Note 4. Business Combinations

Reverse Acquisition

On April 2, 2014, As Seen On TV, Inc. ("ASTV") and Infusion Brands, Inc. ("Infusion"), entered into an Agreement and Plan of Merger ("Merger Agreement"). Under the terms of the Merger Agreement, ASTV issued 452,960,490 shares of its common stock to Infusion Brands International, Inc. ("IBI"), parent of Infusion, in exchange for all of the shares of Infusion. Following the transaction, IBI became an 85.2% owner of ASTV's outstanding common shares and 75% owner of the ASTV's common shares on a fully diluted basis. The Merger Agreement further provided IBI with the right to appoint a majority of the Company's Board of Directors. Accordingly, the transaction was accounted for as a reverse acquisition under the provisions of ASC 805-40 Business Combinations - Reverse Acquisitions with Infusion becoming the acquirer for accounting purposes and ASTV becoming the accounting acquiree.

The effective consideration transferred to ASTV is determined based on the amount of shares that Infusion would have to issue to ASTV shareholders in order to provide the same ownership ratios as previously discussed. The fair value of the consideration effectively transferred by Infusion should be based on the most reliable measure. In this case, the market price of ASTV shares provide a more reliable basis for measuring the consideration effectively transferred than the estimated fair value of the shares of Infusion. The fair value of ASTV common stock is based on the closing stock price on April 2, 2014 of $0.09 per share, the closing stock price on the effective date of the merger.

The Merger Agreement provided for merger consideration of the 452,960,490 shares of ASTV common stock as well as ASTV assuming all obligations of Infusion and all agreements relating to their indebtedness.

The estimate of the consideration paid by the Company in the transaction is as follows:


Fair Value of the ASTV common shares	(A)	$	6,456,713
Less:
Reduction in note payable to IBI	(B)		(450,000	)
Interest accrued on IBI note payable	(C)		(9,237	)
Consideration effectively transferred		$	5,997,476

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(A)

Based on 71,741,250 common shares with a fair value of $0.09 per share, the closing price of As Seen On TV, Inc. common shares on April 2, 2014, the transaction closing date.

(B)

Represents a series of notes issued by ASTV to IBI between December 23, 2013 and March 14, 2014 used for general working capital purposes. In the event the merger transaction was not completed by June 30, 2014, all principal and related accrued interest became payable, which was forgiven when the transaction closed.

(C)

Accrued interest related to the IBI notes, accrued at 12% per annum.

The fair value of assets acquired and liabilities assumed were based on estimates by our management. The Company expects the allocation to be finalized within twelve months of the effective date of the merger. The following table summarizes the estimated provisional fair value amounts of assets acquired and liabilities assumed on the effective date of acquisition:


Cash and cash equivalents	$	53,966
Accounts receivable		4,560
Note receivable - current		225,000
Prepaid expenses and other current assets		271,804
Restricted cash - non current		83,462
Note receivable - non current		675,000
Property and equipment		43,798
Goodwill		514,097
Intangible assets		7,950,000
Deposits		2,185
Total assets acquired		9,823,872

Accounts payable		(625,413	)
Accrued expenses and other current liabilities		(361,471	)
Notes payable - current portion		(230,486	)
Warrant liability		(1,668,795	)
Current liabilities of discontinued operations		(904,788	)
Notes payable - non current		(35,443	)
Total liabilities assumed		(3,826,396	)
Net assets acquired	$	5,997,476

Of the $7,950,000 of acquired intangible assets $3,150,000 was allocated to our eDiets subsidiary and included $1,200,000 of customer relationships, $1,100,000 of domain names and $850,000 allocated to trade names. These intangibles are being amortized on a straight-line basis over a 5-year weighted average useful life. In addition, $4,800,000 of the purchase price was allocated to the Company's asseenontv.com URLs and related websites which are not subject to amortization.

The purchase price exceeded the fair value of the net assets acquired by $514,097 which was recorded as goodwill and assigned to our eCommerce segment.

