the grade of property manager, except that a pro-rated portion of the labor and employee benefit costs for the supervisory personnel of Landlord’s management company may be included in Operating Costs so long as such personnel are directly involved with property management for the Property (it being agreed that such costs shall be prorated to the extent such person performs services with respect to other buildings); (xviii) cost of special cleaning or other services not provided on a regular basis to tenants of the Building; (xix) all costs and expenses of installation and operation of any conference centers, health club, and restaurants in the Property; (xx) cost of structural repairs or replacement, including roof and subsurface/foundation work; (xxi) any Operating Costs representing any amount paid to a related entity or person which is in excess of the amount which would be paid to an unaffiliated party; (xxii) cost of removal, abatement or treatment of asbestos or any other Hazardous Materials in the Property; (xxiii) management fees in excess of 5 % of Base Rent; (xxiv) legal fees and disbursements and other expenses incurred in connection with negotiations or disputes with specific tenants or other occupants or prospective tenants or other occupants, or associated with the enforcement of any leases or the defense of Landlord’s title to or interest in the Building or any part thereof; (xxiii) Landlord’s general entity overhead and general administrative expenses not associated with the Property; (xxiv) costs of providing overtime “HVAC” service to any tenants, i.e., after Building Standard Hours.

F. Audit Rights . Tenant may, within ninety (90) days after receiving Landlord’s statement of actual Operating Costs, give Landlord written notice (“ Audit Notice ”) that Tenant intends to review Landlord’s records of the Operating Costs for that specific calendar year or portion thereof. If Tenant fails to timely deliver an Audit Notice to Landlord, Tenant shall be deemed to have waived its right to review Landlord’s records of the Operating Costs for that specific calendar year or portion thereof. Within a reasonable time after receipt of an Audit Notice, Landlord shall make all pertinent records that are reasonably necessary for Tenant to conduct its review available for inspection at Landlord’s office (or if Landlord’s

office is not located in Dallas, Texas, then at the property management office in the Building). If Tenant retains an agent to review Landlord’s records, the agent must be with a nationally or regionally recognized licensed CPA firm or a division of a commercial real estate services firm specializing in audit services; the audit may not be conducted by an auditor retained on a contingent fee basis. Tenant shall provide Landlord with a copy of any report prepared in connection with such review or audit within two (2) Business Days after Tenant’s receipt of such report. Tenant shall be solely responsible for all costs, expenses and fees incurred for the review or audit, including without limitation, the reasonable cost of Landlord’s personnel required to assist with such review or audit (but only after providing 8 hours of service without charge). Notwithstanding the forgoing, if the audit reveals over Operating Costs were overstated by 5% or greater, then Landlord shall pay the reasonable costs of the audit. Within 60 days after the records are made available to Tenant, Tenant shall have the right to give Landlord written notice (an “ Objection Notice ”) stating in reasonable detail any objection to Landlord’s statement of Operating Costs for that specific calendar year or portion thereof. If Tenant fails to give Landlord an Objection Notice within the 60 day period or fails to provide Landlord with an Audit Notice within the 30 day period described above, Tenant shall be deemed to have approved Landlord’s statement of Operating Costs and shall be barred from raising any claims regarding the Operating Costs for that specific calendar year or portion thereof. If Tenant provides Landlord with a timely Objection Notice, Landlord and Tenant shall work together in good faith to resolve any issues raised in Tenant’s Objection Notice. If Landlord and Tenant determine that Tenant’s Share of Operating Costs for the calendar year are less than the amount paid by Tenant, Landlord shall provide Tenant with a credit against the next installment of Rent in the amount of the overpayment by Tenant. Likewise, if Landlord and Tenant determine that Tenant’s Share of Operating Costs for the calendar year are greater than the amount paid by Tenant, Tenant shall pay Landlord the amount of any underpayment within 30 days. The records obtained by Tenant shall be treated as confidential and shall not, either directly or through Tenant’s agents, be disclosed to any other tenant in the Project. In no event shall Tenant be permitted to examine Landlord’s records or to dispute any statement of Operating Costs unless Tenant has paid and continues to pay all Rent when due.

G. Security Deposit .

(1) Security Deposit . Intentionally Omitted.

5. Electrical Services .

A. Payment of Electrical Costs . Tenant shall pay to Landlord the sum of (1) Tenant’s Share of Electrical Costs (defined below), plus (2) the cost of Tenant’s electrical consumption in the Premises (collectively, “ Tenant’s Electrical Charges ”) for each calendar year or portion thereof during the Term. The electrical consumption in the Premises may be separately submetered or reasonably estimated by Landlord. On or before the Commencement Date and December 15 of each subsequent calendar year, or as soon thereafter as is reasonably practicable, Landlord shall deliver to Tenant Landlord’s reasonable estimate of Tenant’s Electrical Charges for the applicable calendar year. Tenant shall pay to Landlord monthly as Additional Rent, in advance on or before the first day in each succeeding calendar month, an amount equal to one-twelfth (1/12th) of the estimate of Tenant’s Electrical Charges for the applicable calendar year. Landlord may adjust its estimate by notice to Tenant at any time during the applicable calendar year if actual Tenant’s Electrical Charges are substantially different from the estimate, and thereafter payments by Tenant shall adjust accordingly. If Landlord does not provide Tenant with an estimate of Tenant’s Electrical Charges by January 1 of a calendar year, Tenant shall continue to pay monthly installments based on the most recent estimate until Landlord provides Tenant with a new estimate. Upon delivery of the new estimate, an adjustment shall be made for any month for which Tenant paid monthly installments based on the prior year’s estimate. Tenant shall pay Landlord the amount of any underpayment within 10 days after receipt of the new estimate. Any overpayment shall be credited against the next ensuing installments of Additional Rent due

and owing by Tenant, or if no further Additional Rent is due, refunded to Tenant within 30 days of termination. The obligation of Tenant to pay Tenant’s Electrical Charges as provided herein shall survive the expiration or earlier termination of this Lease. If Tenant’s electrical consumption in the Premises is separately submetered, Landlord shall not include such amount in Tenant’s Electrical Charges and Landlord shall invoice Tenant monthly for Tenant’s submetered electrical consumption in the Premises. Tenant shall pay such invoice within 10 days after receipt thereof.

B. Statement of Electrical Costs . No later than June 30 of each calendar year or as soon thereafter as is reasonably practicable, Landlord shall deliver to Tenant a statement of the actual Electrical Costs for the prior calendar year, and the calculation of Tenant’s Electrical Charges for such calendar year. If Landlord fails to deliver the statement for actual Electrical Costs prior to the end of the succeeding calendar year, Landlord shall be deemed to have waived its right to collect any additional amount for Tenant’s Share of Electrical Costs for such prior calendar year. If Tenant’s payments of Tenant’s Electrical Charges during the prior calendar year exceed the actual amount of Tenant’s Electrical Charges for that year, Landlord shall credit the difference against the next ensuing installments of Additional Rent payable by Tenant. If Tenant’s payments of Tenant’s Electrical Charges during the prior calendar year are less than the actual amount of Tenant’s Electrical Charges for that year, Tenant shall pay the amount of the difference to Landlord in cash within 30 days after delivery of such statement. In addition, if Tenant elects to connect to the Building’s electrical management system, Tenant shall be responsible for the cost of connecting the electrical system in the Premises thereto.

C. Electrical Costs Defined . “ Electrical Costs ” shall mean the cost of all electricity consumed in the use, occupancy, and operation of the Property, including the parking garage for the Property, including taxes, maintenance and service costs, surcharge, fuel charge adjustments and other similar expenses, but Electrical Costs shall not include costs incurred for electricity supplied to leased space in the Building for tenants, including Tenant. Electrical Costs shall be adjusted as follows: (a) amounts reimbursable to Landlord for above standard electrical consumption shall be deducted from Electrical Costs, and (b) the cost of electricity incurred to provide overtime HVAC to specific tenants (as reasonably estimated by Landlord) shall be deducted from Electrical Costs. Landlord shall have the exclusive right to select the company providing electrical service to the Premises, the Building and the Property and shall use commercially reasonable efforts to select an electrical service provider with rates that are competitive in the market at the time of selection for providing services to multiple properties. Landlord and Tenant acknowledge that electricity costs and rates may be changed by virtue of peak demand, time of day rates, or other methods of billing, and such costs incurred as a result of the same will be included in the determination of Electrical Costs. Tenant shall have the right, at Tenant’s sole discretion and expense, to separately meter electrical service to the Premises.

D. Excess Electrical Service . Tenant’s use of electrical service shall not exceed, either in voltage, rated capacity, or use beyond Standard Electricity. If Tenant requests permission to consume excess electrical service, i.e., in excess of Standard Electricity, Landlord shall use reasonable efforts to supply Tenant’s excess electricity requirements if the same can be supplied without, in Landlord’s reasonable opinion, overloading the existing Building systems or if the additional equipment necessary to supply Tenant’s excess electricity requirements can be installed without, in Landlord’s reasonable opinion, creating a dangerous condition in the Building. The additional usage (to the extent permitted by Law), installation and maintenance costs of any utility service upgrades, meters, submeters, or other equipment required to provide such excess service, shall be paid for by Tenant. Landlord shall be entitled at any time to install submeters to measure the electricity used in the Building or the Premises at Landlord’s cost, or, if installation of submeters in the Premises is requested by Tenant, then at Tenant’s cost.

6. Services by Landlord .

A. Services . Landlord shall furnish the following services to Tenant 24/7 unless otherwise described: (1) Heat and air conditioning (as required by the seasons) during Building Standard Hours, except on Holidays (the “ HVAC Standard Hours ”), at such temperatures and in such amounts as are standard for comparable buildings, or as is required by governmental authority. Landlord shall utilize a Vykon or comparable system to furnish HVAC services in the Premises and Building. If Tenant requires HVAC services at any time other than HVAC Standard Hours, Tenant shall notify Landlord of the additional time period Tenant desires heating and air conditioning in the Premises, by contacting property management by electronic mail or telephone communication by an authorized representative of Tenant and Landlord shall use reasonable efforts to furnish such additional heating and air conditioning. Tenant shall pay Landlord for each hour of heating and air conditioning service during periods other than the HVAC Standard Hours an amount equal to Landlord’s cost for such additional HVAC services at no mark-up, except for reasonable increases owing to increases in the costs of utilities applicable to such HVAC services ; (2) cold water (at the normal temperature of the water supply to the Building) and hot water for lavatory and toilet purposes, with water service to be at supply points provided for general use of tenants of the Building through fixtures installed by Landlord, or by Tenant with Landlord’s prior consent; (3) electricity in accordance with industry standards for office buildings similar to the Building. Tenant acknowledges that the standard amount of electricity made available to the Premises (“ Standard Electricity ”) shall be 6.0 watts per Rentable Square Foot of the Premises for convenience outlets and lighting during Building Standard Hours. Such Standard Electricity will be allocated as follows: (a) 4.5 watts per square foot for convenience outlets; and (b) 1.5 watts per square foot for lighting; (4) janitor service to the Premises after 6:00 p.m. on days other than Saturdays, Sundays, and Holidays and to the Building, including those services specified in Exhibit C-2 . If Tenant’s use, floor covering or other improvements require special services in excess of the standard janitorial services for the Building, Tenant shall pay the additional cost of such excess services; (5) window washing as determined by Landlord in its reasonable discretion for a first class office building in Dallas, Texas; (6) passenger elevators (provided that Landlord may reasonably limit the number of elevators to be in operation on Saturdays, Sundays, and Holidays) and freight elevator service in common with the other tenants but only when scheduled through the Property manager; (7) replacements of Building standard light bulbs and ballasts in the Premises; (8) controlled access, including (A) card authorized access to the Building and controlled passenger elevator access after Building Standard Hours on Monday through Friday and all day on Saturdays, Sundays and Holidays, and (B) card authorized access parking gates and garage elevators; (9) Building concierge services; and (10) fire and life safety systems. Landlord shall provide an adequate number of cards for card authorized access for Tenant’s use. If Tenant requires any replacement cards thereafter, the charge shall not exceed $25.00 per card during the Term. Tenant shall have the option to install independent controlled access for its Premises, at Tenant’s sole cost and expense, subject to Landlord’s right of entry as provided herein.

Tenant shall have the right to install, at Tenant’s sole cost, supplemental HVAC units above the ceiling of the Premises to provide for other heating, venting and air conditioning services to the Premises, subject to Landlord’s approval of the size and location of such units, which approval by Landlord shall not be unreasonably withheld, delayed or conditioned. In this regard, Tenant shall be permitted to tap into water lines to serve such additional units, but only to the extent the water lines and existing Building systems are not negatively affected.

B. Interruption of Services . Landlord does not warrant that the services provided by Landlord will be free from any slow‑down, interruption, or stoppage under voluntary agreement between Landlord and governmental bodies, regulatory agencies, utility companies, and others supplying services or caused by the maintenance, repair, replacement, or improvement of any equipment involved in the furnishing of the services or caused by changes of services, alterations, strikes, lock‑outs, labor controversies, fuel

shortages, accidents, acts of God, the elements, or other causes beyond the reasonable control of Landlord. No slow‑down, interruption, or stoppage of the services may be construed as an eviction, actual or constructive, of Tenant or as a breach of the implied warranty of suitability, or, except as provided below, cause an abatement of Rent or in any manner or for any purpose relieve Tenant from its obligations under this Lease. Landlord is not liable for damage to persons or property, or in default under this Lease, as a result of any slow‑down, interruption, or stoppage as defined above. Landlord shall use due diligence to resume the service upon any slow‑down, interruption, or stoppage. In no event shall Landlord be liable to Tenant for any loss or damage, including theft of Tenant’s property, arising out of or in connection with such slow‑down, interruption, or stoppage; however, (i) if any portion of the Premises becomes unfit for occupancy for a period in excess of five (5) consecutive Business Days as a result of a failure to provide electricity or heating and air conditioning or water or plumbing services or elevator service and such failure was not caused by Tenant or Tenant’s employees, agents or contractors, then Tenant, as its sole and exclusive remedy or (ii) if access to the Premises is prohibited for a period of thirty (30) consecutive days, in either case, Tenant shall be entitled to receive an abatement of Rent payable hereunder for that portion of the Premises which is not fit for occupancy during the period beginning on the sixth (6 ^th ) Business Day after such failure or on the thirty-first (31 ^st ) day after denial of access and ending on the day that the service or access has been restored, as applicable. If the entire Premises has not become unfit for occupancy, the abatement that Tenant shall be entitled to receive shall be prorated based on the percentage of the Premises which is unfit for occupancy and not used by Tenant to the total Rentable Square Footage of the Premises during the failure of services. The foregoing abatement remedy shall not prevent Tenant from asserting a right to constructive eviction if the Premises are unfit for occupancy or if access to the Premises is prohibited for an unreasonably extended period of time. In the event parking for Tenant’s employees is not made available to Tenant at the Building in accordance with Exhibit E , Landlord shall provide alternative parking for Tenant in a location within reasonably close proximity to the Building. If Landlord is not able to provide alternative parking or if the period of time during which Tenant is required to use alternative parking exceeds thirty (30) consecutive Business Days, then Tenant shall receive an equitable reduction in the Parking Charge under the Lease beginning on the thirty-first (31st) Business Day and continuing until parking is again available at the Building. If the alternative parking for Tenant represents more than fifty percent (50%) of the parking spaces that Landlord is required to provide to Tenant in the Building Garage in accordance with Exhibit E and extends beyond one hundred twenty (120) days, then Tenant shall have the right to terminate the Lease at that time by providing ninety (90) days’ prior written notice to Landlord; provided, however, that such termination right will be waived by Tenant if Landlord provides the required Parking Spaces at the Building within thirty (30) days following receipt of such written notice from Tenant. If any of the foregoing services are interrupted by reason of a casualty, the provisions of Section 15 shall govern and control

C. Third Party Services . If Tenant desires any service which Landlord has not specifically agreed to provide in this Lease, such as private security systems or telecommunications services serving the Premises, Tenant shall procure such service directly from a reputable third party service provider (“ Provider ”) for Tenant’s own account. Tenant shall require each Provider to comply with the Building’s rules and regulations, all Laws and Landlord’s reasonable policies and practices for the Building, including delivery of evidence reasonably satisfactory to Landlord that such Provider’s insurance is in full force and effect and satisfactory to Landlord. Tenant acknowledges Landlord’s current policy that requires all Providers utilizing any area of the Building or the Property outside the Premises to be approved by Landlord and to enter into a written agreement acceptable to Landlord prior to gaining access to, or making any installations in or through such area. Accordingly, Tenant shall give Landlord written notice sufficient for such purposes. Without limitation of the foregoing, unless all of the following conditions are satisfied to Landlord’s reasonable satisfaction, it shall be reasonable for Landlord to refuse to give its approval to any telecommunications Provider: (1) Landlord shall incur no expense with respect to any aspect of the Provider’s

provision of its services, including without limitation, the costs of installation, materials and services; (2) prior to commencement of any work in or about the Building by the Provider, the Provider shall supply Landlord with such written indemnities, insurance, financial statements, and such other items as Landlord reasonably determines to be necessary to protect its financial interests and the interests of the Building relating to the proposed activities of the Provider; (3) the Provider agrees to abide by such rules and regulations, building and other codes, job site rules and such other requirements as are reasonably determined by Landlord to be necessary to protect the interests of the Building, the tenants in the Building and Landlord, in the same or similar manner as Landlord has the right to protect itself and the Building with respect to proposed Alterations as described in Section 8.C. of this Lease; (4) Landlord determines that there is sufficient space in the Building for the placement of all of the Provider’s equipment and materials; (5) the Provider agrees to abide by Landlord requirements, if any, that provider use existing Building conduits and pipes or use Building contractors (or other contractors approved by Landlord); (6) Landlord receives from the Provider such compensation as is determined by Landlord to compensate it for space used in the Building for the storage and maintenance of the Provider’s equipment, for the fair market value of the Provider’s access to the Building, and the costs which may reasonably be expected to be incurred by Landlord; (7) the Provider agrees to deliver to Landlord detailed “as built” plans immediately after the installation of the Provider’s equipment is complete; and (8) all of the foregoing matters are documented in a written license agreement between Landlord and the Provider, the form and content of which is satisfactory to Landlord in its reasonable discretion.

7. Assignment and Subletting .

A. Consent Required . Except in connection with a Permitted Transfer (as defined in Section 7.D below) , Tenant may not, without Landlord’s prior written consent: (1) assign or transfer this Lease or any interest therein; (2) permit any assignment of this Lease or any interest therein by operation of Law; (3) sublet the Premises or any part thereof; (4) grant any license, concession, or other right of occupancy of any portion of the Premises; (5) mortgage, pledge, or otherwise encumber its interest in this Lease; or (6) permit the use of the Premises by any parties other than Tenant and its employees or employees of a Tenant Affiliate. Landlord shall not unreasonably withhold, delay or condition its consent to a proposed sublease or assignment provided that Landlord does not exercise its termination rights set forth in Section 7.B . It is agreed that Landlord’s consent shall not be considered unreasonably withheld if: (a) the proposed transferee’s financial condition does not meet Landlord’s then current criteria for Building tenants; (b) the proposed transferee’s business is not suitable for the Property considering the business of the other tenants and the Building’s reputation, or would result in a violation of another tenant’s rights; (c) the proposed transferee is a governmental agency, medical office, or telemarketing business; or (d) Tenant is in default after the expiration of the notice and cure periods in this Lease; or (e) the character of the business to be conducted within the Premises by the proposed subtenant or assignee is likely to substantially increase the expenses or costs of providing Building services, or the burden on parking, existing janitorial services or elevators in the Building. Landlord’s consent to any assignment or subletting is not a waiver of Landlord’s right to approve or disapprove any subsequent assignment or subletting. Tenant and any Guarantor of Tenant’s obligations under this Lease shall remain jointly and severally liable for the payment of Rent and performance of all other obligations under this Lease after any assignment or subletting, except for (i) a Permitted Transfer under Section 7.D. (2) or (ii) an assignment to an assignee with a net worth equal to or greater than that of Tenant at the time of the assignment, subject to the approval of Landlord’s mortgagee. Except as provided below with respect to a Permitted Transfer, any change in a majority of the voting rights or other control rights of Tenant is an assignment for purposes of this Section 7 . Except as provided below with respect to a Permitted Transfer, if Tenant is a partnership, then any transfer of a general partnership interest is an assignment for purposes hereof. As a condition to the effectiveness of each assignment or subletting, and whether or not Landlord’s prior consent is required for the assignment or subletting, Tenant shall pay to

Landlord its administrative and legal costs in connection therewith, not to exceed $2,000. Any attempted assignment or sublease by Tenant in violation of the terms of this Section 7 is void.

