JRjr33, INC. (NYSEMKT:JRJR) Files An 8-K Changes in Registrant’s Certifying Accountant
Item 4.01. Changes in Registrants Certifying Accountant
On December 13, 2016 JRjr33, Inc. (the Company) appointed Mayer
Hoffman McCann P.C. (MHM) as its independent registered public
accounting firm responsible for auditing its financial
statements, and replaced BDO USA, LLP (BDO) who was dismissed as
its independent registered public accounting firm responsible for
auditing its financial statements.
Hoffman McCann P.C. (MHM) as its independent registered public
accounting firm responsible for auditing its financial
statements, and replaced BDO USA, LLP (BDO) who was dismissed as
its independent registered public accounting firm responsible for
auditing its financial statements.
BDOs reports on the Companys financial statements as of and for
the year ended December 31, 2015, did not contain an adverse
opinion or disclaimer of opinion, and were not qualified or
modified as to uncertainty, audit scope, or accounting
principles.
the year ended December 31, 2015, did not contain an adverse
opinion or disclaimer of opinion, and were not qualified or
modified as to uncertainty, audit scope, or accounting
principles.
The decision to dismiss BDO and the selection of Mayer Hoffman
McCann P.C. was unanimously approved by the audit committee of
the board of directors.
McCann P.C. was unanimously approved by the audit committee of
the board of directors.
During the year ended December 31, 2015 and in the subsequent
interim period through December 7, 2016 (the date of dismissal of
BDO), there were no disagreements with BDO on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements,
if not resolved to the satisfaction of BDO, would have caused it
to make
interim period through December 7, 2016 (the date of dismissal of
BDO), there were no disagreements with BDO on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreements,
if not resolved to the satisfaction of BDO, would have caused it
to make
reference to the subject matter of the disagreement in connection
with its reports on the Companys financial statements for such
years.
with its reports on the Companys financial statements for such
years.
During the Companys most recent year ended December 31, 2015 and
in the subsequent interim period through December 7, 2016, there
were no events otherwise reportable under Item 304(a)(1)(v) of
Regulation S-K, except the Companys internal control over
financial reporting was not effective due to material weaknesses
in internal controls over financial reporting as described in the
Quarterly Report on Form 10-Q for the quarter ended June 30,
2016. Management has identified material weaknesses in the
internal control over financial reporting relating to the
following:
in the subsequent interim period through December 7, 2016, there
were no events otherwise reportable under Item 304(a)(1)(v) of
Regulation S-K, except the Companys internal control over
financial reporting was not effective due to material weaknesses
in internal controls over financial reporting as described in the
Quarterly Report on Form 10-Q for the quarter ended June 30,
2016. Management has identified material weaknesses in the
internal control over financial reporting relating to the
following:
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Overall Control Environment
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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.
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.
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Sufficient Accounting Personnel
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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:
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:
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Management estimates were not performed with the
structure and rigor necessary to result in quality estimate that need for fairly presented financial information. |
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Management missed a required Form 8-K/A filing
requirement related to the acquisition of Kleeneze. Subsequently, the filing was made 8 months later. |
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Management has made significant adjustments for
material errors resulting from the review of the quarterly financial statements. |
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Management has made significant adjustments for
material errors resulting from the audit of the annual financial statements. |
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Management has made significant disclosure remediation
and adjustments to the financial statements resulting from the quarterly review and annual audits. |
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The Company has incurred substantial delays in
completing its audit and filing with the SEC of its 2015 Form 10-K, its March Quarterly Report, June Form 10-Q, and its September Form 10-Q. |
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The Company has incurred breaches to covenants to its
debt agreements due to the delays in missing its filing requirements. |
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Consolidation Process
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The Company does not have 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.
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.
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Account Reconciliation
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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. This 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.
reconciliation of many of its accounts and the timely preparation
and review of the financial statements or information. This 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.
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Deferred Revenue and Revenue
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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.
deferred revenue and revenue in its sales process. This has
resulted in significant adjustments to the financial statements.
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Inventory Management
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Certain companies within the Company accept 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.
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.
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Journal Entry Support
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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.
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.
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Complex Accounting Issues
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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.
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.
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Segregation of Duties
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The Company has not maintained appropriate segregation of duties
throughout the internal control over financial reporting process.
The Company has numerous instances where review and approval is
performed by the same employee negating any monitoring or
approval controls.
throughout the internal control over financial reporting process.
The Company has numerous instances where review and approval is
performed by the same employee negating any monitoring or
approval controls.
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IT System Conversion Controls
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The Company did not develop a process to appropriately control
the ERP system conversion at one of its subsidiaries.
the ERP system conversion at one of its subsidiaries.