The condensed consolidated results of operations for the three and six month periods ended June 30, 2014, include post-combination revenues and net loss attributable to ASTV of approximately $189,000 and $600,000, respectively

VIE Acquisition

Under the provisions of the Amended and Restated RFL Enterprises and Infusion Agreement ("Participation Agreement") dated March 6, 2014, RFL Enterprises LLC, Ronco Funding, LLC and IBI agreed the acquisition of all rights with respect to secured debts held by creditors of Ronco Holdings, Inc. ("Ronco") would be transferred to IBI, subject to an initial payment of $2,000,000 and a final payment of $2,350,000 within one year. The initial payment was made in March 2014 and on April 2, 2014, concurrent with the execution of the merger agreement between the Company and Infusion, as discussed above, Infusion assumed all assets and obligations of IBI, including all rights held by IBI under the Participation Agreement. These rights included the ability to designate a majority of the members of Ronco Holdings board of directors, effective with the initial payment of $2,000,000. Accordingly, while Infusion had not yet acquired an equity position, Ronco was deemed a Variable Interest Entity under the provisions of ASC 810 - Consolidation with Infusion being the primary beneficiary. Accordingly, Ronco was consolidated into the Company's condensed consolidated statement of operations and balance sheet at June 30, 2014. See Note 3.

The fair value of assets and liabilities consolidated, as of March 6, 2014, the date of the Participation Agreement, was based on estimates by our management. The Company expects the allocation to be finalized within twelve months of the effective date of the Participation Agreement. The following table summarizes the estimated provisional fair value amounts of assets and liabilities recorded as of the effective date:


Cash and cash equivalents	$	96,432
Accounts receivable		752,172
Inventories		1,517,374
Prepaid expenses and other current assets		332,613
Property and equipment		179,672
Goodwill		15,907,825
Intangible assets		3,700,000
Total assets		22,486,088

Accounts payable		(2,443,917	)
Accrued expenses and other current liabilities		(2,238,531	)
Notes payable - current portion		(10,165,040	)
Notes payable - related party - current portion		(3,016,228	)
Notes payable - non current portion		(1,922,372	)
Redeemable preferred stock		(2,700,000	)
Total liabilities and temporary equity		(22,486,088	)
Consideration paid	$	-

Of the $3,700,000 of acquired intangible assets $2,000,000 was allocated to our patents and $1,700,000 allocated to our trademarks. The patents are being amortized on a straight-line basis over a 9-year weighted average useful life. The trademarks are an indefinite lived intangible asset not subject to amortization.

The purchase price exceeded the fair value of the net assets acquired by $15,907,825 which was recorded as goodwill and assigned to our Housewares segment.

Pro Forma Results of Operations

The condensed consolidated results of operations for the six months ended June 30, 2014, do not include the revenues or expenses of Ronco prior to March 6, 2014 nor ASTV's business on or prior to April 2, 2014, the closing date of the reverse acquisition.

The following unaudited pro forma results for the six months periods ended June 30, 2014 and 2013 summarize the condensed consolidated results of operations of the Company, assuming the recognition of Ronco as a Variable Interest Entity and reverse acquisition had occurred on January 1, 2013 and after giving effect to the reverse acquisition adjustments, including amortization of intangibles fair valued during the transactions and transaction related costs:


	Six Months Ended June 30,
	2014			2013
Net revenues	$	7,223,669		$	18,441,410
Net income (loss) attributable to As Seen On TV, Inc. stockholders		(4,510,615	)		15,463,691
Net loss per share:
Basic	$	(0.01	)	$	0.03
Diluted	$	(0.01	)	$	0.03
Weighted-average number of common shares outstanding:
Basic		531,815,115			524,242,972
Diluted		531,815,115			526,305,472

These unaudited pro forma results have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which would have actually resulted had the recognition of Ronco and the reverse acquisition occurred on January 1, 2013, nor are they indicative of future results of operations.