B. Notice of Proposed Assignment or Sublease . As part of Tenant’s request for Landlord’s consent to any assignment or sublease, Tenant shall deliver a notice to Landlord specifying the name of, financial information for, and the nature of the business of the proposed assignee or subtenant, including the number of employees of such proposed assignee or subtenant at the Premises, a copy of the proposed assignment or sublease instrument and the proposed effective date and terms of the assignment or sublease. Tenant may not assign or sublease all or any part of the Premises at any time when Tenant is in default under this Lease, after applicable notice and cure periods. Except as provided below with respect to a Permitted Transfer, Landlord shall, within 10 Business Days (if a proposed transfer for 15,000 Rentable Square Feet or less) or 15 Business Days (if a proposed transfer for over 15,000 Rentable Square Feet) after its receipt of all information and documentation required herein, notify Tenant in writing that Landlord elects, to: (1) terminate this Lease as to the space that is the subject of Tenant’s notice as of the date specified by Tenant; (2) consent to the assignment or sublease, in which event Landlord will execute a consent agreement in the form reasonably designated by Landlord; or (3) refuse to consent to Tenant’s assignment or sublease of that space. If Landlord does not notify Tenant of Landlord’s election within the 30-day period, Landlord is deemed to elect option (3). In the event Landlord elects to terminate this Lease pursuant to option (1) above, such termination shall be effective on the proposed effective date of the assignment or sublease for which Tenant requested consent as to the Premises or portion thereof subject to the proposed assignment or sublease.

C. Excess Consideration . Tenant shall pay Landlord fifty percent (50%) of all Rent which Tenant receives as a result of an assignment of this Lease or sublease of the Premises or any portion thereof, that is in excess of the Rent payable to Landlord for the portion of the Premises and the Term covered by the assignment or sublease; provided that Tenant shall be entitled to deduct from the excess all reasonable out-of-pocket expenses actually incurred by Tenant in connection with such assignment or sublease so long as Tenant provides Landlord with documentation evidencing Tenant’s payment of such out-of-pocket expenses. Tenant shall pay Landlord for Landlord’s fifty percent (50%) share of any excess within 10 days after Tenant’s receipt thereof. In the event of an Event of Default hereunder, Landlord, in addition to any other remedies under this Lease or provided by Law, may at its option collect directly from the assignee or sublessee all rents payable to Tenant under the assignment or sublease and apply the rent against any sums due to Landlord under this Lease. Tenant authorizes and directs any assignee or sublessee to make payments of rent directly to Landlord upon receipt of notice from Landlord. No direct collection of rent by Landlord from any assignee or sublessee is a novation or a release of Tenant or Guarantor from the performance of their obligations under this Lease or under any guaranty executed by Guarantor. Receipt by Landlord of rent from any assignee, sublessee, or occupant of the Premises is not a waiver of the covenant against assignment and subletting or a release of Tenant or Guarantor.

D. Permitted Transfers . Notwithstanding anything to the contrary set forth above, Tenant may assign its entire interest under this Lease or sublease the Premises or any portion thereof, without the consent of Landlord, without any termination right afforded Landlord as permitted by Section 7.B , and without being required to pay Landlord any excess consideration as required by Section 7.C above, to (1) an affiliate, subsidiary, or parent of Tenant, or a corporation, partnership or other legal entity wholly-owned by Tenant (collectively, a “Tenant Affiliate”), or (2) a successor to Tenant by purchase, merger, consolidation or reorganization or spin-out, provided that, with respect to a transfer under Section 7.D(2) , all of the following conditions are satisfied (each such transfer under Section 7.D(1) and (2) , being a “Permitted Transfer”): (i) Tenant is not in default under this Lease (beyond applicable notice and cure periods); (ii) Tenant shall give Landlord written notice at least 30 days prior to the effective date of the proposed Permitted Transfer; and (iii) with respect to a purchase, merger, consolidation or reorganization (other than a spin-out) or any Permitted

Transfer which results in Tenant ceasing to exist as a separate legal entity, (a) Tenant’s successor shall own all or substantially all of the assets of Tenant, and (b) Tenant’s successor shall have a net worth which is at least equal to the greater of Tenant’s net worth at the date of this Lease or Tenant’s net worth as of the day prior to the proposed purchase, merger, consolidation or reorganization, in which case Tenant shall be released from its obligations under this Lease. If to a spun-out entity, then Tenant shall promptly provide satisfactory evidence to Landlord of the net worth of such entity as reasonable in light of the remaining obligations of Tenant under the Lease, which evidence shall be reasonably considered by Landlord in determining, in its sole discretion, whether Tenant shall be released from its obligations under this Lease. Tenant’s notice to Landlord shall include information and documentation showing that each of the above conditions has been satisfied. If requested by Landlord, Tenant’s successor shall sign a commercially reasonable form of assumption agreement. As used herein, (A) “parent” shall mean a company which owns a majority of Tenant’s voting equity; (B) “subsidiary” shall mean an entity wholly owned or controlled by Tenant or at least 51% of whose voting equity is owned or controlled by Tenant; and (C) “affiliate” shall mean an entity controlled by, controlling or under common control with Tenant. Notwithstanding the foregoing, if any parent, affiliate or subsidiary to which this Lease has been assigned or transferred (i.e., pursuant to a Permitted Transfer) subsequently sells or transfers its voting equity or its interest under this Lease other than to another parent, subsidiary or affiliate of the original Tenant named hereunder (i.e., not pursuant to a Permitted Transfer), such sale or transfer shall be deemed to be a transfer requiring the consent of Landlord hereunder.

8. Repairs and Alterations .

A. Tenant’s Repair Obligations . Tenant shall, at its sole cost and expense, keep the Premises and all fixtures installed by or on behalf of Tenant in good and tenantable repair and condition. Tenant shall promptly make all necessary non‑structural repairs and replacements thereto except those caused by fire or other casualty covered by Landlord’s insurance on the Building, all at Tenant’s expense, under the supervision and with the approval of Landlord. All repairs and replacements must be equal or better in quality and class to the original work. Tenant’s repair obligations include, without limitation, repairs to floor covering, interior partitions, doors, the interior side of demising walls, electronic, phone and data cabling and related equipment (collectively, “ Cable ”) that is installed by or for the exclusive benefit of Tenant and located in the Premises or other portions of the Building, supplemental air conditioning units, kitchens, including hot water heaters and plumbing serving Tenant exclusively, and alterations performed by contractors engaged by Tenant, including related HVAC balancing. Without diminishing this obligation of Tenant, if Tenant fails to make any repairs and replacements within 10 days after notice from Landlord (although notice shall not be required in the event of an emergency), Landlord may at its option make the repairs and replacements and Tenant shall pay Landlord on demand the reasonable costs incurred by Landlord, plus an administrative fee equal to 5% of the actual cost thereof. Subject to Section 17 below, Tenant shall also pay the cost of repairs and replacements due to damage or injury to the Building, the Property or any part thereof caused by Tenant, or Tenant’s employees, officers, directors contractors, or agents. Such costs shall be payable to Landlord within 30 days after receipt of an invoice therefor. If Landlord performs any maintenance or repairs to the Premises at the request of Tenant, Tenant shall pay to Landlord the actual cost thereof, plus an administrative fee equal to 5% of the actual cost thereof, within 30 days after receipt of an invoice therefor.

B. Landlord’s Repair Obligations . Landlord shall keep and maintain in good repair, condition and working order the structural elements of the Building, the mechanical, electrical, plumbing and life safety systems serving the Building in general, the Common Areas, the roof of the Building, and the exterior windows of the Building. Landlord shall operate and maintain the Common Areas in a clean and first class condition comparable to other Class AA buildings in the Uptown market of Dallas. Subject to Section 17 below, Landlord shall also make repairs and replacements due to damage or injury to the Premises or any part thereof

caused by Landlord, or Landlord’s employees, contractors, or agents. Landlord shall promptly make repairs (taking into account the nature and urgency of the repair) for which Landlord is responsible.

C. Alterations . Tenant shall not make or permit any alterations, improvements, or additions or install any Cable (collectively, “ Alterations ”) in or to the Premises or the Building without Landlord’s prior consent, which consent shall not be unreasonably withheld or delayed with respect to Alterations in the Premises; provided that such alterations will not (1) affect any structural or load bearing portions of the Building, (2) result in a material increase of electrical usage above Standard Electricity, (3) result in an increase in Tenant’s usage of the Building’s heating or air conditioning, (4) materially increase usage of mechanical, electrical or plumbing systems in the Premises or the Building, (5) affect areas of the Premises which can be viewed from Common Areas or affect the exterior appearance of the Building, (6) require materially greater or more difficult cleaning work (e.g., kitchens, reproduction rooms and interior glass partitions), or (7) adversely affect Landlord’s ability to deliver Building services to other tenants of the Building. Notwithstanding the foregoing, Landlord’s consent shall not be required for any Alteration that satisfies all of the following criteria (a “ Cosmetic Alteration ”): (i) is of a cosmetic nature such as painting, wallpapering, and hanging pictures; (ii) is not visible from the exterior of the Premises or Building; (iii) will not affect the systems or structure of the Building; and (iv) does not require work to be performed inside the walls or above the ceiling of the Premises. However, even though consent is not required, the performance of Cosmetic Alterations shall be subject to all the other provisions of this Section 8.C . Prior to starting any Alterations, Tenant shall furnish Landlord with plans and specifications reasonably acceptable to Landlord; names of contractors reasonably acceptable to Landlord (provided that Landlord may designate specific contractors with respect to Building systems); copies of contracts; necessary permits and approvals; evidence of contractor’s and subcontractor’s insurance in amounts reasonably required by Landlord; and any security for performance that is reasonably required by Landlord. Changes to the plans and specifications must also be submitted to Landlord for its approval. Tenant shall reimburse Landlord within 10 days after receipt of an invoice for reasonable sums paid by Landlord for third party examination of Tenant’s plans for non-Cosmetic Alterations. In addition, within 10 days after receipt of an invoice from Landlord, Tenant shall pay Landlord a fee for Landlord’s oversight and coordination of any non-Cosmetic Alterations equal to 5% of the actual hard costs of the non-Cosmetic Alterations, if Landlord is the project manager for the Alterations, or 2% of the actual hard costs of the non-Cosmetic Alterations, if Tenant retains a separate project manager for the Alterations. Upon completion, Tenant shall furnish “as-built” plans (except for Cosmetic Alterations), completion affidavits, full and final waivers of lien and receipted bills covering all labor and materials. Neither Landlord’s approval of Tenant’s plans and specifications for the alterations or improvements nor Landlord’s acceptance of Tenant’s as-built plans is a confirmation or agreement by Landlord that the improvements and alterations comply with applicable Laws. All Alterations must comply with all insurance requirements and applicable Laws, including without limitation, all applicable environmental laws and the Americans With Disabilities Act of 1990 (the “ ADA ”). Provided Landlord has placed the Building in compliance with the ADA prior to Tenant’s occupancy, if Tenant’s use of the Premises causes Landlord to make any alterations or improvements to the Building to comply with the provisions of ADA, Tenant shall reimburse Landlord for the cost of the alterations or improvements, plus an administrative fee equal to 5% of the actual hard costs thereof.

9. Use and Occupancy . The Premises shall be used and occupied by Tenant only for the Permitted Use and for no other purpose. The Premises may not be used for a title insurance company or retail banking, nor may Tenant place an automated teller machine within the Premises or the Building, without Landlord’s express written consent. Tenant shall use and maintain the Premises in a clean, careful, safe, and proper manner and shall comply with all applicable Laws regarding the operation of Tenant’s business and the use, condition (as to the leasehold improvements), configuration and occupancy of the Premises. Tenant shall also comply with the Rules and Regulations attached hereto as Exhibit D and such other reasonable rules

and regulations adopted by Landlord from time to time. Landlord shall not knowingly discriminate against Tenant in Landlord’s enforcement of the Rules and Regulations. Notwithstanding anything to the contrary contained herein, Tenant will not use the Premises in any manner which would result in use or occupancy by more than one (1) person per 250 Rentable Square Feet of the Premises. In no event will the Premises be used for a telephone marketing facility, call center, claims processing center or other similar use. Landlord shall use reasonable efforts to enforce compliance by all other tenants with the Rules and Regulations from time to time in effect, but Landlord is not responsible to Tenant for failure of any person to comply with the Rules and Regulations. Landlord agrees that it will not enter into a lease for space adjoining the Premises that is not restricted to use for general office purposes only

10. Parking . Tenant’s parking rights and obligations are set forth in Exhibit E attached to this Lease.

11. Mechanic’s Liens . Tenant shall not cause or permit any mechanic’s or materialmen’s liens or other liens to be placed upon the Property, the Building, the Premises or Tenant’s leasehold interest by any contractor, subcontractor, laborer, or materialman performing any labor or furnishing any materials to Tenant for any Alteration or repair of or to the Premises, the Building, or any part thereof. If any lien is so filed, Tenant shall cause the same to be discharged within 10 days after Tenant’s receipt of notice of such filing. If Tenant does not discharge the lien, by bonding or otherwise, within the 10-day period, then, in addition to any other right or remedy of Landlord, Landlord shall have the right, but not the obligation, to discharge the lien by paying the amount claimed to be due or by procuring the discharge of the lien by deposit in court or bonding. Tenant shall reimburse Landlord for any amount paid by Landlord relating to any lien not caused by Landlord, including reasonable legal and other expenses, within 10 days after receipt of an invoice from Landlord.

12. Liability of Landlord . Notwithstanding anything to the contrary contained in this Lease, Landlord is not liable to Tenant (or to any person or entity claiming by, through or under Tenant) or to any other person and Tenant hereby waives all claims or loss or damage to Tenant’s business or loss or damage to Tenant’s property, for any injury or damage to person or property due to: (1) the Building or related improvements or appurtenances being out of repair, or defects in or failure of pipes or wiring, or backing up of drains, or the bursting or leaking of pipes, faucets, and plumbing fixtures, or gas, water, steam, electricity, or oil leaking, escaping, or flowing into the Premises, EVEN IF THE SAME IS CAUSED BY THE NEGLIGENCE, OF LANDLORD, BUT NOT IF CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LANDLORD , (2) any loss or damage caused by the acts or omissions of other tenants in the Building or of any other persons except the authorized employees and agents of Landlord; or (3) any loss or damage to property or person occasioned by theft, fire, act of God, public enemy, injunction, riot, insurrection, war, court order, requisition, or order of governmental authority, or any other cause beyond the control of Landlord. All personal property at the Premises is at the sole risk of Tenant. Further notwithstanding the foregoing or anything else to the contrary contained in this Lease, the liability of Landlord to Tenant for any default or indemnity by Landlord under this Lease is limited to the interest of Landlord in the Building. Neither Landlord nor any Landlord Party (defined below) has any personal liability for any amounts payable or obligations performable by Landlord under this Lease. In no event shall Landlord or any Landlord Party be liable to Tenant or any party claiming though Tenant for any special, consequential or punitive damages.

13. Indemnification and Waiver of Claims . Subject to Section 17 and except to the extent caused by the negligence or willful misconduct of Landlord or any Landlord Party (hereinafter defined), Tenant shall indemnify, defend, and hold Landlord, its partners, members, principals, officers, directors, employees, lenders and agents (collectively, “ Landlord Party ”) harmless against and from all liabilities, obligations, damages, penalties, claims, actions, costs, charges and expenses, including, without limitation, reasonable attorneys’ fees, which may be imposed upon, incurred by or asserted against Landlord or any Landlord Party and arising out of or in connection with any damage or injury occurring in the Premises or on the Property

or any acts or omissions (including violations of Law) of Tenant or its partners, members, principals, officers, directors, employees, lenders and agents (collectively, “ Tenant Party ”).

14. Insurance .

(a) Tenant shall, at its expense, maintain at all times during the Term, (1) commercial general liability insurance applicable to the Premises providing, on an occurrence basis, a minimum combined single limit of $2,000,000.00 (including Tenant’s contractual liability to indemnify and defend Landlord); (2) all risk property/business interruption insurance, including flood, written at replacement cost value and with a replacement cost endorsement covering all of Tenant’s trade fixtures, equipment, furniture and other personal property in the Premises, all Alterations and all Tenant’s Work in excess of the Allowance (as defined in Exhibit C ), if any, (3) worker’s compensation insurance as required by applicable Laws, (4) employer’s liability insurance coverage of at least $1,000,000.00 per occurrence, and (5) business income (formerly business interruption) insurance for Tenant with sufficient limits to cover reasonably anticipated business losses including without limitation, loss of electrical power. Tenant’s policies must be written by an insurance company or companies licensed to do business in the State of Texas with an A.M. Best rating of A-IX, or better, with Landlord and Landlord’s property manager (“ Landlord’s Agent ”), named as additional insureds on applicable policies. If Tenant has an umbrella or excess policy, Tenant shall name Landlord and Landlord’s Agent as additional insureds on all layers of umbrella or excess policies. To the extent reasonably available, Tenant shall obtain a written obligation on the part of each insurance company to notify Landlord at least 30 days prior to cancellation of the insurance. Tenant shall deliver copies of its insurance policies or duly executed certificates of insurance to Landlord prior to occupying any part of the Premises. Tenant shall deliver satisfactory evidence of renewals of the insurance policies to Landlord prior to the expiration of the respective policies. If Tenant fails to comply with these insurance requirements after being given written notice and if Tenant fails to correct any deficiencies within 14 days, then, Landlord may obtain the insurance and Tenant shall pay to Landlord on demand as Additional Rent the premium cost thereof and an administrative fee of 5% of the cost thereof

(b) Landlord shall maintain at all times during the Term, (1) commercial general liability insurance applicable to the Common Areas providing, on an occurrence basis, a minimum combined single limit of $2,000,000.00 (including Landlord’s contractual liability to indemnify and defend Tenant); (2) causes of loss – special form, also known as, all risk property/ insurance, written at replacement cost value and with a replacement cost endorsement covering all of the Improvements, excluding, however, above building standard leasehold improvements of tenants; (3) rental loss insurance covering loss of rents for a period of 12 months; and (4) boiler and other equipment loss insurance covering a loss of equipment, fixtures and other property generally covered in such policies.

15. Fire or Other Casualty .

A. Repair or Termination by Landlord . If the Premises or any part thereof are damaged by fire or other casualty, Tenant shall give prompt notice thereof to Landlord. If (1) the Building is so damaged by fire or other casualty that substantial alteration or reconstruction of the Building is, in Landlord’s sole opinion, required (whether or not the Premises are damaged); (2) any mortgagee under a mortgage or deed of trust covering the Property requires that the insurance proceeds payable as a result of the fire or other casualty be used to retire the mortgage debt; (3) if a material uninsured loss to the Building occurs; (4) the Premises have been materially damaged and there is less than 2 years of the Term remaining on the date of the casualty; or (5) Landlord is not permitted by Law to rebuild the Building in substantially the same form as existed before the fire or casualty, Landlord may, at its sole option, terminate this Lease by giving Tenant notice of termination within 60 days after the date of the damage. If Landlord terminates this Lease under this Section, Rent shall abate as of the date of the damage. If Landlord does not elect to terminate this Lease,

Landlord shall within 60 days after the date of the damage commence to repair and restore the Building to the extent of insurance proceeds actually received (except that Landlord shall not be responsible for delays outside its control) to substantially the same condition in which it was immediately prior to the casualty; provided however, that with respect to the Premises, Landlord shall only be required to reconstruct building standard leasehold improvements existing in the Premises as of the date of the damage up to the amount of the Allowance, and Tenant shall be required to pay for the cost of restoring any other leasehold improvements. Landlord is not required to rebuild, repair, or replace any part of Tenant’s furniture or furnishings or fixtures and equipment removable by Tenant under the provisions of this Lease. Landlord is not liable for any inconvenience or annoyance to Tenant or injury to the business of Tenant resulting in any way from casualty damage or the repairs.

B. Termination by Either Party . If all or any portion of the Premises (or other portion of the Building as would prevent reasonable access to the Premises) is damaged as a result of fire or other casualty, Landlord shall, with reasonable promptness (within 60 days of the date of the damage), cause an architect or general contractor selected by Landlord to provide Landlord and Tenant with a written estimate of the amount of time required to substantially complete the repair and restoration of the Premises, using standard working methods (the “ Completion Estimate ”). If the Completion Estimate indicates that the Premises cannot be made tenantable within 270days from the date of the damage, then notwithstanding Section 15.A above to the contrary, either party shall have the right to terminate this Lease by giving written notice to the other of such election within 10 days after receipt of the Completion Estimate. Tenant, however, shall not have the right to terminate this Lease if the fire or casualty was caused by the negligence or intentional misconduct of any Tenant Party. If neither Party terminates this Lease under this Section 15.B, then Landlord shall repair and restore the Premises in accordance with, and subject to the limitations of Section 15.A above.

