NOTE 7 - ASSETS HELD FOR SALE

In accordance with the authoritative guidance of the Financial Accounting Standards Board, assets held for sale are reported at the lower of the carrying amount or fair value less cost to sell and the recognition of depreciation expense is discontinued. On June 23, 2008, Freedom-2 Holdings, Inc., entered into a Sale Agreement for its Cherry Hill facility, which was agreed to and then was rescinded by the purchaser. In 2009 with one potential buyer and then again another on February 16, 2010, Freedom-2 Holdings, Inc., entered into a $1,150,000 Sale Agreement for its Cherry Hill facility which, from information stated to management, was not agreed to by the mortgage holder. Although neither of the latter Sale Agreements were ever finalized, they established a fair market value less than the book value for Freedom-2 Holdings, Inc.’s building and building improvements. Generally accepted accounting procedures require Freedom-2 Holdings, Inc. to adjust the value of its fixed asset to fair market value. Therefore, Freedom-2 Holdings, Inc., and as a result, Nuvilex, have adjusted and reclassified the value of Freedom-2 Holdings, Inc.’s building and building improvements to fixed assets held for sale in the amount of $1,081,000 ($1,150,000 less $69,000 in estimated real estate commission) as of April 30, 2010 and has recorded a loss for impairment of $1,197,779 for the year ending April 30, 2010. For the year ended April 30, 2011 the Company obtained a third party fair market assessment of the building for Freedom-2 Holdings, Inc., which resulted in no further impairment. The Company and Cornerstone Bank were in discussion together and had come to an agreement on the terms in February 2012 prior to the April 30, 2012 fiscal year end, the Company and Cornerstone Bank reached an agreement in principle on terms for settlement of the litigation (the "Settlement Agreement") referenced in Item 3, regarding Legal Proceedings and further described in Note 11. Shortly after the close of the April 30, 2012 fiscal year, settlement documents were prepared and signed and the parties are currently in the process of effecting the Settlement, part of which involves transferring the property to Cornerstone Bank to be sold by the same, with the net proceeds being applied to reduce the Company's Obligations, as defined in the Settlement Agreement.

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