JRJR Networks Update

April 21, 2016 at 3:44 pm 4 comments

We are increasingly concerned by JRJR Network’s lack of communication with shareholders.

In the absence of evidence to the contrary, we are required to read the tea leaves and infer what is going on from the bits of information that are available. BDO has been serving as JRJR’s accounting/auditing firm for about a year now. There was no prior indication that the company might have any accounting issues that would require a late filing. At literally the 11th hour, the company hired a new CFO and filed for an extension, on which they indicated that they expected to file within the 15 day extension period. That day came and went with no additional new releases or filings until the SEC deadline for disclosing the deficiency letter from the NYSE Mkt due to their failure to file within the 15 day extention period. It is difficult to see this as just an extreme disregard for shareholder communication, as it also gives the impression that there may be some surprises when the 10k is ultimately filed. In our experiences, surprises that cause delays of this kind (delays that are kept under wraps until the last possible minute) are not good surprises.

While our general bull thesis could remain intact, it is difficult to know if the turnarounds (Longaberger, Agel, etc.) are progressing, if the newly acquired UK companies are delivering improved margins and if the growth trajectory of YIAH has continued to impress. These things are not knowable because there have been no financials filed that would give official numbers for going on 8 months now. Worse yet, there have been no press releases giving any indication of anything (positive or negative) with these companies with the exception of the pro forma revenue figure released a few months back. The bottom line here is that the lack of shareholder communication raises the risk profile for JRJR Networks significantly. While the current price could turn out to be a tremendous bargain (and we hope it does), we do not currently have the information that would allow us to be certain of that.

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4 Comments Add your own

  • 1. P. Warren  |  April 21, 2016 at 6:28 pm

    The current article almost stops one step short of saying “sell”. I really hope that’s not the case.

    Reply
  • 2. josh taeger  |  April 21, 2016 at 7:47 pm

    I am still quite bullish on the company and think the switch to BDO will have long term benefits. I’m sure they are making recommendations to improve their accounting system and IT that is related. Although I wish their communication was better, I’m not sure what else they could say during a blackout period. I think the current price is unwarranted and this will shoot up when the accounting issues are resolved.

    Reply
  • 3. P. Warren  |  April 21, 2016 at 10:17 pm

    reason we are being delayed is mainly because of our new auditor, this is their first time auditing us and they are being very thorough….IR says the auditors are new…not a year old…I’m confused…

    Reply
    • 4. jwbuffett  |  April 22, 2016 at 12:35 am

      On May 11 it will be one full year since BDO was hired by CVSL/JRJR. They have been on the job for about 49 weeks, so it is a stretch for someone to suggest that they are the “new” auditors. However, this is the first time they have audited a full year’s results for the 10k/annual report.

      Reply

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