C. Abatement of Rent . In the event a material portion of the Premises is damaged as a result of fire or other casualty, during the time and to the extent the Premises are unfit for occupancy, Tenant shall be entitled to a fair reduction of Rent with respect to the portion of the Premises that is unfit for occupancy and is not used by Tenant. Landlord and Tenant hereby waive the provisions of any Law relating to the matters addressed in this Section 15, and agree that their respective rights for damage or destruction to the Premises or the Property shall be those specifically provided in this Lease.

16. Condemnation . Either party may terminate this Lease if the whole or any material part of the Premises (or a material portion of the Building Garage) shall be taken or condemned for any public or quasi‑public use under Law, by eminent domain or private purchase in lieu thereof (a “ Taking ”). Landlord shall also have the right to terminate this Lease if there is a Taking of any portion of the Building or Property which would leave the remainder of the Building unsuitable for use as an office building in a manner comparable to the Building’s use prior to the Taking. In order to exercise its right to terminate the Lease, Landlord or Tenant, as the case may be, must provide written notice of termination to the other within 45 days after the terminating party first receives notice of the Taking. Any such termination shall be effective as of the date the physical taking of the Premises or the portion of the Building or Property occurs. If this Lease is not terminated, the Total Building Area, the Rentable Square Footage of the Premises and Tenant’s Share shall, if applicable, be appropriately adjusted. In addition, Rent for any portion of the Premises taken or condemned shall be abated during the unexpired Term of this Lease effective when the physical taking of the portion of the Premises occurs. All compensation awarded for a Taking, or sale proceeds, shall be the property of Landlord, any right to receive compensation or proceeds being expressly waived by Tenant. However, Tenant may file a separate claim at its sole cost and expense for Tenant’s personal property and Tenant’s reasonable relocation expenses, provided the filing of the claim does not diminish the award which would otherwise be receivable by Landlord.

17. Waiver of Subrogation . Notwithstanding anything to the contrary contained in this Lease, each party hereto waives all claims that arise or may arise in its favor against the other party, or anyone claiming through or under them, by way of subrogation or otherwise, during the Term or any extension or renewal thereof, for all losses of, or damage to, any of its property (EVEN IF THE LOSS OR DAMAGE IS CAUSED BY THE FAULT OR NEGLIGENCE OF THE RELEASED PARTY OR ANYONE FOR WHOM THE RELEASED PARTY IS RESPONSIBLE) , which loss or damage is (or would have been, had the insurance required by this Lease been carried) covered by the fire and extended coverage insurance policies required to be carried hereunder, whether or not such insurance policies are maintained. These waivers are in addition to, and not in limitation of, any other waiver or release in this Lease with respect to any loss or damage to property of the parties. Since these mutual waivers preclude the assignment of any claim by way of subrogation (or otherwise) to an insurance company (or any other person), each party shall immediately give each insurance company issuing to it policies of fire and extended coverage insurance written notice of the terms of these mutual waivers, and have the insurance policies properly endorsed, if necessary, to prevent the invalidation of the insurance coverages by reason of these waivers.

18. Taxes on Tenant’s Property . Tenant shall pay, and indemnify, defend, and hold Landlord harmless against, all taxes levied or assessed against personal property, furniture, fixtures, or other improvements placed by or for Tenant in the Premises or if the assessed value of Landlord’s property is increased by inclusion of personal property, furniture, fixtures, or other improvements placed by or for Tenant in the Premises and Landlord elects to pay the increased taxes, Tenant shall pay to Landlord that part of the taxes for which Tenant is liable under this Section.

19. Rights Reserved by Landlord . Landlord reserves the following rights, exercisable without notice and without liability to Tenant for damage or injury to property, persons, or business and without effecting an eviction, constructive or actual, or disturbance of Tenant’s use or possession or giving rise to any claim for set-off or abatement of Rent: (1) to change the Building’s or the Property’s name or street address; (2) to install, affix, and maintain any signs on the exterior and interior of the Building; (3) to reasonably designate and approve, prior to installation, all types of window shades, blinds, drapes, awnings, window ventilators, and similar equipment, and to control all lighting that is visible from the exterior of the Building; (4) to reasonably designate, restrict, and control any and all services provided to tenants of the Building and, in general, the exclusive right to designate, limit, restrict, and control any business and any service in or to the Building and its tenants; (5) to enter upon the Premises (with prior notice as reasonable, other than for scheduled janitorial services) at reasonable hours to inspect, clean, or make repairs or alterations to the Premises (but without any obligation to do so, except as expressly specified in this Lease), to make repairs or alterations to any part of the Building or the Building systems, to show the Premises to prospective lenders, purchasers, and, during the last 12 months of the Term, to show the Premises to prospective tenants at reasonable hours and, if the Premises are vacant, to prepare them for re-occupancy; (6) to retain at all times, and to use in appropriate instances, keys to all doors within and into the Premises; no locks may be changed or added without the prior consent of Landlord; (7) to decorate and make repairs, alterations, additions, changes, or improvements, whether structural or otherwise, in and about the Building, and for those purposes to enter upon the Premises and, during the continuance of the work, temporarily close doors, entryways, public space, and corridors in the Building, to interrupt or temporarily suspend Building services and facilities, and to change the arrangement and location of entrances or passageways, doors and doorways, corridors, elevators, stairs, toilets, or other public parts of the Building, all without abatement or setoff of Rent or affecting any of Tenant’s obligations under this Lease, so long as the Premises are reasonably accessible (except as otherwise provided in the Lease); (8) to have and retain a paramount title to the Premises and the Property free and clear of any act of Tenant purporting to burden or encumber the Premises or the Property; (9) to grant to anyone the exclusive right to conduct any business or render any service in or to the Building, provided the exclusive right does not operate to exclude Tenant from the uses expressly permitted in this

Lease; (10) to approve the weight, size, and location of safes and other heavy equipment and articles in and about the Premises and the Building and to require all those items and furniture and similar items to be moved into and out of the Building and the Premises only at times and in a manner reasonably specified by Landlord; movements of Tenant’s property into or out of the Building and within the Building are entirely at the risk and responsibility of Tenant; and to reasonably require permits before allowing Tenant’s property to be moved into or out of the Building; (11) to have access for Landlord and other tenants in the Building to any mail chutes or other depositories located on the Premises according to the rules of the United States Postal Service; and (12) to take reasonable measures as Landlord deems advisable for the security of the Building and its occupants including, without limitation, the search of all persons entering or leaving the Building, the evacuation of the Building for cause, suspected cause, or for drill purposes, the temporary denial of access to the Building, and the closing of the Building after Building Standard Hours, subject to Tenant’s, its agent’s, employee’s, contractor’s and invitee’s right to admittance when the Building is closed after Building Standard Hours under reasonable regulations Landlord may prescribe from time to time. Landlord shall have the absolute right at all times, including an emergency situation, to limit, restrict, or prevent access to the Building in response to an actual, suspected, perceived, or publicly or privately announced health or security threat. Landlord shall use commercially reasonable efforts to minimize interference with Tenant’s occupancy and use of the Premises by reason of the exercise of any of the reserved rights.

20. Relocation . Intentionally Omitted

21. Surrender of Premises; Holdover .

A. Surrender of Premises . All improvements made to the Premises (“ Leasehold Improvements ”), whether temporary or permanent in character, by either party (except only movable office furniture and equipment not attached to the Building) are a part of the Building and are the property of Landlord when they are placed in the Premises without compensation to Tenant. However, Landlord, by written notice to Tenant within 30 days prior to the Expiration Date, may require Tenant to remove, at Tenant’s expense: any Leasehold Improvements that are performed by or for the benefit of Tenant and, in Landlord’s reasonable judgment, are of a nature that would require removal and repair costs that are materially in excess of the removal and repair costs associated with standard office improvements (collectively “ Special Improvements ”). Without limitation, it is agreed that Special Improvements include internal stairways, raised floors, personal baths and showers, vaults, rolling file systems and structural alterations and modifications of any type. The Special Improvements designated by Landlord shall be removed by Tenant before the Expiration Date, provided that upon prior written notice to Landlord, Tenant may remain in the Premises for up to five (5) days after the Expiration Date for the sole purpose of removing the Special Improvements. Tenant’s possession of the Premises shall be subject to all of the terms and conditions of this Lease, including the obligation to pay Rent on a per diem basis at the rate in effect for the last month of the Term. Tenant shall repair damage caused by the installation or removal of Special Improvements. If Tenant fails to remove any Special Improvements or perform related repairs in a timely manner, Landlord, at Tenant’s expense, may remove and dispose of the Special Improvements and perform the required repairs. Tenant, within 10 days after receipt of an invoice, shall reimburse Landlord for the reasonable costs incurred by Landlord. Notwithstanding the foregoing, Landlord may, in Landlord’s sole discretion and at no cost to Landlord, require Tenant to leave any Special Improvements in the Premises. Notwithstanding anything to the contrary, Cable shall not be construed to be a Special Improvement or otherwise required to be removed by Tenant. Notwithstanding the foregoing, Tenant, at the time it requests approval for a proposed Alteration (defined in Section 8.C), may request in writing that Landlord advise Tenant whether the Alteration or any portion of the Alteration will be designated as a Special Improvement. Within 10 Business Days after receipt of Tenant’s request, Landlord shall advise Tenant in writing as to which portions of the Alteration, if any, will be considered to be Special Improvements. Upon the Expiration Date or any earlier termination of this

Lease or Tenant’s right of possession, Tenant shall: (i) surrender to Landlord possession of the Premises in good repair and condition, reasonable wear and tear and damages or destruction by any insured casualty excepted, and (ii) deliver to Landlord all keys to the Premises and all parking access cards. If Tenant does not immediately surrender possession, Landlord may enter upon and take possession of the Premises and expel or remove Tenant and any other person who may be occupying the Premises, or any part thereof, by force if necessary, without having any civil or criminal liability therefor. All furniture, movable trade fixtures, and equipment installed by Tenant remains the property of Tenant and must be removed by Tenant at the termination of this Lease. Any removal of Tenant’s property must be accomplished in a good and workmanlike manner so as not to damage the Premises or the Building. Tenant, or Landlord at Tenant’s expense, shall repair any damage to the Premises or the Building caused by any removal. If Tenant fails to remove any of Tenant’s property within 5 days after the termination of this Lease or of Tenant’s right to possession, Landlord at Tenant’s sole cost and expense, shall be entitled (but not obligated) to remove and store Tenant’s property. Tenant shall pay Landlord, upon demand, the expenses and storage charges incurred for Tenant’s property. In addition, if Tenant fails to remove Tenant’s property from the Premises or storage, as the case may be, within 10 days after written notice, Landlord may deem all or any part of Tenant’s property to be abandoned, and title to Tenant’s property shall be deemed to be immediately vested in Landlord.

B. Holding Over . If Tenant or any of its successors in interest continues to hold any part of the Premises after the termination of this Lease, occupancy of the Premises after the termination or expiration shall be that of a month-to-month tenancy. Tenant’s occupancy of the Premises during the holdover shall be subject to all of the terms and conditions of this Lease, provided all expansion rights, rights of first refusal, first notice, and first offer, and all extension rights shall automatically terminate, and Tenant shall pay an amount (on a per month basis without reduction for partial months during the holdover) as monthly rental equal to 100% of the monthly Base Rent payable at the time of termination for the first month of holdover and 150% of the monthly Base Rent payable at the time of termination thereafter, plus, in each case, the payment of all other Additional Rent payable under this Lease. No holdover by Tenant or payment by Tenant after the expiration or early termination of this Lease shall be construed to extend the Term or prevent Landlord from immediate recovery of possession of the Premises by summary proceedings or otherwise. In addition to the payment of the amounts provided above, if Landlord gave written notice to Tenant that its holdover will cause Landlord to be unable to deliver possession of the Premises to a new tenant, or to perform improvements for a new tenant, as a result of Tenant’s holdover and Tenant fails to vacate the Premises within 10 days after Landlord notifies Tenant of Landlord’s inability to deliver possession, or perform improvements, Tenant shall be liable to Landlord for all damages, including, without limitation, consequential damages, that Landlord suffers from the holdover.

22. Events of Default . The following are events of default (“ Events of Default ”) by Tenant under this Lease:

A. Tenant fails to pay Rent or any other amount payable hereunder to Landlord when due, however, with respect to the first payment of Rent not made when due in any calendar year, it shall not be an Event of Default unless Tenant’s failure to pay such Rent continues for a period of 5 days after Landlord delivers written notice of such failure to Tenant. With respect to any subsequent payment of Rent in any calendar year, Tenant’s failure to pay such Rent when due.

B. Tenant fails to comply with any of the terms of this Lease, other than the payment of Rent, and does not cure the failure within 30 days after Landlord delivers notice of the failure to Tenant. However, if Tenant’s failure to comply cannot reasonably be cured within 30 days, Tenant shall be allowed additional time (not to exceed 60 days) as is reasonably necessary to cure the failure so long as: (1) Tenant commences to cure the failure within 30 days, and (2) Tenant diligently pursues a course of action that will cure the failure and bring Tenant back into compliance with the Lease. However, if Tenant’s failure to comply creates a

hazardous condition, the failure must be cured immediately upon notice to Tenant. In addition, if Landlord provides Tenant with notice of Tenant’s failure to comply with any particular term, provision or covenant of the Lease on 3 prior occasions during any 12-month period, Tenant’s subsequent violation of such term, provision or covenant shall, at Landlord’s option, be an incurable event of default by Tenant.

C. Tenant or Guarantor becomes insolvent, makes a transfer in fraud of creditors, commits any act of bankruptcy, makes an assignment for the benefit of creditors, or admits in writing its inability to pay its debts as they become due.

D. Tenant or Guarantor files a petition under any section or chapter of the Bankruptcy Code of the United States, as amended, or under any similar law or statute of the United States or any state thereof, or Tenant or Guarantor is adjudged bankrupt or insolvent in proceedings filed against Tenant or Guarantor, or a petition or answer proposing the adjudication of Tenant or Guarantor as a bankrupt or its reorganization under any present or future federal or state bankruptcy or similar law is filed in any court and the petition or answer is not discharged or denied within 90 days after filing.

E. A receiver or trustee is appointed for all or substantially all of the assets of Tenant or Guarantor or of the Premises or of any of Tenant’s property located therein in any proceeding brought by Tenant or Guarantor, or any receiver or trustee is appointed in any proceeding brought against Tenant or Guarantor and is not discharged within 60 days after appointment or Tenant or Guarantor shall consent to or acquiesce in the appointment.

F. Tenant, if a natural person, dies or becomes incapacitated or, if Tenant is not a natural person, Tenant is dissolved or ceases to exist.

G. Tenant’s leasehold estate is threatened to be taken or is taken on execution or other process of law in any action against Tenant.

H. Tenant fails to take possession of the Premises within 30 days after the Ready for Occupancy Date.

23. Landlord’s Remedies .

A. Landlord’s Remedies . If an Event of Default occurs, Landlord may then or any time thereafter while the Event of Default continues pursue any one or more of the following remedies:

(1) Terminate this Lease by giving notice to Tenant, in which event Tenant shall immediately surrender the Premises to Landlord. If Tenant fails to surrender the Premises, Landlord may, without prejudice to any other remedy, take possession of the Premises and expel or remove Tenant and any other person occupying the Premises, or any part thereof, without being liable for prosecution or any claim of damages. Tenant shall pay to Landlord on demand the amount of all loss and damage Landlord suffers by reason of the termination, whether through inability to re-let the Premises on satisfactory terms or otherwise. Without limiting the generality of the foregoing, Tenant shall pay to Landlord on demand the sum of (x) all Rent accrued hereunder through the date of termination, (y) an amount equal to the total Base Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at a per annum rate equal to eight percent 8% reduced by the then present fair rental value of the Premises for such period, similarly discounted, and (z) the amount of all other loss and damage Landlord suffers by reason of the termination, including all Costs of Reletting. “ Costs of Reletting ” shall include commercially reasonable costs and expenses incurred in reletting all or any portion of the Premises, including the cost of removing and storing Tenant’s furniture, trade fixtures, equipment, inventory or other property, repairing

and/or demolishing the Premises, removing and/or replacing Tenant’s signage and other fixtures, making the Premises ready for a new tenant, including the cost of advertising, commissions, architectural fees, legal fees, but excluding new leasehold improvements. Nothing in this Lease limits Landlord’s right to prove and obtain in bankruptcy or insolvency proceedings damages by reason of the termination of this Lease in an amount equal to the maximum allowed by any statute or rule of law in effect at the time when the damages are to be proved, whether or not the amount is greater, equal to, or less than the amount of the loss or damages referred to above.

(2) Terminate Tenant’s right of possession of the Premises and change the locks, without judicial process, and in compliance with applicable Law, expel and remove Tenant and Tenant’s property and any other person occupying the Premises, or any part thereof, without having any civil or criminal liability and without terminating this Lease. If Landlord terminates Tenant’s possession of the Premises under this Section 23.A(2), Landlord shall have no obligation to post any notice and Landlord shall have no obligation whatsoever to tender Tenant a key for new locks installed in the Premises. Landlord may (but shall not have an obligation to) relet all or any part of the Premises, without notice to Tenant, for a term that may be greater or less than the balance of the Term and on such reasonable conditions (which may include concessions) and for such uses as Landlord in its absolute discretion shall determine. Landlord may collect and receive all rents and other income from the reletting. Tenant shall pay Landlord on demand all past due Rent, all Costs of Reletting and any deficiency arising from the reletting or failure to relet the Premises. Landlord shall not be responsible or liable for the failure to relet all or any part of the Premises or for the failure to collect any Rent. The re-entry or taking possession of the Premises shall not be construed as an election by Landlord to terminate this Lease unless a written notice of termination of this Lease is given to Tenant and Landlord may sue Tenant from time to time to collect any then unpaid Rent.

(3) Enter upon the Premises without having any civil or criminal liability and do whatever Tenant is obligated to do under the terms of this Lease. Tenant shall reimburse Landlord on demand for any expenses Landlord incurs in performing Tenant’s obligations under this Lease, together with an administrative fee of 5%.

(4) In lieu of calculating damages under Section 23.A(1) or 23.A(2) above, Landlord may elect to receive as damages the sum of (a) all Rent accrued through the date of termination of this Lease or Tenant’s right to possession of the Premises, and (b) an amount equal to the total Rent that Tenant would have been required to pay for the remainder of the Term discounted to present value at the discount rate described above, minus the then present fair rental value of the Premises for the remainder of the Term, similarly discounted, after deducting all anticipated Costs of Reletting.

(5) Recover such amounts in addition to or in lieu of the foregoing as may be permitted from time to time by applicable Law, including any other amount necessary to compensate Landlord for the detriment proximately caused by Tenant’s failure to perform its obligations under this Lease.

B. Tenant Not Relieved from Liabilities . No repossession of or re‑entering all or any part of the Premises under Section 23.A above or otherwise and no re-letting of the Premises or any part thereof under Section 23.A(2) relieves Tenant or Guarantor of any liabilities or obligations under this Lease, all of which survive repossession or re‑entering by Landlord. No right or remedy of Landlord under this Lease is intended to be exclusive of any other right or remedy. Each right and remedy of Landlord is cumulative and all other rights or remedies under this Lease or now or hereafter existing at Law, in equity or by statute. In addition to other remedies provided in this Lease, Landlord is entitled, to the extent permitted by applicable Law, to injunctive relief in case of the violation, or attempted or threatened violation, of any of the terms of this Lease, or to a decree compelling specific performance of the terms of this Lease.

C. Mitigation of Damages . Upon termination of Tenant’s right to possess the Premises, Landlord shall, but only to the extent required by Law, use objectively reasonable efforts to mitigate damages by reletting the Premises. Landlord shall not be deemed to have failed to do so if Landlord refuses to lease the Premises to a prospective new tenant with respect to whom Landlord would be entitled to withhold its consent pursuant to Section 7.A above, or who (1) is an affiliate, parent or subsidiary of Tenant; (2) is not acceptable to any mortgagee of Landlord, and (3) is unwilling to accept reasonable lease terms then proposed by Landlord, including leasing for a shorter or longer term than remains under this Lease, re-configuring or combining the Premises without other space, taking only a part of the Premises, and/or changing the use of the Premises. Notwithstanding Landlord’s duty to mitigate its damages as provided herein, Landlord shall not be obligated to give any priority to reletting Tenant’s Premises in connection with its leasing of space in the Building or the Project.

