Jammin Java announces new distribution deal
Published:Friday | July 1, 2011 | 12:00 AM
Steven Jackson, Business Reporter
Jammin Java Corp, a debt-ridden coffee start-up chaired by Rohan Marley, will embark on an ambitious marketing and distribution campaign costing nearly US$600,000 (J$51 million) over the next 12 months.
The projections require US$250,000 (J$21 million) for general and administrative expenses and US$345,000 (J$29.6 million) for marketing and advertising expenses, according to financials posted last week on the company's website.
These projections are significant for the US-listed company which only recently started booking revenues and recorded a net loss of US$181,000 (J$15.5 million) for its April quarter, or seven times worse than year-earlier levels.
"The main reason for the increase in net loss was due to increased general and administrative fees and cost of sales," the earnings report stated.
The company already announced that it secured funding of some US$2.5 million ($214.5 million) from an investor, Straight Path, for a consideration of six million shares.
"The company anticipates using the funds received from Straight Path to meet its capital needs for the remainder of fiscal 2012, provided that we have no commitment from our officers and directors or any of our shareholders to supplement our revenues, if any, and to support our cost of operations or provide us with any additional financing in the future," it said, then added that the worst case scenario would include termination of its operations.
"If we are unable to generate sufficient revenues to support our expenses and operations, raise additional capital from conventional sources and/or additional sales of stock, we may be forced to curtail or cease our operations. Even if we are able to continue our operations, the failure to obtain financing could have a substantially adverse effect on our business and financial results."
Concurrently, the company announced a distribution deal for Florida, Miami, via BC Coffee, the largest south-eastern distributor in the US.
Jammin Java already has distribution deals in place with Markcol Distribution, Blue Tiger Coffee, Distillata, Good as Gold Coffee and Vend X Distributing, as well as with online retailers including Shoffee.com and coffeecow.com.
"BC Coffee leads the field of coffee sales distribution in Florida and we view them as a key component of our future success," said Marley on the distribution deal in a release.
Total sales were some US$28,000 in its first quarter with cost of sales at US$23,200.
Working capital stood at some US$70,000 and its total accumulated deficit hovered at some US$756,000 ($64.8 million) for the review period.
Jammin Java, a US-based company, provides roasted coffee to retail and hotel chains.
Last year, Marley listed Jammin Java on the over-the-counter stock exchange, the OTC.
Up to midday Tuesday the stock traded at US$1.30.
The stock became the darling of the OTC market last month hitting a US$6.11 high on May 12 then dipping rapidly to US$1 a week later.
At peak, the market capitalisation rose to more than US$500 million (J$42.9 billion) in May, then dipping to US$97.5 million (J$8.4 billion) on June 28.
The volatility prompted the company in its annual report released last month to explicitly deny inflating the stock price via third parties.
Last month, The British Columbia Securities Commission issued a cease-trade order against the stock for its jurisdiction until Jammin Java files some 30 outstanding documents.
However, the stock trades freely elsewhere.