Marley Coffee presses on despite losses
Avia Collinder, Business Reporter
Marley Coffee Inc, which trades as Jamming Java Corp, is staving off working capital challenges by selling common stock to suppliers, distributors and debtors.
The coffee company's first-quarter results filed with the US Securities and Exchange Commission discloses doubts about it continuing as a going concern - in large part because of its mounting deficits - but its directors are ploughing ahead to widen distribution, add new products and expand to new markets, which included Canada this year.
In the meantime, it has issued common shares to business partners, including Marley Real Cups supplier Mother Parkers Tea & Coffee Inc, and lender Ironridge.
Mother Parkers and its associate companies based in Canada were issued 7.33 million shares of common stock for US$2.5 million with the right to obtain another 7.33 million additional shares by purchase.
Under agreement with this company, Mother Parkers was also given exclusive right to manufacture, process, package, label, distribute and sell Marley Coffee's single-serve coffee pods in Canada, United States and Mexico.
Marley Coffee also issued shares, otherwise, to boost its cash position.
The company cleared just under US$4.8 million of accounts payable and accrued expenses off its books when it effected three transactions with Ironridge, which purchased the obligation and accepted payment in common stock.
The move, the company noted in its earnings report - filed in July, "significantly" improved its liquidity.
Marley Coffee is mainly owned and chaired by Rohan Marley. The company trades in Blue Mountain coffee.
The company has a new supervisory board, as disclosed in another SEC filing at mid-year, whose directors include a top representative of Mother Parkers.
In its first quarter ending April 30, Marley Coffee incurred a net loss of US$1.91 million, and reported accumulated deficits of US$15.7 million.
Its sales topped US$2 million in the quarter, up from US$846,000 in the comparative period in 2013.
"The company has a history of losses and has only recently begun to generate revenue as part of its principal operations. These conditions raise substantial doubt about the company's ability to continue as a going concern," the report said.
It added that the operations of the company have primarily been funded by issuance of its common stock, and indicated that it may have to resort to more equity sales.
At May 13, 2014, the company had 114,356,971 common shares outstanding.
"No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to the company," the report stated.
Marley Coffee's main channels of revenue are grocery retail, online retail, office coffee services, food service, green bean coffee sales and vending and automated retailing, the company said.
It expressed worry about limited supplies of Jamaican Blue Mountain coffee (JBM), but was optimistic about continued operations.
"Limited JBM supply hampered our growth in fiscal 2014. We are currently working to address the supply issues and while we believe we will be in a far better position in Fiscal 2015 with respect to JBM availability, if we are unable to purchase a sufficient quantity of high-quality coffee beans, we may not be able to fulfil demand for our coffee, our revenue may decrease and our ability to expand our business may be negatively impacted," the report said.
Having added new revenue channels, such as its bike cafes, the company said in its July filing that it intends to continue development of market share by capitalising on the global recognition of the 'Marley' brand.
Its advisory board will make recommendations to the Board of Directors on the organisation, funding, plan of operations, proposed joint ventures and partnerships, governance, marketing and expansion of products and services, and other matters, but its suggestions will not be binding on Marley Coffee's directors.