24. No Implied Waiver . The failure of Landlord or Tenant to insist at any time upon the strict performance of any of the terms of this Lease or to exercise any option, right, power, or remedy contained in this Lease is not a waiver of the right or remedy for the future. The waiver of any breach of this Lease or violation of the Rules and Regulations attached to this Lease does not prevent a subsequent act, which would have originally constituted a breach or violation, from having all the force and effect of an original breach or violation. Acceptance by Landlord of any Rent after the breach of any of the terms of this Lease or violation of any Rule or Regulation is not a waiver of the breach or violation (except if such breach or violation is cured pursuant to Section 22 and Landlord has not terminated either the Lease or Tenant’s right of possession of the Premises pursuant to Section 23), and no waiver by Landlord of any of the terms of this Lease is effective unless expressed in writing and signed by Landlord.

25. Attorneys’ Fees . If Landlord or Tenant engages an attorney concerning the enforcement of this Lease, the prevailing party is entitled to recover from the other party reasonable attorneys’ fees, court costs, and expenses, whether at the trial or appellate level, incurred by the prevailing party.

26. Subordination; Estoppel Certificate . This Lease and all rights of Tenant under this Lease are subject and subordinate to any mortgage or deed of trust secured by a lien against the Property, all increases, renewals, modifications, consolidations, replacements, and extensions of any first lien mortgage or deed of trust (collectively, a “ Mortgage ”) and all ground or underlying leases, restrictions, easements, and encumbrances recorded in the Real Property Records of Dallas County, Texas, to the extent they validly affect the Property, provided that with respect to any of the foregoing entered into after the date of this Lease, such mortgagee, lessee or other party under such instrument agrees to recognize and not to disturb this Lease in accordance with a reasonable Subordination, Non-Disturbance and Attornment Agreement (“SNDA”), so long as no Event of Default exists. The foregoing subordination and non-disturbance shall be self-operative, however, Tenant shall, upon demand at any time or times, execute, acknowledge, and deliver to Landlord, or to Landlord’s mortgagee, any instruments that may be necessary or proper to more effectively effect or evidence this subordination to any Mortgage, subject to such mortgagee executing the non-disturbance provisions. In lieu of having the Mortgage superior to this Lease, a mortgagee shall have the right at any time to subordinate its Mortgage to this Lease. If any Mortgage against the Property is foreclosed, Tenant shall, upon request by the purchaser at the foreclosure sale attorn to the purchaser and recognize the purchaser as “Landlord” under this Lease and execute, acknowledge, and deliver to the purchaser an instrument in appropriate form acknowledging the attornment, provided such purchaser recognizes and does not disturb this Lease so long as no Event of Default exists. Tenant shall, from time to time, within 20 days after a request by Landlord, execute, acknowledge, and deliver to Landlord an estoppel certificate certifying that this Lease is unmodified (except as identified in the estoppel certificate) and in full force and effect, describing the dates to which Rent and other charges have been paid, representing that, to such party’s actual knowledge, there is no default (or stating the nature of the alleged default) and indicating other matters with respect to this Lease that may

reasonably be requested. Tenant shall, upon demand at any time or times, execute, acknowledge, and deliver to Landlord, or to Landlord’s first mortgagee, any instruments that may be necessary or proper to more effectively effect or evidence the subordination to any first mortgage or first deed of trust. Within a reasonable time following full execution of this Lease, Landlord shall deliver to Tenant an SNDA in form and substance reasonably acceptable to Landlord’s mortgagee.

27. Quiet Enjoyment . If Tenant pays the Rent when due and performs all other obligations of Tenant under this Lease, then Tenant may peaceably and quietly enjoy the Premises during the Term without any disturbance from Landlord or from any other person claiming by, through, or under Landlord, but not otherwise, subject to the terms of this Lease and of the deeds of trust, mortgages, ground leases, ordinances, leases, utility easements, and agreements to which this Lease is subordinate. This covenant and all other covenants of Landlord shall be binding upon Landlord and its successors only during its or their respective periods of ownership of the Property, and shall not be a personal covenant of Landlord or any Landlord Party.

28. Notice . All notices, requests, approvals, and other communications required or permitted to be delivered under this Lease must be in writing and are effective on the Business Day received if delivered by telecopier or facsimile; or 3 days after being deposited in the United States mail, certified, return receipt requested, postage prepaid; or upon receipt if delivered personally or by any method other than by telecopier (with written confirmation) or mail, in each instance addressed to Landlord or Tenant, as the case may be, at the address specified in Section 1 of this Lease, or to any other address either party may designate by 10 days’ prior notice to the other party. Subject to the provisions of Section 27(b), if any act or omission by Landlord occurs that would give Tenant the right to damages from Landlord or the right to terminate this Lease due to constructive or actual eviction from all or part of the Premises or otherwise, Tenant may not sue for damages or exercise any right to terminate until (A) it gives notice of the act or omission to Landlord and Landlord’s first mortgagee, if any, and (B) a reasonable period of time for remedying the act or omission elapses following the giving of the notice, during which time Landlord, its agents, employees, and first mortgagee are entitled to enter the Premises and cure the act or omission.

29. Hazardous Materials . To Landlord’s knowledge, the Building shall be constructed without hazardous substances (as hereinafter defined). Tenant may not cause or permit the escape, disposal, or release in the Premises or the Property of any biologically active, chemically active, or hazardous substances or materials (collectively, “ hazardous substances ”) or bring, or permit any other Tenant Party to bring, any hazardous substances into the Premises, the Property (except for de minimis quantities of household cleaning products and office supplies used in the ordinary course of Tenant’s business at the Premises and that are used, kept and disposed of in compliance with all Laws). The term hazardous substances includes, but is not limited to, those described in the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act, as amended, 42 U.S.C. Section 6901 et seq., the Texas Water Code, the Texas Solid Waste Disposal Act, and other applicable state or local environmental laws and the regulations adopted under those acts. If any lender or governmental agency requires testing to ascertain whether or not a release of hazardous substances has occurred in or on the Premises or the Property based on probable cause that a release occurred and was caused by Tenant, then Tenant shall reimburse the reasonable costs of the testing to Landlord on demand. Tenant shall execute affidavits, representations, and the like and speak with Landlord’s environmental consultants from time to time at Landlord’s request concerning Tenant’s best knowledge and belief regarding the presence of hazardous substances in the Premises and the Property. Tenant shall indemnify Landlord from any release of hazardous substances in or on the Premises or the Property or the Project caused by Tenant. These covenants shall survive the expiration or earlier termination of this Lease. In addition to the foregoing, Tenant shall have an on-going right, upon giving Landlord prior written notice of not less than thirty (30) days, to inspect the Premises and Common Areas of the Building (at times other than Building Standard Hours with Landlord’s

prior approval and supervision during inspection) for mold or other air quality issues. If any mold or other air quality issues involving hazardous substances of a material nature are discovered, then Landlord shall use best efforts to remedy such issues as reasonable at Landlord’s sole cost and expense and provide evidence of such remediation to Tenant. If Landlord fails to remedy the mold or other air quality issues involving hazardous substances within a reasonable period of time, and such continuing issues materially affect Tenant’s ability to conduct business from the Premises, then Tenant may thereafter terminate the Lease following ninety (90) days’ written notice of such termination to Landlord; provided, however, that such termination right will be waived by Tenant if Landlord provides remedies the applicable mold or air quality issue within ninety (90) days following receipt of such written notice from Tenant..

30. Miscellaneous .

A. Governing Law; Severability . This Lease and the rights and obligations of the parties shall be interpreted, construed and enforced in accordance with the Laws of Dallas County, Texas and Landlord and Tenant hereby irrevocably consent to the jurisdiction and proper venue of Dallas County, Texas. Each of the terms of this Lease is, and must be construed to be, separate and independent. If any of the terms of this Lease or its application to any person or circumstances is to any extent invalid and unenforceable, the remainder of this Lease, or the application of that term to persons or circumstances other than those as to which it is invalid or unenforceable, are not affected thereby.

B. Recording . Tenant shall not record this Lease or any memorandum thereof without Landlord’s prior written consent.

C. Force Majeure . When this Lease prescribes a period of time for action to be taken by either Landlord or Tenant, such party shall not be liable or responsible for, and there shall be excluded from the computation for the period of time, any delays due to strikes, acts of God, shortages of labor or materials, war, governmental laws, regulations, restrictions, or any other cause of any kind that is beyond the control of such party. However, events of Force Majeure shall not extend any period of time for the payment of monetary sums payable by either party or any period of time for the written exercise of an option or right by either party.

D. Transferability . Landlord shall have the right to transfer and assign, in whole or in part, all of its rights and obligations under this Lease and in the Building and/or Property, and upon such transfer Landlord shall be released from any obligations accruing on or after the date of the transfer, and Tenant agrees to look solely to the successor in interest of Landlord for the performance of such obligations.

E. No Merger . The fact that the same person may acquire or hold, directly or indirectly, this Lease or the leasehold estate hereby created or any interest in this Lease or in the leasehold estate as well as the fee estate in the Premises or any interest in the fee estate does not cause a merger of this Lease or of the leasehold estate hereby created with the fee estate in the Premises.

F. Brokers . Landlord and Tenant each warrant that it has had no dealings with any broker or agent in connection with the negotiation or execution of this Lease other than Tenant’s broker, Cassidy Turley, and Landlord’s agent, Harwood International Incorporated (collectively, “ Brokers ”). Landlord and Tenant shall each indemnify, defend, and hold the other harmless against all costs, expenses, attorneys’ fees, or other liability for commissions or other compensation or charges claimed by any broker or agent other than Brokers claiming by, through, or under such party with respect to this Lease or any renewal or extension or with respect to any expansion of the Premises. Any brokerage commissions payable to Brokers are payable by Landlord pursuant to the terms of separate agreements between Landlord and Brokers.

G. Gender . Words of any gender used in this Lease include any other gender and words in the singular number include the plural, unless the context otherwise requires.

H. Authority; Joint and Several Liability . Landlord and Tenant each covenants, warrants and represents to the other that: (1) each individual executing, attesting and/or delivering this Lease on behalf of Landlord or Tenant, as applicable, is authorized to do so on behalf of such party; (2) this Lease is binding upon such party; and (3) such party is duly organized and legally existing in the state of its organization and is qualified to do business in the state in which the Premises are located. If there is more than one Tenant, or if Tenant is composed of more than one party or entity, the obligations imposed upon Tenant shall be joint and several obligations of all the parties and entities. Notices, payments and agreements given or made by, with or to any one person or entity shall be deemed to have been given or made by, with and to all of them.

I. No Representations . Neither Landlord nor Landlord’s agents make any representations or promises with respect to the Premises or the Property except as expressly set forth in this Lease. No rights, easements, or licenses are acquired by Tenant by implication or otherwise except as expressly set forth in this Lease.

J. Survival of Obligations . The expiration of the Term, whether by lapse of time or otherwise, shall not relieve either party of any obligations which accrued prior to or which may continue to accrue after the expiration or early termination of this Lease. Without limiting the scope of the prior sentence, it is agreed that Tenant’s and/or Landlord’s obligations under Sections 4.A, 4.B., 4.C, 13, 21, 23 and 29, as applicable, shall survive the expiration or early termination of this Lease.

K. Paragraph Headings . The paragraph headings in this Lease are for convenience only and in no way enlarge or limit the scope or meaning of the paragraphs in this Lease.

L. Binding Effect . All terms of this Lease are binding upon the respective heirs, personal representatives, successors, and, to the extent assignment is permitted, assigns of Landlord and Tenant. This Lease shall create only the relationship of landlord and tenant between the parties, and not a partnership, joint venture or any other relationship.

M. Interest . Any amount due from Tenant to Landlord which is not paid within thirty (30) days after the date due shall bear interest at the lower of (1) ten percent (10%) per annum or (2) the highest rate from time to time allowed by applicable Law, beginning 30 days from the date such payment is due until paid, but the payment of such interest shall not excuse or cure the default. It is agreed that all interest chargeable under this Lease shall under no circumstances exceed the maximum amount of interest permitted by applicable Law. If the rate of interest specified in this Lease shall ever be greater than the maximum amount of interest permitted by applicable Law, then the rate of interest chargeable under this Lease shall be the maximum amount of interest permitted by applicable Law.

N. Tax Waiver . TENANT HEREBY WAIVES ALL RIGHTS TO PROTEST THE APPRAISED VALUE OF THE PROPERTY OR TO APPEAL THE SAME AND ALL RIGHTS TO RECEIVE NOTICES OF REAPPRAISALS AS SET FORTH IN SECTIONS 41.413 AND 42.015 OF THE TEXAS TAX CODE. For and in consideration of the foregoing waiver, Landlord agrees to use commercially reasonable efforts to review and protest the valuations of the Property each year, if reasonable to do so.

O. Waiver of Consumer Rights . TENANT HEREBY WAIVES ALL ITS RIGHTS UNDER THE TEXAS DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT, SECTION 17.41 ET. SEQ. OF THE TEXAS BUSINESS AND COMMERCE CODE, A LAW THAT GIVES

CONSUMERS SPECIAL RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF TENANT’S OWN SELECTION, TENANT VOLUNTARILY CONSENTS TO THIS WAIVER.

P. Execution and Approval of Lease . Employees and agents of Landlord and of Landlord’s Broker have no authority to make or agree to make a lease or any other agreement or undertaking in connection herewith. The submission of this Lease for examination and negotiation is not an offer to lease, agreement to reserve, or option to lease the Premises. This Lease is effective and binding on Landlord only upon the execution and delivery of this Lease by Landlord and Tenant. This Lease may be executed in two or more counterparts, each of which is deemed an original and all of which together constitute one and the same instrument.

Q. Calculation of Charges . Landlord and Tenant agree that each provision of this Lease for determining charges, amounts and Additional Rent payments by Tenant (including without limitation, Section 4 of this Lease) is commercially reasonable, and as to each such charge or amount, constitutes a “method by which the charge is to be computed” for purposes of Section 93.004 (Assessment of Charges) of the Texas Property Code, as such section now exists or as it may be hereafter amended or succeeded.

R. Entire Agreement; Amendments . This Lease, including the following exhibits and attachments, constitutes the entire agreement between the parties: Exhibit A [Land], Exhibit B [Floor Plan of the Premises], Exhibit C [Work Letter], including Exhibit C-1 [Base Building Guidelines] and Exhibit C-2 [Janitorial Specifications], Exhibit D [Building Rules and Regulations] Exhibit E [Parking], Exhibit F [Renewal Option], Exhibit G [Right of First Refusal] and Exhibit H [Guaranty]. All negotiations, considerations, representations, and understandings between Landlord and Tenant are incorporated in this Lease. This Lease supersedes any letter of intent, term sheet or other documents or correspondence exchanged between the parties prior to the execution hereof. No act or omission of any employee or agent of Landlord or of Landlord’s Agent may alter, change, or modify any of the terms of this Lease. No amendment or modification of this Lease is binding unless expressed in a written instrument executed by Landlord and Tenant.

S. Tenant Certification . Tenant certifies to Landlord, to Tenant’s current knowledge, that: (1) it is not acting, directly or indirectly, for or on behalf of any person, group, entity, or nation named by any Executive Order or the United States Treasury Department as a terrorist, “Specially Designated National and Blocked Person,” or other banned or blocked person, entity, nation, or transaction pursuant to any law, order, rule, or regulation that is enforced or administered by the Office of Foreign Assets Control; and (2) it is not engaged in this transaction, directly or indirectly on behalf of, or instigating or facilitating this transaction, directly or indirectly on behalf of, any such person, group, entity, or nation. Tenant hereby agrees to defend, indemnify, and hold harmless Landlord from and against any and all claims, damages, losses, risks, liabilities, and expenses (including attorney’s fees and costs) arising from or related to any breach of the foregoing certification.

T. Landlord’s Lien . Landlord waives all statutory and contractual liens on the personal property of Tenant.

U. Termination Option . Tenant will have the one-time right to terminate this Lease as to the entire Premises then leased by Tenant, effective at the end of the 72nd month of the Term (the “ Termination Date ”), by giving Landlord no less than twelve (12) months’ prior written notice. Time is of the essence in Tenant’s exercise of its right to terminate. Tenant will pay to Landlord the (i) amount of the unamortized portion of the Work Allowance referred to in Exhibit C and the unamortized portion of Tenant’s Broker’s commission referred to in Section 30. F. , plus interest accruing on such amounts at a rate of eight percent

(8%) per annum, and (ii) amount equal to the next nine (9) months of Rent coming due (collectively, the “ Termination Payment ”). One-half of the Termination Payment shall be paid upon delivery of the notice of termination to Landlord and the remaining one-half shall be paid on the Termination Date. Tenant shall also pay to Landlord within thirty (30) days following the Termination Date all actual and reasonable costs of restoration as a result of the removal of Tenant’s signage in and around Building. If Tenant does not timely make the Termination Payment, Tenant’s notice of termination will be deemed ineffective and the Lease will be continued in full force and effect.

V. Offset Rights . If Landlord fails to perform any of its obligations under this Lease relating to the Premises (or parking areas or access) and such failure continues for more than thirty (30) days after Landlord’s receipt of notice from Tenant specifying in reasonable detail Landlord’s failure to perform, then Tenant shall have the right, but not the obligation, to perform such obligation in the Premises and bill Landlord for the actual cost incurred by Tenant; provided, however, that such cost shall be limited to the reasonable market cost of performing the obligation . If any such bill is not paid within thirty (30) days of receipt by Landlord, Tenant may offset the next installment(s) of Rent payable hereunder in an amount equal to the unpaid portion of such bill.

Notwithstanding the foregoing, Landlord shall not be in default in the performance of any obligation required to be performed by Landlord under this Lease unless Landlord has failed to perform such obligation within a reasonable period of time, given the circumstances, but in no event later than thirty (30) days after the receipt of notice from Tenant specifying in reasonable detail Landlord’s failure to perform; provided, however, that if the nature of Landlord’s obligation is such that more than thirty (30) days are required for its performance, Landlord shall not be deemed in default if it shall commence such performance within thirty (30) days (or such lesser reasonable time period given the circumstances) and thereafter diligently pursues the same to completion within sixty (60) days from the date of written notice from Tenant. [Discuss: However, if Landlord’s failure to comply creates a hazardous condition, the failure must be cured immediately upon notice to Landlord, failing which Tenant shall have the right to perform such obligation.]

A. Tenant’s Signage . Tenant shall have the right to monument signage facing McKinnon Street which will be generally visible to all North bound traffic going toward the Dallas North Tollway. The location, design and size of such signage shall be uniform in letter height among each tenant whose signage is located on the monument sign, including Tenant. Notwithstanding the foregoing, Tenant shall be provided the most prominent position on the monument sign other than Frost Bank and any tenant leasing in excess of 57,000 Rentable Square Feet, such location to be mutually agreed upon by Landlord and Tenant. Tenant shall be allowed to display its signage in the elevator lobby of any full floor located within the Premises, subject to the reasonable approval of Landlord relating to size, design, color and style (which signage may be required to be uniform on any floor not fully leased to Tenant). Additionally, Landlord shall allow Tenant to install its own signage within a location reasonably designated by Landlord in the Building lobby on the N. Harwood St. side of the Building, subject to the mutual agreement of Landlord and Tenant relating to size, design, color and style.

B. Riser/Roof Rights . Landlord shall provide the following to Tenant, at no cost to Tenant throughout the Term: (i) an area on the roof of the Building sufficient for Tenant to install satellite and/or other communications equipment in a location on the roof mutually satisfactory to Landlord and Tenant, (ii) the right for Tenant to install conduit from the roof satellite/communications equipment to the Premises, and (iii) to the extent Tenant leases a full floor, riser capacity between each floor dedicated solely for Tenant’s use in a secure manner.

C. Supplemental HVAC . Tenant shall have the right to install supplemental HVAC package units in the plenum space or elsewhere within the Premises at no cost to Tenant, and to tap into water lines as ancillary to providing such service to the Premises.

D. Ancillary Services . Landlord shall install the following services in the Building : (1) hardware on stairway doors serving the Premises to permit access to a stairwell from the floor on which the Premises are located, but prevent re-entry from the stairwell and otherwise compliant with applicable Laws, including any building codes; (2) Building system installed by Landlord shall be designed to permit Tenant to install, at Tenant’s cost, a card reader to allow access from the stairwell to Tenant’s Premises, should Tenant elect to do so; (3) video management system with megapixel ip cameras providing live and recorded video monitoring of access to the Building and Building Garage, lobbies and other Common Areas; and (4) a minimum of 2 vehicle gate operators with arms and detection loops installed in the concrete with access by card readers and toll tags.

