Jammin Java Corp (JAMN)

[Brophtron]

smallcapvoice, here are my questions.

Brent Toevs is always listed as a cofounder of National Coffee Service & Vending, but according to an article in Vending Times (Sept. 2001), he joined the (already existing) company as VP of Sales:

NCS&V Names 2 Partners

LAKE WORTH, FL - National Coffee Service & Vending, a brokerage and consulting firm, has announced the appointment of Kent Johnson as vice-president sales/foodservice and Brent Toevs as vice-president sales/OCS.

Johnson joins National Coffee Service & Vending from Pepsi/Lipton Tea Partnership, where he served as national accounts manager for three years. Prior to that, he had been with Unilever/Lipton for 16 years.

Toevs is a 17-year veteran of the coffee service industry and most recently was vice-president of sales for coffee at USRefresh.

Vending Times September 2001

I understand that partnerships can be considered new entities, but it seems that the company existed before he joined, so I wonder how he is listed as a "cofounder".

In all the interviews, Rohan goes on about the 52 acre estate that he bought; he never really mentions that he owns the property privately and that JAMN doesn't own it or the beans; is there a reason that this isn't disclosed more clearly? Also, the estate only actually farms 12 acres and although it might grow in time, a certain part of the land is set aside for conservation; shouldn't this be made more clear in interviews?

When they make announcements of revenue, they recently started this term of "gross revenue"; I have an MBA and have been investing for years and never heard companies use this term before. In the end, the money that they get (net revenue, if you will), is all that matters - why do they provide figures that don't tell the whole story?

There has been a lot of talk about Marley Coffee houses in South Korea. JAMN is supposed to have exclusive worldwide rights to use the name Marley Coffee. I understand that JAMN can't open coffee houses, but if another company uses the Marley Coffee name, doesn't that make the term Exlusive inaccurate? I noticed that JAMN had sales in South Korea of $60 thousand less this year than last year - so has the creation of these coffee houses taken business away from JAMN in South Korea?!

In the 10-K, there is mention of reducing the revenue for several reasons; the first was a late shipment, which also happened a year ago. The second one reads

"reduction of approximately $277,000 of revenue which related to coffee sold directly from the Marley Coffee, Ltd., instead of the Company."

1) Why is Marley Coffee, Ltd. selling directly to the customer?! Are they using the Marley Coffee name? They shouldn't, since JAMN has an exclusive license to use the name.

2) Isn't Marley Coffee, Ltd. selling coffee a conflict of interest?!

3) How does a bookkeeping error like this even happen - is the same bookkeeper handling both sets of books?

4) Who paid for the shipping and packaging of this coffee? You backed off the revenue - but did you back off the COGS or the shipping/packaging costs associated with these? Since COGS is a very significant portion of the product that is sold, how could there not be a corresponding adjustment in COGS when the revenue was reduced?!

I recently went through all the statements of the last 2 years and by my accounts, it appears that JAMN has given Ironridge more shares in make-goods than Ironridge got in the initial deal, yet Brent Toevs has said how it appeared to be a good deal at the time; why did he agree to these make-goods when the deal was made? Then there was the final deal to finish off the obligation; if management thought that the stock would rise, then why would they do this final payoff?

A year ago, Brent Toevs was in Boston for a gathering of investors; he was supposed to continue to New York for a similar meeting but flew directly to Denver instead (per his Twitter account); soon after, the Mother Parkers deal was announced. Now it looks like JAMN is low on cash and with a reduced stock price, it would be hard to get a similar amount of money since it would violate the 10% or shares rule. Was management being short-sighted by not seeking more funding when it had an opportunity and what was then a somewhat stable price?

In the interview, Brent Toevs mentioned wanting to be on NASDAQ or NYSE in 12-18 months. Does he not know that this is impossible in that time frame?

NASDAQ requirements (from Investopedia):
1. The company must have aggregate pre-tax earnings in the prior three years of at least $11 million, in the prior two years at least $2.2 million, and no one year in the prior three years can have a net loss.
2. The company must have a minimum aggregate cash flow of at least $27.5 million for the past three fiscal years, with no negative cash flow in any of those three years. In addition, its average market capitalization over the prior 12 months must be at least $550 million, and revenues in the previous fiscal year must be $110 million, minimum.
3. Companies can be removed from the cash flow requirement of Standard No. 2 if the average market capitalization over the past 12 months is at least $850 million, and revenues over the prior fiscal year are at least $90 million.

You can look up the NYSE requirements, but suffice to say, JAMN can't be listed for at least 4 years (they haven't even had a year with $11 million revenue, let alone earnings of $11 million), assuming that they at least break even this year. Was this not reviewed before he gave his answer?