UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported):
May 31, 2016
JRjr33, INC.
(Exact name of registrant as specified in its charter)
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Florida
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Commission
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98-0534701
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(State or other jurisdiction
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File No.:
001-36755
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(IRS Employer
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of incorporation or organization)
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Identification No.)
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2950 North Harwood Street, 22nd Floor, Dallas, Texas 75201
(Address of principal executive offices and zip code)
(469) 913-4115
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
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If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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Item 1.01. Entry into a Material Definitive Agreement.
As previously disclosed, certain subsidiaries of JRjr33, Inc. (“JRJR” or the “Company”) have used ActiTech, L.P. (“Actitech”) to provide production services. Michael Bishop, a member of the Board of Directors of JRJR, is the controlling shareholder of Actitech. On or about May 31, 2016, Actitech offered a letter agreement to Agel Enterprises, (“Agel”), wherein a floating credit limit was provided so that payments to Actitech would be based on Agel’s cash flow, not on a timing or days since shipping product (the “Acitech Agreement”). To date, Agel has not satisfied all fees requested by Actitech under this arrangement due to Agel’s understanding that the fee provisions are invalid and violate applicable usury statutes.
The agreement does not contain material terms found in a standard financial obligation agreement. The aforementioned lack of standard terminology in the Actitech agreement does not purport to be complete and is qualified in its entirety by reference to the provisions of such agreement, a copy of which is filed as exhibit 10.1 to this Current Report on Form 8-K.
Item 2.03. Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.
The information required by this Item 2.03 is set forth under Item 1.01 above and is hereby incorporated by reference in response to this Item 2.03.
Item 2.04. Triggering Events That Accelerate or Increase a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement.
The information required by this Item 2.04 is set forth under Item 1.01 above and is hereby incorporated by reference in response to this Item 2.04.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 9, 2017, the Company's Executive Vice President Fraser E. Marcus resigned his position with the Company effective immediately. Mr. Marcus has served as Executive Vice President since his appointment on February 8, 2017. During his time at the Company, he headed the group’s M&A, strategy, new business development, financial analysis, and transaction structuring efforts. Mr. Marcus has agreed to continue to provide the Company assistance as an adviser for mergers and acquisitions on a fee basis.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits
Exhibit 10.1 Acitech Agreement, dated May 31, 2016
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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JRjr33, Inc.
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Date: May 17, 2017
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By:
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/s/ John P. Rochon
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John P. Rochon
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Chief Executive Officer and President
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EXHIBIT INDEX
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Exhibit No.
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Description
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10.1
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Exhibit 10.1 Acitech Agreement, dated May 31, 2016
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EXHIBIT 99.1
John,
I am writing to address the current status of payments and shipments between Actitech and Agel. I have given a great deal of thought to these issues for quite some time, and I believe that Actitech’s withholding Agel shipments is counterproductive and emotionally time consuming. I am also mindful of our relationship, which I desire to keep free from strain.
As you know, Actitech was forced to withhold shipments to Agel due to promises by Agel to submit payments in the past which were unfulfilled. Both John LaBonte and I want to keep the past in the past and focus on how Actitech and Agel can renew their relationship in a mutually beneficial way.
I know that there are weeks when Agel, on its own, lacks sufficient cash to pay all of its bills. In the past, before CVSL, Ash Capital would only front money to Agel to pay for product and commission, so the tendency was to pay everything else, then ask for help to pay Innovative and commissions. Agel has maintained this tradition with JRJR. You have also been reluctant to pay Agel’s bills out of cash reserved for acquisitions, which I understand.
Given all of the above, I have tried to come up with a different arrangement that would eliminate Agel’s obligation to pay Actitech’s invoices within a specific period of time, but still provides Agel incentive to pay Actitech when the money is available. More specifically, my proposed payment terms are based on credit basis, not on timing or days since shipping (thus, no “net” anything). No money would be due by Agel at the time it places an order, or upon the receipt of the product. Rather, payment would be completely flexible, based according to Agel’s business analysis of its cash flow requirements. Payment terms would be based on what is a normal net 30, actually received on the 36
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day, which is typical for other Actitech customers. Now that Actitech has the loan from Legacy Bank, Actitech is also paying its net 30 vendors within 36 days. These terms are completely ordinary for preferred customers with good credit history.
Ultimately, Agel’s credit basis with Actitech will increase at the same rate as the increase in orders and invoices. No fees would be paid for any amount of money owed that is less than the credit basis, which is the running average of invoicing amounts for the past 3 months, multiplied by a factor of 1.2, and recalculated at the beginning of the first business day of each month. Shipping and fees are not included in the calculation for the credit basis.
Money due which is more than the credit basis will have fees applied to it in order to incentivize Agel to keep the net balance below the credit basis, but may not result in the need for holding shipments for any foreseeable reason.
For the purpose of calculating the amount of money Agel owes Actitech on an ongoing basis, the following formula would be utilized:
B = “Basis” = the running average total monthly dollar amount of invoices (not including “fees” or freight) times 120 percent for the past three months, calculated on the first day of each month.
I = Invoice amount for order(s) fulfilled from Actitech to Agel, calculated at the end of the day the order passes quality control and is available for shipment. Actitech will store finished product for Agel at no charge. Agel may choose to ship the order when it is invoiced, or any time thereafter.
P = payments from Agel or JRJR networks deposited in Actitech’s bank account
F = fees = amount of money due from Agel to Actitech due to owing more than the basis, calculated at the end of each day.
T = total amount of money that Agel owes Actitech, calculated at the end of each day on a spreadsheet which is emailed to someone at Agel
F = ((T+I-B-P) x 0.0007)+((T+I-2B-P)x0.002)+((T+I-3B-P)x.005)
If F is a negative number, then F = zero (no fees are due)
If T is greater than 5xb, Then the amount above 5xB is immediately due and remedial action may be taken by Actitech.
T = B+F-P
, which is calculated at the end of each day.
I am hopeful that this proposal is acceptable to Agel, as I believe it is fair and accomplishes a resolution to the ongoing payment issues that have led to where the parties currently stand. Please indicate as soon as possible whether Agel accepts Actitech’s offer and, if so, please sign below in the space provided agreeing and accepting Actitech’s offer. Please note that this proposal and the delivery of the same does not waive any outstanding payment defaults by Agel or any of Actitech’s rights or remedies in connection with those defaults. This offer shall remain open until 5:00 p.m. CDT, on Tuesday, May 31, 2016, at which time, if not accepted will be automatically revoked without further notice.
Please contact me if you would like to discuss any of these matters in further detail.
AGREED TO AND ACCEPTED:
AGEL ENTERPRISES
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By: ___________________________________
Its: ___________________________________