E. Storage Space . Landlord grants to Tenant the right to lease any available storage space in the parking garage and/or basement of the Building constructed by Landlord in its development of the Building and available for use by tenants. Tenant shall have 30 days from the date Landlord gives written notice to Tenant setting forth the size and rent for such storage space to elect whether to lease the storage space. The rental rate for the storage space shall be reasonable and comparable to charges for similar space in other Class AA buildings in the Uptown market of Dallas. Tenant shall be responsible for the moisture proofing, temperature control and lighting of any such storage space. Tenant may elect to terminate its lease of the storage space at any time upon 30 days prior written notice to Landlord.

TENANT EXPRESSLY ACKNOWLEDGES THAT, EXCEPT AS OTHERWISE SPECIFIED HEREIN, LANDLORD HAS MADE NO WARRANTY OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING BY OPERATION OF LAW, INCLUDING, BUT NOT LIMITED TO, ANY WARRANTY OF CONDITION, TITLE, HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE WITH RESPECT TO THE PREMISES, ALL SUCH REPRESENTATIONS AND WARRANTIES, AS WELL AS ANY IMPLIED WARRANTIES BEING HEREBY EXPRESSLY DISCLAIMED.

IN WITNESS WHEREOF, this Lease is executed in multiple originals as of the date first above set forth.

LANDLORD:

International Center Development XVIII, LLC,

a Delaware limited liability company

By: /s/ David Roehm

Name: ___ David Roehm

Title: EVP

TENANT:

CVSL Inc., a Florida Corporation

By: /s/ John Rochon Jr.

Name: John Rochon Jr.

Title: Vice Chairman

EXHIBIT A

This Exhibit is attached to and made a part of the Lease dated as of __________, 2014, by and between INTERNATIONAL CENTER DEVELOPMENT XVIII, LLC (“ Landlord ”) and CVSL INC. (“ Tenant ”) for space in the Building located at 2950 North Harwood, Dallas, Texas 75201.

THE LAND

Tract I:

BEING a tract of land situated in the John Grigsby Survey, Abstract Number 495, City of Dallas, Dallas County, Texas and being all of Lot 1, Block 1/931, of the Overton Motor Bank No. 1, an addition to the City of Dallas, Dallas County, Texas, recorded by plat Volume 97076, Page 3344, of the Deed Records of Dallas County, Texas (D.R.D.C.T.) and being more particularly described as follows:

BEGINNING at the intersection of the northeast right-of-way line of North Harwood Street (60' R.O.W.) and the southeast right-of-way line of Wolf Street (45' R.O.W.):

THENCE N. 42 degrees 52 minutes 00 seconds E., continuing along the southeast line of said Wolf Street, a distance of 220.73 feet to a point for corner at the intersection of the southwest line of said Wolf Street and the southeast right-of-way line of Dallas North Tollway (McKinnon Street) (variable width R.O.W.);

THENCE S. 47 degrees 05 minutes 00 seconds E., continuing along the southwest line of Dallas North Tollway (McKinnon Street), a distance of 45.00 feet to a point for corner;

THENCE S. 42 degrees 52 minutes 00 seconds W., departing the southwest line of Dallas North Tollway (McKinnon Street), a distance of 111.14 feet to a point for corner;

THENCE S. 47 degrees 18 minutes 03 seconds E., a distance of 50.00 feet to a point for corner;

THENCE N. 42 degrees 52 minutes 00 seconds E., a distance of 110.95 feet to a point for corner in the southwest line of said Dallas North Tollway (McKinnon Street};

THENCE S. 47 degrees 05 minutes 00 seconds E., continuing along the southwest line of said Dallas North Tollway (McKinnon Street), a distance of 100.00 feet to a point of corner;

THENCE S. 42 degrees 52 minutes 00 seconds W., departing the southwest line of said Dallas North Tollway (McKinnon Street), a distance of 224.59 feet to a point for corner in the aforementioned northeast line of said North Harwood Street;

THENCE N. 45 degrees 57 minutes 00 seconds W., continuing along the said northeast line of North Harwood Street, a distance of 195.04 feet to the POINT OF BEGINNING, containing 37,867 square feet or 0.8693 acres of land, more or less.

Tract II:

BEING a tract of land situated in the John Grigsby Survey, Abstract Number 495, City of Dallas, Dallas County, Texas and being part of Block 1/931, City of Dallas, Dallas County, Texas, and being all of that tract of land conveyed to The Frost National Bank by Special Warranty Deed, recorded in instrument Number 201200174627, of the Official Public Records of Dallas County, Texas (O.P.R.D.C.T.) and being more particularly described as follows:

COMMENCING at the intersection of the northeast right-of-way line of North Harwood Street (60' R.O.W.) and the southeast right-of-way line of Wolf Street (45' R.O.W.);

THENCE S. 47 degrees 05 minutes 00 seconds E., continuing along the southwest line of Dallas North Tollway (McKinnon Street), a distance of 45.00 feet to the POINT OF BEGINNING;

THENCE S. 47 degrees 05 minutes 00 seconds E., continuing along the southwest line of Dallas North Tollway (McKinnon Street), a distance of 50.00 feet to a point for corner;

THENCE S. 42 degrees 52 minutes 00 seconds W., departing the southwest line of said Dallas North Tollway (McKinnon Street), a distance of 110.95 feet to a point corner;

THENCE N. 47 degrees 18 minutes 03 seconds W., a distance of 50.00 feet to a point for corner;

THENCE N. 42 degrees 52 minutes 00 seconds E., a distance of 111.14 feet to the POINT OF BEGINNING, containing 5, 552.23 square feet or 0.1275 acres of land, more or less.

EXHIBIT B

This Exhibit is attached to and made a part of the Lease dated as of __________, 20__, by and between INTERNATIONAL CENTER DEVELOPMENT XVIII, LLC (“ Landlord ”) and ____________________ (“ Tenant ”) for space in the Building located at 2950 North Harwood, Dallas, Texas 75201.

FLOOR PLAN OF THE PREMISES

EXHIBIT C

WORK LETTER

1. Representatives . Landlord hereby appoints Robert Montgomery, Project Manager (“ Landlord’s Representative”) to act on behalf of Landlord in all matters covered by this Exhibit C . Tenant hereby appoints _____________________ (“ Tenant’s Representative ”) to act on behalf of Tenant in all matters covered by this Exhibit C . In addition, Tenant’s Architect (hereinafter defined) will represent Tenant in technical matters that affect the quality, cost or timing with respect to construction and completion of the Premises. All inquiries, requests, instructions, authorizations and other communications with respect to the matters covered by this Exhibit shall be made to Landlord’s Representative or Tenant’s Representative and Tenant’s Architect, as applicable. Either Landlord or Tenant may designate different or additional representatives under this Exhibit C at any time by giving 10 days’ prior written notice to the other.

2. Base Building Work . Prior to August 31, 2014, Landlord delivered to Tenant the drawings and specifications in AutoCAD format (“ Landlord’s Plans ”) for (1) the Common Areas, Building shell, public lobbies, elevators, stairwells, (2) on the floors leased by Tenant, core finish, building standard restrooms, primary plumbing, sprinklers, HVAC, mechanical and electrical service, and (3) the parking areas in the parking lots and/or garage, all to the extent reasonably required for Tenant’s use and occupancy of the Premises. The work required to be accomplished as shown on the Landlord’s Plans is herein referred to as the “ Base Building Work ” and the improvements to be constructed pursuant thereto are herein referred to as the “ Base Building ”. The Base Building Work shall include the work described on Schedule I attached to this Exhibit C .

3. Tenant’s Plans .

a. Preliminary Space Plans . Not later than September 8, 2014, Staffelbach, the architect engaged by Tenant and approved by Landlord (“ Tenant’s Architect ”) shall prepare and submit to Landlord, Preliminary Space Plans (herein so called) for the Premises showing: locations of all partitions and doors, annotated to indicate special mechanical/electrical/plumbing requirements; areas requiring ceilings and lighting other than Building standard items; special use areas with requirements such as extra floor loading, or slab penetrations; special HVAC and/or electrical needs; special acoustical separation requirements; and extraordinary City of Dallas building and fire code considerations. Landlord shall review Tenant’s Preliminary Space Plans and shall notify Tenant in writing within 30 days after receipt thereof of any revisions that Landlord requests, and Landlord’s reasons therefor.

b. Design Development Review . Not later than November 1, 2014, Tenant’s Representative and Tenant’s Architect will prepare and review with Landlord’s Representative in-progress design documents prepared by Tenant’s Architect depicting the then current status of Design Development (herein so called) for the purpose of informing Landlord of any substantive changes in the Preliminary Space Plans previously reviewed by Landlord. Landlord has the right to approve any substantive changes in the Preliminary Space Plans, which approval shall not be unreasonably withheld or delayed. This review shall also be used to determine approximate quantities of materials or elements of construction of Tenant’s Improvements. Landlord shall review Tenant’s in-progress Design Development documents and shall submit suggested revisions and the reasons therefor to Tenant’s Architect, in writing, within 20 days after Landlord’s receipt.

c. Tenant’s Contract Documents . Not later than February 2, 2015, Tenant shall submit to Landlord, working drawings and specifications ready for submission to the City of Dallas for a building permit consisting of complete architectural and engineering plans, with HVAC, plumbing, electrical and structural documentation ( “Tenant’s Contract Documents” ) for the proposed construction of all ceilings, lighting, HVAC, plumbing, special use areas requiring modification of the Base Building, partitions, doors, room finish schedules, location of electrical outlets, telephone and data outlets and all other relevant information for the interior finish of, and installation of Tenant’s improvements in, the Premises (all of the leasehold improvements to be constructed within the Premises pursuant to the Landlord approved Tenant’s

Contract Documents are herein called the “Tenant’s Improvements ”). All labor, materials and work required to complete the Tenant’s Improvements is herein called the “ Tenant’s Work ”. Landlord shall review Tenant’s Contract Documents and notify Tenant in writing within 10 days after receipt of Tenant’s Contract Documents of any revisions thereto that Landlord requests, such as, without limitation, a detailed description of any construction delays anticipated to result from matters contained in the Tenant’s Contract Documents, with recommended actions to alleviate those delays. Within 10 days Tenant’s Architect shall promptly revise Tenant’s Contract Documents to incorporate any agreed changes and shall resubmit them for Landlord’s approval, which approval shall not be unreasonably withheld.

If Landlord withholds approval of all or any part of Tenant’s Contract Documents, then Landlord shall give Tenant’s Representative and Tenant’s Architect a detailed written statement of its objections within 10 days following receipt of Tenant’s Contract Documents. If Tenant disagrees with Landlord’s objections, then Tenant’s Representative, Tenant’s Architect and Landlord’s Representative shall promptly meet and attempt to resolve Landlord’s objections. If Landlord does not notify the Tenant in writing of proposed revisions within such 10-day period, Tenant shall deliver a written request for Landlord’s revisions and if Landlord does not respond to such request within 10 days the Tenant’s Contract Documents will be deemed approved by Landlord.

4. Selection of Contractors . After Design Development review by Landlord, Tenant’s Architect shall keep Landlord’s Representative informed of the anticipated date of delivery to Landlord of Tenant’s Contract Documents. If Landlord is retained by Tenant to serve as the construction manager for Tenant’s Work, then, at least 15 days before the scheduled date of delivery of Tenant’s Contract Documents, Landlord and Tenant shall mutually compile a list of at least three (3) proposed contractors to bid on Tenant’s Work required by Tenant’s Contract Documents, two (2) of which contractors may be proposed by Tenant. If Landlord is Tenant’s construction manager, Landlord agrees that it shall competitively bid Tenant’s Work to all three (3) of the proposed contractors. Tenant may select the contractor with the approval of Landlord, which approval shall not be unreasonably withheld, delayed or conditioned. Landlord may exclude from the Building any contractor proposed to perform any part of the Tenant’s Work, if Landlord reasonably believes that the contractor is incompatible with the Landlord or other contractors and/or subcontractors performing work at the Building. Tenant recognizes that Landlord may require that certain subcontractors be awarded the work for mechanical systems and sprinkler systems to preserve Landlord’s warranties for those systems installed as part of the Base Building. Tenant agrees that Landlord may award that work to those subcontractors unless their respective bids are unreasonably high when compared to the bids of other bidders for that work. If the subcontractors’ bids for the mechanical systems and/or sprinkler system are unreasonably high, then Landlord may, nevertheless, award the mechanical and sprinkler work to those subcontractors, but Landlord shall bear the portion of the cost for the work performed by those subcontractors which exceeds the reasonable costs and expenses to perform that work. If Landlord is not retained by Tenant to serve as construction manager for Tenant’s Work, then Tenant may select a qualified contractor to perform the Tenant’s Work, with the approval of Landlord, which approval shall not be unreasonably withheld, delayed or conditioned. The term “qualified contractor” shall mean a contractor with a minimum of two (2) years’ experience in constructing leasehold improvements in office buildings and is otherwise creditworthy..

5. Construction of Tenant’s Improvements .

a. Construction Contract . Upon selection of the contractor(s), as provided above and submission of the Estimated Construction Costs (hereinafter defined), (i) If Landlord is Tenant’s construction manager, Landlord shall enter into the contract for the construction of Tenant’s Work; and (ii) Landlord shall promptly proceed with the construction of Tenant’s Work. If Tenant elects to proceed without retaining Landlord to serve as construction manager, then Tenant shall enter into the contract with the contractor and proceed with construction of the Tenant’s Work upon Landlord’s delivery of the Premises Ready for Tenant’s Work

(hereinafter defined). The construction contract shall provide, among other things, the following: (1) that the contractor shall construct the Tenant Work in a good and workmanlike manner; (2) that the contractor shall construct the Tenant Work in compliance with all applicable laws, including the ADA/TAS codes, and the Tenant’s Contract Documents; and (3) an express warranty of the Tenant Work from the contractor for a period of one (1) year from completion of the Tenant Work. Landlord’s Representative shall be responsible for giving the contractor a notice to proceed when contractor may commence the Tenant Work.

b. Shop Drawings and Submittals . Tenant or Landlord, as the case may be, shall cause the successful contractors to begin preparing shop drawings and processing submittals. If the Tenant’s Work impacts the Base Building, Tenant’s Architect shall submit the relevant shop drawings and submittals to the Landlord. Landlord will promptly review them for consistence and integration with the Base Building Work and coordination of other subcontractors’ work and shall forward them to Tenant’s Architect for review within five (5) business days. Where action and return is requested or required, Tenant’s Architect will review each shop drawing and submittal and return it with Tenant’s Architect’s written comments to Landlord within five (5) Business Days after receipt by Tenant’s Architect. If Tenant’s Architect or Landlord does not timely deliver written comments, the requesting party shall deliver a written request for comments and if the other party does not respond to such request within 5 Business Days then such shop drawing and submittal shall be deemed approved by the applicable party.

c. Progress Meetings . During the construction of Tenant’s Work, Landlord and Tenant shall schedule “job progress” meetings frequently enough to permit regular monitoring of scheduling and status of Tenant’s Improvements. Landlord’s Representative shall furnish Tenant’s Representative and Tenant’s Architect reasonable prior notice of those meetings and shall require representatives of contractor performing Tenant’s Work and all major subcontractors having influence on the schedule of Tenant’s Work to attend together with the Base Building contractor and the subcontractors to the extent affected.

6. Inspection and Scheduling .

a. Landlord, Tenant and Tenant’s Architect shall inspect the Tenant’s Work, as they progress. Each party shall be available, and cause its respective subcontractors and architect to be reasonably available, to the other parties from time to time, on reasonable prior notice, as necessary or desirable to review the Tenant’s Work.

b. The party entering into the contract with the Contractor shall obtain all approvals, permits and other consents required to commence, perform and complete Tenant’s Work and shall cause the construction of Tenant’s Work to comply with all applicable laws, except that Tenant’s Architect is responsible for Tenant’s Contract Documents being in compliance with the City of Dallas building and fire codes and any other applicable codes and ordinances. The party entering into the contract with the Contractor shall maintain for inspection copies of all approvals, permits, inspection reports and other governmental consents.

c. If Landlord retained the contractor, then Landlord’s Representative shall notify, and permit access by, Tenant approximately 30 days before the estimated date the Premises will be Ready for Occupancy so that Tenant may cause cable and wiring and other furniture, fixtures and equipment to be installed to make the Premises ready for Tenant to conduct business.

7. Payment of Work Costs .

a. The term “Work Costs” , with respect to Tenant’s Work, means the sum of all hard and soft costs and charges incurred by Landlord or Tenant, as may be the case, for labor and materials in having the Tenant’s Work performed by the contractor and subcontractors. If any performance or payment bonds are

required by Landlord, the cost of such bonds shall be at Landlord’s sole cost and expense and not included in the Work Costs. Any Building stocked materials used by Tenant that are required out of Landlord’s warehouse shall be charged against the Tenant’s Work Allowance at the lesser of (i) the cost paid out of pocket by Landlord to the supplier including, if applicable, all stocking costs, taxes, insurance and other soft costs associated with Landlord’s cost to stock the materials, and (ii) the market cost of such materials. Tenant shall not be required to purchase Building stocked materials; however, if Landlord has previously purchased materials for the Base Building and Tenant desires to use other materials, Tenant shall not be provided a credit for the Base Building materials. Notwithstanding the foregoing, the Work Costs include, without limitation all architectural and engineering fees and expenses directly related to Tenant’s Work, all contractor and construction manager costs and fees, all permits and taxes, and a coordination and administration fee payable to Landlord equal to 2% of the hard costs (the “ Construction Supervision Fee ”) for Landlord’s overhead if a third party is retained to serve as construction manager instead of Landlord; but shall exclude the costs of any personal property items of Tenant such as decorator items or services, artwork, plants, furniture, equipment or other fixtures not permanently affixed to the Premises. If Landlord provides construction management services for Tenant, Landlord will be paid a fee of not less than 5% of the hard costs included in the total Work Costs, which cost shall be in lieu of the Construction Supervision Fee. If Tenant uses less than the entire Work Allowance for the hard costs and soft costs relating to construction of the Tenant Improvements, Tenant shall be permitted to utilize no more than $4.00 per Rentable Square Foot for furniture, fixtures, equipment, cabling and other costs and expenses relating to the Premises. Landlord shall provide up to an additional construction allowance (“ Additional Work Allowance ”) of $15.00 per Rentable Square Foot to be amortized at an interest rate of nine percent (9%) per annum in the form of Additional Rent to be paid over the initial Term of the Lease, should Tenant request such an Additional Work Allowance prior to construction of Tenant’s Work. Tenant’s Architect has been engaged to perform preliminary test fits for the Premises and Landlord agrees to provide a space planning allowance (which is in addition to the Work Allowance) equal to $.12 per Rentable Square Foot to defray the cost for such initial test fits which will include all revisions.

b. In connection with the construction of Tenant’s Work, Landlord shall provide an allowance equal to $50.00 per Rentable Square Foot of the Premises that is actually improved(the “Work Allowance” ) to be applied by Landlord to the Work Costs as set forth below. Tenant shall be responsible for payment of all costs and expenses in connection with the Tenant’s Improvements in excess of the Work Allowance. Tenant shall not be entitled to a cash allowance under any circumstances. In the event any portion of the Work Allowance is remaining on the date which is 6 months after substantial completion of the Tenant’s Improvements, such remaining portion shall be the sole property of the Landlord.

c. After selection of the contractor for the construction of the Tenant Work, Tenant will promptly cause to be prepared a preliminary estimate of the cost of the Tenant Work, as described in Tenant’s Contract Documents (the “Estimated Construction Costs” ). To the extent the Estimated Construction Costs are more than the Work Allowance, Landlord will so notify Tenant in writing and Tenant will establish the “ Maximum Approved Costs ” by either (i) agreeing in writing to pay the amount by which the Estimated Construction Costs exceeds the Work Allowance; or (ii) agreeing to have Tenant’s Contract Documents revised by Tenant’s Architect within 10 Business Days in order to assure that the Estimated Construction Costs exceed the Work Allowance by an amount that Tenant shall agree to pay pursuant to subparagraph (i) above. Tenant will give immediate attention to establishing the Maximum Approved Costs and respond to Landlord within five (5) Business Days. Upon Tenant’s timely fulfillment of its obligations in either clause (i) or (ii), the Maximum Approved Costs will be established. Upon establishment of the Maximum Approved Costs, Tenant shall deposit with Landlord the amount by which the Estimated Construction Costs exceeds the Work Allowance (the “Work Costs Deposit” ), which Work Costs Deposit shall be held in a Landlord controlled checking account designated as an escrow account for the benefit of Tenant in an FDIC insured

financial institution for payment of the Work Costs. The Work Costs Deposit shall be used only to pay for the Work Costs as the same are incurred, and shall be paid following receipt of properly submitted applications, as Landlord would require for disbursement from the Work Allowance, plus approval by Tenant’s Representative or Tenant’s construction manager of the invoice for payment, which approval will not be unreasonably withheld, delayed or conditioned, prior to Landlord’s payment of any portion of the Work Allowance for such costs. If Landlord is Tenant’s construction manager, Landlord shall provide Tenant with a copy of all invoices, bills and other similar documentation with respect to each payment made from such account within 10 days after such payment is made. After the entire Work Costs Deposit has been disbursed for payment of the Work Costs, Landlord shall disburse the Work Allowance to pay the remaining Work Costs; provided that in the event the Estimated Construction Costs exceed the Work Costs by an amount in excess of the Work Costs Deposit (the “ Excess Costs ”), Tenant shall promptly pay to Landlord the Excess Costs. In the event the Work Costs Deposit exceeds the Maximum Approved Costs minus the Work Allowance, Tenant shall be entitled to a refund of such excess within 30 days after the Commencement Date. To the extent the Work Costs do not exceed the Work Allowance, Landlord agrees to make payments of the Work Allowance within thirty (30) days following receipt of properly submitted applications, including lien waivers, paid invoices and all supporting documentation of the Tenant’s Work.

