Penny Stock in News: Jammin Java keeps it Hot
  • OTCBB Hot Stock; Jammin Java Delays filing its Annual Report
  • Jammin Java upward Rally Resumes; Uncertainties Remain
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    Jammin Java plunges on Profit-taking

    Jammin Java Corp. (OTC BB: JAMN) shares pulled back 20% in today’s trade, piled on losses of more than 35% yesterday, after the stock climbed 885% this year. The recent plunge is a result of significant profit taking, as apparently there are more sellers than buyers for the stock. In addition, a number of research companies suggested that the company’s upward rally was a result of a significant market awareness campaign, which started in January. Approximately 19.4 million shares changed hands on May 16, a 440% increase over the 90-day average volume.The stock had a big run-up this year, soaring from $0.55 in January to a record of $6.35 on May 12, with market capitalization topping at $355 million despite tiny results, limited resources and operating history. The surge was driven by the rapid roll-out and expansion of product distribution, additions and changes to management team as well as aggressive activity to promote short-term investments in the company.

    The company’s surge has also been supported by rising coffee prices, which nearly doubled over the last year. Adverse weather in coffee growing regions, rising consumption in exporting countries and tight supplies have created a situation where coffee prices are witnessing record highs in futures markets. Arabica coffee futures touched $3.089 a pound this year in New York, the highest level since May 1997. As of May 16, the coffee futures were trading at $2.64 per pound, compared to 2.00 per pound in December 2010.

    JAMN provides premium roasted gourmet coffee on a wholesale level to the service, hospitality, office coffee service and big box store industry. The company owns “Marley Coffee” and related trademarks. Some of the key coffees that JAMN distributes are the Lion’s Blend (signature roast), Kingston City Roast (espresso) and The Mountain Roast (Swiss Water decaf). The company plans to capitalize on the success of the Marley name, as Rohan Marley, JAMN’s chairman is the son of renowned reggae singer Bob Marley.

    The coffee seller has recently made some changes to its management team, recruiting proven expertise in building sales and marketing awareness on online retailers and started to aggressively promote its offering. Subsequent to these changes, JAMN commenced selling its coffee on Cooking.com, MarleyCoffee.com and Amazon.com. The company has recently picked up the leading retailer Coffeewiz.com, a Web site dedicated to providing the best single serve coffees on the market, as another key online distributor.

    The company has already reported solid customer response and accelerated revenue uptake from these channels, as well as optimistic outlook concerning its presence in the $4 billion U.S. single-serve coffee and tea pods market. Last month, JAMN launched a new line of products to expand into the tea pods market as well. The company has also introduced the 2.5-ounce ground fractional packages of coffee, and 2.2-pound bags of whole beans.

    The coffee seller established several distribution agreements to cover the U.S. and Canada markets. JAMN has engaged National Coffee Service & Vending to oversee its national sales initiative and appointed United Natural Foods Canada, a division of United National Foods Inc., as its Canadian distribution partner. Moreover, JAMN confirmed Gourmet Merchants International as their distributor in California.

    The delay in filing its annual 2010 report with Securities Exchange Commission, however, raised some doubts about the scale of growth and operations profitability. The last quarterly report, filed in December 2010, revealed that JAMN has not generated any revenue since inception, has an accumulated deficit of $0.5 million and zero cash on its balance sheet.

    Despite the optimistic news from JAMN, there are uncertainties regarding the marketing success of the company and magnitude of growth. The filing of an annual report for 2010, which could happen by the end of May, could weather away these uncertainties and allow for a better understanding of the company’s potential. With a market capitalization of $231 million, JAMN looks expensive, despite the recent plunge.

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