By: Dylan Sikes - AllPennyStocks.com News

Tuesday, December 16, 2014

A compilation of factors, from caffeine to culture, is likely the culprit behind the world’s addiction to coffee that has grown into an $81 billion global empire. In America alone, people drink more than 400 million cups of joe every day in a $30 billion industry. There are some dominant players, but the highly competitive industry is still fragmented with plenty of room for smaller companies to garner a respectable piece of the market. That’s the goal of Jammin Java Corp. (OTCQB:JAMN), a Denver-based company doing business as Marley Coffee founded by Chairman Rohan Marley, the son of music icon Bob Marley. Underscored by a Bob Marley-type theme of hope and unity, Marley Coffee sources its sustainably grown, ethically farmed and artisan roasted gourmet coffee beans from around the world, including Ethiopia, Central and South America and Jamaica. Established in 2009, with roots going back to 1999, Rohan Marley went through the learning curve to get the company off the ground to finally start selling its high-end coffee products about two years ago.

In addition to beans, the company sells ground coffee and single-serve cups (called RealCup), which are compatible with all of the single serve Keurig K-Cup® style brewers. Next summer, RealCup products will be transitioned to the new EcoCup design, representing one of the first brands to market with an easy to use recyclable single serve solution.

The company’s core competency is traditional distribution channels, with an average of just over 5 products on shelves in more than 7,100 stores and authorization to be in another 10,000 stores in the U.S. Marley Coffee products are sold at many household name retailers, such as Sam’s Club, Bed Bath and Beyond and Albertsons, as well as serving as the official coffee of the University of Colorado football and basketball teams. A partnership with Mother Parkers is expected to result in Marley Coffee products to be found on shelves in more than 2,000 stores, including most major retailers, in Canada by the end of next year.

International distribution is another pillar of growth for the company with a focus next year on expansion in the United Kingdom, Chile, South Korea and Canada, as just mentioned. In addition to those markets, Marley Coffee has added distribution partners in Mexico and Colombia and is now testing Australian and South American markets.

Marley Coffee is also planning to establish its own e-commerce sales channel, rather than redirecting customers from its own site to partner sites. In a press release on Tuesday disclosing results from the latest quarter and providing an overview of operations and outlook, the company said it is “approximately a week away” from launching www.MarleyCoffee.com.

In the release, the company reported sales for the third quarter ended October 31 of $2,841,504, a 24.8% increase from the year prior quarter ($2,277,290) and a 36.7% increase from the second quarter. Marley Coffee forecast sales above $3 million for the fourth quarter, adding to $7,061,287 in sales during the three quarters.

Net loss for the recent quarter widened to $2,939,838, or 2 cents per share, from $1,378,551, or 1 cent per share, in the third quarter last year. The company cited $1.35 million of the net loss due to closing out a transaction with Ironridge Global, an institutional investor who had previously bought-up Jammin Java debt held by third-party creditors. Another $400k of the net loss was related to stock compensation during the quarter.

Gross profit as a percentage of net sales slipped to 30% from 37% last year as one-time slotting fees and increased trade spending negatively impacted margins. The company expects the investments to deliver improved performance going forward and to scale-back slotting and instead focus expenditures on direct consumer marketing programs, which should boost margins.

Shares of JAMN had a nice climb in 2013 (moving from a low near 7 cents to as high at 65 cents), but have stumbled in 2014. After ending 2013 around 36 cents, shares hit a 52-week low late in November at 16.2 cents. The markets are responding favorably to the update and quarterly results on Tuesday with shares up 4.5% at 18.9 cents in early trading activity.

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