8. In addition to, and separate from, the Work Allowance, and to the extent not already included in any Base Building Work performed by Landlord, Landlord, at its sole cost and expense, (i) shall provide all improvements creating a multi-tenant floor in a manner consistent with comparable office buildings in the uptown market of Dallas, including, without limitation, corridors and restrooms, and (ii) shall provide all “above the ceiling” improvements. Change Orders . Regardless of which party holds the contract for construction, Tenant may authorize changes to the Tenant’s Work during construction only by written instructions to Landlord’s Representative on a form reasonably approved by Landlord. All changes that involve compliance with laws or Base Building system capabilities will be subject to Landlord’s prior written approval, which approval shall not be unreasonably delayed or withheld. Prior to commencing any change, Landlord or Tenant will cause the contractor to prepare and deliver to the other party, for the other party’s approval, a change order setting forth the total costs of such change, which will include associated architectural, engineering, construction contractor’s costs and fees, completion schedule changes and the costs of Landlord’s applicable supervision or management fee . The party’s approval shall not be unreasonably withheld, delayed or conditioned, as applicable. If Tenant is the approving party and fails to approve such change order within 5 days after delivery by Landlord, Tenant will be deemed to have withdrawn the proposed change and Landlord will not proceed to perform such change. Upon Landlord’s receipt of Tenant’s approval, Landlord will proceed with such change. The costs associated with a Tenant initiated change order shall be included in Work Costs and shall be payable out of the Work Allowance to the extent available.

9. Tenant Delay . If Landlord is the construction manager, the term “ Tenant Delay ” shall mean any delay that Landlord may encounter in the prosecution of Tenant’s Work caused by any act, neglect, failure or omission of Tenant, its agents, employees or contractors and shall include, without limitation, any day that occurs: (a) because of Tenant’s failure to timely deliver or approve any required documentation such as the Preliminary Space Plans, the Design Development Review or Tenant’s Contract Documents; (b) because Tenant fails to timely furnish any requested information or deliver or approve any required documents such as the Preliminary Space Plans, the Design Development Review or Tenant’s Contract Documents (whether preliminary, interim revisions or final), pricing estimates, construction bids, and the like; (c) because of any change by Tenant to the Tenant’s Contract Documents; or (d) because of any specification by Tenant of long lead materials or installations in addition to or other than Building standard materials;

10. Dispute Resolution . In the event of a dispute between Landlord and Tenant with respect to any matter relating to this Work Letter, including, without limitation, Tenant’s Contract Documents, to be resolved by mediation, Tenant’s Architect and Landlord’s Representative shall meet to immediately resolve that matter in good faith and as expeditiously as possible. In the event Tenant’s Architect and Landlord’s Representative are unable to resolve the matter, then it shall be submitted to an independent architect selected by them, whose decision shall be final. Tenant’s Architect and Landlord’s Representative shall select the independent architect by mutual agreement, failing which each shall submit a list of the names of 10 architects in order of preference to the other. The first name appearing on both lists shall be designated as the independent architect. If no name appears on both lists, the process shall be repeated until an independent architect is selected. If a party fails to submit a list, then the first name on the party whose list was submitted shall be the independent architect.

11. Punch-List . Within ten (10) days after substantial completion of the Tenant’s Work in the Premises, or applicable portion thereof, Landlord and Tenant shall walk through the Premises together and prepare a punch list of items in the Premises, or portion thereof, that remain to be finished so as to complete the Tenant’s Work (“ Punch List Items ”). The Punch List Items will not include any damage to the Premises caused by Tenant’s move-in or early occupancy. Damage caused by Tenant will be repaired or corrected by Landlord or Tenant’s contractor at Tenant’s expense. If Tenant fails to submit Punch List Items to Landlord within two (2) months after substantial completion of the Premises, or any portion thereof, it will be deemed that there are no items needing additional work or repair. Landlord’s or Tenant’s contractor, as applicable, shall complete all Punch List Items within 30 days after Tenant submits the Punch List Items or as soon as practicable thereafter. For purposes hereof, “ substantial completion ” and “ substantially complete ” shall mean when the City of Dallas approves the Premises, or applicable portion thereof for occupancy by issuance of a Certificate of Occupancy.

12. Ready for Occupancy Date . For purposes of commencement of the Term, the Ready For Occupancy Date is the date that is ten (10) days after substantial completion and the earlier to occur of (i) the date the City of Dallas approves the Premises for occupancy; or (ii) the date the City of Dallas would have approved the Premises for occupancy but for Tenant Delay. In the event Landlord is acting as Tenant’s construction manager and the Premises are not Ready for Occupancy by September 1, 2015, then Tenant shall receive one (1) day of additional abatement of Base Rent for each day beyond September 1, 2015 until the Premises are delivered to Tenant Ready for Occupancy. The abatement hereunder shall be in addition to any abatement otherwise provided to Tenant as set forth in Section 1.D. If the Premises are not Ready for Occupancy by December 31, 2015 and Landlord is acting as Tenant’s construction manager, as such date may be extended day by day for each day of a delay caused by a Tenant Delay, then Tenant may terminate this Lease at any time thereafter and prior to delivery of the Premises Ready for Occupancy.

If Tenant elects to contract with the contractor to perform the Tenant’s Work, then the Commencement Date will be one hundred twenty (120) days from the date the Premises are delivered to Tenant Ready for Tenant’s Work, but not earlier than July 1, 2015. The term “Ready for Tenant’s Work” shall mean the Landlord’s Work is substantially complete. The term “Landlord’s Work” shall mean the Base Building improvements described on Exhibit C-1 , attached hereto. “Substantial completion” (or words to such effect)for purposes of this paragraph means the Landlord’s Work is sufficiently complete, including the Building Shell and Service Core with exterior windows in place, building systems brought to the Premises and elevator access completed, as described in Exhibit C-1 to the extent necessary for Tenant’s Work to begin with only minor items remaining in Landlord’s Work which will not interfere with construction of Tenant’s Work. Prior to the substantial completion of Landlord’s Work, Landlord’s Representative and Tenant’s Representative shall walk through the Premises for the purpose of establishing that Landlord’s Work is substantially complete and jointly prepare a list of minor items of Landlord’s Work which, in the mutual opinion of Landlord and

Tenant, have not been fully completed or which require repair (the “ Landlord’s Work Punch List ”). If Tenant’s Representative fails to participate in a walk-through within five (5) days following request by Landlord’s Representative following substantial completion of Landlord’s Work, then Tenant shall be deemed to have accepted Landlord’s Work. If there is a dispute regarding substantial completion or the Landlord’s Work Punch List, the provisions of Section 10 of this Exhibit C shall apply. Upon written completion of the Landlord’s Work Punch List, Landlord shall cause its contractor to make the repairs and complete the items on the Landlord’s Work Punch List in a timely manner and in coordination with the contractor performing Tenant’s Work to minimize interference with Tenant’s Work. If any such repairs or completion of Landlord’s Work will interfere with Tenant’s Work such that completion of Tenant’s Work will be delayed or if Landlord fails to obtain any certificates or approvals which, in turn, delay Tenant obtaining receipt of any certificates or approvals from governmental authority, then the 120 day period set forth above shall be extended day for day by any such delay caused by Landlord’s contractor performing such repairs or completing such other items on Landlord’s Work Punch List or by Landlord’s failure to obtain the requisite certificates or permits.

13. Conflicts . In the event of a conflict between the provisions of this Exhibit C and the provisions of the Lease, the provisions of this Exhibit C will control.

EXHIBIT C-1

BASE BUILDING GUIDELINES

Landlord shall deliver to Tenant, at no additional expense, all of the items set forth below in accordance with applicable Laws including Building codes and regulations (collectively, “Code”), including, without limitation, the ADA, and in good working order. Additionally, Landlord shall construct the Building overall to Class AA standards substantially comparable to other Class AA buildings in the Uptown market of Dallas, Texas and in substantial accordance with Building Schematics (a copy of which has been provided to Tenant).

1. Building Shell & Service Core

a) Building envelope fully finished and in ready condition, including, without limitation, fully waterproofed, caulked, glazed (with all glass requiring replacement due to defects, cracks or broken panes replaced), cleaned (including exterior glass) and with all metal finishing and trim completed, touched up and cleaned;

b) Building standard window coverings (motorized shades at Penthouse Level 22 only) installed immediately before Tenant’s occupancy; typical floors will be building standard roll down shades. Shades for the 22 ^nd floor shall be a product of similar look/quality to mecho brand shades and fully motorized, automated and installed at the sole cost of the Landlord immediately before Tenant’s occupancy

c) All core walls (not columns) shall be framed with metal studs, dry walled, taped, floated, sanded, and ready to receive final Tenant finishes; exterior walls are all floor to ceiling glass for the exception of two areas where exterior building signage will be installed.

d) Concrete floors within Premises shall be broom clean and shall have a Floor Flatness (Ff) of 25 and a Floor Levelness (Fl) of 20.

e) The core area shall be compliant with Code required fire ratings and including the following to the extent located on each floor of the Premises: (i) enclosed, finished and secured mechanical, electrical, telephone/low voltage, toilet and janitorial rooms (collectively, the “Core Service Rooms”), (ii) stairways and elevators, and (iii) heating, ventilation, air conditioning (“HVAC”), electrical, plumbing and life-safety systems as hereinafter described.

g) Finished Building standard doors and required hardware compliant with Code at stairwells and core service rooms;

h) Core service electrical rooms complete on all proposed floors with transformers and panels. Landlord, at Landlord’s expense, will provide 5.0 watts (4.0 watts for power and 1.0 watt for lighting) connected load per usable square foot capacity for Tenant’s use (“Building Standard Electricity”). Tenant, at Tenant’s expense, will also have an additional 2.0 watts (power) connected load available for a total of 7 watts as described below. Such Building Standard Electricity will be metered directly to the Landlord and will be included as part of Operating Expenses;

i) In addition, space will be allocated for additional transformers and panels sufficient to provide an additional 2.0 watts (power) connected load per usable square foot capacity for tenant use (the “Above-Standard Electricity”) for a total of 7.0 watts connected load. Any distribution equipment (panels, transformers, conduit, wiring, etc.) required to deliver Above-Standard Electricity shall be at the Tenant’s cost and all consumption on this excess equipment shall be separately metered and billed directly to Tenant by Landlord and shall not be included in Operating Expenses;

j) Exit signage as required by Code for the Building Core and Shell. Such signage shall be edge lit acrylic type fixtures;

k) A primary fire/life safety annunciation system as required by Code for the Building Core and Shell and “backbone” sufficiently sized for Tenant's secondary distribution as required by Code;

l) Core service telephone rooms installed with plywood backboards, interior lighting and electrical outlets, and sufficient sleeves, risers, conduits, and pull-boxes to accommodate the installation of Tenant’s signal cable from the main point of entry to the site to the Premises, and one 4” raceway (conduit and/or floor sleeves) from the main telephone room to Tenant’s floor through the Building’s secure telecom riser closets which will be available for Tenant’s exclusive use;

m) Men's and women's toilet rooms on Tenant's floors finished to Building standards and compliant with Code, including plumbing fixtures, countertops for sinks, full length and full height mirrors above the vanities, hot and cold (or mixed and tempered) running water, porcelain tile on floors and wet wall surfaces, stainless steel toilet partitions and stall doors, accessories (similar to Bobrick or equal stainless steel), ceilings (painted drywall) and lighting. Tenant at its cost may choose to redesign the bathroom stalls on their floors. Any design alteration to be approved by Landlord. Water closets, urinals, and lavatory faucets shall be hands free operational Landlord will provide the restroom design to Tenant prior to Lease execution and attach an image of the anticipated finishes as an exhibit to the Lease;

n) Passenger elevators and freight elevators, including finished interior cabs complete with finished doors, frames, hardware, call lanterns and buttons, fire department connections and egress placards as required by Code and consistent with Building standards. Quantity and speed of elevators shall be designed for a maximum wait time of 30 seconds at peak loading times at full occupancy. Ground floor main lobby elevator entrances shall be stainless steel not less than 9’ tall, stainless steel doors, jambs and returns. Non-main lobby elevator entrances shall include painted elevator doors, jams and returns. Tenant will require that the elevators contain a card access system to limit visitor access; such card access system must be compatible with Landlord's security system and shall be at Tenant's expense.

o) Main mechanical system room with equipment, fire dampers and primary medium pressure insulated duct and terminal units. Landlord will provide five (5) VAV box per floor.

p) HVAC: Landlord will provide building standard digitally controlled air handling units, medium pressure duct distribution and fan powered boxes serving five (5) No downstream distribution is provided. Core service rooms will be served with variable air volume boxes and downstream distribution ductwork and diffusers. The base building HVAC system (“Base Building HVAC System”) will be designed to provide a minimum capacity of 1 person per 150 USF (“Building Standard Density”), and to HVAC and ventilation per ASHRAE 90.1 based on the following criteria:

(i) Summer design outdoor condition: 98.7ºF DB, 75.6ºF WB.

(ii) Summer outside air handling unit design condition: 96ºF DB, 78ºF WB.

(iii) Winter design temperature: 27.4ºF

(iv) Indoor design conditions: 74ºF (summer), 72ºF (winter) – maintain plus/minus 2ºF.

The indoor air quality shall comply with the ASHRAE standards 62.1 outside air ventilation provided by base building systems on each floor;

q) Landlord shall provide supplemental cooling capacity of no less than three (3) tons per Tenant floor for Tenant’s supplemental cooling systems. Access shall be provided on every other Tenant floor for either chilled or condenser water, including vent and drainage risers, for such systems. Landlord shall make available for Tenant’s Separate HVAC Equipment for Tenant’s specific use for above-building standard supplemental air conditioning requirements (i) excess condenser water on a 24/7 basis and (ii) excess chilled water during Building Standard Hours. Tenant’s use of any chilled water shall be metered at Tenant’s cost, and Tenant’s use of condenser water shall be free of charge;

r) Areas adjacent to the mechanical rooms capable of maintaining a noise criteria rating of not more than NC-42 and open plan office areas capable of maintaining a noise criteria rating of not more than NC-40. Landlord, at its sole cost shall design and utilize reasonable means to reduce and limit any vibrations, odors, noises, etc. originating from the Building’s main mechanical equipment on level above or adjacent space, all consistent with comparable first-class office buildings in the Uptown market;

s) Primary fire sprinkler system consisting of control and flow valves, primary distribution mains, laterals, and upright sprinkler heads to provide light hazard coverage as required by Code for the Building Core and Shell;

t) When required by the authorities having jurisdiction, fire extinguishers shall be in semi-recessed fire extinguisher cabinets as required for Building Core and Shell;

u) Structural floor capacity within the Premises of 80 PSF design live load plus 20 PSF design dead load. Landlord can also accommodate increased floor loading capacities required by Tenant, at Tenant’s expense, with notice given to Landlord prior to the commencement of Building construction;

v) Completed ground floor lobby with finishes to be specified in detail in an exhibit to the lease agreement;

w) Completed parking facilities with finishes to be specified in detail in an exhibit to the lease agreement;

x) Completed exterior plazas and landscaping with finishes to be specified in detail in an exhibit to the lease agreement;

y) Completed loading dock;

z) Standard Ceiling Tile: 2x2 tegular edged tiles. The ceiling tile and grid will be similar to Armstrong Dune with SupraFine 9/16” grid; however, Tenant may elect to receive a credit and upgrade in accordance with paragraph (ff) hereof. The ceiling tile and grid will be stacked on each floor;

aa) Standard Ceiling Height of Proposed Tenant Floors: The finished ceilings shall be 10 feet in height or greater for the exception of one area by the restroom walls;

bb) The Building mechanical systems, including electrical systems, ductwork, and sprinkler mains, shall have a clearance of no less than 6” above Tenant Premises ceiling height; for the exception of one area by the restroom walls..

cc) Standard Lighting: Standard lighting stacked on the floor shall be direct/indirect 2’x4' with two T8 or latest technology T5/LED lamps, at a ratio of one fixture per 125 RSF;

dd) Digital Fan Powered Boxes (FPB) HVAC Boxes: Landlord shall provide five (5) Digital FPB to serve Building perimeter zones;

ee) Building standard doors at stairwells and core service rooms, finished and installed with required hardware and compliant with Code;

ff) Tenant may at their cost may elect to substitute/upgrade materials and to receive a credit in lieu of Landlord providing either (i) the Building-standard ceiling tile specified in item (z) above, (ii), window coverings in item (b) above and/or (iii) the Building-standard lighting specified in (cc) above. Tenant shall notify Landlord in writing of Tenant's election to receive such credit on or before two month before start of TI, and in such event, the credit amount shall be in the amount of the costs paid by Landlord for such items. Any such credit amounts shall be added to the TIA. In the event that Tenant fails to timely notify Landlord of Tenant's election to receive such credit in the manner required above, then Landlord shall provide such applicable items to the Premises;

(gg) Tenant may install cell phone repeaters as needed to support Tenant’s cellular phone and data requirements.

(hh) Landlord will provide or will allow Tenant access and ability to install Cable or Satellite TV systems.

(ii) Landlord will provide terrace for Tenant’s use with the following improvements provided at the landlords cost:

• 1’-6” structural drop

• Tapered rigid insulation to drain

• TPO roofing system.

• TPO Protection Layer or protection Board

• Window Washing Davit Pedestal

• 8’-0” wind screen glass wall

• One door accessing Terrace

• 3 weather proof GFCI receptacles mounted on pedestal

EXHIBIT C-2

JANITORIAL SPECIFICATIONS


I.	General Cleaning – Five Nights Weekly


A.	Sweep, vacuum or scrub all hard surface flooring using approved dust-down preparations; damp mop all hard surface flooring in the first floor lobby, entrance foyers on each floor, and building and garage elevator foyers. Damp mop all the hard surfaces flooring as needed. Floor crew performs stripping and waxing of floors (as needed).


B.	Vacuum all carpeted areas and rugs.


C.	Empty, clean, damp dust, and wash (if necessary) all wastebaskets, ashtrays, receptacles, etc. Replace plastic liners.


D.	Clean all ashtray urns and replace sand as necessary.


E.	Remove wastepaper, waste materials and recycling materials to designated areas.


F.	Dust and wipe clean all desktops, horizontal furniture surfaces, fixtures, and window-sills (as needed).


G.	Clean all glass furniture tops, damp wipe and polish (as needed).


H.	Dust all chair rails, stair rails, trim, etc. (as needed).


I.	Dust all baseboards, remove stains if necessary (as needed).


J.	Wash clean and sanitize all water fountains and coolers, kitchen and coffee bar surface areas, and dining/lounge areas, including but limited to counters, tables, chairs, sinks, and exterior of appliances.


K.	Keep entrance doors to offices locked while cleaning. Upon completion of cleaning, all lights are to be turned off.


L.	Keep service corridors and freight elevator and lobbies on each floor, including lobby floor, in clean and orderly condition.


M.	Remove all fingerprints, scuff marks, chewing gum, and other foreign matter.


N.	Clean glass partitions and all doors, door jambs, walls and wall coverings, removing fingerprints and smudges.


O.	Clean all walls in first floor lobby entry (as needed).


P.	Dust and clean telephones as needed.


II.	General Cleaning – Lavatories – Five Times Per Week


A.	Wash and polish all mirrors, power shelves, brightwork, enameled surfaces, etc., including but not limited to flushometers, piping and toilet seat hinges.


