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 in 2007. 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 audited consolidated financial statements and the accompanying notes include the Company's accounts and the accounts of the Company's subsidiaries. These audited consolidated 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 financial information and the instructions to the Annual Report on Form 10-K.

In accordance with the guidance for non-controlling interests in consolidated financial statements, references in this report to the earnings per share, net income, and stockholders’ equity attributable to JRjr33, Inc. do not include non-controlling interests, which is reported separately.

The Company's Portfolio

The Company has grown as a result of acquiring nine direct-to-consumer brands following the reverse merger of Happenings in 2012. 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 businesses in order of acquisition: The Longaberger Company, Your Inspiration at Home Proprietary Limited, CVSL TBT LLC, Agel Enterprises Inc., My Secret Kitchen Limited, Paperly, Inc., Uppercase Living, Inc., Kleeneze Limited, and Betterware Limited. In addition, Happenings Communications Group, Inc. further diversifies the portfolio by operating in the magazine publishing industry.

Going Concern Considerations

The accompanying 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. The Company had a net loss of $34.9 million during the fiscal year ended December 31, 2016, and had an accumulated deficit of approximately $76.2 million as of December 31, 2016. The Company also had negative working capital of approximately $44.9 million and debt of approximately $13.5 million as of December 31, 2016. Cash and cash equivalents and marketable securities were $2.6 million as of December 31, 2016, a decrease of $9.2 million from December 31, 2015, primarily due to a reduction in cash used to fund the net loss from operations during the fiscal year.

The assumption that the Company will continue to operate as a going concern is largely dependent upon its ability to improve operations, its ability to refinance debt as it comes due, and reliance on the Funding Request Agreement that the Company entered into on October 18, 2017, with Rochon Capital Partners to provide short term funding of cash shortages arising in the ordinary course of business through October 31, 2018. This is discussed in Note (9), Related Party Transactions, to the consolidated financial statements included in this report.

The Company intends to fund operations through raising additional capital through debt financing, equity financing, improvement in gross margin profitability, reduction of operating costs, and if necessary, drawing on the Funding Request Agreement with Rochon Capital Partners.

The Company is in negotiations with current debt holders to restructure and extend payment terms of the existing debt which could include a potential refinancing of 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. However, the Company has a non-binding principle agreement with a creditor to provide placement of a senior secured convertible term loan in the amount of $5.0 million.

In response to these financial issues, management has taken the following actions that alleviate the doubt about the Company's ability to continue as a going concern:


•	The Company has entered into an agreement with Rochon Capital Partners to support the Company through October 31, 2018;


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


•	The Company is seeking investment capital and has a non-binding principle agreement with a creditor to provide placement of a senior secured convertible term loan;


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


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


•	The Company is aggressively reducing its operating costs; and


•	The Company has approached its trade creditors for extended payment terms.