Jammin Java Corp (PINK:JAMN) Continue to Rise
Quite a lot of coffee was spilled and quite a lot of keyboards were damaged around the office this morning when we saw that Jammin Java Corp (PINK:JAMN) closed the trading session with a further 30% added to their value. We covered them already and we are still quite perplexed as to why people put so much trust in them.
After failing to make an impression on other business sectors for about four years, JAMN decided in 2008 that it’s time to take on the coffee industry. They paid quite a lot of money to obtain licenses to use the name of the famous reggae singer Bob Marley and, now a few years later, they claim that they offer high-end coffee at a bargain price. The problem is, during the last couple of years, their share price has been going steadily down until the second half of January when we saw some movement.
The recent upward trend is not completely illogical, either. JAMN along with its subsidiary, Marley Coffee are functioning companies with operations taking place and, for the last year or so, revenues coming in. The thing is, looking through the financial statement we would say that it’s still quite early to call it for sure. The figures below illustrate our point. They are taken from JAMN‘s financial statement covering the period before October 31 and they are not too inspiring:
- cash: 9 thousand
- current assets: $623 thousand
- current liabilities: $922 thousand
- revenue (previous 3 quarters): $1.4 million
- net loss (previous 3 quarters): $2.8 million
Indeed they will need quite a lot of time before they can claim themselves to be a household name, but that doesn’t change the fact that they have yet to make even a cent in profit.
Another problem that has stood before JAMN since the very beginning is the fact that they are unable to finance their operations effectively. This means that they needed to borrow substantial amounts of money from mostly off-shore companies, and because of the continuous losses, they are now struggling to pay them off. On top of that, the latest report states that they will need around $1.4 million during the next 12 months if they are to fulfill their business plan. It’s going to be a toll order securing this sort of money.
The Board of Directors don’t seem fazed by this, however, and they have recently approved a stock-based compensation plan with which they would like to congratulate their management team for the good work. Of course, only directors can decide what they define as “good work”, but the thing that disturbs us most is the fact that the compensation comprises of freely-trabeable common stock, which means that some of the officers could be easily tempted to sell some of the shares and make a substantial profit.
Although, JAMN have managed to register respectable revenues considering the short time frame, they still have a long way to go. That being said, they stand a chance, albeit small, of becoming a successful company. Until that happens, though, we would advice you to weigh your odds carefully.
