vemma-logoAs part of the preliminary injunction granted against Vemma last year, the company is required to file quarterly reports.

The takeaway?

Vemma lost $3.8 million dollars in the first quarter of 2016.

Vemma’s explanation for the ongoing losses, despite revenue increasing slightly each month, is the appointment of the Temporary Receiver last year.

Vemma slam the Receiver for shutting down their business, despite the Receiver at the time reasoning that there was no legitimate way to run Vemma.

Indeed, the only reason Vemma hasn’t collapsed is ongoing loans made to it by owner BK Boreyko.

Furthermore, a review of the financial state of Vemma prior to the Receiver taking over, reveals the company had already lost $4 million in the first half of 2015.

Had the Receiver of continued to run Vemma, those losses would have mounted and Vemma had no positive cashflow for the Receiver to cover costs with.

BK Boreyko had planned to bail Vemma out prior to the Receiver’s appointment, however the FTC action against the company prevented him from doing so.

Despite this, Vemma and Boreyko remain optimistic about the company’s future.

Once the Company completes its resolution of the extraordinary expenses caused by the Temporary Receiver’s actions, the Company will be operating in a profitable manner.

Due to demand for its innovative nutritional products and customer loyalty, Vemma anticipates that its sales will continue to grow.

It should be noted that the court to date has not found fault with the Temporary Receiver’s conduct.

With regard to revenue raised by Vemma this year, the sales figures the company is reporting don’t really add up.

Last year, under Vemma’s pyramid scheme business model, the company was hemorrhaging money.

Once the FTC action was filed, Vemma was forced to come up with a new compensation plan. The revised plan only pays Vemma affiliates if they generate retail sales.

Subsequently, affiliate commission expenses dropped from an average of 42% of Vemma’s revenue to just 5%.

This means we know Vemma’s affiliates aren’t getting paid for Vemma’s purported increase in product sales.

Furthermore Alexa estimates that traffic to the Vemma website has been in free-fall since mid last year:

alexa-traffic-vemma-website-decline-april-2016

Vemma’s Facebook page is also a ghost town. It hasn’t been updated since October, 2015.

So uh, if Vemma affiliates aren’t a contributing factor in increased sales, and activity on the Vemma website is at an all-time low, how is the company increasing product sales month on month?

Who is doing the selling? And perhaps more importantly, how?

Are the figures inflated in any way? Are they sustainable or is this the result of business to business sales between Vemma and unnamed third-party merchants?

Not that there’d be anything wrong with that, but it’s a bit rich to claim Vemma as an MLM opportunity is in good shape if its affiliates aren’t generating sales.

I suppose we’ll have to wait and see if Vemma can generate positive cashflow in the second quarter. Scapegoating the Temporary Receiver can’t go on indefinitely…

 

Footnote: Our thanks to Don@ASDUpdates for providing a copy of Vemma’s first quarter report for 2016.