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IT Control Environment
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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 inappropriate approval of journal entries,
inappropriate approval of expenditures, and inappropriate access
to the general ledger.
over the ability to access its ERP systems. The lack of control
could result in the inappropriate approval of journal entries,
inappropriate approval of expenditures, and inappropriate access
to the general ledger.
During the Companys two most recent years ended December 31, 2015
and in the subsequent interim period through December 7, 2016,
the Company did not consult with MHM regarding the application of
accounting principles to a specified transaction, either
contemplated or proposed, or the type of audit opinion that might
be rendered on the Companys financial statements, and neither a
written report nor oral advice was provided that was an important
factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue, or with any of
the matters outlined in Item 304(a)(2)(ii) of Regulation S-K.
and in the subsequent interim period through December 7, 2016,
the Company did not consult with MHM regarding the application of
accounting principles to a specified transaction, either
contemplated or proposed, or the type of audit opinion that might
be rendered on the Companys financial statements, and neither a
written report nor oral advice was provided that was an important
factor considered by the Company in reaching a decision as to the
accounting, auditing or financial reporting issue, or with any of
the matters outlined in Item 304(a)(2)(ii) of Regulation S-K.
The Company provided BDO with a copy of this Current Report on
Form 8-K prior to its filing with the SEC, and requested BDO
furnish the Company with a letter addressed to the SEC stating
whether it agrees with the statements made by the Company above,
and if not, stating the respects in which it does not agree. A
copy of BDOs letter dated December 13, 2016, is attached hereto
as Exhibit 16.1.
Form 8-K prior to its filing with the SEC, and requested BDO
furnish the Company with a letter addressed to the SEC stating
whether it agrees with the statements made by the Company above,
and if not, stating the respects in which it does not agree. A
copy of BDOs letter dated December 13, 2016, is attached hereto
as Exhibit 16.1.
Item 4.02 Non-Reliance on Previously Issued Financial Statements
or a Related Audit Report or Completed Interim Review
or a Related Audit Report or Completed Interim Review
On September 7, 2016, the Company filed a Current Report on Form
8-K stating that the Audit Committee had concluded that the
quarterly financial statements filed in the Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2015, June 30, 2015
and September 30, 2015 as previously issued should no longer be
relied upon and will be restated. On October 14, 2016, the
Company filed an amendment to its Quarterly Report on Form 10-Q
for the quarter ended March 31, 2015 which included restated
quarterly financial statements and on December 6, 2016, the
Company filed an amendment to its Quarterly Report on Form 10-Q
for the quarter ended June 30, 2015 which included restated
quarterly financial statements. After further review, the Audit
Committee has concluded that quarterly financial statements filed
in the Quarterly Reports on Form 10-Q for the quarter ended
September 30, 2015 does not require restatement and can be relied
upon.
8-K stating that the Audit Committee had concluded that the
quarterly financial statements filed in the Quarterly Reports on
Form 10-Q for the quarters ended March 31, 2015, June 30, 2015
and September 30, 2015 as previously issued should no longer be
relied upon and will be restated. On October 14, 2016, the
Company filed an amendment to its Quarterly Report on Form 10-Q
for the quarter ended March 31, 2015 which included restated
quarterly financial statements and on December 6, 2016, the
Company filed an amendment to its Quarterly Report on Form 10-Q
for the quarter ended June 30, 2015 which included restated
quarterly financial statements. After further review, the Audit
Committee has concluded that quarterly financial statements filed
in the Quarterly Reports on Form 10-Q for the quarter ended
September 30, 2015 does not require restatement and can be relied
upon.
Item 9.01 Financial Statements and Exhibits.
(a) – (c)
N/A
(d) Exhibits.
16.1 Letter from BDO USA, LLP to the SEC dated December 13, 2016*
*To be filed by amendment
About JRjr33, INC. (NYSEMKT:JRJR)
JRjr33, Inc. (JRJR), formerly CVSL Inc., offers a platform of direct-to-consumer brands. The Company operates through the segments, which include Gourmet Food, Nutritional and Wellness, Home Decor, Publishing and Printing, and Other. The Gourmet Food Products segment consists of operations related to the production and sale of hand-crafted spices, oils and other food products from around the world. The Home Decor 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. The Nutritionals and Wellness segment consists of operations related to the selling of nutritional supplements and skin care products. The Publishing and Printing Segment consists of the operations of Happenings Communications Group, Inc. and Paperly, Inc. The Other Segment consists of the operations of Tomboy Tools, Inc. JRjr33, INC. (NYSEMKT:JRJR) Recent Trading Information
JRjr33, INC. (NYSEMKT:JRJR) closed its last trading session down -0.036 at 0.735 with 147,698 shares trading hands.
