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 Florida. The Company changed its name to JRjr33, Inc. on March 7, 2016 and began doing business as JRjr Networks, using the stock symbol JRJR on January 28, 2016.

Basis of Presentation

The unaudited condensed consolidated financial statements and the accompanying notes include the Company's accounts and the accounts of the Company's subsidiaries. All inter-company accounts and transactions have been eliminated in consolidation. Business combinations accounted for as purchases are included in the condensed consolidated financial statements from their respective dates of acquisition. The unaudited condensed consolidated financial statements included herein reflect all adjustments (consisting only of normal, recurring adjustments) which are, in the Company's opinion, necessary for a fair presentation of the information as of and for the periods presented. These unaudited condensed consolidated interim financial statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC") and in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Quarterly Report on Form 10-Q. Accordingly, they do not include all disclosures required under GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements should be read in conjunction with our Annual Report on Form 10-K filed by the Company for the year ended December 31, 2015 (the "2015 Form 10-K".) The preparation of financial statements in conformity with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In preparing these financial statements, we have made our best estimates and judgments of certain amounts included in the financial statements, giving due consideration to materiality. Changes in the estimates and assumptions used by us could have a significant impact on our financial results. Actual results could differ from those estimates. All amounts have been presented in USD currency unless otherwise noted.

The Company's Portfolio

The Company has grown as a result of acquisitions. The Company intends to pursue additional acquisitions that improve the fundamental strength of the existing business. The Company's platform of direct-to-consumer brands is currently comprised of the following nine businesses in order of acquisition: The Longaberger Company ("Longaberger" or “TLC”), Your Inspiration at Home Proprietary Limited (“Your Inspiration at Home” or “YIAH”), CVSL TBT LLC ("Tomboy Tools" or "TBT"), Agel Enterprises Inc. (“Agel” or "AEI"), My Secret Kitchen Limited ("My Secret Kitchen" or “MSK”), Paperly, Inc. (“Paperly”), Uppercase Living, Inc. ("Uppercase Living"), Kleeneze Limited (“Kleeneze”) and Betterware Limited ("Betterware"). In addition, Happenings Communications Group, Inc. ("Happenings" or "HCG") further diversifies the portfolio by operating in the magazine publishing industry.

Going Concern Considerations

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. As of September 30, 2016, the Company had an accumulated deficit of approximately $61.3 million and recurring losses from operations. The Company also had negative working capital of approximately $22.1 million and debt of approximately $14.2 million as of September 30, 2016.

The Company intends to fund operations through raising additional capital through debt financing and increased sales. In addition, the Company intends to continue to reduce operating expenses. We cannot provide any assurance that we can obtain the required funding, or that if obtained it will be sufficient to fund the Company's capital expenditures, working capital or other cash requirements over the course of the next twelve months from the filing date of this Form 10-Q.

The Company is in negotiations with current debt holders to restructure and extend payment terms of the existing short term debt as well as potentially refinancing the debt. The Company is seeking additional funds to finance its immediate and long-term operations. The successful outcome of future financing activities cannot be determined at this time and there is no assurance that if achieved, the Company will have sufficient funds to execute its intended business plan or generate positive operating results. These factors, among others, raise substantial doubt about the Company's ability to continue as a going concern. The accompanying consolidated financial statements do not include any adjustments related to recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might result should the Company be unable to continue as a going concern.

In response to these financial issues, management has taken the following actions:


•	The Company is seeking to renegotiate and potentially refinance existing debt.


•	The Company is seeking investment capital.


•	The Company is aggressively targeting new distributors and looking to expand into new markets with our more successful companies.


•	The Company is seeking to reduce excess inventory to improve working capital.