B.	Sweep, mop, and disinfect floors, including removing scuff marks.


C.	Wash, sanitize, and wipe dry both sides of all toilet seats.


D.	Wipe clean and polish all toilet tissue, soap, towel and sanitary napkins dispensers and disposal units.


E.	Wash all basins, bowls and urinals, and disinfect.


F.	Clean/wash all partitions, tile wall, enamel surfaces, dispensers, and receptacles, using proper disinfectant.


G.	Clean towel and sanitary napkins disposal receptacles.


H.	Remove wastepaper and refuse to a designated area. No refuse to remain in building overnight.


I.	Fill toilet tissue holders, soap dispensers, towel dispensers, sanitary napkin dispensers, and air freshener dispensers.


J.	Machine scrub restroom floors (as needed).


III.	General Cleaning – At Least Monthly or as Required by Management


A.	Dust all pictures with protective glass surface frames and similar wall hangings not reached in nightly cleaning.


B.	Clean all fire stairwell doors (inside and out), floors, and stairs (as needed).


C.	Dust all vertical surfaces such as walls, partitions, and others not reached in nightly cleaning in office and public areas.


D.	Stairway, office and utility doors and frames on all floors to be checked for general cleanliness; remove finger marks and dust.


E.	Dust all door louvers and other ventilating louvers within reach (weekly).


F.	Remove all finger marks, smudges and other marks from metal/chrome partitions and other surfaces.


G.	Dust all window frames as needed.


H.	Spot carpet cleaning will be done (as needed) and shampoo carpeted floors at Tenant request at Tenant cost.


I.	Dust all blinds.


J.	Dust and clean light fixtures and covers (interior and exterior).


IV.	Miscellaneous


A.	Keep walls and ceiling clean.


B.	Janitorial activities should generally be performed at night (i.e., between 6 p.m. and 6 a.m.) or during the weekends unless there is a specific need for work during the day.


C.	Daily maid services for common area.

D. Landlord shall provide such other janitorial services generally consistent with the level of service provided to first-class buildings in the Uptown submarket of Dallas, Texas, including continuing to provide all such services currently provided by Landlord

EXHIBIT D

BUILDING RULES AND REGULATIONS

The following rules and regulations shall apply, where applicable, to the Premises, the Building, the parking garage (if any), the Property and the appurtenances. Capitalized terms have the same meaning as defined in the Lease.


1.	Tenant may not erect, place, or allow to be placed any sign, advertising matter, stand, booth, or showcase in or upon the doorsteps, or to the extent visible from outside of the Premises, vestibules, halls, common corridors, doors, walls, windows, or pavement of the Building without the prior consent of Landlord.


2.	No birds, animals, except those assisting handicapped persons, reptiles, or any other creatures may be brought into or about the Building.


3.	Nothing may be swept or thrown into the corridors, halls, elevator shafts, or stairways.


4.	Tenant may not make or permit any improper noises (which may be heard outside the Premises) in the Building, create a nuisance, or do or permit anything which, in Landlord’s reasonable judgment, interferes in any way with other tenants or persons having business with them.


5.	No equipment of any kind may be operated on the Premises that disturbs any other tenant in the Building.


6.	Tenant shall cooperate with Building employees in keeping the Premises neat and clean.


7.	Corridor doors, when not in use, must be kept closed.


8.	No bicycles or similar vehicles are allowed in the Building.


9.	Each contractor and subcontractor performing work in the Building on behalf of Tenant must deliver evidence satisfactory to Landlord that such contractor or subcontractor maintains the insurance reasonably required by Landlord prior to commencing work.

10.

Tenant shall refer all contractors, contractor’s representatives, and installation technicians rendering any service on or to the Premises for Tenant to Landlord for Landlord’s approval and supervision for performance of any contractual service. This provision applies to all work performed in the Building, including installation of telephones, telephone equipment, electrical devices, and attachments and installations of any nature affecting floors, walls, woodwork, trim, windows, ceiling, equipment, or any other physical portion of the Building.


11.	No nails, hooks, or screws may be driven into or inserted in any part of the Building except in connection with hanging pictures, diplomas and other similar artwork.


12.	Sidewalks, doorways, vestibules, halls, stairways, and similar areas may not be obstructed by any Tenant Party, or used for any purpose other than ingress and egress to and from the Premises, or for going from one part of the Building to another part of the Building. No furniture may be placed in front of the Building or in any lobby or corridor without prior consent of Landlord.


13.	Any Tenant Party who desires to enter the Building after Building Standard Hours, is required to sign in upon entry and sign out upon leaving, giving the location during their stay and their time of arrival and departure.


14.	All deliveries must be made via the service entrance and service elevator during normal working hours or at other times as Landlord may determine. Prior approval must be obtained from the Landlord for all deliveries that must be received after Building Standard Hours.


15.	Landlord may require all Tenant Parties to evacuate the Building in the event of an emergency or catastrophe.


16.	Tenant may not do anything, or permit anything to be done, in or about the Building, or bring or keep anything in the Building that in any way which would reasonably be considered to increase the possibility of fire or other casualty, or do anything in conflict with the valid laws, rules, or regulations of any governmental authority.


17.	No food may be distributed for profit or exchange of funds from Tenant’s office without the prior approval of the Building manager.


18.	No additional locks may be placed on any doors without the prior consent of Landlord, which shall not be unreasonably withheld, delayed or conditioned. All necessary keys must be furnished by Landlord and must be surrendered to Landlord upon termination of this Lease. Tenant shall then give Landlord the combination for all locks on the doors and vaults.


19.	Tenant shall comply with reasonable parking rules and regulations as may be posted and distributed from time to time.


20.	Plumbing and appliances may be used only for the purposes for which designed. No sweeping, rubbish, rags, or other unsuitable material may be thrown or placed therein. Any stoppage or damage resulting to any fixtures or appliances from misuse by Tenant shall be paid for by Tenant.

21.

No signs, posters, advertisements, or notices may be painted or affixed on any windows, doors, or other parts of the Building to the extent visible from outside of the Premises, except in colors, sizes, and styles, and in places, approved in advance by Landlord. Landlord has no obligation or duty to give this approval. Building standard suite identification signs will be prepared by a sign writer approved by Landlord. The cost of the Building standard signs is payable by Tenant. Landlord may remove all unapproved signs without notice to Tenant, at the expense of Tenant.


22.	Tenant shall not use or occupy the Premises in any manner or for any purpose other than general office purposes. No portion of the Building may be used as lodging rooms or for any immoral or unlawful purposes.


23.	Tenant may not operate, or allow the operation of any coin or token operated vending machine or similar device for the sale of any goods, wares, merchandise, food, beverages, or services, including but not limited to machines for the sale of beverages, foods, candy, cigarettes or other commodities.

24.

Tenant must obtain Landlord’s prior approval, which is at Landlord’s sole discretion, for installation of any solar screen material, window shades, blinds, drapes, awnings, window ventilators, or other similar equipment and any window treatment of any kind whatsoever. Landlord may reasonably control all lighting that is visible from the exterior of the Building and may change any unapproved lighting without notice to Tenant, at Tenant’s expense.


25.	Tenant shall not permit any Tenant Party to hold, carry, smoke, or dispose of a lighted cigar, cigarette, pipe, or any other lighted smoking equipment in the Building (including without limitation, the Premises), unless designated as a “smoking area” by Landlord.


26.	Tenant shall notify the Building manager when any furnishings or equipment are to be taken into or out of the Building. Moving of those items must be done under the supervision of the Building manager, after receiving approval from Landlord.


27.	Landlord may prescribe the weight and position of safes and other heavy equipment that may overstress any portion of the floor. All damage done to the Building by the improper placing of heavy items that overstress the floor will be repaired at the sole expense of the Tenant.

28.

The persons employed to move Tenant’s equipment, material, furniture, or other property in or out of the building must be acceptable to Landlord. The moving company must be a locally recognized professional mover, whose primary business is the performing of relocation services, and must be bonded and fully insured. A certificate or other verification of such insurance must be received and approved by Landlord prior to the start of any moving operations. Insurance must be sufficient, in Landlord’s sole opinion, to cover all personal liability, theft or damage to the Building, including but not limited to floor coverings, doors, walls, elevators, stairs, foliage, and landscaping. Special care must be taken to prevent damage to foliage and landscaping during adverse weather. All moving operations will be conducted at such times and in such a manner as Landlord will direct, and all moving will take place during non-business hours unless Landlord agrees in writing otherwise. Tenant will be responsible for the security of its property and improvements during all moving operations, and will be liable for all losses and damages sustained by any party as a result of the failure to supply adequate security. Landlord will have the right to prescribe the weight, size, and position of all equipment, materials, furniture, or other property brought into the Building. Heavy objects will, if considered necessary by Landlord, stand on wood strips of such thickness as is necessary to properly distribute the weight. Special care must be taken so as to prevent damage to the floor coverings and elevators in the Building. Landlord will not be responsible for loss of or damage to any such property from any cause, and all damage done to the Building by moving or maintaining such property will be repaired at the expense of Tenant. Landlord reserves the right to inspect all such property to be brought into the Building and to exclude from the Building

all such property which violates any of these rules and regulations or the lease of which these rules and regulations are a part. Supplies, goods, materials, packages, furniture, and all other items of every kind delivered to or taken from the Premises will be delivered or removed through the entrance and route designated by Landlord, and Landlord will not be responsible for the loss or damage of any such property unless such loss or damage results from the negligence of Landlord, its agents, or employees.


29.	Landlord will have the right to prohibit any advertising by Tenant mentioning the Building that, in Landlord’s reasonable opinion, tends to impair the reputation of the Building or its desirability as a Building for offices, and upon written notice from Landlord, Tenant will refrain from or discontinue such advertising.

30.

Each Tenant will store all its trash and garbage within its Premises. No material will be placed in the trash boxes or receptacles if such material is of such nature that it may not be disposed of in the ordinary and customary manner of removing and disposing of trash and garbage without being in violation of any law or ordinance governing such disposal. All garbage and refuse disposal will be made only through entryways and elevators provided for such purposes and at such times as Landlord designates. Removal of any furniture or furnishings, large equipment, packing crates, packing materials, and boxes will be the responsibility of each Tenant and such items may not be disposed of in the Building trash receptacles nor will they be removed by the Building’s janitorial service, except at Landlord’s sole reasonable option and at the Tenant’s expense. No furniture, appliances, equipment, or flammable products of any type may be disposed of in the Building trash receptacles.


31.	Canvassing, peddling, soliciting, and distributing handbills or any other written materials in the building are prohibited, and each Tenant will cooperate to prevent the same.


32.	No picketing may be conducted at or within the Building.


33.	The requirements of the tenants will be attended to only upon application by written, personal, telephone or electronic (if designated by Landlord) notice at the office of the Building. Employees of Landlord will not perform any work or do anything outside of their regular duties unless under special instructions from Landlord.


34.	Except as otherwise provided in the Lease, space on any exterior signage will be provided in Landlord’s sole discretion. No Tenant will have any right to the use of any exterior sign except in Landlord’s sole discretion or as otherwise provided in the Lease.

35.

Tenant may not use space heaters. Tenant will see that the doors of the Premises are closed and locked and that all coffee pots, water faucets, water apparatus, and utilities are shut off before Tenant or Tenant’s employees leave the Premises, so as to prevent waste or damage, and for any default or carelessness in this regard. Tenant will make good all injuries sustained by other Tenants or occupants of the Building or Landlord. Tenant shall not install, operate or maintain in the Premises or any other area of the Building, electrical equipment that would overload the electrical system beyond its capacity for proper, efficient and safe operation as reasonably determined by Landlord. On multiple-tenancy floors, all Tenants will keep the doors to the Building corridors closed at all times except for ingress and egress.

36.

Tenant (including Tenant’s employees, agents, invitees, and visitors) will use the parking spaces solely for the purpose of parking passenger model cars, small vans, and small trucks and will comply in all respects with any rules and regulations that may be promulgated by Landlord from time to time with respect to the parking areas. The parking areas may be used by Tenant, its agents, or employees, for occasional overnight parking of vehicles. Tenant will ensure that any vehicle parked in any of the parking spaces will be kept in proper repair and will not leak excessive amounts of oil or grease or any amount of gasoline. If any of the parking spaces are at any time used for any purpose other than parking as provided above and after providing notice of such breach and cure period as provided for Events of Default under the Lease, then Landlord, in addition to any other rights otherwise available to Landlord, may consider such default an event of default under the Lease.


37.	Landlord prohibits, at all times, the usage or possession of weapons of any kind, concealed or otherwise, by Tenant, or Tenant’s employees, contractors, agents or invitees, while on or visiting any Premises, the Building, or any related garage, sidewalks, drives, Common Areas or any related complex of buildings of which the foregoing are a part.

EXHIBIT E

This Exhibit is attached to and made a part of the Lease dated as of __________, 2014, by and between INTERNATIONAL CENTER DEVELOPMENT XVIII, LLC (“ Landlord ”) and CVSL INC._ (“ Tenant ”) for space in the Building located at 2950 North Harwood, Dallas, Texas 75201.

PARKING

During the initial Term, Landlord shall provide to Tenant three (3) parking spaces for each 1,000 Rentable Square Feet in the Premises (the “ Parking Spaces ”), which Parking Spaces shall be located (i) within the Building’s parking garage (the “ Building Garage ”) at a ratio of two (2) spaces per 1,000 Rentable Square Feet in the Premises and (ii) at Landlord’s discretion either on surface parking lots within close proximity to the Building or at the building garages located at 2727 N. Harwood St. or 2728 N. Harwood St. (the “ Off-Site Parking ”) at a ratio of one (1) space per 1,000 Rentable Square Feet in the Premises. Tenant shall be required to lease Parking Spaces in the Building Garage equal to at least a minimum ratio of one (1) space per 1,000 Rentable Square Feet in the Premises. Tenant may lease on a reserved basis in the Building Garage up to fifteen percent (15%) of Tenant’s available Parking Spaces in the Building Garage. If Tenant does not lease the Parking Spaces that are available to Tenant in the Building Garage at the ratio of two (2) spaces per 1,000 Rentable Square Feet in the Premises, Landlord may lease the unused spaces to other tenants. However, Landlord shall provide a right of first refusal to Tenant to lease back the unused spaces to Tenant for the remainder of the Term of the Lease as such spaces become available. Upon notification of the availability of additional spaces, Tenant will have five (5) days to respond to Landlord indicating Tenant’s decision to accept or decline Landlord’s offer to lease to Tenant the spaces for the remainder of the Term upon the same terms and conditions set forth herein. Notwithstanding the foregoing, in the event Tenant is leasing all Parking Spaces available to Tenant in the Building Garage and there are additional parking spaces available in the Building Garage in excess of Tenant’s ratio for Parking Spaces, Tenant shall be provided a right of first refusal to lease such available spaces at market rates subject to availability and on a month to month basis. Tenant shall be entitled to maintain the foregoing ratio with respect to any additional space leased by Tenant during the Term of the Lease. In consideration for the Parking Spaces, Tenant will pay to Landlord with each installment of Base Rent due under the Lease, the Parking Charge (hereinafter defined) set forth below, and Tenant will be required to pay the Parking Charge for all Parking Spaces allocated under this Paragraph 1, notwithstanding any period of non-use by Tenant. Tenant shall deliver to Landlord a list of the automobile license numbers of Tenant’s employees who will be using the Parking Spaces. Except in connection with the reserved Parking Spaces, Tenant is not assigned designated parking spaces, but is permitted to use whatever unreserved stalls are available, on a first-come, first-served basis in the Building Garage. Landlord shall cause any Off-Site Parking to be well lit and maintained in clean, orderly and good condition and in good repair throughout the Term.

In consideration for the Parking spaces, Tenant covenants and agrees to pay to Landlord during the initial Term, as Additional Rent, a parking charge (the “ Parking Charge ”) equal to the sum of $90.00 per month, plus applicable sales tax, for each unreserved Parking Space and $195.00 per month, plus applicable sales tax, for each reserved Parking Space within the Building Garage and market rates for Off-Site Parking. The Parking Charge shall be waived during the Rent abatement period set forth

in Section 1. D . A pro rata portion of such Parking Charge shall be payable for the (a) first partial calendar month of the Term immediately following the Rent abatement period in the event the Commencement Date occurs on a date other than the first day of a calendar month, and (b) for the last partial calendar month of the Term in the event the Lease terminates on a date other than the last day of a calendar month. Tenant’s obligation to pay the Parking Charge shall be considered an obligation to pay Rent for all purposes under the Lease. As additional consideration for the Parking Spaces, Tenant hereby waives on behalf of itself all claims, whether based on negligence or other grounds, against Landlord, its agents and employees arising out of any loss or damage to automobiles or other property while located in the Building Garage, or arising out of any personal injuries sustained in connection with the use of said Building Garage.

Tenant’s right to use the Building Garage will be in common with other tenants of the Property and with other parties permitted by Landlord to use the Building Garage. Tenant will not park in any numbered space or any space designated as: RESERVED, HANDICAPPED, VISITORS ONLY, or LIMITED TIME PARKING (or similar designation). The failure to timely pay the Parking Charge specified above, or to comply with the rules and regulations governing the use of the Building Garage shall entitle Landlord, in addition to any other remedies provided hereunder, to tow any vehicles which are in violation of said rules and regulations from the Building Garage at the sole cost and expense of Tenant and without liability for damages resulting there from.

Tenant and its employees, agents, contractors and invitees shall comply with all traffic, security, safety, and other rules and regulations promulgated from time to time with respect to the Building Garage. Landlord reserves the right to assign and reassign, from time to time, particular parking areas for use by persons selected by Landlord. Landlord will not be liable to Tenant for any temporary unavailability of parking spaces due to circumstances beyond the reasonable control of Landlord, nor will any such unavailability entitle Tenant to any refund, deduction, or allowance with respect to the Parking Spaces; provided that if for any reason Landlord fails or is unable to provide the Parking Spaces allocated to Tenant or such reserved Parking Spaces are not available for use by Tenant, such failure or inability is not a default by Landlord under this Lease, but Tenant’s obligation to pay the Parking Charge for any Parking Space that cannot be used shall be abated for so long as Tenant does not have the use of such Parking Space and such abatement shall constitute full settlement of all claims that Tenant might otherwise have against Landlord by reason of such failure or inability to provide Tenant with such parking space.

EXHIBIT F

RENEWAL OPTION

A. Tenant shall have the right to extend the Term (the “ Renewal Option ”) for one additional period of ten (10) years or up to two additional periods, each of five (5) years commencing on the day following the Expiration Date of the initial Term (or first Renewal Term in the case of successive five (5) year terms) and ending on the tenth (10 ^th ) or fifth (5 ^th ) anniversary of the Expiration Date, as the case may be (each, a “ Renewal Term ”), if:

1. Landlord receives notice of exercise (“ Renewal Notice ”) not less than nine (9) full calendar months prior to the expiration of the initial Term and not more than eighteen (18) full calendar months prior to the expiration of the initial Term; and

2. Tenant is not in default under the Lease beyond any applicable cure periods at the time that Tenant delivers its Renewal Notice or at the time Tenant delivers its Acceptance Notice.

B. The Base Rent rate per rentable square foot for the Premises during the Renewal Term shall equal the Prevailing Market Rate (hereinafter defined) per rentable square foot for the Premises and the Prevailing Market Rate shall include a determination of the Parking Charge to be payable during the Renewal Term.

C. Tenant shall pay Operating Costs for the Premises during the Renewal Term in accordance with the terms and conditions of the Lease.

D. Within 30 days after receipt of Tenant’s Renewal Notice, Landlord shall advise Tenant of the applicable Base Rent rate for the Premises for the Renewal Term. Tenant, within 15 days after the date on which Landlord advises Tenant of the applicable Base Rent rate for the Renewal Term, shall either (1) give Landlord final binding written notice (“ Acceptance Notice ”) of Tenant’s exercise of its option at the rate proposed by Landlord, or (2) if Tenant disagrees with Landlord’s determination, provide Landlord with written notice of rejection (the “ Rejection Notice ”). If Tenant fails to provide Landlord with either an Acceptance Notice or Rejection Notice within such 15 day period, Tenant’s Renewal Option shall be null and void and of no further force and effect. If Tenant provides Landlord with an Acceptance Notice, Landlord and Tenant shall enter into the Renewal Amendment upon the terms and conditions set forth herein. If Tenant provides Landlord with a Rejection Notice, Landlord and Tenant shall work together in good faith to agree upon the Prevailing Market Rate for the Premises during the Renewal Term; provided, however, that either party shall be entitled to suspend negotiations regarding the Prevailing Market Rate if the parties have not been able to agree upon the Prevailing Market Rate within 45 days after Landlord’s receipt of the Rejection Notice. Upon agreement, Tenant shall provide Landlord with an Acceptance Notice and Landlord and Tenant shall enter into the Renewal Amendment in accordance with the terms and conditions hereof. For purposes hereof, “ Prevailing Market Rate ” shall mean the arms-length fair market annual rental rate per square foot under renewal leases and amendments entered into on or about the date on which the Prevailing Market Rate is being determined hereunder for space comparable to the Premises in office buildings comparable to the Building in the Uptown Submarket. The determination of Prevailing Market Rate shall take into account (i) the location, quality, condition and age of the Building, (ii) creditworthiness of Tenant, and (iii) the length of the proposed Renewal Term. Notwithstanding the foregoing, if Landlord and Tenant are unable to agree upon the Prevailing Market Rate for the Premises within 45 days after the date Tenant provides Landlord with the Rejection Notice, Tenant, by written notice to Landlord (the “Arbitration Notice”) within 5 days after the expiration of such 45-day period, shall have the right to have the Prevailing Market Rate determined in accordance with the arbitration procedures described below. If Landlord and Tenant are unable to agree upon the Prevailing Market Rate for the Premises within the 45 day period described and Tenant fails to timely exercise its right to arbitrate, Tenant’s Renewal Option shall be deemed to be null and void and of no further force and effect.

(i) If Tenant provides Landlord with an Arbitration Notice, Landlord and Tenant, within 5 days after the date of the Arbitration Notice, shall each simultaneously submit to the other, in a sealed envelope, its good faith estimate of the Prevailing Market Rate for the Premises during the Renewal Term (collectively referred to as the “Estimates”). If the Prevailing Market Rate is not resolved by the exchange of Estimates, then, within 7 days after the exchange of Estimates, Landlord and Tenant shall a person to be an arbitrator (“Arbitrator”) who shall be a licensed real estate broker with not less than ten (10) years of experience in

negotiating office leases in the Central Business and Uptown Business Districts and may not be an employee, former employee, affiliate or former affiliate of Landlord or Tenant and, as a condition to selection, the Arbitrator must have negotiated at least two (2) major office leases (25,000 square feet or more) in the Uptown Business Districts during the 36 month period preceding his or her selection. The Arbitrator shall determine which of the two Estimates most closely reflects the Prevailing Market Rate for the Premises during the Renewal Term. Landlord and Tenant shall submit to each other within the 7 day period a list of 10 persons qualified to be the Arbitrator, in order of preference. The first name appearing on both lists shall be the Arbitrator. If no name appears on both lists, the parties shall repeat the process each 7 days until an Arbitrator is selected.

(ii) Upon selection, the Arbitrator in good faith to agree upon which of the two Estimates most closely reflects the Prevailing Market rate for the Premises. The Estimate chosen by such appraisers shall be binding on both Landlord and Tenant as the Base Rent rate for the Premises during the Renewal Term. If either Landlord or Tenant fails to provide a list of brokers within the 7-day period referred to above, the first broker appearing on the list of the party submitting same shall be selected. If the Arbitrator believes that expert advice would materially assist him, he may retain one or more qualified persons to provide such expert advice. The parties shall share equally in the costs of the Arbitrator and of any experts retained by the Arbitrator. Any fees of any appraiser, broker, counsel or experts engaged directly by Landlord or Tenant, however, shall be borne by the party retaining such persons.

(iii) If the Prevailing Market Rate has not been determined by the commencement date of the Renewal Term, Tenant shall pay Base Rent upon the terms and conditions in effect during the last month of the initial Term for the Premises until such time as the Prevailing Market Rate has been determined. Upon such determination, the Base Rent for the Premises shall be retroactively adjusted to the commencement of the Renewal Term for the Premises. If such adjustment results in an underpayment of Base Rent by Tenant, Tenant shall pay Landlord the amount of such underpayment within 30 days after the determination thereof. If such adjustment results in an overpayment of Base Rent by Tenant, Landlord shall credit such overpayment against the next installment of Base Rent due under the Lease and, to the extent necessary, any subsequent installments, until the entire amount of such overpayment has been credited against Base Rent.

If Tenant is entitled to and properly exercises its Renewal Option, Landlord shall prepare an amendment (the “ Renewal Amendment ”) to reflect changes in the Base Rent, Term, Expiration Date and other appropriate terms; provided that an otherwise valid exercise of the Renewal Option shall be fully effective whether or not Tenant executes the Renewal Amendment.

E. The renewal rights of Tenant hereunder shall not be severable from the Lease, nor may such rights be assigned or otherwise conveyed in connection with any permitted assignment of the Lease, except pursuant to a Permitted Transfer. In the event an assignee of Tenant pursuant to a Permitted Transfer exercises the Renewal Option set forth herein, Tenant shall remain liable under the Lease for all of the obligations of the tenant hereunder during such Renewal Term (unless Tenant was released at the time of the Permitted Transfer), whether or not Tenant has consented to or is notified of such renewal. In no event shall a subtenant be entitled to exercise the Renewal Option. Landlord’s consent to any third-party assignment of the Lease shall not be construed as allowing an assignment of such rights to any assignee.

EXHIBIT G

RIGHT OF FIRST REFUSAL FOR ADDITIONAL SPACE

During the initial Term of this Lease, Tenant shall have an ongoing subordinate right of first refusal (“ Right of First Refusal ”) to lease space located on the 15 ^th floor of the Building, as more particularly shown on Schedule G-1 attached hereto (the “ Additional Space ”), so long as the use for the Additional Space includes the use specified in Section 1.K of this Lease, provided that:


(a)	this Lease is in full force and effect and Tenant is open and operating in substantially all of the Premises;


(b)	Tenant is not in default under the terms and conditions of this Lease (after applicable notice and cure periods) at the time it exercises the Right of First Refusal and shall not be in default when it is supposed to take possession of the Additional Space;


(c)	Intentionally deleted;


(d)	Tenant’s then current financial condition, as revealed by its most recent financial statements (which shall include quarterly and annual financial statements, including income statements, balance sheets, and cash flow statements) must demonstrate, either:


(i)	Tenant’s net worth is comparable to its net worth at the time this Lease was signed; or


(ii)	Tenant meets the financial criteria then currently acceptable to Landlord, in Landlord’s reasonable discretion, for lease of such Additional Space.


(e)	Frost Bank elects not to exercise any of its rights pertaining to the Additional Space under its existing office lease with Landlord.


2.	Landlord’s Notice . Landlord shall give Tenant notice, in writing (the “ Landlord’s Notice ”), of a prospective lease for the use, as described in Paragraph (a) above, at the Additional Space. The Landlord’s Notice shall include the terms and conditions of such prospective lease.


3.	Tenant’s Exercise of Right . Subject to Subparagraph (c) below and subject to Frost Bank’s superior rights to the 15 ^th floor which may limit the length of the term of Tenant’s occupancy of the 15 ^th floor as well as limit Tenant’s renewal of the 15 ^th floor, to exercise this Right of First Refusal as such rights exist on the date of this Lease, Tenant shall:

(a)

Accept the terms and conditions of the prospective lease as proposed by Landlord by notifying Landlord, in writing, sent by registered or certified mail, return receipt requested, of its intent to so accept, postmarked within fifteen (15) days after receipt of Landlord’s Notice. Tenant’s notice of acceptance shall include the financial statements required by Paragraph 1 above and such other financial information required by Landlord to make its decision;


(b)	After accepting the terms and conditions of the prospective lease, execute an amendment to this Lease, subjecting the Additional Space to this Lease (at the rent and for the terms and conditions set forth in the prospective lease mentioned hereinabove); within fifteen (15) days after receipt of same from Landlord.

(c)

If Tenant exercises the Right of First Refusal or otherwise contractually agrees to lease any portion of the 15 ^th floor prior to commencement of construction of Tenant’s Improvements on the 22 ^nd floor, Landlord shall provide Tenant a Work Allowance equal to $50.00 per rentable square foot subject to the terms further defined in Exhibit C , attached hereto, and the following schedule of Base Rent shall apply to the Additional Space,:



Total Months		Rate/Rentable Square Foot
8		$00.00 +E
4		$14.00 Net
12		$28.00 Net
12		$28.50 Net
12		$29.00 Net
12		$29.50 Net
12		$30.00 Net
12		$30.50 Net
12		$31.00 Net
12		$31.50 Net
12		$32.00 Net
15		$32.50 Net

Lapse of Right . Tenant acknowledges that time is of the essence with regard to this Right of First Refusal. If Tenant does not timely satisfy the conditions of Paragraph 3(b) above, then (a) Landlord will have the right, to accept the prospective lease on substantially the same terms and conditions offered to Tenant free of the rights of Tenant under this Paragraph, and (b) Landlord’s obligation under this Paragraph shall be null and void and without further force and effect throughout the remainder of the term of this Lease and any renewals or extensions thereof. If Landlord fails to enter into the prospective lease with the third party within 180 days following the date of Landlord’s Notice, Tenant shall again have a Right of First Refusal in connection with the Additional Space.


5.	Personal to Tenant . This Right of First Refusal for the Additional Space is not transferable without the prior written consent of Landlord, except in the event of a Permitted Transfer not requiring the consent of Landlord..


6.	No Obligation . In the event the Additional Space becomes available but no third party offer for the Additional Space exists, Landlord is under no obligation to offer for lease all or any portion, of the Additional Space to Tenant.


7.	Events Not Triggering Right . Anything contained herein to the contrary notwithstanding, the Right of First Refusal shall be deemed applicable if any of the following events occur:


(a)	The sale or transfer of stock or other ownership interests in Landlord;


(b)	Landlord enters into a management agreement or any similar agreement which transfers management of the Building;


(c)	Landlord enters into a ground lease, mortgage, or trust deed respecting all or any portion of the Premises, makes any advances thereunder, or enters into any renewals, modifications, consolidations, replacements, extensions, and refinancings thereof; or


(d)	Landlord enters into a contract for the sale of the Building containing the Premises.

If (i) the Proposed Lease Term for the Additional Space would end more than 18 months after the last day of the Current Term, (ii) there is on the date of the Landlord Notice at least one unexercised Renewal Term, and (iii) the conditions of Exhibit G are satisfied, then Tenant may, in its acceptance notice, elect to renew the term of this Lease for the next such Renewal Term (in this subsection, the “Renewal Term”), and such election will be effective as an irrevocable Renewal Notice, even if given more than eighteen months prior to the then-current Expiration Date. If such conditions are satisfied and Tenant gives such Renewal Notice to Landlord,

then (x) the Proposed Lease Term will be extended so that it is coterminous with the last day of the Renewal Term and (y) Base Rent for the Premises (not including the Additional Space) for the Renewal Term will be determined as set forth in Exhibit F (such process of determination to begin on the date that is one year prior to the date the Current Term is going to expire). The Base Rent for the Additional Space will be the amount set forth in the Landlord Notice for the Proposed Lease Term set forth on the Landlord Notice; and thereafter, for the remainder of the Term (as extended by the Renewal Term), will increase or decrease to equal to Base Rent for the remainder of the Premises.

EXHIBIT H

This Exhibit is attached to and made a part of the Lease dated as of ______, 2014, by and between International Center Development XVIII, LLC (“Landlord”) and CVSL Inc. (“Tenant”) for space in the Building located at 2950 North Harwood, Dallas, Texas 75201.

GUARANTY OF LEASE

This Guaranty of Lease is dated as of the ___ day of ______, 2014, given by Richmont Holdings, Inc, a Texas Corporation (“Guarantor”) to Landlord.

WHEREAS, simultaneously with the delivery of this Guaranty, the Landlord is leasing to Tenant, pursuant to that certain Office Lease dated ______, 2014 (the “Lease”), certain premises which are more particularly described in the Lease; and

WHEREAS, the Landlord is unwilling to enter into the Lease unless the Guarantor executes and delivers to the Landlord this Guaranty;

NOW, THEREFORE, in order to induce the Landlord to enter into the Lease, the Guarantor hereby covenants, guarantees and agrees as follows:

The Guarantor hereby unconditionally guarantees to Landlord the payment of rent pursuant to the Lease throughout the term of the Lease and subject to the burn-off as outlined herein.

Any modification, sublease or assignment of the Lease or waiver of the performance thereof, or the giving by the Landlord or any extension of time for the performance of any of the obligations of the Tenant, or any other forbearance on the part of the Landlord, or any failure by the Landlord to enforce any of its rights under the Lease shall not in any way release Guarantor from liability hereunder or affect or diminish the validity of this Guaranty. Notice to Guarantor of any such modification, sublease, assignment, waiver, extension, forbearance or failure, or of any default by Tenant under the terms thereof is hereby waived.

If any default is made in the payment of rental or if Landlord shall declare Tenant in default for any reason pursuant to the terms of the Lease, then Guarantor shall pay any amounts due and owing as rentals or otherwise cure all monetary defaults of Tenant.

The Guarantor agrees that in the event of institution by or against Tenant of bankruptcy, reorganization, readjustment, receivership or insolvency proceedings of any nature, and if in any such proceedings the Lease shall be terminated or rejected, or the obligations of the Tenant thereunder shall be modified, the Guarantor agrees, that it will continue to pay rents as they become due t under the Lease. In the event any payment by Tenant to Landlord is held to constitute a preference under the bankruptcy laws, or if for any other reason Landlord is required to refund such payment or pay the amount thereof to any other party, such payment by Tenant to Landlord shall not constitute a release of Guarantor from any liability hereunder, but Guarantor agrees to pay such amount to Landlord upon demand. The Guarantor’s obligation to make payment in accordance with the terms of this agreement shall not be impaired, modified, releases or limited in any manner whatsoever by any impairment, modification, release or limitation of the liability of the Tenant or its estate in bankruptcy resulting from the operation of any present or future provision of the Bankruptcy Code or other statute, or from the decision of any court.

The Guarantor shall not be subrogated to any of the rights of the Landlord under the Lease or in or to the premises demised thereby, or to any other rights of the Landlord, by reason of any of the provisions of this instrument or by reason of the performance by the Guarantor of any of its obligations hereunder, and the Guarantor will look solely to the Tenant for recoupment.

The Guarantor waives any defense arising by reason of any disability or other defense of the Tenant or by reason of the cessation from any cause whatsoever of the liability of the Tenant under the Lease, and the Guarantor shall be liable hereunder notwithstanding any such disability, defense or cessation of the Tenant’s liability under the Lease.

The Guarantor agrees that in the event this Guaranty is placed in the hands of an attorney for enforcement, the Guarantor will reimburse the Landlord for all expenses incurred, including reasonable attorney’s fees.

This Guaranty shall bind Guarantor, its heirs, successors and assigns, and shall inure to the benefit of and be enforceable by the Landlord, its successors and assigns.

Guarantor waives diligence of Landlord or its assignees in pursuing any remedy against Tenant. Furthermore, Landlord shall not be required to pursue or exhaust any other remedies before invoking the benefits of this Guaranty; however, any pursuit of any such remedies shall in no manner impair or diminish the rights of Landlord under this Guaranty.

This is an absolute and continuing Guaranty, and shall apply to and cover the Lease.

To the extent permitted by law, Guarantor expressly waives and relinquishes all rights and remedies of surety.

In the event the Guarantor is a corporation, such Guarantor warrants and represents that it has full authority to execute and deliver this Guaranty and agrees that it will do all things necessary to preserve and keep in full force and effect its existence, franchises, rights and privileges as a business or stock corporation under the laws of the state of its incorporation.

Guarantor expressly agrees that this contract is performable in the City of Dallas, Dallas County, Texas.

The invalidity or unenforceable in any particular circumstances of any provision of this Guaranty Agreement shall not extend beyond such provision or such circumstance, and no other provision of this instrument shall be affected thereby.

Whenever used herein, the singular number shall include the plural, the plural the singular, and the use of any gender shall include all genders.

Beginning on the first anniversary of the Rent Commencement Date, Guarantor’s obligations shall be reduced annually by an amount equal to twenty percent (20%) of all payments and sums guaranteed under this Guaranty and shall expire on the sixth anniversary of the Rent Commencement Date.

EXECUTED as of the date first above written.

GUARANTOR:

Richmont Holdings, a __ Texas Corporation

Address of Guarantor

2400 Dallas Parkway

Suite 230

Plano, TX 75093

By: /s/ John Rochon Jr.

Name: ___ John Rochon Jr.

Its: _______CEO__________________________

Exhibit 21



Name of Subsidiary	Incorporated	Owned
Happenings Communications Group, Inc.	Texas	100	%
The Longaberger Company	Ohio	51.7	%
TMRCL Holding Company	Ohio	51.7	%
TMRCL Holding LLC	Ohio	51.7	%
Spice Jazz LLC	Texas	100	%
Your Inspiration at Home Pty Ltd	Australia	100	%
CVSL TBT LLC	Texas	100	%
Agel Enterprises Inc.	Delaware	100	%
Agel Agility LLC	Utah	100	%
Agel Enterprises Mexico S de RL de CV	Mexico	99	%
Importadora, Exploratada y Distribuidora ASGT Global Mexico Dde RLdeCV	Mexico	99	%
Agel Enterprises (Canada) ULC	Canada	100	%
Agel Enterprises Argentina SRL	Argentina	99	%
Agel International SRL	Argentina	99	%
Agel Enterprises Colombia LTDA	Colombia	99	%
Agel Panama LLC	Panama	99	%
Agel Enterprises (Netherlands), B.V.	Netherlands	100	%
Agel Enterprises Denmark ApS	Denmark	100	%
Agel Italy SRL	Italy	100	%
Agel Enterprises RS LLC	Russia	100	%
Agel Enterprises Hungary Medical-Nutritional Products Distributor Limited Liability Company	Hungary	100	%
Agel Enterprises Ukraine	Ukraine	100	%
Agel Israel LTD	Israel	100	%
Agel Enterprises Kazakhstan (LLC)	Kazakhstan	100	%
Agel Enterprises International SDN BHD	Malaysia	100	%
Agel Enterprises (Malaysia) SDN BHD	Malaysia	100	%
Agel Enterprises, PTE. LTD.	Singapore	100	%
Agel Japan GK	Japan	100	%
Agel Enterprises Australia PTY., LTD.	Australia	100	%
CVSL AG	Switzerland	100	%
My Secret Kitchen Ltd.	United Kingdom	90	%
Paperly, Inc.	Delaware	100	%
Uppercase Acquisition	Delaware	100	%
JRjr AG	Switzerland	100	%
Trillium Pond AG	Switzerland	100	%
Stanley House Distribution Limited	United Kingdom	100	%
Kleeneze Limited	United Kingdom	100	%
Betterware Limited	United Kingdom	100	%

EXHIBIT 23.1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and

Stockholders of JRjr33, Inc.:

We have audited the accompanying consolidated balance sheet of JRjr33, Inc. as of December 31, 2015, and the related consolidated statements of operations, comprehensive loss, stockholders' equity (deficit), and cash flows for the year then ended. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion

on these financial statements based on our audit.

effectiveness of the Company’?s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement

presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of JRjr33, Inc. as of December 31, 2015, and the results of its operations and its cash flows for the year then ended, in conformity with accounting principles generally accepted in the United States of America.

Dallas, Texas

June 27, 2016

EXHIBIT 23.2

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors of

JRjr33, Inc. and subsidiaries:

We consent to the inclusion in this filing on Form 10-K of our report dated March 16, 2015, with respect to the consolidated balance sheet of JRjr33, Inc. (formerly CVSL Inc.) as of December 31, 2014, and the related consolidated statements of operations, comprehensive loss, shareholders’ equity(deficit), and cash flows for the year then ended, and our report dated March 16, 2015 on the effectiveness of internal control over financial reporting as of December 31, 2014.

/s/ PMB Helin Donovan

PMB Helin Donovan

Dallas, TX

June 24, 2016

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO RULE 13a-14 OR RULE 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, John P. Rochon, certify that:

1. I have reviewed this annual report on Form 10-K of JRjr 33, 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; and

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 27, 2016 By: /s/ John P. Rochon

Name: John P. Rochon

Title: Chief Executive Officer

(Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER

PURSUANT TO RULE 13a-14 OR RULE 15d-14 OF THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Christopher L. Brooks, certify that:

1. I have reviewed this annual report on Form 10-K of JRjr33, Inc.;

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 27, 2016 By: /s/ Christopher L. Brooks

Name: Christopher L. Brooks

Title: Chief Financial Officer

(Principal Financial Officer)

EXHIBIT 32.1

CERTIFICATION PRINCIPAL EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of JRjr 33, Inc. (the “Registrant”) hereby certifies, to such officer’s knowledge, that:

(1) the accompanying Annual Report on Form 10-K of the Registrant for the year ended December 31, 2015 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: June 27, 2016 By: /s/ John P. Rochon

Name: John P. Rochon

Title: Chief Executive Officer

(Principal Executive Officer)

EXHIBIT 32.2

CERTIFICATION PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.

Date: June 27, 2016 By: /s/ Christopher L. Brooks

Name: Christopher L. Brooks

Title: Chief Financial Officer

(Principal Financial Officer)